Ecuador's Constitutional Court Takes On Extractive Industries

• Published date: 01 March 2022
• Subject Matter: Government, Public Sector, Energy and Natural Resources, Mining, Constitutional & Administrative Law, Indigenous Peoples
• Law Firm: Herbert Smith Freehills
• Author: Mr Ben Rubinstein, Maxwell Herman, Daniela Paez and Emily Westphalen

The Constitutional Court of Ecuador (the 'Court') has recently ruled on a series of constitutional actions brought against the development of mining projects in Ecuador (the 'Decisions'). The Decisions illustrate the Court's continued approach to recognizing and strengthening the right to prior consultation of indigenous communities on extractive activities in the country. The Decisions however seem to run counter to President Lasso's attempts to reform the country's historic economic policy by pledging to promote foreign investment to stimulate Ecuador's economic growth, especially through the exploration and exploitation of hydrocarbons and mining resources.

We discuss below the Decisions and some of their potential implications for companies in extractive industries.

The Decisions

1. The Los Cedros Decision (December 1 2021)

On December 1, 2021, the Court revoked environmental licenses granted by the Ecuadorian government based on grounds of protecting the 'Rights of Nature' in the Los Cedros case (the 'Los Cedros Decision'). The Los Cedros case was a constitutional action filed by the city of Cotacachi against the Ministry of Environment and Ecuador's state-owned mining company ENAMI EP in relation to the Río Magdalena mining project carried out in partnership with Canadian mining company Cornerstone Capital Resources in the Los Cedros protected forest (the 'Forest').

In late 2018, the lower appellate court found that environmental licenses granted by the Ministry of Environment to ENAMI EP in December 2017 for the exploration of minerals in the Forest violated the rights of nature and the constitutional rights to clean water, a healthy environment and environmental consultation.

In the Los Cedros Decision, the Court held that nature has rights under the Ecuadorean Constitution, and that the Forest's rights had been violated by the mining activities, which the Court presumed under the precautionary principle caused harm to the Forest's biodiversity. The Court also found that the Ministry of Environment had failed to properly assess the impact of the licensed activities on the people's access to clean water and a healthy environment, and that affected communities had not been consulted as required by local and international law.

As a result, the Court revoked the environmental license and water permits for the mining project and prohibited any extractive activity that may be harmful to the Forest. It also ordered the Ministry of Environment to take all...