Mining Companies Are Turning the Tables on Resource Nationalism

With Timothy Foden, Partner at Boies Schiller Flexner LLP

Recording date: 21th July, 2025

Mining companies facing government interference are increasingly turning to international arbitration as a legal remedy against sovereign risk. Timothy Foden of Boies Schiller Flexner LLP specializes in representing mining companies against states that expropriate assets or deny permits through arbitrary administrative actions, operating across jurisdictions including Poland, Tanzania, Peru, Morocco, and Mexico.

The legal framework relies on bilateral and multilateral investment treaties established since the 1950s, which protect foreign investment through binding arbitration mechanisms under international law. Successful claims typically demonstrate that sovereign states acted arbitrarily or violated their own mining codes and administrative laws to disadvantage foreign companies.

Boies Schiller Flexner's selective approach has yielded significant results, including a $331 million award against Poland for the Jan Karski coal project and three successful cases against Tanzania. The firm evaluates cases based on five criteria: evidence of legal breaches, substantial sunk costs, witness quality, treaty compliance, and the defendant state's ability to pay awards.

Most cases require third-party litigation financing due to junior mining companies' limited resources. Specialist financiers evaluate legal merit and damages potential before funding cases, serving as an additional quality filter. The arbitration process spans approximately two years, with 18 months of written pleadings followed by evidentiary hearings and tribunal deliberation.

Damages calculations vary by project stage, with production-ready projects potentially receiving net present value awards, while exploration-stage projects may receive "exploration multiplier" compensation based on sunk costs. Awards are enforceable globally wherever defendant states maintain assets, though collection depends on sovereign financial capacity.

The firm currently handles active cases in Morocco, Ethiopia, Montenegro, Mexico, and Poland, while monitoring emerging risks like Ecuador's new per-hectare mining fees. As resource nationalism increases globally, international arbitration provides mining companies with meaningful recourse against sovereign interference, though success requires substantial preparation, financing, and legal expertise.

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