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Why This Decision Matters
In Lupaka Gold Corp. v. Republic of Peru, ICSID Case No. ARB/20/46, an arbitral tribunal ordered Peru to pay over USD $40.4 million for breaching the Canada-Peru Free Trade Agreement ("FTA").1 The award is among one of the first international arbitral decisions to hold a State liable for actions taken by an Indigenous or autonomous community exercising governmental authority within its territory.
Background and Factual Overview
Canadian mining company Lupaka Gold Corp. ("Lupaka") held mining concessions in Peru's highland regions through its subsidiary Invicta Mining Corporation ("Invicta"). The concessions overlapped with lands claimed by the Rural Community of Parán (the "Parán Community"). Rural Communities are self-contained, self-governing groups with deep pre-colonial roots and strong ties to their territories. They own land collectively, apply their own customary law, and maintain armed patrols.2
Relations between Invicta and the Parán Community deteriorated over time. In October 2018, Parán Community members blockaded the access road to the mining site. Despite Invicta's repeated requests for assistance from Peruvian government agencies, officials consistently maintained that Invicta needed to pursue dialogue with the Parán Community as the only effective means of managing the situation.3
In May 2019, violence erupted when security guards retained by Invicta attempted to access the mine site. Gunfire broke out, resulting in injuries and one fatality. Following the incident, members of the Parán Community seized physical control of the mine and began exploiting it themselves. Invicta never regained possession of the site.4
The Attribution Challenge
The central issue before the tribunal was whether the Parán Community's actions could be attributed to Peru under international law. The rules governing State attribution are codified in the International Law Commission's Articles on State Responsibility for Internationally Wrongful Acts ("ARSIWA"), which are broadly accepted as reflecting customary international law. Article 4 addresses the conduct of State organs, including territorial units, while Article 5 addresses conduct by entities empowered by law to exercise governmental authority.5
Lupaka argued that the Parán Community's actions were attributable to Peru under both Articles. Peru disputed attribution, arguing that Rural Communities enjoy distinct status under Peruvian and international law, and that the relevant actions constituted private acts rather than official State action.
The Tribunal's Analysis
The tribunal determined that Peru was responsible for the actions of the Parán Community under either Article 4 or 5 of the ARSIWA, finding that Peru failed to provide full protection and security to Lupaka's investment.
Under Article 4, the tribunal examined Peru's Constitution, laws, and regulations, finding that Rural Communities are substantially integrated into the State's legal structure. The tribunal found "no compelling difference" between regional or local governments and the Parán Community, noting that both govern and provide security within State-defined territorial boundaries and legal frameworks.6 While Rural Communities enjoy a degree of autonomy, they also perform core State functions such as legislative policymaking, dispute resolution, law enforcement, and security provision.7
The tribunal further held that even if the Parán Community were not considered a State organ under Article 4, attribution would still be proper under Article 5 of the ARSIWA. For similar reasons, the tribunal concluded that Peruvian law empowered the Parán Community to exercise elements of governmental authority and that it was acting in that capacity during the crucial instances leading to the loss of the investment.8
Finally, the tribunal addressed Peru's argument that attribution would conflict with international efforts to respect Indigenous communities' rights. The tribunal rejected this argument, noting that its "necessary consequence seems to be that a State, and the State's treaty partners, are bound to accept that there are areas within a State's territory where its treaty obligations do not operate."9 The tribunal held that the domestic status of the Parán Community does not shield Peru from international responsibility for treaty violations stemming from the Community's actions where State attribution was made out.10
Concluding Thoughts
This decision represents a significant interpretation of State attribution in the context of Indigenous and autonomous communities. Critically, the tribunal's reasoning relied on a network of constitutional, statutory, and regulatory provisions showing that Peru's Rural Communities are substantially integrated into the legal structure of the State and perform important functions that are distinctly governmental in nature. While not binding, the decision has particular implications for States with similar governance structures with their Indigenous communities.
Footnotes
1 Lupaka Gold Corp v. Republic of Peru, ICSID Case No. ARB/20/46, Final Award, 30 June 2025 ("Lupaka v. Peru").
2 Lupaka v. Peru, at paras. 86, 90.
3 Lupaka v. Peru, at paras. 108, 326.
4 Lupaka v. Peru, at paras. 428-431.
5 International Law Commission, Responsibility of States for Internationally Wrongful Acts, UN Doc. A/RES/56/83 (2001): https://docs.un.org/en/a/RES/56/83.
6 Lupaka v. Peru, at para. 232.
7 Lupaka v. Peru, at para. 227.
8 Lupaka v. Peru, at paras. 247, 256.
9 Lupaka v. Peru, at para. 238.
10 Lupaka v. Peru, at para. 238.
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