A few days ago I talked to my lawyer about the issue with the claims, and he gave me his point of view about the matter. Below you have a summary (on italics) of the conversation:
I wanted to discuss with you the case of a company (Macusani Yellowcake) that has 149 mining claims in Puno and has found significant amounts of lithium and uranium in some of them. As part of its obligations, the company pays INGEMMET every year the rights of validity of each claim and also a penalty for those claim in which it has not invested the minimum established. Normally, MINEM publishes the amounts of penalties at the national level at the beginning of each year, and the holders of mining claims have until the last day of June (July 2 in 2018) to cancel the rights of validity and penalties, which must be paid simultaneously for each claim because INGEMMET’s system does not allow paying one and don’t paying the other.
The problem that has presented to the company recently is that, in 2017, MINEM commissioned an audit of expenditures made on claims nationwide since 2000, with the aim of determining whether there correct penalties were greater than those actually paid by the holders of mining claims. As a result of this audit, in February 2018, MINEM determined that Macusani owed a total of $ 2.7 million for penalties. For this reason, Macusani conducted a review and rejected the amounts determined for most of its claims, mainly for 32 of them, in which it had spent in excess and could prove it. Thus, in April and May 2018 Macusani discussed MINEM and managed to reduce the amount of penalties to $ 0.8 million, and throughout the month of June it managed to reduce the penalties to $ 0.5 million. On June 25th, Macusani paid the validity rights and penalties for 117 concessions and, only on July 2nd at 4:03 p.m. it received the MINEM resolution exempting the remaining 32 concessions from penalties, when less than 30 minutes were left before the deadline for payment accreditation of validity rights before INGEMMET.
They want to take your claims away.
Do you really think that?
It's obvious, they want to take them away. The lithium and uranium resources you mentioned, were they found in these 32 concessions?
Yes, a good part of them.
You see, someone wants those claims badly. They send the resolution half an hour before the deadline... there are no coincidences in these affairs. Did the company manage to pay in the bank the validity rights and penalties of the 32 concessions?
Yes, they paid them that same day, but they took the vouchers to INGEMMET to make the payment accreditation at 17:16, that is, when INGEMMET offices were already closed. There was a Macusani employee who entered INGEMMET before 4:30 pm and presented the payment accreditation document, but without the vouchers, and the INGEMMET employee recorded this fact in the accreditation request. Later, at 17:16, the vouchers were handed in (I suppose through the window), but INGEMMET's documents reception unit no longer wanted to accept them.
No problem, they had 48 hours to correct. They did it?
Yes, the next day (July 3rd) Macusani presented a writing explaining what happened and attached the vouchers that had not been accepted.
So, what is the problem?
That still, INGEMMET rejected the vouchers and declared that the payment accreditation was inadmissible.
Let's see, that's a contradiction. In administrative processes there are two ways to reject a request: declare it inadmissible or declare it impermissible. The difference is that when it is declared impermissible, the rejection is definitive, while when it is declared inadmissible, the possibility of correcting the deficiencies in the form is being offered, for example when all the requirements have not been attached. In that case, the law clearly establishes a period of 48 hours to correct, that is, on July 3rd INGEMMET had to accept the vouchers.
But INGEMMET rejected the correction made by Macusani.
I see, what happened next?
Macusani filed a complaint on July 3rd, and in response to this, the Directorate of Validity Rights prepared a report.
Do you have the report?
Yes, here you are.
Mmm ... it does not say that it cannot be corrected, it simply says that the document reception unit was not obliged to receive the vouchers once the opening hours were over. What happened after?
In October, the Directorate of Validity Rights of INGEMMET presented a report to the Executive Presidency with the list of concessions whose holders had not complied with the payment of the validity rights, including the 32 claims of Macusani. Based on this report, on October 3rd the Executive Presidency approved the list for publication in "El Peruano".
One moment, you said that the company had paid the validity rights on the last day of term. Why were the claims included in the list?
What happens is that Macusani paid at the bank on July 2nd, but it cannot accredit the payments because it did not have the vouchers before the closing time of INGEMMET.
The General Mining Law mentions the deadline for payment, and the company has met that deadline...
Yes, but according to the Regulation, the payment consists of the deposit in the bank and an accreditation, that is, it is necessary that both are made for the payment to be considered made.
No, that’s not true. In legal terms, a payment is considered made when the money leaves the domain of the administered (Macusani) and passes into the domain of the institution (INGEMMET), that is, when it changes hands. If the payment was made on the last day of term then the company complied with the substance of its obligation, and the only thing that failed was in the form, so it can be corrected. A law always has priority over its regulation.
In fact, according to the legal framework of the administrative procedures, the Directorate of the Validity Rights (which rejected the vouchers) was obliged to notify the administered (Macusani) indicating that the writing was inadmissible due to form failures and inviting it to correct (deliver the vouchers) within 48 hours. When the Directorate received the vouchers on July 3rd, it had to accept them and take the form failure as corrected. Did the company appeal the Resolution dated October 3rd?
Yes, they filed an Appeal for Nullity before the Mining Council, in order to overturn the said Resolution.
No, I ‘m asking if they filed an appeal before INGEMMET.
As far as I know, they did not submit any appeal to INGEMMET. The first appeal they presented was before the Mining Council.
And what was the result?
The Mining Council rejected that appeal because, according to the Law, it is appropriate to challenge INGEMMET's decision only once the claims expiration has been decided.
Of course, that’s the way it is. When INGEMMET decided to include the 32 concessions in the list of concessions whose holders did not comply with the payment of validity rights, it was up to Macusani to present the administrative appeals that the Law provides before the same instance that made the decision injurious to Macusani's interests, that i, before the Executive Presidency of INGEMMET. The first appeal that can be filed is the Appeal for Reconsideration (Recurso de Reconsideracion), and if it is not successful, the regular Appeal (Recurso de Apelacion) can be filed. Once this instance has been exhausted, and only then, in some cases (as in this case) the Law provide an extraordinary mechanism to request that a higher authority (the Mining Council in this case) review the administrative action, and such mechanism is called Appeal for Review (Recurso de Revision). That is to say, it is understood that if you have gone to the Mining Council, it is because you have already exhausted all previous ways of appeal. What happened after?
On February 20th, the Executive Presidency of INGEMMET issued a Resolution declaring the expiration of the 32 mining claims. Subsequently, on March 14th, Macusani presented an Appeal for Review before the Mining Council requesting the February 20th Resolution be overturned.
Do you have the text of this Appeal for Review?
Yes, here you are. The appeal was in charge of the “Estudio Muniz” law firm.
Let's see, ... it seems that the “Estudio Muniz” law firm does not have attorneys specialized in administrative processes.
Why do you say that?
The Appeal for Review says over and over again that the vouchers had to be received on July 2nd, instead of focusing on the most important arguments: the rights of validity were paid on the last day of term and that same day the payment accreditation was made. The fact that the accreditation did not have the vouchers attached is a form failure and therefore can be remedied within a maximum period of 48 hours. At the time when INGEMMET did not accept the correction, it introduced a vice in the process and therefore its decision to expire the claims is not in accordance with the Law. What happens is that these big law firms only care to bill, their relationship with clients is quite impersonal. What was the Mining Council’s answer?
They rejected the appeal, saying that INGEMMET wasn’t’ obliged to receive the vouchers once the working hours were over.
Fair enough, INGEMMET did the right thing on July 2nd, but did not do the right thing the following days when it rejected the correction made by Macusani, and the Appeal for Review should had focused on that. Now the company must to go to the Judiciary...
Isn't there the possibility of presenting more appeals?
No, the Appeal for Review is the last appeal in the administrative channel, and as I told you a moment ago, it is an extraordinary appeal that is only available in specific cases.
But if there are new arguments, can't a new appeal be submitted to the Mining Council?
The company can present more appeals, but take it for sure that the Mining Council will dismiss them, because it is an issue already discussed. The only exception would be if there is any special legal provision that allows the submission of additional appeals in the case of mining claims, but I do not believe such a thing exists. I am not specialized in mining, however.
I asked you that question because recently the company informed its shareholders that it had new arguments that had been unknown or ignored by the Mining Council, and that it has presented those arguments in Nullity Resources (Recursos de Nulidad), that is, a new appeal that seeks the nullity of the Resolution dated February 20th.
Let's see… all appeals are aimed at nullifying administrative acts. There is no “Appeal for Nullity” in the law of administrative procedures (Law 27444). That is, they can present more appeals, but almost certainly they will be dismissed by the Mining Council. The most important thing now is to file the judicial appeal (Accion Contenciosa Administrativa), what shoudn’t happen here is that, because of presenting additional appeals, you miss the 90-day deadline to present the Contentious Administrative Action before the Judiciary.
Once the judicial appeal (Contentious Action) is filed, is the company confident that INGEMMET cannot sell the 32 claims?
Mmm... if we take into account that the Mining Council Resolution has exhausted the administrative channel, in theory INGEMMET could execute the Resolution dated February 20th and put the 32 claims on sale, but... the company has the option to request a Precautionary Measure before the judge.
What is a Precautionary Measure?
It is a legal measure that the judge approves so that, during the trial, the application of the administrative act in question is suspended, so that unjust damage to the plaintiff (in this case Macusani) is avoided before it has been determined whether the administrative act was correct or not. That is, if the judge accepts the Precautionary Measure, the company will maintain ownership of the 32 claims, at least until the trial ends.
How long is a contentious trial?
Due to the company's strong arguments, this trial should not last more than two years.
But on average trials in the judiciary take longer.
Yes, but the contentious courts are not equal to the rest of the courts in the country, they are more specialized, and therefore they resolve the cases faster.
Do you consider then that, if the Precautionary Measure is dictated by the judge, the result of the trial will be favorable and the damage to Macusani will be minimized?
Yes, absolutely. The arguments are very solid. Even if the judge considered that the accreditation was late, it is clear that, as the MINEM Resolution was received less than 30 minutes before the accreditation deadline, the administrative act was not possible, so according to Article 3 of Law 27444 such an administrative act (requiring proof of payment of the validity rights) was not valid. But it must be taken into account that in order to use this argument it would have to be demonstrated in detail why it was not possible to pay the correct amount before 4:30 p.m.
You must know that, unlike an administrative appeal, in a trial the judge evaluates all the details of what happened, and makes a decision accordingly. The purpose of a trial is more general, it is not to respond to the company's arguments, but to seek the truth.
I forgot to mention that INGEMMET did not attend the hearings before the Mining Council. Do you think that the MINEM lawyers will not appear at the trial?
This is different. They will present themselves, and when they lose the judgment they will appeal to the Supreme Court.
How long does an appeal before the Supreme Court take?
It doesn't take long, about six months.
Is it possible for the Supreme Court to prove them right?
That almost never happens. But they will still do it, because that's the way they are (laughs).
How can I follow the process before the Judiciary?
You can enter the file code on the website. There you will see all the writings that are presented, the scheduled hearings, and so on.
Will I be able to see the details of the writings?
No, the writings submitted by the parties are mentioned, but the content is usually not public.
Can I attend the hearings?
No. In criminal law the hearings are public, but this case belongs to administrative law. These hearings are only attended by the parties or their representatives.
Is it showed on the website when a Precautionary Measure has been submitted?
No, by its nature a Precautionary Measure is confidential, it is only made public when the judge approves it. Not even INGEMMET or the Mining Council will know about the Precautionary Measure before its approval.
Is there a possibility that the judge rejects the Precautionary Measure?
In theory, yes, but I don't think so. The judge will try to quantify the damage that would be done to the company by taking away its claims, which depends on the amount invested and the value of the resources found, and according to that he will take a decision. According to what you have told me, the company has invested millions and has found very valuable resources, so I am pretty sure that the judge will grant the Precautionary Measure without further discussion.
How do I get the file code?
That's easy, you go to the Judicial Branch’s documents reception unit, mention the parties (the company and the Mining Council) and request the file number.
Yesterday I went to the Judicial Branch's documents reception unit and asked about the files. It seems that the judicial appeal have been filed (on October 4th) only for two of the claims, and the file number of the corresponding demands are 10759 and 10760. The link is:
https://cej.pj.gob.pe/cej/forms/busquedaform.html In the form you have to select/type the following:
Distrito judicial: LIMA
Instancia: JUZGADO ESPECIALIZADO
Especialidad: CONTENCIOSO ADMINISTRATIVO
Ao: 2019
N° Expediente: <file number>
After pressing the button "CONSULTAR" you see the summary of the demand, and by clicking the magnifying glass button at the right side you can read the demand's details . For each of the 32 claims there is a Mining Council's Resolution and so there is also a corresponding demand. For example, demand number 10759 corresponds to the claim "LINCOLN XXIX", whose expiration was confirmed by the Mining Council's Resolution with numer 359.