NCPO shot itself in the foot with gold mine closure order 

opinion November 05, 2017 01:00

By The Nation

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Consequences of the use of article 44 a symptom of junta rule 

Article 44 may be a convenient instrument for the ruling junta to control Thai people.

But when it comes to international dealings, such draconian measures don’t hold water and junta chief, Prime Minister Prayut Chan-o-cha, is getting a taste of his own medicine. 

Just days ago, Australia’s Kingsgate Consolidated Ltd started arbitration proceedings against Thailand under the Australia-Thailand Free Trade Agreement.

At the centre of the dispute is the damages suffered by the company after the National Council for Peace and Order (NCPO) ordered all gold mines in Phichit province to be closed. The order was issued on January 1 this year, only to be reversed less than a year later.

The Australian company opted for arbitration after the two sides failed to settle the dispute over the extent of damages. Kingsgate operated the Chatree gold mine under the management of its subsidiary Akara Resources whose operations were closed following the NCPO order on January 1.

Needless to say, the NCPO’s abrupt decision inflicted financial damage on Kingsgate, not to mention the blow to Thailand’s international standing in the eyes of global investors, particularly those in the mining industry.

To recover the substantial losses it had suffered, the firm appointed international law firm Clifford Chance to represent it in the arbitration proceedings with Andrew Bell as its lead barrister.

“The board of Kingsgate considers that the company has excellent prospects of successfully recovering very substantial damages against the Kingdom of Thailand, and will vigorously prosecute its claim,” the company’s statement said.

Without an opposition and the silencing of the masses, the NCPO is left without a warning mechanism. Often, it sees any criticism as an attack against its rule and often against Thailand. Sadly, the junta equates itself with Thailand, arrogating to itself the right to define and determine what Thailand is and should be.

A cursory investigation suggests that the Article 44 order used to shut down Kingsgate’s mine was not in keeping with the procedures outlined in the bilateral agreement that was drafted to ensure fairness.

The agreement says any action by the Thai government to shut down the mine should be justifiable. 

The reasons provided by the NCPO were not only unconvincing but also brief and shallow. But because the political atmosphere in the country, which is not conducive for critical debates on anything, Kingsgate and its associates were pretty much on their own. 

The bilateral agreement also called for a full disclosure of documents and other evidence to support the action.

According to one expert, there were insufficient scientific and academic documents to substantiate the NCPO order.

Decharut Sukkumnoed of Kasetsart University wrote on his Facebook page that the Thai government may face a tough legal problem. He said there is much scientific and academic evidence on this matter, but the dearth of its inclusion as direct support for the special NCPO order could become a factor leading to a legal defeat in the arbitration proceedings.

Sad but true, Thai citizens are not able to challenge the merit of Article 44 but foreign investors can do so. And that’s because they have a bilateral agreement, while Thai people don’t have such a contract – social or legal.

A democratically elected government, no matter how pathetic the politicians may be, at least comes with a mechanism for the sake of accountability.

Pasu Loharjun, permanent secretary of Industry Ministry, is left to pick up the pieces of the mess created by the NCPO.

Naturally, he pointed to the complaints by the local residents who cited environmental reasons and public health concerns.

While no one doubts that complaints have been filed, the problem was the manner in which the government handled the matter.

Of course, any industrial activity will have some sort of impact on the environment. But the task at hand is to define where the country should draw the line. What constitutes a violation must be clearly defined or else the risks that foreign investors have to take would be too high and unrealistic.