2.1 Domesticating Investment Law

Colombia started opening up its economy to foreign investment in the early 1990s, under Cesar Gaviria's government. The 1991 Constitution was designed to facilitate these economic reforms and ensure the legal framework that would encourage foreign investment. It also provided the space for the subsequent introduction of domestic investment laws and other laws relating to foreign investment.Footnote ²⁴

In the first instance, Law 9 of 1991 (Ley de Cambios Internacionales) established a legal basis for foreign investment, building on the Constitution. It incorporated the recommendations of the International Monetary Fund (IMF), including principles such as national treatment of foreign investors, in Art. 15 paragraph 4. The Government also issued a general authorization for foreign investment, which applied to most investments, with the important exception of public services, for which an explicit authorization was required.Footnote ²⁵

In the early 2000s, the Conservative governments of Andrés Pastrana and Alváro Uribe were intent on attracting more foreign investment. There was a broad consensus amongst the political elites that opening the economy to international markets was key to domestic growth; the soaring fiscal deficit and an economic crisis further led an acceleration of the efforts to attract foreign investment. At this time, Decree 2080 of 2000 was adopted, implementing the 1991 Law and building the domestic investment law regime. The Decree regulates foreign direct investment, except when superseded by international treaties. Article 2 of the Decree incorporates the principle of national treatment for foreign investors directly into domestic law. It also sets out that foreign investment is welcome in all sectors of the economy – with certain exceptions linked to national security, hazardous waste, and network television concessions. However, it allows the government to restrict the entry of foreign capital by decree. Compared to other domestic investment laws, it is not as far-reaching – it does not include an arbitration clause. Where there is no international treaty granting access to international arbitration, all disputes are meant to be resolved as per Colombian law.Footnote ²⁶

Pastrana also enacted other reforms to facilitate foreign investment in the economy, such as a new mining code, involving the granting of mining titles on a ‘first come, first served’ basis, which made it much easier for foreign companies to obtain these rights to the resources.Footnote ²⁷ Following the election of Álvaro Uribe in 2002, further legal reforms were introduced to create incentives for the extractive industries; state resources were privatized, and labour rules loosened.

The Uribe government had also significantly increased the defence budget, as part of its strategy to combat guerrilla insurgents through increased military action. The rising costs of the military programme, coupled with a growing fiscal deficit, led to an attempt to attract more capital through growing mining investments in the mid-2000s.Footnote ²⁸ This included a further expansion of free-market policies and incentives for foreign investors. For example, a law was passed in 2005 that allowed the creation of investor–state contracts guaranteeing legal stability.Footnote ²⁹ Legal stability was defined as the maintenance of legal norms identified as important to the proposed investment. Many such contracts were signed by the governments until the Law was abrogated in 2012.Footnote ^30, Footnote ³¹ This shows the extent to which Uribe's government was willing to limit regulatory space in order to attract foreign investment.

2.2 Institution-Building to Attract Foreign Investment

The Santos government (2010–2018) was similarly keen on attracting foreign investment, including in the mining sector, facilitated by favourable legislation and, initially, high commodity prices. The slump in commodity prices around 2013 caused a further push to promote the mining industries.Footnote ³² However, the Santos government was more focused on institution building as a means of attracting foreign investment – creating mechanisms of legal stability and competitive fiscal policy, amongst others.Footnote ³³ A formal strategy was developed on how to prevent and respond to investment claims. This strategy existed before the first claims arose, contrary to the findings that many countries ignore the risk of arbitration until they are faced with a claim.Footnote ³⁴ The legal framework of the strategy was set out in 2010 in a document of the National Council of Social and Economic PolicyFootnote ³⁵ and Decree 1859 of 2012. In the 2010 strategy, the government recognized the risk of its public employees’ lack of experience with international investment agreement (IIA) commitments, which was likely to lead to investment arbitration.Footnote ³⁶ It set out the objective of training government officials on how their actions could breach IIA provisions. The government organized dozens of workshops on Colombia's IIA commitments, and published reports such as ‘Know Colombia's Investment Commitments and Obligations’ (in collaboration with the Inter-American Development Bank), and ‘Prevention and Management of Investor–State disputes under IIAs’ (in collaboration with the EU).Footnote ³⁷ The strategy was not only concerned with avoiding disputes, but also aimed at improving the overall investment climate. It created the Investment Attraction Facilitation System (SIFAI), a public–private mechanism that gathers information on encouraging investment through legal reform. The SIFAI also allows collective complaints to be voiced by a group of investors. However, this mechanism is not used much, because investors frequently have individual complaints.Footnote ³⁸ The SIFAI exemplified the government's focus on creating a pro-investor environment, as it actively encourages the participation of investors in legal reform.

In addition to the bodies created in the CONPES strategy, the Santos government reformed the institutions responsible for defending the state when faced with international litigation. The 2010–2014 National Development Plan created a specialized agency responsible for both defending the state and preventing possible cases, the Agencía Nacional de Defensa Jurídica del Estado (ANDJE). It also runs programmes to train officials on how to avoid the risk of investment claims.Footnote ³⁹ The Santos government also pursued an investor-friendly environment through a national arbitration law – Law 1563 of 2012 – which is based on the UNCITRAL Model Arbitration Law – a model that international investors are familiar with.Footnote ⁴⁰

2.3 Mechanism for Internalization of Costs

The literature on regulatory chill notes that whether the cost of arbitration will be a deterrent to regulation depends on which part of the state will end up paying that cost.Footnote ⁴¹ As questioned by the Colombian academic Rene Urueña, if a decision depends on a local authority, but the costs of claims are paid by the central government, why should the local authority choose to minimize the risk of arbitration?Footnote ⁴² For arbitration costs to create incentives, there would need to be a form of internalization, a loss-allocation mechanism internal to the state, or another system for controlling risk-increasing activities of state officials.Footnote ⁴³

It is unclear whether such a transfer of costs is possible under Colombian law, and whether it would apply to the Santurbán case. There is a legal procedure that allows the central government to seek redress against the state official who is considered liable for the international breach, the acción de repetición. However, only a few of my interviewees believed this action to have any significant impact on official behaviour.Footnote ⁴⁴ The legal procedure is based on Article 2 of Law 678 from 2001, which defines it as ‘a civil action of patrimonial character that should be exercised against a current or former public official, who as a consequence of their wilful misconduct, or seriously wrongful conduct caused the State to be obliged to pay compensation, stemming from a judgement, conciliation or other form of terminating a conflict’. Articles 5 and 6 of the same law define what wilful misconduct (conducta dolosa) and seriously wrongful conduct (culpa grave) are. The former relates to an official wilfully acting in pursuit of objectives extraneous to the goals of their official functions. The latter occurs where the damage caused is a consequence of direct violation of the law or the constitution, or an inexcusable omission or breach of their exercise of official duties.

The acción de repetición could be used against an official if they were perceived to have acted contrary to their functions, or in a seriously wrongful manner. It is unclear to what extent this action has any effect on official behaviour, as only one of my respondents seemed to be influenced by it.

While the impact of the formal route for transferring costs is unclear, a few interviewees mentioned pressures that were informal, following the line of the central government. For instance, a junior official might receive a phone call from a more senior official in their department, directing them to change a particular regulatory proposal. This type of informal power could also limit the officials’ autonomy to disregard the risk of investment claims.

2.4 History of Colombian Constitutional Law in its Relationship to Investment Law

The domestication of international investment law into the Colombian legal system described above took place in parallel with important developments in Colombian constitutional law, and the interactions between the two show the need to understand domestication of IEL in its broader context. The current Colombian Constitution was enacted in 1991 during the government of Cesar Gaviria, who was also a proponent of the free-market reforms with a view to opening the Colombian economy to international investment. A new Constitution was deemed necessary in order to ensure the rule of law, which was thought to be a precondition for economic development and growth. The prevailing understanding was that a well-functioning market economy requires clear rules and the protection of individual rights, in particular, property rights.Footnote ⁴⁵ Gaviria was not, however, a proponent of including enforceable socio-economic rights in the Constitution. Rather, he argued that while negative rights are enforceable, socio-economic rights should be developed by the legislature as appropriate to the circumstances. Nonetheless, a large proportion of the Constituent Assembly did not agree with this perspective and succeeded in including social rights in the Constitution as substantive goals for the Colombian government. This was partly because social groups that were traditionally excluded from Colombian electoral politics, such as representatives of indigenous movements, were involved in the constitution making process.Footnote ⁴⁶ The 1991 Constitution is thus based on a dual logic of both favouring the rule of the free market (for example, by providing autonomy to the central bank) and protecting rights consistent with an interventionist social democracy (for example, the principle of the social function of property).Footnote ⁴⁷

The interaction between constitutional law and investment law, and their mutual influences, became very clear in the 1990s. The Constitutional Court found that the prohibition of expropriation without compensation contained in the free trade agreement negotiated with the UK was unconstitutional, as it violated Article 58 of the Constitution, which allowed expropriation without compensation in certain circumstances.Footnote ⁴⁸ Following this judgement, Article 58 was derogated in 1999, in a clear move to facilitate investment in the country.

At the same time, the Constitutional Court was awarded vast powers of review via the 1991 Constitution through the institution of the tutela. The tutela is a mechanism for rights-review in all courts; the tutela was relatively easy to bring to court, due to low costs and simple procedures and grew in popularity over the 1990s. The Constitutional Court significantly expanded the possibilities for use of the tutela by ruling strongly on the responsibility of judges to protect fundamental rights.Footnote ⁴⁹ The Court's increasing involvement in the protection of rights led to an implementation of a regime radically different from what the Gaviria government had envisioned. Social rights were being judicially enforced, including the state's obligation to pay welfare benefits. The right to health, in particular, has been invoked very frequently – famously, the Constitutional Court had found that the Colombian health legislation was not satisfactory, and was granting applicants rights to access specific medicines and procedures that were not granted in the state programmes.Footnote ⁵⁰

The strong role of the Colombian Constitutional Court in protecting fundamental rights and creating a check on executive power is part of a broader trend in Latin America since the 1990s for the interpretations of human rights to be more expansive and assertive.Footnote ⁵¹ This was manifest through the proliferation of new constitutions that included a broader range of fundamental rights. Judicial actors also became bolder in upholding human rights against the intervention of governments.Footnote ⁵² There was increasing social demand for judicial involvement in political controversies,Footnote ⁵³ and human rights were increasingly recognized as an established part of constitutional law. As a result, courts gained in importance as political actors.Footnote ⁵⁴

The Constitutional Court has thus gained a reputation as a strong and independent institution for the protection of fundamental rights.Footnote ⁵⁵ The Santurbán páramo case shows that this role is relevant to understanding regulatory chill, and the interactions between international investment law and domestic laws. The Court was empowered to use rights-review to control policy-making, while ignoring the potential effects that might have in terms of international arbitration. Judicial rights review can be a way of preventing regulatory chill; the Court may stop the executive and legislature from being excessively accommodating to the interests of foreign investors when that may jeopardize fundamental rights.

3.1 The Santurbán Páramo Saga

The concept that states are reluctant to regulate when there is a risk of investment claims being brought against them assumes that the relevant policymakers are aware of the investment treaty obligations and how they are related to their area of policy. Research indicates that this is not necessarily the case. Poulsen has argued that the majority of developing country policymakers were not aware of the possibility of investment claims until they were faced with the first investment arbitration.Footnote ⁵⁶ This study was based on both qualitative and quantitative data from a large range of countries. Other studies have approached the issue of awareness of investment treaties in a more localized and context-focused manner. According to a study of five developing countries, based on interviews with officials at different levels of administration, many government officials had remained unaware of investment treaties even after the state had become a respondent in investment arbitration.Footnote ⁵⁷ Nonetheless, in other contexts, knowledge of the arbitration cases against the state was substantial and was clearly affecting the decision-making of officials.Footnote ⁵⁸

Creating similar obligations in domestic law could induce regulatory chill, raising awareness of the possibility of investment claims. As the Santurbán case shows, domestic investment law is likely to be part of a broader process of promoting foreign investment in the economy, intended to facilitate foreign investment. This raises the question of what effect domestic investment law might have on the occurrence of regulatory chill.

In Colombia, domestic investment laws were put in place to attract and facilitate foreign investment. Contrary to many developing country cases discussed in the literature, these were accompanied by programmes and strategies aimed at raising awareness of the potential impact of investment treaties.Footnote ⁵⁹ This section shows that the domestic institutions and investment laws did have an impact on the officials’ awareness of potential of investment claims, and their chosen approach to regulate on the delimitation of the Santurbán páramo.

A former government official informed me that when the delimitation of the páramos was being debated, a risk assessment based on international law was conducted by the Ministry of Commerce. It took into account the risk of arbitration claims being brought by foreign investors in the regions affected by delimitations.Footnote ⁶⁰ The conduct of risk assessments, which evidences an advanced knowledge of the effects of international law, together with a set-up of domestic investment law facilitating foreign investment, would suggest a fairly high likelihood of regulatory chill occurring.

The first páramo that the government attempted to delimit was Santurbán, ‘a dramatic one’, as explained to me by a former official from the Ministry of Environment.Footnote ⁶¹ The process was incredibly difficult, and the delimitation was frequently delayed. The drama and difficulty came from the fact that Santurbán is a traditional mining region. In the area of the páramo, there are significant amounts of gold, which had been exploited for hundreds of years by small-scale miners in the towns of California and Vetas. Multinational companies bought the titles to the resource from many of these miners and began mining explorations in these areas. At the same time, activists in Bucaramanga and Floridablanca, cities in the areas surrounding the páramo, protested against mining in these areas due to water pollution in rivers that flow from the páramo to their towns.

This explains why the deadline for a final delimitation of the páramo has been frequently postponed. The obligation to delimit the páramos was included in the National Development Plan Santos I (NDP) in 2010, which also reiterated the prohibition of mining in the páramos, with an exception for those who had a consolidated right to mine before the initial prohibition was passed in February 2010. It then took three years for the Santurbán páramo to have its first delimitation. In the process of delimitation, the Instituto Alexander von Humboldt (IvH), a scientific institute providing technical services to the government, delivered an area of reference for the government, which was meant to serve as a scientific basis for delimiting the páramo. Nonetheless, the final delimitation was smaller than that area – although it did include areas of ‘special protection’ outside the páramo. A few years later, this delimitation was questioned by the Constitutional Court, which in a constitutional review of the NDP 2010 found that the process of delimitation vested unfettered discretion on the government, which could depart from the technical advice of the IvH with no limits. It also found that the exclusion from the prohibition of mining of those with rights consolidated before 2010 was unconstitutional, and the prohibition had to be a total one.

Following that, another case regarding Santurbán was brought to the Constitutional Court; this time in the form of an individual rights claim (tutela). It challenged the Resolution that enacted the delimitation on the basis that it had not sufficiently consulted the local population in the process. Based on the right to participation in environmental governance, the Court found that the delimitation had to be redrawn, in a process that would involve the locally affected populations to a larger extent.Footnote ⁶²

The decisions regarding the páramo and the prohibition of mining led to mining companies losing their chance of obtaining an environmental licence, and having to cease their exploration activities. This resulted in investment claims brought by several Canadian mining companies (Eco Oro, Red Eagle, Galway Gold) against Colombia. The claims were brought under the Canada–Colombia Free Trade Agreement, which includes ISDS for the settlement of disputes. The companies based their claims on the legal uncertainty regarding the delimitation of the páramo, referring to clauses such as the minimum standard of treatment and the prohibition of expropriation without adequate compensation. They added external pressure to what was already a complex clash of multiple divergent interests posing distinct pressures on the state.

The tribunal's award in Eco Oro vs Colombia, issued in 2021, finds that Colombia's actions had not amounted to expropriation of Eco Oro's investment, but they did violate the minimum standard of treatment and fair and equitable treatment standard.Footnote ⁶³ The tribunal holds that the process of delimiting the páramo was subject to excessive delays and had created legal uncertainty. Various assurances and communications of Colombian government agencies created legitimate expectations that Eco Oro would be allowed to apply for an environmental licence for its mining project. The tribunal also states that Colombia did not provide a sufficiently stable business environment for the mining companies in the region.Footnote ⁶⁴

The tribunal's decision evidences a problematic perception of the state under international investment law that can be raised as a more general critique of the investment regime. The tribunal notes the divergent views of the institutions within the state and holds that the divergence resulted in the lack of a stable business environment. However, it does not recognize that it is common for state institutions to take different approaches, particularly in a process as complex as the delimitation of a new protected zone in a populated area. As the dissenting arbiter, Professor Philippe Sands points out in paragraph 28 of his separate opinion:

A deeper look within the structures of the state, the domestic laws and policies, allows for a more realistic view of the internal processes of a state that determines both its actions towards foreign investors, and any potential for regulatory chill. It also shows that the perception that some arbitration tribunals have of the state is problematic, as they require it to act in a unitary manner and ensure stability and consistency as a priority (based on an interpretation of the FET standard).Footnote ⁶⁵ This perception contrasts with the understanding of the diverse functions of the state and how they interact with each other to create a system of checks and balances. A judiciary overturning the decision of the legislative based on sound constitutional grounds may lead to less stability of the business environment (in the short-term), but it is a sign of a well-functioning legal system where state institutions control each other. There is therefore a normative dimension to understanding the disaggregated nature of the state – the correct functioning of the state may lead to decisions being changed or overturned.

3.2 The Sunset Clause: Partial Regulatory Chill

The initial decision of the government regarding mining in the páramos allowed consolidated mining titles to continue, via a sunset clause in the Law 1753. This section argues that this was partially related to the perceived risk of investment claims, and therefore constituted an element of regulatory chill.

It is useful to place the sunset clause, which allows existing mining to continue in its historical and political context. The Santos governments relied on foreign investment in extractive industries for state revenue, continuing the trend from previous governments. Mining remained the most important export sector – at 20% of total exports between 2010 and 2015.Footnote ⁶⁶ As Carlos Cante, the vice-minister for mining in the second Santos government described in an interview, large-scale mining with the involvement of foreign investors was seen as crucial to the economic development of Colombia.Footnote ⁶⁷ The slump in commodity prices in 2013 did not detract the government from extractive industries; rather, it led to their further expansion.Footnote ⁶⁸ The second Santos government (2014–2018) granted new advantages to mining companies, including shortening the process for obtaining environmental licences.Footnote ⁶⁹ At the same time, there was a clear willingness within the Santos governments to put in place measures for environmental protection; a priority that was not shared with the previous government. The Santos government in 2010 began the process of delimiting many environmental areas, but in that process, it had to deal with previously assigned mining titles. The officials in the Santos government perceived it as a definite rupture with previous policies regarding natural resources, emphasizing the complexities involved in creating a system of environmental protection where mining titles had already been granted. As the former Minister of Energy and Mining, German Arcé, told me:

What was the government's approach to dealing with the tension between the policy of creating protected areas, and the many mining titles already assigned? Minister Arcé emphasized that the mining titles themselves did not grant the right to exploit the resource, and as that was clear in Colombian law, there was little risk of investment claims being brought. Nonetheless, when pressed on the issue, the former Minister acknowledged that: ‘there is always a risk, as you need to go to a tribunal, and someone has to understand the legal order, these tribunals take place outside of Colombia, so understanding the whole sequence is a lot to ask ’.Footnote ⁷⁰ As discussed above, the Ministry of Commerce had conducted a risk assessment based on international investment law, which shows that at least some members of the executive were aware of the risk posed by investment claims.

Furthermore, according to my interviewees, including Andrés Gómez Rey, a former Ministry of Environment official and legal academic who worked on the delimitation of the Santurbán páramo, the reason for the non-retroactive prohibition was primarily to avoid paying compensation, both to domestic and foreign miners, which could be due under domestic law as well as investment treaties. The consideration of possible investment claims, therefore, did have an impact on the decision to refrain from prohibiting mining prospectively. Yet, Andrés Gómez Rey also emphasized the fact that the concern was about miners who already had all the required documents and permits, whereas those who only had a mining title were considered to have low chances of winning a potential ISDS case. It is surprising that some cases that Colombia is facing today, including Eco Oro, have been brought by companies that only had a mining title.Footnote ⁷¹

Therefore, there was an element of regulatory chill in the decisions that were made by the Santos government officials; the decision to prohibit mining was partly motivated by the willingness to avoid potential claims for compensation. In this case, there was an attempt to prevent the risk of investment claims by making the prohibition on mining only prospective, and thus delimiting the páramo on the assumption that those who had already established their mining license in the area would be able to continue.

3.3 The Constitutional Court Cases: Reversing the Chill

The decision of the government brought about a partial regulatory chill, but the Constitutional Court reversed it in 2016.Footnote ⁷² The Court based its reasoning on human rights enshrined in the Constitution, finding that allowing existing mining to continue would not guarantee the rights to a healthy environment, water, and national heritage. The Constitutional Court further questioned the process of delimiting the Santurbán páramo following a tutela brought in 2017.Footnote ⁷³ These judgements show that domestic laws and decision-making processes are not unitary when it comes to their approach to potential investment claims or the risk of them bringing about the regulatory chill. Constitutional law, its interplay with other domestic laws, and the functioning of an independent constitutional tribunal are critical factors when determining whether regulatory chill is likely to occur.

In the 2016 court case, the majority of the judges found that any mining in the páramos was unconstitutional, invalidating the sunset clause that allowed those with consolidated titles to continue. Some dissenting judges argued in favour of the sunset clause referring to the risk of investment claims. However, the majority of judges made their decision based on the constitutional rights to a healthy environment, water, and national heritage. In Colombian constitutional law, as in many constitutional orders, the constitution and the fundamental rights in the bloque de constitucionalidad Footnote ⁷⁴ are at the top of the legal hierarchy of norms.Footnote ⁷⁵ Therefore, in deciding based on fundamental rights, the judges were fulfilling their role as guardians of the constitution. In the case, the judges described their function to be counterbalancing the short-term perspective of the executive with a more long-term view of the constitutional problem.Footnote ⁷⁶

The majority held that selectively refraining from applying the prohibition of mining to those who had obtained a contract and environmental licence before 2010 according to Article 173(1) of the National Development Plan Santos II, Law 1753 of 2015, was unconstitutional, as it did not guarantee the right to (a) a healthy environment, (b) water, and (c) national heritage. Based on these constitutional rights, the Court found that all mining in the páramos, whether new or already existing, had to be immediately prohibited. In their dissenting opinion, Judges Linares and Guerrero disagreed with the view that Article 173 para. 1 is unconstitutional. Their reasoning was based on three main arguments. First, they found that the method of interpretation of the Constitution that the Court adopted does not follow the canons of interpretation found in case law. Second, they stated that the Court's review of the article, which is part of the Law establishing the National Development Plan, infringed upon the democratic principle, as the National Development Plan is a law approved by Congress, created in a widely participatory process, involving many consultations.Footnote ⁷⁷ Following these two arguments, Linares and Guerrero referred to the negative consequences that the immediate prohibition might have and criticized the majority judgement for failing to take these into account:

Therefore, Judges Linares and Guerrero based their dissenting opinion on the possibility of causing investment claims, among other reasons, and they even went so far as to claim that this should have been obvious to the Court, which was under the obligation to consider the same. However, the majority decided the case based on constitutional law principles, and did not consider the risk of an investment claim to be a convincing legal argument.

In C-035/16, the Court referred to several constitutional rights and principles which had to be balanced against each other. It considered the principle of economic freedom and qualified it by the right of the state to intervene in economic activity. It then referred to the rights of those who had already acquired mining titles and stated that:

The Court acknowledged both the utility of the páramo as providing water to the surrounding villages, as well as its value as a unique ecosystem. It discussed the fundamental right to water of the inhabitants of the towns that rely on water sources from the páramo. It specified that this right had to be made effective through positive obligations placed on the state:

The Court also discussed the protection of the páramo as an ecosystem that is valuable in itself and requires protection. It based its reasoning on the concept of the ‘Ecological Constitution’, which is based on the right to a healthy environment enforceable via rights-review.Footnote ⁸¹ While it recognized that the competence to delimit the páramo was in the hands of the Ministry of Environment, which received technical advice from the Instituto von Humboldt, it found that the Ministry had an unfettered discretion with regard to the delimitation. There was no obligation in place limiting the extent of deviation from the area of reference provided by the IvH, which did not provide a sufficient safeguard for protecting the páramo.

The tribunal in the Eco Oro v Colombia case cites the Constitutional Court's judgement on several occasions, and in fact, refers to quotes from it to explain the ecological importance of the páramo ecosystem. It does not regard the Constitutional Court's judgement as a violation of the MST or FET. Rather, the tribunal focusses on the level of inconsistency of the government's decisions relating to the delimitation of the páramo (which the government had a constitutional obligation to pursue). It is the lack of clarity and inconsistency of these decisions that are found to violate the standards of treatment.Footnote ⁸³ But as mentioned above, this relies on a problematic perception of the state as being tasked primarily with ensuring the consistency and stability of the business environment. It does not take into account the complexity of interests to which the state needs to respond or the possibility that decisions will take some time or may need to be changed.

In 2017, two civil society organizations brought a case against the Ministry of Environment alleging that the existing delimitation of the páramo had breached the right of the affected population to participate in the delimitation.Footnote ⁸⁴ The action was brought by the means of a tutela. The groups comprised of two civil society organizations – Corporación Colectivo de Abogados Luis Carlos Pérez, a human rights NGO, and Comité de Santurbán, an activist organization focused on mobilizing efforts to protect the ecosystem of the páramo and the access to water of populations in cities surrounding it.

The tutela was brought once the arbitration case between Eco Oro and the Colombian state had already been initiated. Therefore, there was clearly an awareness of the Court on the risk of investment claims. Therefore, there was no doubt as to the importance of the delimitation for international investors. Nonetheless, the Court still decided to declare the delimitation of the páramo unconstitutional, requiring a more participatory process.

The tribunal in Eco Oro vs Colombia criticizes this judgement, stating that ‘there was a marked lack of clarity as to the true meaning of the effect of this decision given the vague terms used’.Footnote ⁸⁵ However, throughout the arbitral award, the tribunal does not give much attention to the cities surrounding the páramo, and their dependence on the ecosystem for access to water. The tribunal focuses on the tension between mining and protecting the environment but does not discuss the diverse interests of the populations living in the páramo and its surroundings in much detail. This may have led to an under, appreciation of the need for local participation in the process of delimiting the páramo, which has huge social significance. This is another example of where the tribunal has a simplistic view of the state and the multiple local interests at play.

3.4 Domestic State Actors and Interest Groups

In addition to analysing the methods of reasoning and priorities of state institutions, it is helpful to understand their relationships with relevant interest groups. State institutions do not operate in a void – they react to, and are influenced by, particular parts of society. The institutions’ responsiveness to the demands of given interest groups, or lack of it, was an important factor in determining whether regulatory chill occurred.

The social impact of the delimitation was an important consideration for the officials deciding where the páramo starts and ends. The bureaucrats from the Ministry of Environment whom I interviewed emphasized the difficulty of drawing the limits of the páramo in areas where most people had always relied on mining for their livelihoods.Footnote ⁸⁶ They spoke about the town of Vetas, which according to the boundaries of the páramo drawn by the Instituto von Humboldt would find itself entirely within the protected areas, which would mean that all mining and agriculture would be prohibited within that town.

The government and bureaucracy's consideration of the situation of domestic miners shows that they were responsive to the interests of those groups. The risks of international arbitration had been assessed and considered, but at the same time the interests of the local population inhabiting the area of Santurbán were crucial to the officials’ decisions on the delimitation. The reason for the solely prospective prohibition of mining was both to protect the local miners in places such as Vetas and California, and to avoid paying compensation, both to local and foreign miners. The fact that the interests of the domestic miners were intertwined with those of the multinational mining companies highlights how complex it is to analyse the impact of the risk of arbitration in a context where there are conflicting domestic interests at stake. To fully understand the influence of the risk of claims, it is necessary to observe its interactions with the domestic influences.

The government was considering the interests of those living within the páramo, but it was less responsive to the interests of the local activist groups from towns relying on the water from the páramo. The fact that these groups had less influence on the government, coupled with the Ministry of Environment's lack of technical and financial capacity to pursue deeper involvement with these groups and their arguments influenced the Ministry's approach to the delimitation.Footnote ⁸⁷ This is evidenced by the way the Ministry of Environment considered the input of IvH. While the IvH took the interests of those relying on the water of the páramo into account, the Ministry adopted a different approach by attempting to appease the communities in the páramo. It was more concerned with opposition from those villages than the demands of social movements in Bucaramanga and Floridablanca for a more extensive protection of the páramo.

The Constitutional Court, due to the nature of its constitutional function, is supposed to make decisions based on laws and constitutional principles, rather than in response to the demands of interest groups. That is the approach that Court took in the 2016 case, where it found that all mining in the páramos should be prohibited, the majority of the Court did not regard the potential effects of their decisions on investment claims or miners within the páramo to be decisive in their reasoning. This approach evidenced a distance from interest groups critical to the effective functioning of an independent judiciary.

Nonetheless, such distance from the groups which are likely to be most affected by the decisions can also have negative consequences, if it impedes a deeper understanding of the issue under consideration. In the analysed case, the total prohibition of mining in case C-035/16 created significant difficulties for populations living within and around the páramo, as it meant that they could not continue with their existing livelihoods. The conflicting interests at stake and the complexity of the process meant that a total prohibition of mining, unaccompanied by other policies to aid the transition to alternative livelihoods, created significant concern among the local populations.

The 2017 case T-361/17 represents the Court's increased understanding of the complex problem of the mining and other economic activity in the páramo. In analysing the question of whether the process of delimiting the páramo had impinged on individual rights, it gave more attention to the interests of the affected population than in 2016. In the earlier case, it had not fully considered the ways in which the prohibition of economic activities in the páramo would affect the local population; in this case, it recognized the importance of involving the affected groups in the decision-making process. It explicitly recognized that its previous decision had an adverse effect on those populations:

Therefore, the judges considered that the Resolution delimiting the páramo did not adequately provide for the right to participation of the local population, taking a different approach from the 2016 case. The Court refocussed on the need to involve the local population in the decision-making process. It also shows a deeper understanding of the ways in which the páramo can be managed, as the Court recognizes that there can be more solutions that protect the páramo but which do not amount to a total prohibition on mining, affecting artisanal miners as well as mining companies. Through gaining a deeper understanding of the issue the Court develops its application of constitutional principles.