Lupaka v. Peru: Rethinking the Boundaries of Attribution

On 30 June 2025, the tribunal in ICSID Case No. ARB/20/46 (“Tribunal”) issued its final award (“Award”), ordering the Republic of Peru (“Peru”) to pay USD 40 million to a Canadian investor, Lupaka Gold Corp. (“Lupaka”), for damages arising out of the blockade and subsequent taking of a gold mine by the Rural Community of Parán (“Parán”). The Tribunal attributed the conduct of Parán to Peru and found it liable for breaches of the Fair and Equitable Treatment, Full Protection and Security, and expropriation clauses in the Free Trade Agreement between Canada and Peru (the “FTA”).

This post offers an overview of the dispute, the award, and some potential implications of the Tribunal’s approach to attribution.

Overview of the Dispute

Lupaka acquired Invicta Mining Corporation (“Invicta”) in 2012. Invicta held a gold mining concession that partially overlapped with the lands of three rural communities in Peru. Invicta had a pre-existing agreement with the Lacsanga community to operate the mine in their territory, but Parán claimed this territory.

Tensions grew between Parán and Invicta in 2018. Members of the community occupied the mine and blocked access. Parán and Invicta attempted negotiations, but the situation escalated when community members took over the mine and were involved in a shooting with Invicta’s personnel. Invicta requested the assistance and protection of Peruvian authorities but never recovered the mine. In 2019, Lupaka’s shares in Invicta were foreclosed under financial agreements used to capitalize its operation.

Lupaka claimed that Peru was liable under the FTA for the conduct of its authorities and of Parán. In Peru, rural communities have special jurisdictional and police powers that make them an organ of the State under Article 4 of the International Law Commission’s Articles on State Responsibility (“ILC Articles”), or an entity exercising elements of governmental authority under ILC Article 5. Therefore, Parán’s conduct is attributable to the State.

Peru argued that Parán is neither a state organ nor an entity engaging in governmental activity. Peruvian laws and prior investment awards (see Bear Creek v. Peru) show that indigenous communities are separate from the State. Peru emphasized the absence of precedents finding that indigenous communities exercise elements of governmental authority. Peru also claimed to have met its obligations under the FTA.

The Award

The Tribunal found that Parán’s conduct was attributable to Peru and violated the FTA. According to the Tribunal, Parán is an “autonomous territorial unit” of the State and, therefore, a State organ under ILC Article 4. Alternatively, Parán is an entity exercising governmental authority under ILC Article 5 (Award, ¶¶ 244, 256).

The Tribunal reached this conclusion by analyzing Peru’s legal and constitutional framework. National laws, while relevant to determine the status of a State-organ for the purposes of ILC Article 4, are not dispositive of the issue but only the starting point. The term “organ” must be read “in the most general sense” and giving value “to the facts of the situation” to determine the extent to which an entity is “integrated into the legal structure of the state” (Award, ¶ 211).

In the Tribunal’s view, Peru’s Constitution, laws, and regulations confirm that rural communities are a State organ because they are “substantially integrated into the legal structure of the State,” fulfilling “important State functions,” “distinctly governmental in character,” and “classically recognized as those of States and their organs, including legislative policy and rule-making, dispute resolution, law enforcement, and security” (Award, ¶¶ 213, 227). While rural communities are not listed as part of the governmental structure in Peru’s Constitution, they are vested with jurisdictional functions (Article 149, Peru’s Constitution). Also, Parán had rural patrols or “rondas campesinas,” “authorized, trained and armed” by Peruvian authorities to maintain peace and security (Award, ¶¶ 219-223).

According to the Tribunal, Parán’s independent legal personality is not incompatible with its status as “State organ.” Parán’s autonomy and independence is limited to the community’s territory and by Peruvian laws, operating as a State “territorial unit” under ILC Article 4. Additionally, the degree of State control over an organ is “irrelevant” for the attribution of international responsibility (Award, ¶¶ 232-235).

The Tribunal also dismissed Peru’s arguments under “developing” principles on the rights of Indigenous Peoples and did not recognize the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) as customary international law (Award, ¶ 236).

The Tribunal’s Approach to Attribution

The recognition of an indigenous community as a State organ under ILC Article 4, while explored in other areas, appears as a novel approach in the context of investment arbitration that will have numerous ramifications not only for Peru but for the Latin American region, home to over 700 indigenous groups, comprising a population of more than 50 million. This post explores two possible consequences.

First, we could start seeing new cases in the region exploring Lupaka-attribution arguments. Multiple Latin American States have legal frameworks for their native and indigenous communities that strongly resemble that of Peru. In the Award, it seems that one of the strongest points to find attribution in this case was the partial delegation of jurisdictional powers to rural communities, as a core State function. The Constitutions of Colombia (Article 246), Ecuador (Article 171), and Bolivia (Article 191) have strikingly similar provisions to Article 146 of the Peruvian Constitution, as they all recognize that indigenous communities have certain jurisdictional functions in their territories. In particular, the Colombian Constitution recognizes indigenous communities as “territorial units” (Articles 329 and 330).

With such salient similarities, some foreign investors might start bringing arbitrations based on the Lupaka-attribution arguments. Such a hypothetical scenario seems rather proximate considering that many infrastructure, mining, and energy projects involving foreign investors in Latin America tend to occur in territories close or adjacent to indigenous communities. For example, Colombia is no stranger to investment disputes involving the rights of indigenous or native communities (see Glencore v. Colombia). In the Colombian domestic context, there are precedents of indigenous communities attempting to exercise general jurisdiction over companies and individuals to take their property or impose convictions, based mainly on their territorial presence. However, Colombian courts have recognized that the indigenous jurisdiction is limited and cannot replace ordinary courts as the “natural judge” (Judgment T-139/24).

Moreover, it is worth noting that, in the Award, the Tribunal ascribed great weight to the role of the rondas campesinas and their “arming” by the State. This may be a distinctive element that sets this case apart from future cases involving similar legal frameworks but different factual backgrounds.

Second, a more distant but possible consequence is the extension of the Lupaka-attribution argument to other entities that also exercise powers of a jurisdictional nature, like arbitrators in proceedings seated in the host State. As mentioned above, a key element in the Award was the exercise of jurisdictional functions by rural communities, pursuant to Peru’s Constitution. While not identically, Article 139 of Peru’s Constitution also recognizes arbitration under the prism of “the jurisdictional function.” Similarly, other Latin American jurisdictions like Venezuela, Costa Rica, Mexico, and Colombia have constitutionally, statutorily, or judicially recognized arbitration in connection with the exercise of jurisdictional powers, with various nuances (PR Vallejo, 2013).

It remains to be seen whether, in the context of investment arbitrations in Latin America, investors will rely on the Lupaka-attribution argument to attack the effects of arbitrations seated in the host State by invoking its liability for arbitrators’ conduct. However, a country that provides an interesting setting for debate purposes is Colombia. On the one hand, Article 116 of the Colombian Constitution, in a rather unique and specific fashion, recognizes arbitrators as individuals “entrusted temporarily with the function of administering justice.” Under this provision, arbitrators have been equated to judges and their awards to judgments, subject to constitutional injunctions (Judgment T-354/19). Moreover, arbitrators can now conduct enforcement proceedings in Colombia (see here), broadening the scenarios for liability attribution.

On the other hand, the Colombian Council of State recently changed its position on State liability for the conduct of arbitrators, holding that the State is not liable for the conduct of arbitrators during their “arbitral activity” because it does not participate in the arbitration, and parties have “absolute freedom” to appoint arbitrators (Judgment 50928 (2008-00176-01), 24 October 2025). This development seems to weigh against a finding that the conduct of arbitrators can bind the State. However, under the Award’s reasoning, this recent decision would not preclude the debate because “a State cannot invoke its national law to avoid its international legal obligations” (Award, ¶ 206).

Conclusion

The Award constitutes a relevant development in investment arbitration, as it attributes the conduct of a rural community to the State under ILC Articles 4 and 5. In a region where several constitutions closely resemble the Peruvian framework in recognizing jurisdictional powers and territorial autonomy for indigenous communities, Lupaka provides a point of reference for investors in similar circumstances.

At the same time, the Tribunal’s focus on the exercise of jurisdictional functions as a core indicator of “State organ” status raises a distinct question: whether this reasoning could extend to other actors entrusted with administering justice. While some may argue it is still too early to fully anticipate how far Lupaka will travel, the Award will likely shape future debates on attribution and State responsibility in Latin America.