On June 25, 2025, the tribunal in Lupaka Gold Corp. v. Peru rendered a groundbreaking decision, awarding the investor USD 40 million in damages. This ruling highlighted Peru’s liability for its failure to ensure “full protection and security” against third-party interference, as well as for the actions of a local Indigenous community, with these actions attributed to the state under Articles 4 and 5 of the International Law Commission’s Articles on State Responsibility for Internationally Wrongful Acts (“ARSIWA”). While framed as a conventional dispute over full protection, due diligence, and state attribution, the award pointedly reveals the stark limitations imposed on the right to self-determination for Indigenous communities. It underscores a governance structure that is firmly state-centric, where the state retains ultimate supervisory authority over investment regimes.

This article argues that investment tribunals often adopt an overly restrictive interpretive framework when assessing governance in self-determination contexts. This framework bifurcates governance into internal and external categories, diverging starkly from the broader definitions established by the International Court of Justice (ICJ) and other international adjudicative bodies. The current focus on legal personality, constitutional recognition, institutional structure, and public law status constrains the understanding of governance within the framework of the right of Indigenous Peoples to self-determination. The narrowed formulation reveals a governance framework within ISDS that, while seemingly cooperative, ultimately reallocates responsibility and Indigenous actions back to the state, undermining the authentic expression of self-determination.

Tribunal’s approach to governance, Indigenous authority, and attribution

Lupaka Gold v. Peru underscores the struggles investment tribunals encounter in delineating the normative contours of self-determination through the notion of governance and state agency. The case revolves around a contentious mining site on ancestral lands of the Parán Community, which possesses a close legacy of self-governance and spiritual ties to its territory (paras. 113(b), 257–259, 360–361, 631(iii)). The Parán Community sought to assert its authority through protests, occupations, and blockades, actions that disrupted mining operations, prompting allegations that Peru violated Article 805 of the Canada–Peru FTA by failing to exercise due diligence and ensure full protection and security (FPS) against third-party interference.

In this context, Lupaka’s interpretation recast the Parán Community’s protests not as valid expressions of Indigenous self-governance but as mere “third-party interference.” This framing became the crux of its claims regarding the violation of the FPS standard. The claimant advanced the argument that the applicable legal norms imposed an obligation on Peru that extended beyond mere abstention; they required affirmative action to mitigate disruptions from local communities. The claimant explained that “social licence” is a clear responsibility of the government. This means that the state should not only acknowledge these conditions but also work to protect them using its laws and administration, rather than viewing them as just a basic social or political idea (paras. 259–263 and 598). Following this line of thinking, the claimant cited Cengiz v. Libya to illustrate that the obligation to fulfill FPS encompasses two critical components: a negative obligation to refrain from harming the investment, and a positive obligation to protect it from community interference (Respondent’s counter-memorial para. 42). The claimant argued that the obligation of FPS defines the limits of governance for Peru, requiring the state to actively manage risks. This meant that Peru had a responsibility to organize, coordinate, and deploy its institutions in a way that would prevent Indigenous and rural communities from successfully blocking the mining project. In this context, the claimant presented governance as a centralized responsibility of the state, emphasizing its role as the main authority in maintaining public order with respect to the investment.

In contrast, Peru presented a different view of governance in its argument, which shifts responsibility away from the central government through three main points:

1. Definition of social licence: Peru argued that “social licence” is an informal, unwritten, and ever-changing agreement between a corporation and the local community (para. 34, 87). It emphasized that this concept is “not a formal permit or a state responsibility” (para. 91). Additionally, Peru asserted that obtaining a formal permit, as understood in traditional administrative law, is not necessary (para. 91). In this framework, social licence exists outside the reach of state regulatory authority, meaning the central government does not have any due diligence obligations in this regard.
2. Corporate responsibility for local order: Peru argued that the corporation is responsible for maintaining peaceful and harmonious relationships with the local community within its area of influence. This view shifts the responsibility for managing local interactions onto the company. The company is expected to handle community expectations, build trust, and gain tacit consent, while the state’s role is limited to facilitating dialogue, not enforcing corrective actions to protect private investment (para. 105).
3. Indigenous self-determination and state responsibility: Citing ILO Convention No. 169 and the UN Declaration on the Rights of Indigenous Peoples (UNDRIP), Peru argued that actions taken by Indigenous communities are rooted in their right to self-determination. Peru claimed that when these communities express their rights through protests, blockades, or occupations, the state cannot be held responsible for such actions (para. 197). Because the state is bound by international obligations to respect Indigenous autonomy, its ability to intervene is limited, shielding it from liability for community resistance.

In addressing Peru’s liability, the tribunal took a different approach. The tribunal’s findings delineate a clear and significant framework for state responsibility with respect to Indigenous communities under the FTA.

First, the tribunal establishes that Peru bears a robust affirmative obligation to exercise due diligence in protecting the investment, which includes actively managing and mitigating community resistance. It concludes that Peru did not meet this responsibility, stating that its attempts at dialogue were “ineffectual” and did not meet the necessary standards under FPS parameters (para 360). The state is expected to take proactive measures to anticipate and neutralize potential disruptions rather than merely convening discussions or relying on non-coercive strategies.

This compartmentalization becomes evident in the tribunal’s attribution analysis according to the ILC Articles on State Responsibility. It attributes the Parán Community’s blockades and occupations to Peru, interpreting the community as an organ of the state under Article 4 ARSIWA (Claimant´s memorial, para. 237 et seq.; Respondent’s counter-memorial, para. 385). As a registered rural community, constitutionally recognized and structured as a public law entity, its actions are regarded as integral to the state apparatus. The tribunal maintains that references to autonomy, ILO Convention No. 169, and UNDRIP do not alter this classification. As the tribunal noted, “The autonomy of the Parán Community, as well as references to ILO Convention No. 169 and UNDRIP, do not change this characterization. While autonomy is acknowledged, it does not diminish the fact that the Community, as a public law entity, is integral to Peru’s state apparatus” (para. 239).

By designating the Parán Community as a state organ, the tribunal effectively integrates Indigenous governance within the state’s framework, portraying the community as a decentralized extension of the Peruvian state. This characterization holds one significant consequence: it neglects the fact that the Parán Community’s authority predates state recognition, rooted in customary law and self-determination, rather than originating from a hierarchical endowment of powers. However, it denies that this authority extends to controlling external actors, resource exploitation, or the fate of the mining project. In this sense, governance powers are distinctly split: inward-facing authority over community life is allocated to the Parán Community, while outward-facing authority over investment, resource development, and relations with companies is reserved for the central state. This “inside/outside” structure severely restricts the community’s ability to influence the most consequential decisions affecting its territory, effectively limiting its governance role. As a result, the community’s collective actions, including protests and blockades, are classified as state conduct under Article 4 ARSIWA (para 240). Furthermore, even if the Parán Community were determined to act ultra vires, the tribunal invokes Article 7 ARSIWA to assert that such actions remain attributable to the state, as they occurred through formal institutional channels. Thus, the tribunal’s reasoning regarding the nature of state organs is rooted in formal criteria that encompass legal personality under domestic law, constitutional recognition, a defined institutional structure, and public law status.

The tribunal’s reliance on formal criteria—legal personality, constitutional recognition, institutional structure, and public law status—stands in sharp contrast to the approach taken by other international courts. While the Lupaka tribunal treated these formal markers as sufficient for attribution, the ICJ, ISDS tribunals in other contexts, and human rights courts have developed more substantive tests that examine the actual relationship between entities and states. These alternative frameworks offer important insights into how Indigenous communities should be understood within international law’s attribution rules.

Redefining state organs: Indigenous rights and the expanding boundaries of governance

The gap between the Lupaka tribunal’s approach and established international jurisprudence becomes clear when examining how other courts determine state organ status. International tribunals have developed four distinct tests that look beyond formal recognition to examine the substantive nature of governance relationships. These tests—structural integration, functional authority, effective control, and pre-existing authority—provide a more nuanced framework for distinguishing between genuine state organs and autonomous Indigenous communities.

The Structural Integration Test in Military and Paramilitary Activities

In the case of Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States), the ICJ highlighted that for an entity to be considered part of a state’s structure under Article 4, it must have a formal, hierarchical relationship with the central government (paras. 158-9). The court noted that even if an entity’s status does not follow from domestic law, it can still be seen as a state organ if it acts entirely under the state’s control. This approach suggests that governance is flexible, and the status of entities depends on specific circumstances, rather than automatically assuming that all recognized entities are part of a formal state structure.

The Functional Authority Test in Jan de Nul

Article 5 of the ILC Articles helps determine if an entity has been delegated governmental authority, while Article 7 addresses actions that exceed this authority. In the Jan de Nul case, the tribunal assessed whether the Suez Canal Authority had “public powers” based on indicators such as regulatory control and legal functions. If Article 5 isn’t met, Article 7 may still hold the state responsible if an entity acts with governmental authority, even beyond its intended limits. For example, Indigenous communities in Peru likely wouldn’t qualify under Article 5, as their powers are limited to internal governance. However, under Article 7, if they were given specific state responsibilities, their actions could still be recognized as official, even if they overstepped their authority.

The Effective Control Test in Bear Creek

In Bear Creek Mining Corp. v. Republic of Peru, the tribunal examined whether actions by Indigenous communities during protests could be attributed to the state. Applying Article 8 of the ILC Articles, the tribunal determined that the unrest stemming from mining operations was driven by community pressure on the state, rather than by state-directed actions. The Ministry of Interior’s deployment of armed forces to maintain order was characterized as a response to independent community actions, not evidence of state control over those actions. This distinction underscores a critical evidentiary requirement: attribution demands proof of the state’s effective control over specific conduct, not merely the presence of state organs during events. This reasoning invites a counterargument: there is a meaningful distinction between pressure from the general public and actions by constitutionally recognized Indigenous communities with self-governance powers. The latter may warrant different attribution analysis given their unique legal and political status.

The Pre-existing Authority Doctrine in Yakye Axa

Finally, an approach that stands in the clearest tension with the Lupaka reasoning is the framework adopted by the Inter-American Court of Human Rights in Yakye Axa Indigenous Community v. Paraguay. The court acknowledged that Indigenous authority is rooted in communal tenure systems and customary law that predate the state itself. Crucially, this authority is not derived from state delegation but exists independently, grounded in historical continuity and self-determination.

This Pre-existing Authority Doctrine has significant implications for attribution analysis. It prevents Indigenous communities from being classified as state organs under Article 4 of the ILC Articles, as their authority originates entirely outside the state structure. Indigenous communities exercise self-governance rather than perform governmental functions on behalf of the state. This framework provides the most forceful counter to tribunals’ attribution arguments, as it challenges the foundational premise that Indigenous authority flows from or through the state apparatus.

In the context of the Lupaka case, the application of these tests indicates a different conclusion. The Parán Community does not meet the level of complete dependence as outlined by the Nicaragua ICJ judgment, nor does it exercise the delegated coercive powers over third parties as required by Jan de Nul. Furthermore, it acted independently, without state direction, as affirmed in Bear Creek, and holds pre-existing authority based on customary law, as recognized in Yakye Axa. Therefore, the tribunal’s formalistic approach appears to overlook an important opportunity to harmonize investment law with the broader international legal framework concerning Indigenous governance.

Conclusion

The Lupaka Gold v. Peru decision highlights an important challenge in reconciling investment protection with Indigenous self-determination. By classifying the Parán Community as a state organ based on constitutional recognition and public law status, the tribunal adopted an approach that may not fully align with the tests developed by other international courts. This creates a tension: communities are held responsible for actions affecting investments while having limited authority over resource decisions impacting their territories. This paper advocates for greater consistency between investment tribunals and other international adjudicative bodies to strengthen the coherence of international law on Indigenous rights and clarify the scope of ILO Convention 169 and UNDRIP in investment contexts. Three constructive steps could help facilitate this alignment:

1. ISDS tribunals could benefit from incorporating the structural integration tests established in Nicaragua and related jurisprudence.
2. Future tribunal decisions could more explicitly distinguish between delegated state authority and pre-existing Indigenous governance.
3. States negotiating investment treaties could clarify the relationship between authentic Indigenous self-governance and state attribution.

These measures would help harmonize investor protection with the evolving international framework on Indigenous self-determination.

Author

Naimeh Masumy is a PhD candidate at Maastricht University.