SULLIDEN EXPLORATION INC.
TSX : SUE

SULLIDEN EXPLORATION INC.

June 12, 2006 16:11 ET

Litigation Update on Shahuindo Property: Constitutional Tribunal Rejects Appeal of Algamarca and Reaffirms Autonomy of Arbitration Process

MONTRAL, QUEBEC--(CCNMatthews - June 12, 2006) - Sulliden Exploration Inc. (Sulliden) (TSX:SUE) is pleased to announce that the Constitutional Tribunal has rejected the appeal of Exploraciones Algamarca S.A.(Algamarca) that the arbitration process provided for in the Transfer Agreement relating to the Shahuindo property is not valid.

As previously reported, the Transfer Agreement between Sulliden and Algamarca for the purchase by the Company of the Shahuindo gold property in Peru executed in November 2002 provides that any disputes regarding the agreement shall be resolved by arbitration. In early 2003, the new shareholder of Algamarca unilaterally commenced legal procedures to have the executed transfer agreement declared invalid. Accordingly, Sulliden in accordance of the terms of the transfer agreement requested that an Arbitration Tribunal be established. The Arbitration Tribunal convened in January 2004 and had completed all phases of this process including the evidentiary stage by May 2005. Algamarca has objected to the arbitration clause and the process, although it has actively participated in the Arbitration, and has attempted in various Courts in different locations and in different jurisdictions to have the Arbitration Proceedings suspended.

In January 2004, Algamarca presented to the District Judge of Villa Maria del Triunfo (in Lima) a constitutional petition to declare the invalidity of the arbitration clause in the transfer agreement executed with Sulliden in November, 2002. By resolution of May 2004, the Judge of Villa Maria del Triunfo declared the petition of Algamarca S.A. invalid. After appealed by Algamarca, the Superior Court revoke the resolution and declare invalid the petition of Algamarca in September 2005 on other grounds . In December 2005, Algamarca appealed that decision of the Superior Court of Lima to the Constitutional Tribunal. Finally, on Thursday, June 8, 2006 the Constitutional Tribunal published its Decision (dated April 30, 2006) rejecting the appeal of Algamarca and declaring its petition invalid.

In its 18 pages decision which is final, the Constitutional Tribunal confirmed the legal requirements to initiate a Constitutional Petition, against an arbitration process. The Constitutional Court established that it is mandatory to comply with the Justice System, the Arbitration Decision, and any appeal of the Arbitration Decision, before a Constitutional complaint against a decision of Arbitration can commence.

The Constitutional Tribunal also ordered that no judge can interfere in the Arbitration Process until the Arbitration Award and Appeal process is finished. The Constitutional Tribunal confirmed that in the Arbitration started by Sulliden the Arbitrators have the constitutional protection to finish the Arbitration without the interference of any Judge or Court.

In its decision the Constitutional Tribunal also questioned the legitimacy of a separate injunction which had been granted in December 2005 by the Third Judge of Cajamarca forbidding the Tribunal from issuing an Arbitration award until a dispute with regard to the ownership of surface property had been determined. Based on that injunction from the Court of Cajamarca the Arbitration Tribunal had suspended its hearings in December 2005. The Constitutional Tribunal recommended to the OCMA (Officina de Control de la Magistratura) that the mandatory resolutions of the Constitutional Tribunal regarding the autonomy of the arbitration process should be enforced with personal responsibility.

With this decision of the Constitutional Tribunal, Sulliden believes the Arbitrators now have the Constitutional protection to finish with the Arbitration without any further interference from any judge or Court.

Contact Information

  • SULLIDEN EXPLORATION INC.
    Mr. Jacques Trottier
    President
    (514) 861-1953
    sulliden@colba.net
    or
    Mr. Jim Coleman
    Chairman
    (403) 267-8373