Centerra Gold has started arbitration proceedings against the Kyrgyz Republic in a legal battle involving the Kumtor mine.

The proceedings come in response to the Kyrgyzstan President Sooronbay Jeenbekov passing a bill that threatens the government’s takeover of the Kumtor mine if it breaches environmental standards.

The arbitration suit is an attempt by the firm to stop the government from taking further steps to implementing the recent legislation or to pursue fines and tax claims against mine operator Kumtor Gold Company (KGC).

Centerra claims that these recent measures violate the government’s investment agreements related to the Kumtor mine.

Centerra CEO Scott Perry said: “The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor mine has been operated and has refused to engage with us on any matters it considers to be the subject of dispute.”

Furthermore, Centerra has been fined $3.1bn by a district court in Kyrgyzstan, which ruled that operations of its Kumtor mine violated the country’s certain environmental laws.

The measures by the government have triggered concerns by international financial institutions working in Kyrgyzstan and the western governments.

The Financial Times reported Canada and the UK as saying that the government’s measures that ‘negatively impact trade and foreign direct investment will further undermine already fragile economic livelihoods of the Kyrgyz people’.

Located 350km south-east of Bishkek and 60km north of the border with the People’s Republic of China, the Kumtor is claimed to be one of the largest gold mines in Central Asia.