Reproduced from www.worldbank.org/icsid with permission of ICSID.
I. PRELIMINARY STATEMENT
1. Canada files this Statement of Defence in response to the Notice of Arbitration and Statement of Claim ("NOA") filed by Westmoreland Mining Holdings LLC (the "Claimant" or "WMH") against Canada on August 12, 2019.1 The Claimant brings this claim under NAFTA Chapter Eleven on behalf of itself and its subsidiary, Prairie Mines & Royalty ULC ("Prairie"), in connection with its investment in coal mines located in the Province of Alberta. The Claimant demands at least $470 million for alleged violations of NAFTA Articles 1102 (National Treatment) and 1105 (Minimum Standard of Treatment).
2. The Claimant's NOA is nearly identical to a Notice of Arbitration and Statement of Claim filed by Westmoreland Coal Company ("WCC") against Canada under NAFTA Chapter Eleven on November 19, 2018. WCC filed that NAFTA claim after submitting a petition for bankruptcy in the United States ("U.S.") on October 9, 2018. On March 15, 2019, WCC announced that it had sold Prairie to the Claimant, a new company formed by WCC creditors. WCC is set to dissolve. WCC withdrew its NAFTA claim against Canada on July 23, 2019, and the Claimant filed the current claim less than a month later.
3. The Claimant explains in its NOA: "[t]he term `Westmoreland' is used generically throughout this Notice of Arbitration and Statement of Claim to describe the facts and circumstances of the dispute." However, the Claimant is not the same entity as WCC. The companies are distinct, and acquired investments in Canada at fundamentally different times. NAFTA Chapter Eleven does not allow an investor of a Party to file a claim on behalf of another investor. The Claimant must have had ownership or control of its investments at the time of the alleged breaches. It did not.
4. The Claimant nonetheless seeks millions of dollars in damages for the alleged economic disruption caused to WCC and its investments in coal mines by the Government of Alberta's decision to phase out greenhouse gas ("GHG") emissions and air pollutants (together, "emissions") produced by coal-fired electricity generation by the year 2030. The decision was part of the Government of Alberta's broader Climate Leadership Plan, which it announced on November 22, 2015 (the "2015 Climate Leadership Plan" or "Plan"). A response to climate change, the Plan was a comprehensive strategy to reduce emissions in the province. Since coal-fired electricity was the second-highest GHG-emitting sector in the province, Alberta's decision to phase out emissions from coal-fired power plants by 2030 contributed significantly to its overall policy objective of reducing GHG emissions and air pollutants.
5. The Claimant alleges that "Albertan coalmine operators" were paid millions of dollars for the economic disruption allegedly caused to their operations by the coal-fired emissions aspects of the 2015 Climate Leadership Plan "to the exclusion of the only American coalmine operator". This is incorrect. No company or individual received any payment from the Government of Alberta with respect to any interest in any coal mine under the 2015 Climate Leadership Plan or otherwise. Furthermore, coal mining was not a focal point of the 2015 Climate Leadership Plan because coal mining has a relatively low emissions profile. The Plan took no policy stance on the continued mining of coal in the province - it did not address any mineral rights, leases, land tenures, permits, ownership, royalty interests, or coal supply contracts.
6. The payments in question were voluntary payments that the Government of Alberta undertook, in 2016, to provide to the owners of the six coal-fired generating units in the province that were expected to operate - and produce emissions - beyond 2030 ("Transition Payments"). In exchange for these payments, the three owners (ATCO, Capital Power, TransAlta) committed to ceasing emissions from the six generating units by 2030, and to continue participating in the electricity market in Alberta. In undertaking to provide the Transition Payments, the Government of Alberta was concerned with reducing emissions from the high-emitting electricity sector. It was also concerned with ensuring that it could attract a sufficient level of continued investment in the electricity sector to maintain a reliable grid and reasonable price stability for consumers as the Province transitioned to a lower-carbon electricity system. This was particularly important in the context of Alberta's unique competitive market for electricity generation in which the timing of, and need for, new generation assets are dictated by market forces, rather than by a centralized plan or a government utility. The Claimant's claim that WCC, a coal mining company, was owed a Transition Payment similar to those paid to power companies is nothing short of an attempt at a windfall and must be rejected.
7. As Canada will explain in greater detail, the Claimant's claims must be dismissed for several reasons. First, the claims fall outside of the Tribunal's jurisdiction. In particular, the Tribunal lacks jurisdiction ratione temporis because the Claimant was not an "investor of a Party" at the time of the alleged breaches. The measures the Claimant challenges also do not "relat[e] to" the Claimant or its investments as required by NAFTA Article 1101(1) - NAFTA Chapter Eleven's jurisdictional gateway to arbitration - because they pre-date the existence of the Claimant and its investments in Canada. Moreover, neither the Claimant nor its investments could have suffered damages arising out of the alleged breaches, as required under NAFTA Articles 1116(1) and 1117(1), because the alleged breaches transpired in 2015 and 2016, before the Claimant acquired its investments in 2019. These jurisdictional defects bar consideration of the Claimant's claims in their entirety. In addition, any claims challenging the Government of Alberta's decision to phase out emissions from coal-fired electricity in its 2015 Climate Leadership Plan must be rejected because they are time-barred under NAFTA Articles 1116(2) and 1117(2).
8. Second, the Claimant's claim that the Government of Alberta's decision to grant Transition Payments violated NAFTA Article 1102 must be dismissed because it is inadmissible by virtue of NAFTA Article 1108(7)(b). Under Article 1108(7)(b), "subsidies or grants provided by a Party" are excluded from the application of Article 1102, and the Transition Payments fall within this plain language. In particular, the Transition Payments are made under Alberta's Energy Grants Regulation, which gives Alberta's Minister of Energy the authority to "make grants to any person or organization in respect of any matter that is under the Minister's administration." The Transition Payments are also listed in the Government of Alberta's publicly available grant payments disclosure table. As a result, the Tribunal may not consider the Claimant's claim that the Government of Alberta failed to grant WCC a Transition Payment in contravention of NAFTA Article 1102.
9. Third, the Claimant's NAFTA Article 1102 claim is without merit, in any event. Alberta did not discriminate against the Claimant on the basis of nationality in its allocation of Transition Payments, nor was its alleged treatment of the Claimant and the three electricity market participants that owned the six coal-fired generating units accorded "in like circumstances." Both are necessary elements of an Article 1102 claim and both are absent in this case. The Claimant is one of several entities with investments in coal mines in Alberta, and not a single company or individual with coal mine interests received any sort of payment from the Government of Alberta for those interests under the 2015 Climate Leadership Plan or otherwise. Providing Transition Payments for interests in coal mines would not have advanced the Government of Alberta's policy objective of reducing emissions in its electricity sector, while maintaining the reliability of the electricity system. The Claimant's claim under NAFTA Article 1102 has no merit.
10. Fourth, both of the Claimant's NAFTA Article 1105 claims must be rejected on their merits. The Claimant first alleges that the Government of Alberta violated Article 1105 because WCC was "arbitrarily and uniquely excluded" from receiving a Transition Payment. However, this allegation essentially repeats the Claimant's allegation under NAFTA Article 1102. Nothing the Government of Alberta did comes close to being arbitrary and NAFTA tribunals have consistently held that Article 1105 is not a vehicle through which to recycle the same allegations made under Article 1102.
11. The Claimant next alleges that the Government of Alberta's decision to phase out emissions from coal-fired electricity generation in its 2015 Climate Leadership Plan violated NAFTA Article 1105 because it disrupted the "predictable future" established for WCC and its investments by Canada's Federal Government under emissions regulations enacted in 2012. However, government regulations alone do not offer a predictable future, let alone in a federation like Canada where provinces have the constitutional prerogative to regulate emissions within their borders. Moreover, when WCC made its investment in Canada, increasingly stringent requirements for lower emissions from electricity generation were the trend globally and across Canada, including in Alberta. Public filings made by WCC at the time of its investment in Canada confirm its understanding of these regulatory trends.
12. The Claimant is thus incorrect to suggest that WCC reasonably believed its investments would have a predictable future under the federal regulations. Moreover, there are further factual flaws in the Claimant's allegations as the federal regulations that had been enacted in 2012 were amended in 2018 such that, by the time the Claimant invested in Canada, the federal regulations required all coal- fired electricity generating units across Canada to meet stringent emissions performance standards earlier than under the 2012 version of the regulations - by December 31, 2029, at the latest. For all of these reasons, the Claimant's Article 1105 claims must be dismissed.
13. Finally, the Claimant's demand for "damages exceeding $470 million" is exaggerated, and ultimately, groundless. Two of the three coal mines the Claimant raises in its NOA - the Paintearth mine and the Sheerness mine - have reserves that will be exhausted in 2022 and 2024, respectively, well in advance of 2030 when emissions from coal-fired generating units in Alberta must be reduced to zero. The third mine - the Genesee mine - was owned jointly by WCC and Capital Power. On March 28, 2017, the two companies announced they had entered into a $70 million agreement with respect to the joint venture,11 pursuant to which WCC "fully recovered its capital investments at the mine".12 The Claimant's damages claim is thus inflated.13
14. Canada explains all of the defects that it has highlighted above in the sections that follow. In addition, in Section VII, Canada provides a summary of its proposal to bifurcate these proceedings, under which the Tribunal would first consider jurisdiction and admissibility rather than combining these preliminary objections with an unnecessary and expensive merits phase.
 Westmoreland Mining Holdings LLC, Notice of Arbitration, 12 August 2019 ("NOA").
 Unless otherwise specified, all references to dollar amounts in this Statement of Defence are in Canadian dollars.
 NOA, ¶ 5, fn. 1.
 NOA, ¶ 13.
 R-001, Energy Grants Regulation, A.R. 103/2003, s. 2.
 R-002, Government of Alberta, Grant payments disclosure table, "CLP Coal Generation Transition", "Energy General Armed" [Excerpts], available at: https://www.alberta.ca/grant-payments-disclosure-table.aspx.
 NOA, ¶ 100.
 NOA, ¶ 5.
 NOA, ¶ 111.
 NOA, Exhibit 3, Westmoreland Coal Company Presentation, "Westmoreland Announces Transformational Acquisition of Sherritt's Coal Operations", 24 December 2013, p. 10.