Lupaka Gold Corp v Republic of Peru - ICSID Case No. ARB/20/46 - Canada's Non-Disputing Party Submission - 26 May 2022
Country
Year
2022
Summary
Reproduced from www.worldbank.org/icsid with permission of ICSID.
TABLE OF CONTENTS
I. INTRODUCTION
II. ARTICLE 819(1) (CLAIM BY AN INVESTOR OF A PARTY ON ITS OWN BEHALF)
III. ARTICLE 801(1) (SCOPE AND COVERAGE)
IV. ARTICLE 805(1) (MINIMUM STANDARD OF TREATMENT)
A. Article 805(1) Guarantees Treatment in Accordance with the Customary International Law Minimum Standard of Treatment
B. Article 805(1) Does Not Protect an Investor's Legitimate Expectations
C. Article 805(1) Does Not Extend Beyond Physical Protection and Security of Investments
V. ARTICLE 804 (MOST-FAVOURED-NATION TREATMENT)
VI. ARTICLE 812 (EXPROPRIATION)
I. INTRODUCTION
1. Canada makes this submission pursuant to Article 832 of the Free Trade Agreement between Canada and the Republic of Peru signed on May 29, 2008, which entered into force on August 1, 2009 ("Canada-Peru FTA" or "the Agreement").
2. Canada's submission does not address all interpretative issues that may arise in this proceeding. To the extent that certain issues raised by the disputing parties or the Tribunal have not been addressed, no inference should be drawn from Canada's silence. Canada does not, through this submission, take a position on issues of fact or on the application of these submissions to the facts of this dispute.
II. ARTICLE 819(1) (CLAIM BY AN INVESTOR OF A PARTY ON ITS OWN BEHALF)
3. In order for a tribunal to have jurisdiction over a claim under Section B of the Canada-Peru FTA, a claimant submitting a claim on its own behalf must meet the requirements of Article 819. A determination in this regard is a question to be decided in accordance with the Agreement and applicable rules of international law
4. Article 819(1) does not expressly address the situation where a claimant no longer owns or controls the investment that is the subject of its claim at the time that it submits the claim to arbitration. Article 819(1) provides, in relevant part, that "[a]n investor of a Party may submit to arbitration under this Section a claim that the other Party has breached: (a) an obligation under Section A. .. and that the investor has incurred damage by reason of, or arising out of, that breach". Accordingly, to bring a claim on its own behalf, a claimant must be: (1) an "investor of a Party," (2) who has allegedly suffered a breach of an obligation under Section A, and (3) who has allegedly suffered damage by reason of, or arising out of, that breach. Canada addresses each jurisdictional requirement in turn.
5. First, Article 819(1) requires that a claimant demonstrate that it is an "investor of a Party" as that term is defined under Article 847 of the Agreement. Article 847 defines an "investor of a Party" as, in the case of Canada, "a national or an enterprise of Canada that seeks to make, is making or has made an investment". A person's ability to bring a claim as an investor is therefore tied to the investment that it is seeking to make, is making, or has made in the past.2 Canada notes that the definition contemplates circumstances where an investor may have started and completed the relevant investment entirely in the past.
Read together, Article 819 and the definition of "investor of a Party" in Article 847 do not expressly require that a person own or control an investment at the time it submits a claim to arbitration.
6. Second, to properly assert a violation of an obligation in Section A, a claimant must have been protected under the treaty when the alleged violation occurred.3 Article (Scope and Coverage) of the Agreement establishes that the Chapter applies to measures adopted or maintained that relate to: (a) investors of the other Party, and (b) covered investments.4 To establish standing under Article 819, a claimant must establish a close connection between itself, its investment, and the measure at issue. Inter alia, this "relating to" requirement limits the standing of later-in-time owners of an investment from asserting a claim under Article 819 with respect to an alleged breach that occurred prior to its acquisition of the investment in question.
7. Third, the use of the word "the" in Article 819(1) to describe the investor who has incurred damage makes clear that the investor bringing the claim must be the same investor that suffered damage because of the alleged breach. A claim under Article 819(1) can only be for damage that the claiming investor has itself suffered.
8. Provided that the investor bringing the claim is the same investor that held the relevant investment at the time of the alleged breach, and that suffered the alleged damage as a result of the alleged breach, Article 819 does not limit that investor's ability to bring a claim on its own behalf, even if it no longer holds the investment when the claim is submitted to arbitration. While the circumstances surrounding the divestment of the relevant investment in any particular case may hold relevance for other parts of a claimant's claim (for example, quantum of damages), divestment of the subject investment between the date of the alleged breach and the filing of the claim alone does not present a jurisdictional hurdle under Article 819.
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V. ARTICLE 804 (MOST-FAVOURED-NATION TREATMENT)
28. Article 804 of the Agreement does not allow for the importation of substantive obligations or procedural rules contained in other international investment treaties
29. Article 804 requires each Party to accord to investors of the other Party and covered investments treatment no less favourable than that it accords, in like circumstances, to investors of a non-Party and their investments. For Article 804 to apply, there must be an actual instance of more favourable treatment to an investor of a third party. Substantive obligations and procedural rights in other international treaties do not constitute "treatment" of investors. Hypothetical treatment that may result from a treaty cannot give rise to a breach of the most-favoured nation treatment obligation.
VI. ARTICLE 812 (EXPROPRIATION)
30. Article 812 of the Canada-Peru FTA provides that a Party shall not "nationalize or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalization or expropriation", except under certain circumstances.
For there to be an expropriation, a property right must have been taken.33 In other words, there must be a taking of fundamental ownership rights, either directly or indirectly, that causes a substantial deprivation of economic value of the investment.34 Mere interference with an investment's use or enjoyment of the benefits associated with property is not the standard for expropriation at international law
31. Where an allegation of an indirect expropriation is made, recourse must be had to Annex 812(1) of the Agreement. The Annex sets out the Parties' shared understanding of the factors that must be present for a measure to constitute an indirect expropriation. In particular, once the scope of the property interest, including applicable limitations, has been established, determining whether an indirect expropriation has occurred requires a case- by-case, fact based inquiry that considers and balances a number of factors. These include:
the economic impact of the measure or series of measures, although the sole fact that a measure or series of measures of a Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred;
the extent to which the measure or series of measures interfere with distinct, reasonable investment-backed expectations; and
the character of the measure or series of measures (for example if the measure is general in nature as opposed to targeting a particular investment).
32. No single factor is determinative or can be considered in isolation. Moreover, a non-discriminatory measure that is designed and applied to protect legitimate public welfare objectives such as health, safety, and the protection of the environment, does not constitute indirect expropriation, except in rare circumstances where its impacts are so severe in the light of its purpose that it cannot be reasonably viewed as having been adopted and applied in good faith
Dated this 26th day of May, 2022.
Respectfully submitted on behalf of Canada,
Trade Law Bureau
Government of Canada
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