Summary

FINAL AWARD

July 25, 2022
Arbitral Tribunal:
Professor Bernard Hanotiau (Presiding Arbitrator)
Dean Ronald A. Cass
Professor Céline Lévesque

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B. OVERVIEW OF THE DISPUTE

5. A dispute has arisen between the Claimant and Canada in respect of which the Claimant commenced arbitration pursuant to Chapter 11 of the North American Free Trade Agreement ("NAFTA").

6. This dispute concerns the Claimant's investment in the following supercalendered paper ("SC Paper") mills in Québec, Canada: the Laurentide mill, the Dolbeau Mill, and the Kénogami Mill. The Claimant argues that the Government of Nova Scotia ("GNS") granted Pacific West Commercial Corporation ("PWCC") (the new owner of the Port Hawkesbury mill (the "PHP Mill"), following a court-sanctioned process of arrangement with creditors) a package of assistance measures in 2012 (the "Nova Scotia Measures" or "Assistance Measures") "to assure the reopening of PHP as `the lowest cost producer' in North America".1 According to the Claimant, the Assistance Measures are attributable to GNS (and, therefore, to Canada) under international law and constitute a violation of the national treatment standard (NAFTA Article 1102) and the minimum standard of treatment (NAFTA Article 1105).2 The Claimant argues that, with the benefit of the Assistance Measures, the PHP Mill was able to restart operations and add significant capacity to an SC Paper market in secular decline, which had negative effects on Resolute's prices and shipments.3 According to the Claimant, GNS thereby knowingly caused Resolute "substantial, accelerated economic damages".4

7. The Claimant claims compensation in the amount of at least US$121.4 million for profits lost due to price erosion (the Claimant arrives at US$126 million using a forecasting approach and US$121.4 million using a price-elasticity approach, and asks to be awarded the lower sum, "consistent with Resolute's overall conservative approach to damages").5 It also requests an award "for its costs and fees of this arbitration".6

8. In the first phase of this arbitration, the Respondent argued that the Claimant's allegations in respect of the measures taken by GNS were time-barred under NAFTA Articles 1116(2) and 1117(2) (the "Time-Bar Objection"). Alternatively, the Respondent argued that the Nova Scotia- related claims fell outside the scope of application of NAFTA under Article 1101(1) (the "Scope Objection") and that the Claimant's national treatment claims were inadmissible under NAFTA Article 1102(3) (the "Provincial Treatment Objection"). The Tribunal also considered whether it had jurisdiction over the Article 1110 claim of expropriation of the Laurentide Mill under the Oil Platforms test. Finally, the Respondent also submitted that the Tribunal lacked jurisdiction in respect of the Nova Scotia Measures insofar as they relate to taxation measures implemented by GNS (the "Taxation Measures Objection").

9. The Tribunal issued its Decision on Jurisdiction and Admissibility on January 30, 2018 (the "Jurisdiction Decision"). In the Jurisdiction Decision, the Tribunal rejected the Time-Bar Objection.7 The Tribunal also rejected the Scope Objection, except with respect to interim measures taken by the Respondent to keep the PHP Mill in operation prior to its sale in September 2012, which the Tribunal found it had no jurisdiction over.8 The Tribunal rejected the Provincial Treatment Objection based on Article 1102(3), while at the same time noting that in the first phase of the proceedings the Tribunal was not called upon to discuss the application of the "like circumstances" test, nor the meaning of "treatment" in Article 1102.9 In the Jurisdiction Decision, the Tribunal expressed the view that the Claimant's Article 1110 claim for expropriation of the Laurentide Mill faced "considerable difficulties, even assuming the facts as pleaded", but nevertheless considered that the claim should not be dismissed at the preliminary stage.10 The Article 1110 claim was later abandoned by the Claimant.11 Finally, with respect to the Taxation Measures Objection, the Tribunal found that taxation measures are "simply not covered by NAFTA except as provided in Article 2103, and there is no relevant exception here".12 Thus, even if the present claim fell within the jurisdiction of the Tribunal and was otherwise admissible, "it could not include any aspect of Nova Scotia's conduct covered by the taxation measures exemption in Article 2103".13

10. In addition to the arguments on jurisdiction and admissibility dealt with in the first phase of the arbitration, the Respondent has also raised objections to the Tribunal's jurisdiction relating to the measures taken by Canada in respect to the investigation by the United States Department of Commerce ("US DOC") in relation to the Canadian SC Paper industry. The Parties had agreed that those objections would be dealt with in this merits phase of the arbitration.14 The Claimant has abandoned this claim at the merits phase of this arbitration.15

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VIII. AWARD

816. For the foregoing reasons, the Tribunal:

A. Finds that the Assistance Measures, but for the LRR, are attributable to Canada;

B. Dismisses the Claimant's request for a finding that Canada has violated its obligations to Resolute under NAFTA Article 1102;

C. Dismisses the Claimant's request for a finding that Canada has violated its obligations to Resolute under NAFTA Article 1105;

D. Dismisses the Claimant's request for a finding that Canada's breaches of its obligations under NAFTA Chapter 11 caused Resolute to incur damages;

E. Dismisses the Claimant's request for an award of damages;

F. Orders Resolute to pay Canada US$ 316,666.67 representing the Arbitration Costs incurred by the Respondent in excess of its share as fixed and apportioned by the Tribunal; and

G. Save as aforesaid, dismisses all other claims made by the Parties.

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Footnotes omitted