Tennant Energy LLC v Government of Canada - NAFTA - PCA Case No 2018-54 - Final Award - 25 October 2022
Country
Year
2022
Summary
FINAL AWARD
The Arbitral Tribunal
Mr. Cavinder Bull SC (Presiding Arbitrator)
Mr. Doak Bishop
Sir Daniel Bethlehem KC
25 October 2022
TABLE OF CONTENTS
I. INTRODUCTION
A. THE PARTIES AND THE TRIBUNAL
B. THE DISPUTE
II. RELEVANT PROCEDURAL HISTORY
A. COMMENCEMENT OF THE ARBITRATION AND CONSTITUTION OF THE TRIBUNAL
B. FIRST PROCEDURAL STEPS
C. REQUEST FOR BIFURCATION AND PRELIMINARY MOTIONS
D. FURTHER WRITTEN PLEADINGS AND THE RENEWED BIFURCATION REQUEST
E. BIFURCATED JURISDICTIONAL PHASE
F. HEARING ON JURISDICTION
G. POST-HEARING PROCEEDINGS
III. THE PARTIES' REQUEST FOR RELIEF
A. THE RESPONDENT'S REQUEST FOR RELIEF
B. THE CLAIMANT'S REQUEST FOR RELIEF
IV. FACTUAL BACKGROUND
A. THE CLAIMANT'S ALLEGED INVESTMENT
1. The Alleged Beneficial Ownership in the Shares of Skyway 127
2. Skyway 127 Application to the FIT Program
B. THE FIT PROGRAM
C. THE GEIA
D. ONTARIO'S HANDLING OF GOVERNMENT RECORDS
1. Management of Documents Concerning Gas Plants Cancellation
2. Claim for Spoliation of Documents in Trillium Power v. Ontario
E. OTHER RELEVANT NAFTA PROCEEDINGS
1. Mesa Power Group, LLC v. Canada
2. Windstream Energy, LLC v. Canada
V. THE CLAIMANT'S CASE ON MERITS AND QUANTUM
VI. THE PARTIES' ARGUMENTS ON JURISDICTION
A. PRELIMINARY CONSIDERATIONS
1. The Respondent's Position
2. The Claimant's Position
3. The Non-Disputing Parties' Submissions
(a) Submissions of the United States and Mexico
(b) The Respondent's Reply to the Submissions of the Non-Disputing Parties
(c) The Claimant's Reply to the Submissions of the Non-Disputing Parties
B. THE FIRST OBJECTION
1. The Respondent's Position
(a) Interpretation of Article 1116(1) of the NAFTA
(b) Whether the Claimant Complied with the Requirements of Article 1116(1)
The Alleged Breach Occurred between 2008 and 2013
The Claimant Was Not an "investor of a Party" When the Alleged Breach
Occurred
2. The Claimant's Position
(a) Interpretation of Article 1116(1) of the NAFTA
(b) Whether the Claimant Complied with the Requirements of Article 1116(1)
The Claimant Became an "investor of a Party" on 26 April 2011
The Alleged Breaches Occurred in August 2015
3. The Non-Disputing Parties' Submissions
(a) Submissions of Mexico and the United States
(b) The Respondent's Reply to the Submissions of the Non-Disputing Parties
(c) The Claimant's Reply to the Submissions of the Non-Disputing Parties
C. THE SECOND OBJECTION
1. The Respondent's Position
(a) Interpretation of Article 1116(2) of the NAFTA
(b) Whether the Claimant's Claims Comply with the Time Limit under Article 1116(2) of the NAFTA
Measures Concerning the GEIA
Measures Concerning the Administration of the FIT Program
Measures Concerning the Handling of Documents
2. The Claimant's Position
(a) Interpretation of Article 1116(2) of the NAFTA
(b) Whether the Claimant's Claims Comply with the Time Limit under Article 1116(2) of the NAFTA
3. The Non-Disputing Parties' Submissions
(a) Submissions of the United States and Mexico
(b) The Respondent's Reply to the Submissions of the Non-Disputing Parties
(c) The Claimant's Reply to the Submissions of the Non-Disputing Parties
VII. THE TRIBUNAL'S ANALYSIS
A. THE FIRST OBJECTION
1. Preliminary Considerations
2. The Pre-conditions for Jurisdiction under Article 1116(1)
3. Whether the Claimant is an "investor of a Party"
4. When the Claimant Became an "investor of a Party"
5. Ownership
(a) The Alleged Existence of an Oral Trust
(b) Control
(c) Conclusions on When the Claimant Became an "investor of a Party"
6. When the Alleged Breaches Occurred
7. The Claimant as a "Successor in Interest"
8. Whether the Claimant Suffered Loss or Damage by Reason of, or Arising out of, the Alleged
Breaches
9. Conclusions on the First Objection
B. THE SECOND OBJECTION
VIII. THE RESPONDENT'S RE-APPLICATION FOR SECURITY FOR COSTS
IX. COSTS
A. THE PARTIES' ARGUMENTS ON COSTS
B. THE TRIBUNAL'S ANALYSIS
X. THE TRIBUNAL'S DECISION
...
B. THE DISPUTE
6. This arbitration concerns the Claimant's allegation that the Respondent violated its obligations under Chapter Eleven of the North American Free Trade Agreement (the "NAFTA" or the "Treaty") through certain measures related to the 2011 Feed-in Tariff Program (see below) in respect of the Claimant's alleged investment in Skyway 127 in Canada.
7. In particular, the Claimant submits that the Respondent violated Article 1105 of the NAFTA by reference to the following five alleged wrongful actions or omissions:6
"(a) Special business opportunities provided to a politically connected local favourite, IPC.
(b) The "Breakfast Club" cabal of politicians and senior officials systemically abusing the process to reward friends at the expense of everyone else.
(c) Ontario's decision to not complete its FIT Program for the Bruce Region contrary to the legitimate expectation of FIT Proponents such as Skyway 127.
(d) The delay of the award of contracts because of Korean Consortium's failure to comply with its contractual obligations.
(e) The conspiracy in the systemic violations of the NAFTA and the spoliation and wanton destruction of evidence by Ontario."
8. In its Statement of Defence, dated 2 July 2019, the Respondent advanced four objections to the jurisdiction of the Tribunal over the Claimant's claims. By its Procedural Orders Nos. 8 and 9, dated 12 November 2020 and 10 March 2021, respectively, the Tribunal ordered the bifurcation of the proceedings, such that two of those objections would be decided as preliminary questions, namely, that (a) the Claimant was not a protected "investor of a Party" when the alleged breach occurred, and therefore the Claimant has not met the requirements of Article 1116(1) of the NAFTA (the "First Objection"); and (b) the claim was not filed prior to the expiry of the 3-year limitation period articulated in Article 1116(2) of the NAFTA (the "Second Objection", and together with the First Objection, the "Preliminary Objections"). In this Final Award, the Tribunal decides the Respondent's Preliminary Objections.
...
X. THE TRIBUNAL'S DECISION
476. For the reasons set forth above, the Tribunal decides as follows:
(a) The Tribunal does not have jurisdiction to hear this claim on the grounds that the requirements under Article 1116(1) of the NAFTA are not satisfied;
(b) The Claimant's claim is accordingly dismissed in its entirety;
(c) The Respondent's re-application for security for costs dated 16 February 2022 is dismissed;
(d) The costs of the arbitration are fixed at USD 950,319.05 and CAD 359,710.09;
(e) The Claimant shall bear 100% of the arbitration costs fixed in the preceding paragraph and the Tribunal thus orders that the Claimant pay the Respondent USD 384,112.56 and CAD 359,710.09 within 30 days of notification of this Final Award; and
(f) The Claimant shall bear 80% of the Respondent's legal representation and assistance costs
and the Tribunal thus orders that the Claimant pay the Respondent CAD 2,075,318
within 30 days of notification of this Final Award.
Seat of the arbitration: Washington, D.C.
Date: 25 October 2022
Footnotes omitted