II. FACTUAL BACKGROUND
A. The Global Context for the Challenged Measures and the Harms of Emissions from Coal-Fired Electricity Generation
B. Alberta Takes Action to Reduce Emissions from Coal-Fired Electricity Generation
1. Alberta's 2007 Emissions Reduction and Carbon Pricing Regulations
2. Alberta's 2015 Climate Leadership Plan
3. Alberta's 2016 Off-Coal Agreements with Power Companies
4. Alberta's 2019 and 2020 Updates to its Emissions Reduction and Carbon Pricing Regulations
C. Canada Takes Action to Reduce Greenhouse Gas Emissions
D. The Claimant and Its Purchase and Sale of Interests in Coal Mines in Canada. ........17 1. WCC Purchases Canadian Enterprises with Interests in Coal Mining Operations in Alberta in 2014
2. WCC Sells the Canadian Enterprises in an Arm's-Length Transaction in March 2019
E. The Procedural Background to the Claimant's Claim
1. WCC Files a NAFTA Claim in 2018 Against the Government of Canada
2. WMH, the Arm's-Length Purchaser of the Canadian Enterprises, Attempts to Substitute Itself for WCC in WCC's 2018 Claim
3. WCC Withdraws its 2018 Claim and WMH Pursues its Own NAFTA Claim in 2019
4. The WMH Tribunal Dismisses WHM's Claim in 2022
5. WCC and Westmoreland Mining LLC Purport to Re-Transfer the Withdrawn 2018 NOA Back to WCC in the U.S. Bankruptcy Proceeding
6. WCC Submits This New Claim to Arbitration in 2022
F. Summary of Key Events for the Jurisdictional Phase
III. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE CLAIMANT'S CLAIM UNDER CUSMA ANNEX 14-C
A. The Claimant Bears the Burden to Establish That The Tribunal Has Jurisdiction
B. The Claimant Has Failed to Establish That It Holds a Legacy Investment Under Paragraph 6(a) of CUSMA Annex 14-C
1. CUSMA Annex 14-C Requires a Claimant to Own or Control The Relevant Investment When CUSMA Entered into Force
2. WCC Did Not Own or Control Any Investment in Canada When CUSMA Entered into Force
IV. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE CLAIMANT'S CLAIM UNDER NAFTA CHAPTER ELEVEN
A. The Claimant Has Failed to Establish that Its Claim is Timely under NAFTA Articles 1116(2) and 1117(2)
1. NAFTA Articles 1116(2) and 1117(2) Establish a Strict Limitation Period
2. The Claim Falls Outside the Strict Limitation Period
B. The Claimant Has Failed to Meet the Conditions Precedent for Submission of a Claim to Arbitration under NAFTA Article 1121
1. NAFTA Article 1121 Requires a Claimant and Its Enterprise to Waive Their Rights to Initiate or Continue Proceedings with Respect to the Measures Alleged to Violate NAFTA Chapter Eleven
2. The Claimant Has Not Met the Formal Requirements of Article 1121
3. The Claimant Cannot Bring Its Article 1117 Claim Because Prairie Waived Its Rights To Such a Claim in a Prior Arbitration
C. The Claimant Has Failed to Establish That It Is Entitled to Bring Its Claim Under NAFTA Articles 1116(1) and 1117(1)
1. WCC Has Failed to Plead a Prima Facie Damages Claim Under NAFTA Article 1116(1)
2. WCC Did Not Own or Control Prairie When WCC Submitted Its NAFTA Article 1117(1) Claim to Arbitration
D. The Claimant Has Failed to Establish the Requirements of NAFTA Article 1101(1) with Respect to the Federal Fuel Charge
1. Article 1101(1) Requires a Legally Significant Connection between the Measure Alleged to Constitute a Violation and a Claimant or Its Investment
2. There Is No Legally Significant Connection Between the Federal Fuel Charge and WCC or Its Alleged Investments
V. CANADA'S RESPONSE TO THE CLAIMANT'S NOTICE OF ARBITRATION
A. Canada Has Not Violated NAFTA Article 1102
B. Canada Has Not Violated NAFTA Article 1105
C. Canada Has Not Violated NAFTA Article 1110
D. The Claimant Is Not Entitled to Damages
VI. REQUEST FOR RELIEF
The Tribunal does not have jurisdiction over the claim that Westmoreland Coal Company ("WCC" or the "Claimant") submitted to arbitration on October 14, 2022 ("2022 NOA"). The claim alleges that certain climate change measures taken by Alberta and Canada to reduce greenhouse gas emissions violate Articles 1102 (National Treatment), 1105 (Minimum Standard of Treatment), and 1110 (Expropriation and Compensation) of the North American Free Trade Agreement ("NAFTA").
It echoes a separate claim that WCC, a Delaware corporation, previously submitted to arbitration in 2018 ("2018 NOA"), and freely withdrew in 2019. The Claimant's bid to pursue this new claim several years later suffers from serious flaws that mean that the Claimant cannot establish this Tribunal's jurisdiction under the Canada-United States-Mexico Agreement ("CUSMA") or NAFTA.
On July 1, 2020, CUSMA superseded NAFTA. As the only free trade agreement in place between the United States and Canada, CUSMA provides the exclusive, not the "alternative",1 basis for Canada's consent to arbitrate investor-State claims with U.S. investors. However, that consent is limited to claims related to "legacy investments", as set out in CUSMA Annex 14-C. To hold a "legacy investment", a claimant must have owned or controlled the investment at issue when CUSMA entered into force on July 1, 2020. The Claimant fails to meet this requirement. On March 15, 2019, WCC sold all of its Canadian assets - including an enterprise named Prairie Mines & Royalty ULC ("Prairie") that owned and operated thermal coal mines in Alberta - in an arm's-length sale. WCC did not have any investments in Canada when CUSMA entered into force. Accordingly, the Claimant's entire claim fails for lack of jurisdiction, and the Tribunal need not proceed further.
However, even if the Tribunal determines that WCC held a "legacy investment" under CUSMA Annex 14-C, the Claimant must also establish that its claim meets each of the jurisdictional requirements of NAFTA Chapter Eleven. Once again, it has failed to do so.
First, the Claimant has failed to establish the Tribunal's jurisdiction ratione temporis. NAFTA Articles 1116(2) and 1117(2) set a strict three-year time limit on a claimant's ability to bring a claim.
This time limitation cannot be tolled under NAFTA Chapter Eleven, and its requirements cannot be met by any claim other than the one before the Tribunal. WCC brings a claim on its own behalf under Article 1116, and on behalf of Prairie under Article 1117. As the evidence demonstrates, both WCC and Prairie first acquired knowledge of the alleged breaches and loss more than three years prior to the date of the 2022 NOA. As a result, WCC's claim falls outside the three-year limitation period and must be dismissed.
Second, the Claimant has failed to establish the Tribunal's jurisdiction ratione voluntatis.
NAFTA Article 1121 imposes formal waiver requirements on claimants and their local enterprises.
Here, the Claimant relies on waivers for WCC and Prairie that are dated from 2018 and that accompanied the 2018 NOA, which was withdrawn by the Claimant in 2019. These waivers do not satisfy the formal requirements of Article 1121 for the purposes of this arbitration. WCC has also failed to confirm that the individuals who signed the 2018 waivers had the authority to waive the legal rights of WCC and Prairie at the time the 2022 NOA was filed. As a result, WCC has failed to file waivers that meet the formal requirements of Article 1121. Absent Canada's consent, which is not provided here, there is no legal basis on which these defective waivers can be cured following the constitution of the Tribunal. The claim must be dismissed.
Separately, the Claimant cannot assert the claim on behalf of Prairie because Prairie waived its right to bring claims related to the measures at issue here in a separate claim filed in 2019 ("WMH NOA") by its subsequent owner, Westmoreland Mining Holdings LLC ("WMH"). As the Claimant has conceded, the current claim before the Tribunal "relies on the same or related claims, facts, and harms" of which WMH complained.2 The 2022 NOA thus falls within the scope of Prairie's waiver in the Westmoreland Mining Holdings LLC v Canada ("WMH") arbitration, and the Tribunal does not have jurisdiction to hear the NAFTA Article 1117 claim on behalf of Prairie.
Third, the Claimant has failed to establish the Tribunal's jurisdiction ratione in personam under both NAFTA Articles 1116(1) and 1117(1). Under Article 1116(1), an investor must submit a prima facie claim that the alleged breaches caused the investor to suffer loss. An investor is not entitled to reflective loss under the provision. The only damages WCC alleges are Prairie's alleged damages for which WCC is not entitled to submit a claim under Article 1116(1). As a result, WCC's claim under NAFTA Article 1116(1) must be dismissed because it has failed to make a prima facie claim of damage.
Moreover, Article 1117(1) requires an investor to own or control the enterprise on whose behalf it brings a claim at the time the claim is submitted to arbitration. As noted above, WCC sold Prairie on March 15, 2019, long before it submitted this claim to arbitration on October 14, 2022. As a result, WCC's claim under NAFTA Article 1117(1) must be dismissed.
Finally, the Claimant has failed to establish the Tribunal's jurisdiction ratione materiae with respect to the impugned federal measure. NAFTA Article 1101, the gateway of NAFTA Chapter Eleven, establishes that only measures that "relate to" an investor of another Party or an investment of an investor of another Party fall within the scope of the chapter. The federal measure did not apply in Alberta until long after WCC sold Prairie. As a result, the federal measure does not "relate to"
WCC or its investment, and any claim with respect to the federal measure must be dismissed.
The Claimant's attempts to sidestep these fundamental flaws in its claim cannot be sustained.
For instance, it asks the Tribunal to find jurisdiction over this claim because WCC "already initiated this dispute" when it submitted its 2018 NOA, and that this claim can be "relate[d] back" to the 2018 NOA.3 However, the Tribunal's jurisdiction under CUSMA Annex 14-C and NAFTA Chapter Eleven must be established with respect to the specific claim that the Tribunal has been constituted to adjudicate - here, in the 2022 NOA. But even if the Tribunal could entertain establishing its jurisdiction on the basis of a separate claim, WCC freely withdrew the 2018 NOA on July 23, 2019.
There is thus no claim to which the 2022 NOA can "relate back".
The Claimant further muddies the waters by constructing what it calls the "First Arbitration"
out of its withdrawn 2018 NOA and the claim brought in 2019 by WMH, the arm's-length purchaser of Prairie.4 This "First Arbitration" does not exist. There has not been one single claim to arbitration that has been transferred back and forth between WCC and WMH. There have been three separate claims: (1) WCC filed one in 2018 and withdrew it in 2019; (2) WMH filed one in 2019 that was dismissed in 2022; and (3) WCC has now filed this claim in 2022. Each claim must independently meet the requirements of CUSMA and NAFTA, as applicable. WCC's 2018 NOA was withdrawn before a tribunal was constituted to determine whether it met the requirements of NAFTA Chapter Eleven. The WMH tribunal found that the WMH claim did not meet the requirements of NAFTA Chapter Eleven. This Tribunal must assess WCC's 2022 NOA and determine whether it meets the requirements of CUSMA Annex 14-C and, if so, whether it also meets the requirements of NAFTA Chapter Eleven. It does not.
The Claimant mischaracterizes the procedural history and minimizes the choices it has made.
It asks this Tribunal to overlook the fact that those choices have consequences for its ability to meet the preconditions to Canada's consent to arbitrate investor-State claims. The Tribunal cannot do so.
The terms of the treaties and the facts of this case lead to one conclusion: WCC's claim must be dismissed for lack of jurisdiction.
Canada's Memorial on Jurisdiction is organized in five sections. In Section II, Canada sets out the facts necessary for the Tribunal to determine whether it has jurisdiction over the 2022 NOA, including a high-level description of the challenged measures, the circumstances of WCC's purchase and sale of interests in Canada, and the procedural history leading to WCC's submission of this claim.
It concludes with a table summarizing the key facts for the jurisdictional phase. In Sections III and IV, Canada sets out the reasons why the Tribunal does not have jurisdiction to hear this claim under CUSMA Annex 14-C and NAFTA Chapter Eleven, respectively. In Section V, Canada provides its brief response to the merits of the 2022 NOA, as the Tribunal directed in Procedural Order No. 1. In particular, Canada explains that there has been no violation of NAFTA Articles 1102, 1105, or 1110, and that the Claimant has failed to establish that it is entitled to any award of damages. Section VI contains Canada's request for relief.