Canada begins court fight to overturn NAFTA ruling on Digby quarry
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CBC | 29 Janvier 2018

Canada begins court fight to overturn NAFTA ruling on Digby quarry

By Paul Withers

Canada will make its case Monday in the Federal Court of Canada to overturn a potentially expensive NAFTA ruling that it wrongly rejected a Digby, N.S., quarry project a decade ago.

Ottawa is asking the court to set aside a 2015 international arbitration tribunal decision in favour of Bilcon, a New Jersey concrete company.

Bilcon successfully argued the rejection of its proposed 152-hectare quarry and marine terminal on Digby Neck in 2008 violated investor protections contained in Chapter 11 of the North American Free Trade Agreement.

The company is seeking hundreds of millions of dollars in compensatory damages.

Bilcon said only on limited and narrow grounds can the federal court set aside the tribunal ruling. The test is whether the tribunal award falls outside the scope of the arbitration. The company argues test has not been met.

"Interference with the award rendered by the arbitral tribunal would be unlawful, contrary to the Canadian doctrine of judicial deference to arbitration awards, and would bring the integrity of Canada’s commitment to the NAFTA, and thereby its national honour, into disrepute," Bilcon lawyer Gregory Nash said in a court document.

Canada rejects tribunal’s ruling

Canadian Justice Department lawyers say the arbitration tribunal had no jurisdiction to hear Bilcon’s complaint, which centred on its treatment at the hands of a joint federal-provincial review panel in 2008.

After public hearings, the panel decided the quarry project’s impact on what it called "community core values" was a significant environmental effect that could not be mitigated.

The project was not approved.

Bilcon said it was blindsided because "community core values" was a vague criterion and was never raised at the hearings.

By a vote of 2-1, the NAFTA tribunal ruled the joint review panel’s decision was unfair, arbitrary and broke Canada’s own environmental assessment rules.

Canada’s case

Canada argues Bilcon should have taken its objections to the Federal Court for a judicial review. That’s because "the tribunal determination that the panel breached domestic law was the sole determinant of its liability findings" and NAFTA tribunals are only empowered to decide questions of international law, said federal lawyers Karen Lovell and Roger Flaim in court documents.

Those are "questions of Canadian law that are reserved for this Court," they said.

In its brief to the court, Canada argued the tribunal’s decision was without precedent in NAFTA Chapter 11 jurisprudence with significant implications, including putting a "chill" on future environmental assessments.

"Where a NAFTA investor is a proponent in an environmental assessment, any judicially reviewable error will immediately give rise to potential liability under 1102 if Canadian proponents were not subjected to the same error."

A test of Canadian sovereignty

The appeal is supported by environmental groups in Canada who see the Bilcon case as a test of Canadian sovereignty.

"It has an impact on decision-making in Canada, decisions around how we in Canada protect our environment, how we assess large, resource-based projects that will have an impact our environment," said Lisa Mitchell, executive director of the East Coast Environmental Law Association.

The association and the Sierra Club of Canada are intervenors in the case.

Bilcon argues it was not obliged to pursue a judicial review in Canadian courts.

Nash said it’s well established that tribunals consider domestic law in deciding whether a NAFTA violation occurred.

The tribunal’s finding that the review panel departed from standards of evaluation required by Canadian law is "merely a matter of fact," he said.

"When the decision is read as a whole, the arbitral tribunal found that Canada had breached its international law obligations under the NAFTA based on numerous factors leading to the conclusion that Canada had breached Articles 1105 and 1102 of the NAFTA under international law."

source: CBC