CCPA | January 2023
Canada ISDS roundup
Just before Christmas, Canadian copper miner First Quantum, in an ongoing spat with the Panamanian government over royalties, launched two ISDS cases against the state, apparently as leverage in ongoing contract talks related to the highly controversial Cobre Panama mine. One of the requests for arbitration is under a 1997 mining contract that Panama’s supreme court declared unconstitutional in 2017. The second was filed under the ISDS process of the Canada–Panama Free Trade Agreement.
As Reuters reports this week, “First Quantum paid $61 million in royalties to Panama’s government in 2021, while the Cobre Panama mine posted sales revenues of $3.2 billion for the year, company data showed.” Panama wants to increase annual taxes on the Canadian company to US$375 million, or about 10-15% of revenues. First Quantum wants “[e]xclusive rights to explore other minerals, enlarge the area of its concession, a $1 billion tax credit for its investment and a demand that no laws enacted after the new contract.”
A report released on Earth Day last year by the Panama Worth More Without Mining movement added the following to its list of 200 serious environmental breaches over the Cobre Panama mine’s 10-year lifespan: “the felling of 876 hectares above the authorized area, the non-reforestation of 1,300 hectares, the discharge of waste from the tailings tank into natural bodies of water without official endorsement, as well as the debt of $11 million to MiAmbiente (the Ministry of the Environment).” Canadian Dimension has a good piece on the conflict and Canada’s support for First Quantum.
In other ISDS news, the NAFTA tribunal hearing a third complaint involving Ontario’s lapsed feed-in-tariff program (Windstream and Mesa Power were the other two) tossed out all claims on jurisdictional grounds. According to the tribunal, Tennant Energy had only become an investor in 2015, months after the alleged NAFTA breaches had taken place. The tribunal ordered Tennant to pay all costs for the five-plus-year arbitration as well as 80% of Canada’s legal fees.
The number of ISDS claims against Ontario’s Green Energy Act confirms a trend discussed in a December report from the Colombia Center on Sustainable Investment, based on a survey of renewable industry experts. “The proliferation of claims and threatened claims challenging changes to renewable energy incentives schemes substantially increases the cost to states of implementing such policy tools that necessarily require flexibility in light of complex and evolving technologies, financial factors, and assumptions about costs and markets, among other changing circumstances,” the report concludes, adding that the presence of an investment treaty has no discernible impact on private investment.
The long-anticipated decision in Lone Pine’s NAFTA lawsuit against Quebec’s moratorium on fracking was also rendered last year, though it is not yet public. According to Investment Arbitration Reporter, based on a stock exchange filing from Lone Pine’s Canadian parent company, Prairie Provident Resources, a majority of the tribunal, with one dissenter, found no breach of NAFTA. Finally, Koch Industries’ response (dated July 18, 2022) to Canada’s defence in the NAFTA legacy ISDS case against Ontario’s cancellation of cap-and-trade was made public in December.