By: Nigel Bankes

PDF Version: The Bilcon Award

Award Commented On: The Claytons and Bilcon v Canada, NAFTA, UNCITRAL Rules, 17 March 2015

Once again Canada has lost an important investor/state arbitration under Chapter 11 of NAFTA (for a post on Canada’s last reversal (Mobil and Murphy), also characterized by a strong dissent, see Regulatory Concussion). The Clayton family and Bilcon Inc (US investors, the claimants) were hoping to develop a quarry in Digby Neck, Nova Scotia. The project was sent to a joint federal/provincial environmental review panel (JRP) by both levels of government. The JRP recommended rejection and both governments accepted that recommendation, and thus the project died. The claimants took the view that the JRP process was badly flawed. They were of the opinion that the panel had recommended rejection on the basis that the project would be inconsistent with “community core values” and furthermore that the panel had deliberately failed to identify any mitigation measures that might make the project acceptable. However, instead of seeking judicial review of the JRP in the Federal Court the claimants commenced this NAFTA arbitration. They have been rewarded with a majority decision in their favour. The majority (Judge Bruno Simma and Professor Bryan Schwartz) found that Canada had breached both Article 1105 (minimum standard of treatment (MST) – even as constrained by the Interpretation Note (2001) issued by NAFTA contracting parties here) and Article 1102 (national treatment standard). The matter will now go back to the tribunal for it to assess damages. Professor Donald McRae delivered a strong dissent contending that the majority had turned what was nothing more than a possible breach of domestic law into an international wrong. I have nothing to add to McRae’s excellent critique (and see also Meinhard Doelle’s post on the decision); my purpose here is to review some of the implications of the Award from a number of different perspectives.

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