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Dispute Settlement

NAFTA - Chapter 11 - Investment

NAFTA Chapter Eleven Arbitration between
Pope & Talbot, Inc. and Canada

Executive Summary of Award dated April 10, 2001

Pope & Talbot Inc. ("the Investor") is a U.S. forest products company with an investment in Canada consisting of three softwood lumber mills and one pulp and paper mill, all located in British Columbia. Unsatisfied with allocations of quota to its investment, it submitted a claim to NAFTA Chapter Eleven arbitration. The claim alleged that Canada's implementation of the Canada-U.S. Softwood Lumber Agreement ("the SLA") breached five of Canada's obligations under NAFTA Chapter Eleven and sought damages in excess of US$ 500 million.

In this Award, the Tribunal rejects the Investor's remaining two allegations that Canada's implementation of the SLA breached its NAFTA obligations under Article 1102 (national treatment) and Article 1105 (minimum standard of treatment). Previously, the Investor withdrew an allegation based on the MFN treatment obligation and the Tribunal rejected allegations concerning expropriation and prohibited performance requirements in an award dated June 26, 2000.

The Tribunal held the softwood lumber quota allocation system did not discriminate on the basis of the nationality of the parties and, therefore, rejected the claim of denial of "national treatment". The Tribunal further determined that, in administering its responsibilities to allocate softwood lumber quota, Canada did not breach any obligation under NAFTA Article 1105.

However, the Tribunal held the treatment of the investment in connection with the verification review process resulted in a denial of the "fair" treatment required by NAFTA Article 1105. Canada conducted a verification review of the Investor's investment to determine whether its allocations of quota were correct. It insisted that it take place in Canada. Consequently, the Investor was required to produce its investment's sales and production records for review in Canada.

In the next phase of the arbitration, the Tribunal will determine the amount of damages incurred by the Investor arising from the verification review.

The foregoing is a summary of the Tribunal's Award on the Merits of Phase 2 of the NAFTA Chapter Eleven arbitration of the claim submitted by Pope & Talbot, Inc. For the complete text of the award please refer to Award_Merits (PDF Document - 3.40 MB).

Updated on April 27, 2001