Joint Request for Arbitration

In the London Court of International Arbitration

Submitted on Behalf of Canada and the United States of America

Table of Contents

I. Introduction

1. Canada and the United States ("the Parties") jointly request arbitration of a dispute between the Parties concerning the interpretation of the Award entered on January 20, 2011, by the Tribunal in LCIA Arbitration No. 81010 (the "Award")Footnote 1 under Article XIV(1) of the Softwood Lumber Agreement 2006 (the "SLA" or "Agreement").Footnote 2 Article XIV(1) provides that: "[e]ither Party may initiate dispute settlement under this Article regarding any matter arising under the SLA 2006."

2. Canada and the United States disagree over when Canada's obligation to collect the Compensatory Adjustments awarded by the Tribunal in LCIA Arbitration No. 81010 ceases. The Parties' positions are described in moredetail in Part VI, below.

3. The Parties would be grateful for the LCIA's assistance in resolving this dispute. The Parties have attached an understanding, contained in an Exchange of Diplomatic NotesFootnote 3 ("the Parties' Understanding"), which details the terms and procedures that have been agreed to by the Parties, including the application of Procedural Order No. 2 ("PO No.2") in LCIA Arbitration No. 81010 (the Confidentiality Agreement and Undertaking) to this proceeding.Footnote 4

II. Parties to the Arbitration

A. Canada

4. Canada's legal representatives in this proceeding are:

Arun Alexander
Michael Owen
Isabelle Ranger
Trade Law Bureau
Government of Canada
Lester B. Pearson Building
125 Sussex Drive Ottawa, Ontario
K1A OG2
Canada
Tel: +1.613.943.2803
arun.alexander@international.gc.ca
michael.owen@international.gc.ca
isabelle.ranger@international.gc.ca

John M. Townsend
Joanne E. Osendarp
Eric S. Parnes
John M. Ryan
Elizabeth C. Solander
HUGHES HUBBARD & REED LLP
1775 I Street, N.W. Washington, D.C. 20006
United States
Tel: +1 (202) 721-4600
Fax: +1 (202) 721-4646
townsend@hugheshubbard.com
osendarp@hugheshubbard.com
parnes@hugheshubbard.com
ryanj@hugheshubbard.com
solander@hugheshubbard.com

B. United States

5. The United States' legal representatives in this proceeding are:

Stuart F. Delery
Jeanne E. Davidson
Reginald T. Blades, Jr.
Claudia Burke
Gregg M. Schwind
Katy M. Bartelma

United States Department of Justice
Commercial Litigation Branch
Civil Division
1100 L Street, N.W.
Washington, D.C. 20005
UNITED STATES
Tel: +I (202) 514-7300
Fax: +1 (202) 514-7969
national.courts@usdoj.gov;
reginald.blades@usdoj.gov;
claudia.burke@usdoj.gov;
gregg.schwind@usdoj.gov;
katy.m.bartelma@usdoj.gov

III. The Arbitration Agreement

6. The Parties have engaged in extensive consultations and have now determined that further consultations will not resolvethe dispute.The Parties therefore respectfully submit this Joint Request pursuant to Article XIV of the SLA and the Parties' Understanding. The arbitration should be conducted underthe dispute settlement provisionsin Article XIV of the SLA and the Parties'Understanding.

IV. Matters Regarding the Arbitration

A. Selection of the Arbitral Tribunal

7.The Parties request that this arbitration be conductedbefore the same Tribunal as in LCIA ArbitrationNo. 81010, if they are available to serve.The arbitrators who comprised the original Tribunal in the 81010 Arbitration are:

Prof. Gabrielle Kaufmann-Kahler, Tribunal Chair
Levy Kaufmann-Kahler
3-5 Rue du Conseil General
P.O. Box 552
CH-1211 Geneva 4
Switzerland

Prof. Albert Jan van den Berg
Hanotiau & van den Berg
IT Tower- 9th Floor
480 Avenue Louise-B9
1050 Brussels
Belgium

Mr.David Williams, QC
Bankside Chambers
Level 22, The Lumley Centre
88 Shortland Street
Auckland
New Zealand

8. If either of the Party-nominated arbitrators in LCIA Arbitration No. 81010 is unavailable, the Parties have agreed that the respective Party will nominate a replacement within 15 days. If the Chair is unavailable, the Parties have agreed that the Party-nominated arbitrators will be asked to agree on a replacement Chair within 15 days of the appointment of both the Party-nominated arbitrators. If either of the Parties fails to nominate a replacement arbitrator within 15 days or if the arbitrators fail to decide upon a replacement Chair within 15 days, the Parties have agreed that the LCIA will appoint the replacement. The SLA calls upon the LCIA to endeavor to appoint the three nominated arbitrators within five business days afterthe date the Chair is nominated.Footnote 5 No citizen or residentof either Canada or the United States may be appointed to the Tribunal.Footnote 6

B. Remuneration of the Arbitrators

9. According to the SLA, the arbitrators will be remunerated and their expenses paid in accordance with LCIA rates.Footnote 7

C. Hearings of the Tribunal

10. The Parties request that the Tribunal make its decision based on the Parties' written submissions and the existing record and that a hearing not be held.

D. Evidence

11. The Parties request that the Tribunal resolve this dispute based solely upon the existing record in LCIA No. 81010 and the Parties' written submissions, as specified in paragraph(7), and qualified by paragraph (8), of the Parties' Understanding.

12. The legal place of arbitration shall be London, United Kingdom.Footnote 8

E. Applicable Rules

13. The Partiesagree that the arbitration shall be conducted underthe LCIA Arbitration Rules in effect on the date the SLA was signed, as modifiedby the SLA and by the Parties' Understanding.Footnote 9

F. The Award of the Tribunal

14. The Tribunal is requested to communicate to the Parties a determination as soon as possible with respectto whether Canada must continue to apply the Compensatory Adjustments beyondOctober 12, 2013, and that it issue its Award explaining the reasons for its determination as soon as practicablethereafter.Footnote 10 This Award shall be final and binding, with no appeals.Footnote 11TheTribunal may not award costs.A portion of the funds allocated to the binational industry council established under Annex 13 of the SLA shall be used to fund arbitration costs other than those of the Parties.Footnote 12 Each Party shall bear its own costs, including costs of legal representation and related costs.Footnote 13

V. Fee

15. The Parties have agreed that the fee prescribed in the LCIA Schedule of Costs can be taken from the balance of monies in the account for LCIA Arbitration No. 111790, and shall be forwarded to the Registrar of the LCIA together with this Joint Request.

VI. Nature of the Case

16. The Parties request assistance in resolving a disagreement concerning the interpretation of the Award issued by the Tribunal in LCIA. Arbitration No. 81010 on Janurury 20, 2011. The Tribunal found, inter alia, that certain programs in the Canadian provinces of Ontario and Quebec were in breach of the SLA, and provided that Canada must cure the breaches or apply certain compensatory adjustments (the "Compensatory Adjustments").

17. Canada began applying those Compensatory Adjustments on March 1, 2011, and, as of May 31, 2013, has identified $435,461 collected in tax revenue as a result of levying an additional 0.1 percent export charge on Ontario lumber exports, and $19,312,164 in tax revenue as a result of levying an additional 2.6 percent export charge on Quebec lumber exports (subject to variances going forward for late returns, refunds and future assessments).

18. Article AXVIII of the SLA provides that the SLA remains in force during a period starting on the date of entry into force of the Agreement (October 12, 2006) and ending seven years later (October 12, 2013), unless the Parties agree to extend the SLA.Footnote 14

On January 23, 2012, the Parties agreed to extend the SLA through October 12, 2015.Footnote 15

19. The Parties disagree over when Canada's obligation to collect the Compensatory Adjustments awarded by the Tribunal in LCIA ArbitrationNo. 81010 ceases.

20. Canada's position is that the Award in LCIA ArbitrationNo. 81010 requires Canada to apply the Compensatory Adjustments specified in paragraph 410 of the Award only until the expiration date of the SLA as it existed at the time of the Award (i.e.,October 12, 2013).

21.The U.S. position is that the Award requires Canada to continue to apply the Compensatory Adjustments for as long as the SLA remains in effect until Canada has collected the amounts of change in U.S. producer sutplus identified in the Award because, based on Canada's reportedcollections referenced above, Canada will not collect these amounts by October 12, 2013.

VII. Request for Relief

22. The Parties ask that the Tribunal decide which of the Parties' positions, set out above in paragraphs 20 and 21, is the correct interpretation of the Award.

23. Should the Tribunal decide in Canada'sfavor, Canada respectfullyrequests that the Tribunal specify that the Compensatory Adjustments set out in the Award expire on the termination date for the SLA that was in effect when the 81010 Tribunal issued its Award-October 12, 2013. Canada furtherrequests that, if an award is issued indus proceeding after October 12, 2013, it should provide that any Compensatory Adjustments collected from exporters between October 12, 2013 and the date of the Award should be reimbursed.

24. Should the Tribunal decide in the United States' favor, the United States respectfully requests that the Tribunal clarify that its Award in LCIACase No. 81010 requires Canadato continue to apply the Compensatory Adjustments for as long as the SLA remains in effect until Canada has collected the respective amounts of change in U.S. producer surplus specified in the Award for Ontario and Quebec.

VIII. Service of the Request

25. This JointRequest is being transmitted by e-mail by the legal representatives of Canada on behalf of the Parties.

For Canada:

John M. Townsend

Arun Alexander
Michael Owens
Isabelle Ranger
Trade Law Bureau Government of Canada Lester B. Pearson Building
125 Sussex Drive
Ottawa, Ontario K1A OG2, Canada Tel: +1 (613) 943-2803
arun.alexander@international.gc.ca
michael.owen@international.gc.ca
isabelle.ranger@international.gc.ca

Attorneys for Canada

John M. Townsend
JoanneE. Osendarp
Eric S. Parnes
John M. Ryan
Elizabeth C. Selander
HUGHES HUBBARD & REED LLP
1775 I Street, N.W.
Washington, D.C., United States
Tel: +1 (202) 721-4600
Fax: +1 (202) 721-4646
townsend@hugheshubbard.com
osendarp@hugheshubbard.com
pames@hugheshubbard.com
ryanj@hugheshubbard.com
solander@hugheshubbard.com

Respectfully submitted,

For the United States of America:

Stuart F. Delery
Assistant Attorney General

Jeanne E. Davidson
Director

Reginald T. Blades Jr.

Claudia Burke
Gregg M. Schwind
Katy M. Bartelma
United States Department of Justice
Commercial Litigation Branch
Civil Division
1100 L Street, N.W
Washington, D.C. 20530
UNITED STATES
Tel: +1 (202) 514-7300
Fax: +1 (202) 514-7969
national.courts@usdoj.gov
reginald.blades@usdoj.gov
claudia.burke@usdoj.gov
gregg.schwind@usdoj.gov
katy.m. bartelma@usdoj.gov

Timothy M. Reif
General Counsel
United States Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508
UNITED STATES

Attorneys for the United States

September 30, 2013

List of Exhibits

  • Exhibit A: United States.Canada, LCIA No. 81010, Award dated January 20, 2011.
  • Exhibit B: 2006 Softwood Lumber Agreement Between the Government of Canada and the Government of the United States of America as amended.
  • Exhibit C: Exchange of Diplomatic Notes between the Government of Canada and the Government of the United States of America, dated September
    30, 2013.
  • Exhibit D: LCIA No. 81010, Procedural Order No. 2, dated June 25, 2008.
  • Exhibit E:Agreement Between the Government of the United States of America and the Government of Canada Extending the Softwood Lumber Agreement, as Amended, dated January 23, 2012.

Footnotes

Footnote 1

Exhibit A, United States, Canada, LCIA No. 81010, Award Qan. 20, 2011).

Return to footnote 1 referrer

Footnote 2

Exhibit B, 2006 Softwood Lumber Agreement  between the Government of Canada and the Govenunent of the United States of America.

Return to footnote 2 referrer

Footnote 3

Exhibit C, Exchange of Diplomatic Notes  between the Government of Canada and the Govenunent of the 
United States of America, dated September 30, 2013.

Return to footnote 3 referrer

Footnote 4

Exhibit D, LCIA Arbitration No. 81010, Procedural  Order  No.2 Qw1e 25, 2008).

Return to footnote 4 referrer

Footnote 5

SLA Art. XIV(11).

Return to footnote 5 referrer

Footnote 6

SLA Art. XIV(8).

Return to footnote 6 referrer

Footnote 7

SLA Art. XIV (12).

Return to footnote 7 referrer

Footnote 8

SLA Art. XIV(13).

Return to footnote 8 referrer

Footnote 9

SLA Art. XIV(6).

Return to footnote 9 referrer

Footnote 10

Exhibit B.

Return to footnote 10 referrer

Footnote 11

SLA Art. XIV(20).

Return to footnote 11 referrer

Footnote 12

SLA Art. XIV(21).

Return to footnote 12 referrer

Footnote 13

Id.

Return to footnote 13 referrer

Footnote 14

SLA, Art. XVIII.

Return to footnote 14 referrer

Footnote 15

Exhibit E, Agreement Between The Government of the United States of America and The Government of Canada Extending the Softwood Lumber Agreement, as Amended January 23, 2012).

Return to footnote 15 referrer