North America Free Trade Agreement

Chapter 11 - Investment

Clayton/Bilcon v. Government of Canada

In the Matter of an Arbitration Under Chapter Eleven of the North American Free Trade Agreement and the UNCITRAL Arbitration Rules

Departments of Justice and of
Foreign Affairs
and International Trade
Trade Law Bureau
Lester B. Pearson Building
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
CANADA

Government of Canada Rejoinder

March 21, 2013

Table of Contents

Table of Abbreviations

Abbreviation
Definition
ADM
Assistant Deputy Minister
CEAA
Canadian Environmental Assessment Act
CLC
Community Liaison Committee
CS
Comprehensive Study
DFO
Department of Fisheries and Oceans
EA
Environmental Assessment
EC
Department of the Environment
EIS
Environmental Impact Statement
FTC
Free Trade Commission
GATT
General Agreement on Tariffs and Trade
GQP
Global Quarry Products
ha
Hectare
HADD
Harmful Alteration, Disruption or Destruction of Fish Habitat
iBoF Salmon
Inner Bay of Fundy Salmon
JRP
Joint Review Panel
NSDEL
Nova Scotia Department of Environment and Labour
NSEA
Nova Scotia Environment Act
NWPA
Navigable Waters Protection Act
UNCTAD
United Nations Conference on Trade and Development
WPQ
Whites Point Quarry

I. Introduction

A. Preliminary Statement

1. The Claimants have now had over five years, access to some 50,000 of Canada’s documents, and a full opportunity to file hundreds of pages of pleadings, witness statements and expert reports in support of their NAFTA claim.  And yet, despite all of the time, effort and expense they have forced both sides to incur in this arbitration, they have failed to establish that the environmental assessment (“EA”) of the Whites Point Quarry and Marine Terminal violated any of Canada’s NAFTA obligations.  Each and every one of the Claimants’ claims in these proceedings is without merit and should be dismissed.

2. The Claimants’ Reply of December 21, 2012 continues to insist that the Whites Point project was the subject of a grand conspiracy perpetrated by government officials and elected representatives of Canada and Nova Scotia over a period of five years and several different governments.  In support of their theory, the Claimants and their experts attack the bona fides of virtually every decision made throughout the Whites Point EA process, attributing each one to alleged ill-will and bias against the Whites Point project.

3. Their story is pure fabrication.  Cognizant of the complete lack of evidence that would substantiate it, the Claimants continue with their desperate claim that Canada has intentionally withheld relevant documents.  This is simply not true.  Canada has exercised the utmost diligence in producing all of the documents requested by the Claimants.  It has not produced any documents that support the Claimants’ allegations of conspiracy or bad faith for a simple reason – such documents do not exist.

4. The rhetoric and bluster of the Claimants’ Reply, based as it is upon out-of- context sound bites and blatant distortions of the facts, fails to prove that the decisions they impugn were made with a view to anything other than fulfillment of the policy objectives underlying the EA regimes contained in the Canadian Environmental Assessment Act (“CEAA”) and the Nova Scotia Environment Act (“NSEA”).  Each and every one of the decisions taken in the course of the Whites Point EA was rational in light of the facts, legitimate in light of the law, and carried out on a non-discriminatory basis which accorded the Claimants due process.

5. The Claimants were entitled to nothing more.  Despite their many misguided notions about EA in Canada, they did not have a right to project approval.  At the end of every EA process, a decision must be made by the responsible government(s) as to whether a proposed project should be permitted to proceed.  The evidence gathered and evaluated through the EA process will sometimes lead to the determination that the potential environmental effects of a project make it inappropriate for the environment for which it is proposed.  Canada has already explained why this very determination was made in the Whites Point EA.  While the Claimants and their experts take issue with the rejection of the Whites Point project, in the end their many complaints fail to show that the outcome of the Whites Point EA would, or should, have been any different.

6. Relative to the Claimants’ Reply, Canada’s Rejoinder is brief. This is partly because the Claimants have failed to demonstrate that the true narrative of the Whites Point EA is anything other than as Canada has portrayed it in its Counter-Memorial and supporting affidavits.  Accordingly, Part II below is limited to highlighting just the overarching facts that explain how and why the Whites Point EA process unfolded, and concluded, as it did.  These facts, which should all be undisputed, illustrate the utter irrelevance of the pages upon pages of complaints submitted by the Claimants.

7. In Part III, Canada explains how the Claimants’ Reply does not seriously address – and in some cases simply ignores – the jurisdictional barriers to their claims.  In particular, the Claimants continue to fixate on measures taken in connection with the industrial approval issued to Nova Stone Exporters, Inc. (“Nova Stone”) to operate a 3.9 ha quarry on the site of the Whites Point project – measures that did not “relate to” the Claimants or their investment and that are, in addition to a number of their other claims, time-barred.  The Claimants also continue to fail in their efforts to show that certain decisions made by the JRP in the course of the Whites Point EA are measures adopted or maintained by Canada and thus, subject to Chapter Eleven.  Finally, they fail to show why the Tribunal has jurisdiction to consider the Federal Government’s decision on the EA when that decision could not cause them loss or damage given the project had been definitively rejected a month earlier by Nova Scotia.

8. In Part IV Canada then explains how the Claimants have been unable to rehabilitate any of their claims on the merits.  Specifically, the Claimants have merely repackaged their erroneous interpretations of Article 1105 in an attempt to prove that Canada breached the minimum standard of treatment obligation through the initiation, administration and outcome of the Whites Point EA.  The Claimants not only misrepresent the applicable standard under Article 1105, they also fail to establish that any of the decisions, acts or recommendations of which they complain reach the high threshold required to breach that standard.

9. The Claimants’ allegations with respect to Articles 1102 and 1103 are similarly ill-founded.  In addition to advancing several dubious new interpretations of these provisions, the Claimants persist with their absurd proposition that all enterprises in the EA process are in “like circumstances” for the purposes of a national treatment or most- favoured nation treatment claim.  This proposition is without merit as it ignores the requirement to consider the very factors existing in every EA process that result in legitimate differences in the treatment accorded to EA proponents.  The Claimants fail to establish they were treated less favourably than other EA proponents in actual like circumstances by reason of their nationality.

10. For the reasons explained in detail below, Canada requests that the Tribunal dismiss each and every one of the Claimants’ claims in their entirety, and that Canada be completely indemnified for the costs that it has been forced to incur in this arbitration.

B.  Materials Filed by Canada with its Rejoinder

11. Canada’s Rejoinder is accompanied by 60 additional Exhibits and 21 additional Authorities which have been included in Canada’s Book of Exhibits and Book of Authorities. In addition, Canada has filed the following Affidavits and Expert Report in support of its Rejoinder:

  • Second Affidavit of Bob Petrie:Mr. Petrie’s second Affidavit provides further testimony on his decision to include the blasting conditions, suggested by the Department of Fisheries and Oceans (“DFO”), in Nova Stone’s industrial approval for the 3.9 ha quarry that it sought to operate on the site of the Whites Point project.
  • Second Affidavit of Mark McleanIn his second Affidavit, Mr. McLean corrects the Claimants’ mischaracterization of DFO’s involvement in the review of Nova Stone’s blasting plan for its 3.9 ha quarry, and of the decision DFO made, once the Whites Point project had been referred to a review panel, regarding interactions with Nova Stone on mitigation measures that could be taken on the 3.9 ha quarry.
  • Second Affidavit of Stephen Chapman:In his second Affidavit, Mr. Chapman explains the recommendation that the Canadian Environmental Assessment Agency (the “Agency”) made to DFO in the summer of 2003 regarding DFO’s interactions with Nova Stone on mitigation measures that could be taken on the 3.9 ha quarry.  Mr. Chapman also clarifies the facts relating to the notification provided to the Claimants of the referral of the Whites Point project to a review panel.
  • Second Affidavit of Christopher Daly: Mr. Daly’s second Affidavit clarifies the nature of the decision the Government of Nova Scotia had to make after the JRP issued its recommendations on the Whites Point project.
  • Rejoinder Expert Report of Lawrence E. Smith, Q.C.: Lawrence E. Smith, Q.C., an expert in regulatory and environmental law, files his Rejoinder Expert Report to address matters raised in the Reply Expert Report of David Estrin, and the Expert Report of T. Murray Rankin.

II. The Facts

12. As Canada explained in its Introduction, the paragraphs that follow are in no way intended as an exhaustive summary of all the facts relevant to the EA of the proposed Whites Point project.  A comprehensive statement of the relevant facts has been provided in Canada’s Counter-Memorial, and in the exhibits and testimony noted therein.  Canada offers the following points and clarifications to cast light on the indisputable facts that the Claimants ignore in their attempt to make out a NAFTA claim.  In particular, the Claimants fail to acknowledge the Whites Point project for what it was – a massive
quarry and marine terminal to be located in the middle of a highly sensitive environment. They also fail to acknowledge the Whites Point EA process for what it had to be – an environmental review that reflected the nature of the project and that satisfied the requirements of both the federal and Nova Scotia EA regimes.  Finally, the Claimants fail to acknowledge the nature and effect of the independent decisions that had to be made by Canada and Nova Scotia with respect to the project.

A.  The Whites Point Project – The Claimants’ Proposal Was to Build and Operate a 152 ha Quarry and Marine Terminal on the Digby Neck in Nova Scotia

13. The Whites Point project was proposed as a large scale and long-term industrial undertaking consisting of two interdependent components: (1) a 152 ha aggregate quarry that would blast, crush, wash and stockpile millions of tons of rock a year for 50 years; and (2) a 170m long marine terminal that would service and load massive cargo ships with approximately 40,000 tons of aggregate, every week of that 50-year period.Footnote 1

14. The project was to operate on a narrow peninsula of land, the Digby Neck, and along the world renowned Bay of Fundy − both of which are unique environments of ecological significance and sensitivity.Footnote 2 In their Reply, and in the Supplemental Witness Statement of Mr. Buxton in particular, the Claimants suggest that this region of Nova Scotia is run-down, was previously industrialized, and is of no particular environmental concern.Footnote 3  As Canada has shown, these characterizations are inaccurate.Footnote 4 Moreover, the fact that a small gravel pit may have existed some 60 years ago on the proposed Whites Point site does not mean that blasting an entire mountain to rubble and shipping it to market via post-Panamax size ships would have been an environmentally insignificant endeavour.  Nor does it undo the simple reality that, given where the project was to be situated, the Claimants’ plan engaged a high level of public concern from the very outset.Footnote 5  For the Claimants to suggest otherwise Footnote 6 is evidence only of the cavalier attitude and the sense of entitlement that they brought to the entire EA process. Footnote 7

15. At the time that they made their proposal, there appeared to be no question in the minds of the Claimants, or of government regulators for that matter, that the proposed quarry and marine terminal were two interdependent components of one single project. Indeed, in every description they gave of their project, whether provided in verbal discussions with regulators or in formal project descriptions filed with the Governments of Canada and Nova Scotia, the Claimants described both components as being part of one single project.

16. For example, in a meeting with officials of the Nova Scotia Department of Environment and Labour (“NSDEL”) on June 14, 2002, the Claimants explained that their plan was to develop a large quarry and a marine terminal, with the latter being an “integral part of this project.”Footnote 8 Two weeks later, at a meeting with DFO officials, the Claimants described their proposed project as consisting of a quarry and a marine terminal, explaining that “quite frankly, if they cannot put in a wharf structure they are not interested in the quarry.”Footnote 9

17. Similarly, the Claimants consistently reiterated the integrated nature of the Whites Point project in each of their project descriptions submitted to government regulators.  In their first rudimentary project description, submitted on September 30, 2002 and referring to the “Whites Point Quarry and marine facility,” they described the required infrastructure as including both a “Land Based Construction” and “Marine Based Construction.” Footnote 10 The second project description submitted on January 28, 2003, entitled “Whites Point Quarry & Marine Terminal,” similarly described the dual nature of the project, identifying it as a “physical plant for construction aggregate processing and a marine terminal for ship loading of the aggregate.” Footnote 11  And their third project description, filed on March 10, 2003 and also entitled “Whites Point Quarry & Marine Terminal,” was even clearer, describing the proposed project as the construction, operation and decommissioning of a basalt quarry with a marine terminal.”Footnote 12

18. In their Reply, the Claimants try to distance themselves from these facts. At several places, they mischaracterize the project as being only a quarry without a marine terminal.Footnote 13  It was not.  In other instances, both the Claimants and their expert, Mr. Estrin, disingenuously refer to the proposed marine terminal as merely a “nearby dock.”Footnote 14Again, it was not.  The quarry and the marine terminal were indissociable – there would be no Whites Point quarry without the marine terminal, and there would be no Whites Point marine terminal without the quarry. Footnote 15

19. The Claimants have also generated pages of complaints against governmental decisions relating to a conditional approval granted to Nova Stone to quarry a 3.9 ha portion of the Whites Point site.Footnote 16 That the Claimants persist in complaining about these measures is baffling.  As Canada has explained, any debate over these measures was ultimately rendered moot in May of 2004 when the Claimants and Nova Stone invalidated the conditional industrial approval.Footnote 17  Moreover, the Claimants’ reliance on this project is surprising because they seem to complain about the treatment afforded to this project as if it was the project they had proposed.  Once again, it was not.

20. While it is true that in April of 2002 Nova Stone obtained a conditional approval from Nova Scotia to operate a 3.9 ha quarry on the site of the Whites Point project before the EA of the Whites Point project was even commenced,Footnote 18  the Claimants never intended for the Whites Point project to be confined to a small 3.9 ha plot of land.  In fact, after Nova Stone received its conditional approval, its representative’s first act was not to provide DFO officials with a blasting plan for the 3.9 ha quarry as required by the conditional approval;Footnote 19  rather, it was to meet with officials to discuss the Claimants’ plan for the 152 ha quarry and marine terminal Footnote 20 and to file a draft project description for the Whites Point project.Footnote 21

21. As explained by Stephen Chapman and Mark McLean, all of this left government officials uncertain as to the purpose of Nova Stone’s 3.9 ha quarry operation once the Claimants triggered an EA of the Whites Point project.Footnote 22 It also rendered government officials understandably cautious in dealing with Nova Stone once the EA of the Whites Point project had been referred to a review panel.Footnote 23 In particular, once a review panel became responsible for the Whites Point EA, government officials could not interact with Nova Stone in a way that could ultimately undermine the EA process.Footnote 24 While the Claimants question, criticize and misrepresent the approach of government officials here, any difficulties or disappointment they encountered were purely of their own making. Placed in its appropriate context, Nova Stone’s 3.9 ha quarry was nothing more than the first step in the Whites Point project. Government officials certainly could not be expected to be complicit in the Claimants’ efforts to use another company, Nova Stone, to exploit a regulatory loophole and develop the first phase of their planned 152 ha quarry and marine terminal before an EA of the Whites Point project was completed. Footnote 25

22. Accordingly, it is essential to remember that the Whites Point project was neither just a quarry nor just a dock.  It was not short-term, it was not on an already industrialized site, and it was most definitely never to be confined to just 3.9 ha of land.  The project that the Claimants sought to operate was a 152 ha quarry and marine terminal − one component fully dependent upon and integrated with the other − of a size and magnitude which did not exist anywhere else on the Digby Neck.  The project, in its entirety, engaged the potential for a wide array of significant adverse environmental effects, and gave rise to a high level of public concern.Footnote 26 The project, in its entirety, is what determined the nature and the course of its EA.

B. The Whites Point EA Process – The EA Process Reflected the Nature of the Whites Point Project

23. The nature and location of the Whites Point project meant that it required authorizations or approvals from the Governments of Canada and Nova Scotia.Footnote 27

 Before such authorizations or approvals could be issued, an EA of the Claimants’ proposal had to be conducted under applicable federal and provincial legislation. Footnote 28

1. The Scope of the Project Had to Include Both the Quarry and the Marine Terminal

24. The Claimants and their experts consistently ignore the dual nature of the Whites Point EA process. For example, they expend much of their energy contesting DFO’s jurisdiction to assess the quarrying activities proposed by the Claimants.Footnote 29 For the reasons Canada has explained, DFO’s decision that the quarrying element of the Whites Point project should be included in the scope of the project was legitimate and
reasonable.Footnote 30 As explained below, DFO’s decision was also of no practical consequence.

25. The Claimants’ proposal called for the construction of a 152 ha quarry at Whites Point.  A quarry in excess of 4 ha is an “undertaking” according to Nova Scotia’s applicable regulations.Footnote 31  Before work can begin on any undertaking in Nova Scotia, a proponent must obtain the approval of the Nova Scotia Minister of Environment and Labour.Footnote 32  And before such an approval can be provided, an EA must first be conducted in accordance with Nova Scotia law.Footnote 33 The Claimants do not dispute these facts.

26. The Claimants’ proposal also required the construction of a marine terminal that would jut 170m out into the Bay of Fundy and interfere with marine navigation.Footnote 34  As such, it required a permit under the Navigable Waters Protection Act (“NWPA”).Footnote 35Further, the construction of the marine terminal would have resulted in the destruction of some fish habitat, and therefore required an authorization under s. 35 of the Fisheries Act.Footnote 36 Before an NWPA permit or a s. 35 authorization can be provided, a federal EA must be completed under the CEAA.Footnote 37This fact is also beyond dispute.

27. As such, irrespective of whether or not the activities on the quarry actually required an authorization from the Federal Government under the Fisheries Act, the Whites Point project could not proceed until an EA of both of its components had been completed.  Moreover, for the reasons explained in Canada’s Counter-Memorial, federal and provincial officials decided to harmonize their respective EAsFootnote 38 and ultimately to assess the project by way of a JRP.Footnote 39 The joint approach taken by the two governments – one that the Claimants actually encouraged Footnote 40 − meant that the scope of the project that would be assessed in the EA would ultimately be decided by the Federal Minister of the Environment and the Nova Scotia Minister of Environment and Labour in the JRP Agreement.Footnote 41 The scope would have to be broad enough to meet the informational needs of both jurisdictions.Footnote 42 The Claimants do not dispute this fundamental fact. Indeed, they were given the opportunity to comment on the scope of the project in the JRP Agreement before it was finalized.  In response, they noted that they “regarded [the JRP Agreement] … as a reasonable document and hence did not feel the need for comment.”Footnote 43

28. Put simply, while DFO correctly determined that blasting on the quarry would likely require authorizations under the Fisheries Act and therefore trigger an EA under the CEAA,Footnote 44 this determination had no material effect on the scope of the project to be assessed in the EA of the Whites Point project.  Because of the involvement of both the Federal and Provincial Governments, the scope of the project necessarily included both the quarry and the marine terminal.  For this very reason, Lawrence Smith has observed in his Rejoinder Expert Report that “[i]n this respect, it seems pointless to protract a theoretical debate about what parts of the Whites Point Project would have been appropriate to include in a federal-only review.”Footnote 45

2. The Referral of the Whites Point EA to a Joint Review Panel Was Based Upon Public Concern and the Risk of Significant Adverse Environmental Effects Relating to the Entire Whites Point Project

29. Under the CEAA, a project can be referred to a review panel if it presents a risk of significant adverse environmental effects or if public concerns warrant such a referral.Footnote 46 The reasons that officials believed that the Whites Point project satisfied these criteria are laid out in Canada’s Counter-Memorial.Footnote 47 There is no need to repeat those reasons here.

30. In order to attack that decision in their Reply, the Claimants and their experts suggest that the Whites Point EA could only be referred to a review panel because of the Federal Government’s allegedly improper assumption of jurisdiction over the quarry.  For example, in his Reply Expert Report, Mr. Estrin states, “DFO knew there were no significant adverse environmental effects to fish or navigation arising from the marine terminal, and that public concerns related to the quarry, not the marine terminal. Therefore, unless the quarry was scoped into the project to be reviewed, there was no basis for a CEAA referral.”Footnote 48  Mr. Estrin’s claims are factually inaccurate. The public was as concerned with the proposed marine terminal as it was with the proposed quarry,Footnote 49 and officials had concerns about the possible significant adverse environmental effects that could result from the marine terminal.Footnote 50 The fact that other marine terminals existed along the Bay, or that shipping already took place in the Bay,Footnote 51 did not negate the public concerns or the risks of adverse environmental effects at Whites Point.  Thus, irrespective of whether or not the Federal Government considered the quarry in the course of the EA, a referral to a review panel would have still, in light of the marine terminal, been entirely legitimate.

31. The Claimants also allege that they were unfairly misled to believe that the EA would take the form of a comprehensive study, not a review panel.Footnote 52 Canada has already explained that nothing could be further from the truth.  Government officials were consistent in advising the Claimants that given the nature of their project and the environment for which it was proposed, it could very well be referred to a review panel.Footnote 53

32. Finally, the Claimants and their experts attack the decision to refer the Whites Point project to a review panel because some officials believed the likely effects of the proposed project were less significant than others, and because information generated through the EA process modified the project’s risk profile.Footnote 54  But in lodging their criticisms, they again ignore the relevant facts about how decisions are made. Determinations as to the “likelihood” of significant adverse environmental effects at the outset of an EA are, by their very nature, preliminary.  No official has a crystal ball – rather, knowledgeable officials can act only on the best information available to them at the time.  As explained by Robert Connelly:

At the stage when the initial type of assessment decision is being made, the information that the government has with respect to the second and third factors, potential significant adverse environmental effects and the level of public concern associated with a proposed project, is necessarily incomplete….  As a result, when making a decision on the type of assessment, only a preliminary determination can be made, on the basis of the information available to governmental authorities at that time, that significant adverse environmental effects may arise as a result of the project, or that public concern exists over the project being proposed. This preliminary determination is then used to inform the type of assessment to which a project is subject.Footnote 55

At this early stage in the process, officials can disagree with one another and debate is inevitable.  But unanimity is not a requirement, debate is not a sign of impropriety, and at some point a decision must be made.Footnote 56   Further, initial concerns about the likelihood of significant adverse environmental effects may well prove to be lessened after additional information becomes available.  But this does not mean there was anything inappropriate about the initial judgment call that a deeper level of understanding was needed.  All it means is that the EA process has run its course and fulfilled its purpose.Footnote 57

3. The Whites Point JRP Was Required to Consider Both the “Environmental Effects” of the Project Under Federal Law and the “Socio-Economic” Effects of the Project Under Nova Scotia Law

33. In an EA conducted by a JRP, all possible environmental effects relevant to the decisions to be made by each participating jurisdiction must be considered, evaluated and addressed.  As explained by Robert Connelly, “an agreement to establish a joint review of the entire project eliminates potential questions as to which government has jurisdiction over the various project components and in the scope of project.  This is because the environmental assessment must provide the information required to allow each government to make a decision following completion of the assessment.”Footnote 58As such, the Whites Point JRP was necessarily mandated to review and assess information pertaining to any and all environmental effects under both the CEAA and the NSEA.

34. Pursuant to the CEAA, an EA must consider and evaluate “any change that the project may cause in the environment” including “any effect of any change [in the environment] … on health and socio-economic conditions”, and “physical and cultural heritage.”Footnote 59

35. Pursuant to Part IV of the NSEA, under Nova Scotia law an EA is required to consider and evaluate “any change, whether negative or positive, that the undertaking may cause in the environment, including any effect on socio-economic conditions, on environmental health, physical and cultural heritage or on any structure, site or thing”Footnote 60 (emphasis added).  As the Claimants’ own expert David Estrin has acknowledged, this means that as part of an EA, the Province of Nova Scotia is required to consider, in addition to the effects of a project on the physical environment, the socio-economic effects of a project, an inquiry that can include consideration of whether the effects of the project would be inconsistent with the community’s core values.Footnote 27

36. For this very reason, the JRP Agreement signed between Canada and Nova Scotia required the JRP to conduct its review of the Whites Point project “in a manner that discharges the requirements set out in the Canadian Environmental Assessment Act” and also “Part IV of the Nova Scotia Environment Act.”Footnote 62 Similarly, the Agreement required the JRP to consider the environmental effects of the project, as defined under federal law, as well as the socio-economic effects of the Project, as required by the Nova Scotia legislation.Footnote 63 The Nova Scotia specific requirements were also reflected in the Environmental Impact Statement Guidelines (“EIS Guidelines”) adopted by the JRP, which required the Claimants to provide information on the impacts of the proposed project on factors such as the “Existing Human Environment” and on “Social and Cultural Patterns.” Footnote 64

37. Faced with this unavoidable reality, the Claimants have constructed a one- dimensional case that focuses on the JRP’s alleged improprieties under federal law.Footnote 65Their allegations here are unfounded – as Lawrence Smith has explained, “the Panel’s determination was in fact based on a significant adverse environmental effect within the meaning of the CEAA.” Footnote 66 Moreover, their arguments also fail to recognize that the JRP’s recommendations had to also satisfy the requirements of provincial law.

C.  The Whites Point EA Government Decisions – Both Nova Scotia and Canada Had to Make A Decision With Respect to the Whites Point Project

38. Once the JRP completed its work, it made its recommendations to the Governments of Nova Scotia and Canada.  Again, the Claimants seem to forget that this is all the JRP did because it was all it could do – make recommendations. In spending pages upon pages attacking the work of the JRP and the recommendations it reached, the Claimants ignore the fact that the JRP’s recommendations were simply an input into the decision-making of the governments involved. Indeed, once the harmonized EA process ended, Nova Scotia and the involved federal departments were required to respond to the recommendations in accordance with their own legislation.Footnote 67 Both levels of government had to make decisions.  Neither of the government decision-makers could “rubber stamp” the JRP’s recommendations, nor endorse its reasoning, without appropriate reflection and consideration.

39. In addition, the Claimants also ignore that they needed the approval of both levels of government in order for the Whites Point project to proceed.  A decision not to approve the project by Nova Scotia, or not to issue the required authorizations by the Federal Government, would mean that the Whites Point project, as it had been proposed by the Claimants, could not proceed.Footnote 68

40. In this regard, the Claimants and Mr. Estrin focus almost entirely on the alleged wrongfulness of the Federal Government’s response to the Whites Point JRP’s recommendations.Footnote 69 But as Lawrence Smith has explained, the Federal Government’s decision was “lawful and constitutionally proper” because “the socio-economic effects of the project which arose from the environmental effects the JRP identified were a legitimate basis for federal authorities to base their decisions.” Footnote 70

41. More importantly, the Claimants ignore the fact that Nova Scotia also had a decision to make that was critical to the fate of the project.Footnote 71   While authorizations under various federal acts were indeed necessary, they were not sufficient for the project to proceed.  The quarry also had to be approved by Nova Scotia, and as the Claimants themselves had noted, without the quarry they were not interested in the marine terminal.Footnote 72 As such, the refusal by Nova Scotia to approve the quarry, on grounds permitted by its legislationFootnote 73,  meant the end of the Claimants’ proposed project.Footnote 74

42. In an attempt to avoid this fact, the Claimants suggest that Nova Scotia would not have rejected the project if the Federal Government had expressed concern over the approach taken by the JRP in its recommendations.Footnote 75  There is no evidence that this is true. As Christopher Daly explains in his second Affidavit, Nova Scotia’s decision had to be made, and indeed was made, independently of the Federal Government’s decision.Footnote 76 In fact, the Nova Scotia Minister of the Environment and Labour made his decision not to approve the project almost one month before the Federal Government made its decision.Footnote 77 As Mr. Smith summarizes in his Rejoinder Expert Report, “The evidence discloses not the faintest hint of doubt, hesitation or equivocation on the part of Nova Scotia about its decision to reject the project….  Nova Scotia demonstrated a clear intention, in that respect, to “go it alone” and its decision amounted to a complete rejection of the Whites Point Project regardless of the federal decision-making process.” Footnote 78

43. Provincial and federal decision-makers were indeed interested in how the other viewed the recommendations of the JRP,Footnote 79 but as Mr. Daly explains in his second Affidavit “Nova Scotia was not looking to align its decision with that of the Federal Government. Rather, Nova Scotia communicated with Canada regarding the timing and nature of the decisions in order to prepare an appropriate communications strategy around the Minister’s announcement.” Footnote 80

44. Ultimately, while the Claimants advance a multitude of complaints and arguments on virtually every decision taken during the Whites Point EA process, their entire case boils down to the fact that they were not permitted to build and operate their proposed quarry and marine terminal at Whites Point.  They are understandably disappointed. However, contrary to what they seem to believe, the EA process is not merely a licensing exercise and a proponent subject to an environmental assessment in Canada – any level of assessment – is not entitled by right to have its proposal approved.  The EA process exists for a reason, and it is inevitable that some projects will be rejected because they are simply inappropriate for the biophysical and human environments for which they are proposed.

III. The Tribunal Lacks Jurisdiction to Hear Certain Allegations Being Advances by the Claimants

45. As Canada explained in its Counter-Memorial, a number of the Claimants’ claims are beyond the jurisdiction of this Tribunal.  In their Reply, the Claimants fail to seriously respond to any of the jurisdictional barriers identified by Canada.  This approach is remarkable given that it is the Claimants who bear the burden of establishing that this Tribunal has jurisdiction to hear the claims they have submitted.Footnote 81

46. Below, Canada explains how the Claimants have failed to meet their burden of establishing this Tribunal’s jurisdiction to hear their claims with respect to: (1) the industrial approval for a 3.9 ha quarry granted to Nova Stone; (2) measures of which the Claimants had knowledge over three years prior to the date on which they commenced these proceedings; (3) the actions of the JRP; and (4) the Government of Canada’s acceptance of the JRP’s recommendations.

A.  The Tribunal Lacks Jurisdiction Over the Claimants’ Claims Relating to Nova Stone’s Industrial Approval for the 3.9 ha Quarry

47. In their Memorial and their Reply, the Claimants allege a number of NAFTA violations in connection with the industrial approval issued to Nova Stone for its 3.9 ha quarry.  These include the alleged imposition by DFO of blasting conditions and inappropriate set back distances, and the alleged refusal by DFO to approve Nova Stone’s blasting plan or to explain setback distances on the 3.9 ha quarry.Footnote 82 Canada explained in its Counter-Memorial that any measures taken in connection with Nova Stone’s industrial approval do not “relate to” the Claimants or to their investment.  Canada also explained that even if these measures were found to “relate to” either the Claimants or their investment, the Claimants have not rebutted the overwhelming evidence demonstrating that their claims are time-barred under Article 1116(2).

48. In their Reply, the Claimants offer no new evidence or theories sufficient to meet their burden of establishing that this Tribunal has jurisdiction to hear these claims. Instead, as explained below, the Claimants resort to offering nothing more than misleading factual statements and erroneous interpretations of the law in support of their positions.

1. Measures Taken in Connection with Nova Stone’s Industrial Approval do not “Relate to” the Claimants or to Their Investment

49. The manner in which measures must “relate to” an investor or an investment of another NAFTA Party in order to be the subject of a Chapter Eleven claim has been explained in detail in Canada’s Counter-Memorial.Footnote 83  In order to demonstrate that the measures they complain of in connection with the industrial approval for the 3.9 ha quarry “relate to” them or their investment, the Claimants take liberties with the facts of this case.  For example, in their Reply they state that “Bilcon’s attempt to operate a quarry at Whites Point … was set in motion by the industrial approval of its application on April 30, 2002.” Footnote 84  (emphasis added)  They also describe “Bilcon” as the entity that prepared the blasting plan pursuant to the conditions contained in the industrial approval.Footnote 85 None of these assertions is correct.  In fact, Bilcon neither applied for nor received the industrial approval of April 30, 2002.  Nor did Bilcon prepare and file the blasting plan pursuant to the approval. Nova Stone did both.Footnote 86

50. The Claimants further argue that their execution of a partnership agreement with Nova Stone, entered into on May 2, 2002,Footnote 87 somehow means that measures taken in connection with the industrial approval issued on April 30, 2002, “relate to” them.  To the contrary, the approval was issued to only Nova Stone – not to the Claimants.  As Bob Petrie, the official who issued the approval, has already explained, “the holder of the approval from NSDEL’s perspective was always Nova Stone.  Under the NSEA,
industrial approvals – such as the one issued here – cannot be transferred, sold, leased or otherwise disposed of without the written consent of the Minister.” Footnote 88 Accordingly, the industrial approval could only belong to Nova Stone.  Nothing in the Claimants’ Reply contradicts that fact.

51. In admitting that their only interest in the industrial approval arises from a “partnership agreement,” Footnote 89  the Claimants are essentially admitting that they have no standing to bring claims concerning measures relating to that approval.  Under international law, a claimant does not have standing to bring a claim on behalf of or for losses or damages suffered by one of its partners.  Rather, its standing is limited to an ability to claim for its own share of the losses.Footnote 90 In this case, the Claimants had no share of the 3.9ha industrial approval, as it belonged to Nova Stone alone, and hence, they have no standing to pursue any claims in respect of measures relating to that industrial approval.

52. Moreover, as a factual matter, it is not apparent why a partnership agreement entered into after the issuance of the industrial approval should even be considered relevant at all. Nova Stone actually first applied for the industrial approval on February 18, 2002,Footnote 91  over two months prior to it entering into any sort of business relationship with the Claimants.  NSDEL rejected the application and so on April 23, 2002, Nova Stone − again on its own and prior to entering into the partnership agreement with the Claimants − filed a new application for the approval.Footnote 92 The industrial approval was issued one week later, on April 30, 2002,Footnote 93  still prior to Nova Stone and Bilcon entering into the partnership agreement.

53. Ultimately, it is undisputed that Nova Stone entered into a business relationship with the Claimants in order to advance the Whites Point project.  It is also undisputed that Nova Stone’s 3.9 ha quarry was to be the first step in that larger project.  But it does not follow from these facts that measures taken in connection with Nova Stone’s industrial approval for the 3.9 ha quarry “related to” either the Claimants or to their investment for the purposes of a NAFTA claim.  At best, the Claimants have shown that they were part of an “indeterminate class of investors” that could be affected by the measures. However, as the Methanex Tribunal explained,Footnote 94 this is far from sufficient to meet the threshold provided by Article 1101.  The blasting conditions, and any subsequent communications or decisions relating to those conditions, related to Nova Stone and Nova Stone only, and therefore could not and did not “relate to” the Claimants for the purposes of NAFTA.

2. Any Measures Taken in Connection with Nova Stone’s Industrial Approval Are Time-Barred

54. As Canada explained in its Counter-Memorial, Article 1116(2) of NAFTA requires an investor to challenge a measure within three years of its first acquiring actual or constructive knowledge: (1) of the measure giving rise to the breach; and (2) that it has incurred loss or damage as a result of the breach.Footnote 95 In addition, Canada described the facts that definitively show that the Claimants are time-barred from advancing claims in respect of any measures for which they had the requisite knowledge over three years prior to the June 17, 2008 commencement of the arbitration – i.e., prior to June 17, 2005.Footnote 96  In their Reply, the Claimants’ only response is once again to misapply the law and misrepresent the relevant facts.

55. First, the Claimants persist in advancing the untenable argument that measures relating to Nova Stone’s conditional approval are not time-barred due to their “ongoing and prejudicial effect on the Investment.” Footnote 97  Canada has already explained why an alleged “ongoing effect” does not toll the limitation period of Article 1116(2).Footnote 98 The Claimants’ “ongoing effect” interpretation completely ignores the ordinary meaning of the terms of Article 1116(2) which provides that the three year time period runs from the point at which the Claimants “first acquired … knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.” Footnote 99 (emphasis added)  The “effect” of a measure, which might be felt well after an investor acquires knowledge of an alleged breach and resultant loss or damage, is irrelevant to the issue of whether a claim is time- barred under Article 1116(2).

56. Moreover, the Claimants once again resort to re-inventing the facts of this case to make out their argument.  In an attempt to demonstrate the measures relating to Nova Stone’s 3.9ha industrial approval “continued” up to the point at which the federal and Nova Scotia governments decided to reject the Whites Point project, they argue that the blasting conditions “allowed the DFO to continue to refuse permission to Bilcon to undergo test blasting throughout the remainder of the Environmental Assessment,” “prevented Bilcon from being able to begin accumulating the necessary data,” and that “the lack of test blasting was relied upon by the Joint Review Panel as a reason to recommend against approval.” Footnote 100These assertions are not only misleading, they are wrong.

57. The blasting conditions in Nova Stone’s industrial approval had nothing to do with whether or not test blasting was conducted at the site through to the end of the EA in 2007. In fact, as a result of Nova Stone’s withdrawal from the project, the industrial approval was invalidated on May 1, 2004.  Accordingly, the blasting conditions ceased to exist more than three years before the end of the EA in 2007.  There were simply no measures pertaining to the industrial approval that occurred after May 1, 2004, let alone after June 17, 2005.Footnote 101

58. Nor could these measures have had the continuing “effect” suggested by the Claimants.  For example, they had no impact on Bilcon’s ability to “accumulate the necessary data” for its EA. Irrespective of measures taken in connection with Nova Stone’s industrial approval, Bilcon had three years to make arrangements for test blasting on the project site in order to gather any data that it thought might be necessary for the EA.  It chose not to.  Further, the “lack of test blasting” was not relied upon by the JRP as a reason to recommend against approval of the Whites Point project − the project’s inconsistency with community core values was the reason underlying the Panel’s recommendation.Footnote 102

59. Second, the Claimants attempt to avoid this jurisdictional bar by misrepresenting the requirements for the application of Article 1116(2).  In particular, they claim that Article 1116(2) requires “concrete knowledge of actual loss.” Footnote 103 (emphasis added)  This purported interpretation ignores the ordinary meaning of the terms in Article 1116(2). Those terms require nothing more than knowledge of loss or damage.  The Claimants cite no authority in support of their interpretation. In fact, all the authority is to the contrary. The overwhelmingly consistent approach of other NAFTA tribunals has been that concrete knowledge of the actual amount of loss or damage is not a pre-requisite to the running of the time period under Article 1116(2).Footnote 104

60. Moreover, even if the Claimants were correct as to the interpretation of Article 1116(2), it is clear that they did have concrete knowledge of actual damages arising from this alleged breach by no later than 2003.  In 2003, Mr. Buxton, who was the representative of both Nova Stone and Global Quarry Products (“GQP”), claimed that he was aware of actual losses which he alleged were connected with the inability to begin quarrying at Whites Point. In particular, Mr. Buxton wrote to NSDEL on June 25, 2003, advising that there “are serious financial consequences which arise from our inability to operate in accordance with the Permit,” that the “Company has suffered significant costs,” and that the “[f]ailure to act [i.e., to allow Nova Stone to blast] will cause severe economic hardship to the Company and the project.” Footnote 105 Moreover, contrary to the Claimants suggestion that the alleged “financial consequences” noted by Mr. Buxton in his letter were not known to Nova Stone at the time in actual quantifiable terms, two weeks earlier, on June 10, 2003, Mr. Buxton complained to the Agency’s Derek McDonald that Nova Stone “Now had an opportunity to bid on Hwy 217 upgrading worth XXXX, but unable to because blasting plan not approved.” Footnote 106 In short, the evidence discloses that the Claimants, through their representative, Mr. Buxton, had actual knowledge of the alleged NAFTA breaches, and of the alleged losses suffered, at least five years before submitting this claim to arbitration.  Accordingly, the Tribunal should dismiss the Claimants’ claims relating to Nova Stone’s industrial approval.

B. The Tribunal Lacks Jurisdiction Over the Claimants’ Claims Regarding DFO Determinations on the EA of the Whites Point Project as These Claims are Time-Barred

61. As Canada explained in its Counter-Memorial, the Claimants’ allegations regarding DFO’s determinations on the EA of the Whites Point project − including DFO’s determinations that the quarry should be included in the scope of project for the purposes of the EA, that the Whites Point project was subject to a comprehensive study, and that the EA be referred to a review panel − are all also time-barred under Article 1116(2).Footnote 107

62. While the Claimants’ Reply submissions regarding each of these DFO determinations are difficult to decipher, it appears the Claimants argue that the continuing effect of each of these measures tolled the running of the limitation period under Article 1116(2).Footnote 108 As Canada has explained both above and in its Counter-Memorial,Footnote 109 the alleged “ongoing effects” of a measure do not render it a continuing measure under Article 1116(2).  Each one of the DFO determinations described above were distinct measures that were clearly made known to the Claimants.  Further, to the extent that they entailed additional cost or expense as alleged by the Claimants,Footnote 110 the Claimants knew or should have known of those costs or expenses well before June 17, 2005.Footnote 111 Any alleged “effects” of these measures are irrelevant to the analysis to be conducted under Article 1116(2). As such the Claimants’ Reply fails to address the jurisdictional barrier facing their allegations regarding DFO’s determinations on the EA process.

C.  The Tribunal Does not Have Jurisdiction to Consider the Alleged Acts of the Whites Point JRP

63. In its Counter-Memorial, Canada explained that the jurisdiction of this Tribunal is limited to consideration of measures that are attributable to Canada at international law.Footnote 112 In their Memorial, the Claimants alleged that all of the acts of the JRP are attributable to Canada because it is an organ of Canada, the JRP members were agents of Canada, and the JRP exercised delegated governmental authority.  In response, Canada clearly laid out the tests at international law, as explained by the International Court of Justice most recently in the Genocide Convention case, for attributing to States the conduct of both de jure and de facto organs, as well as the test for attributing to States the acts of private parties exercising delegated governmental authority.  On the basis of these tests, applied appropriately, Canada demonstrated how the acts of the JRP that the Claimants challenge cannot be attributed to Canada.Footnote 113

64. In their Reply, the Claimants now group their arguments under two headings: (1) “Canada’s Internal Law Recognizes the Joint Review Panel as an Organ of Canada” and (2) “Canada Acknowledged and Adopted the Joint Review Panel Report.” Despite this superficial organization, what the Claimants have actually presented in their Reply is an unhelpful and confused jumble of baseless allegations and unsupported assertions haphazardly applying various theories of state responsibility. For example, under their first point, in addition to arguing that the JRP is a de jure organ of Canada,Footnote 114  the Claimants also argue, in the alternative, that the JRP is a private party exercising delegated governmental authority,Footnote 115 and acting under the instruction or effective control of Canada.Footnote 116 Under their second heading, the Claimants do not even bother to lay out the legal test for attribution on these grounds, and even more confusingly, include a number
of paragraphs that actually do not seem to relate to the question of attribution argument at all.Footnote 117

  • 65. While the Claimants’ unstructured and convoluted approach makes it difficult for Canada to respond, it also evidences the lack of a solid legal basis for any of the Claimants’ claims. Indeed, nothing in the Claimants’ Reply offers anything sufficient to meet their burden to establish that the complained of acts of the JRP are in fact measures adopted or maintained by Canada. This does not mean of course that Canada is not responsible for its own acts, or the acts of Nova Scotia during the EA of the Whites Point Project. For example, there is no dispute between the parties that Canada is responsible at international law for both its own and Nova Scotia’s decision to ultimately accept the JRP’s recommendation and reject the project on the basis of its inconsistency with community core values – though as is shown below, there was nothing wrongful about those decisions.
1. The JRP Is Not a De Jure Organ of Canada

66. In their Reply, the Claimants offer nothing new to respond to the explanations Canada offered as to why the JRP is not a de jure organ of the government.  Instead, they simply reprise the same argument from their Memorial, claiming that the mere fact that a JRP’s decisions are subject to judicial review in Canadian courts means that Canadian law recognizes a JRP as an organ of the government.  As Canada explained in its Counter-Memorial, this is not true as a matter of Canadian law.Footnote 118 In none of the cases cited by the Claimants does a court conclude that a JRP is an organ of government.  This is unsurprising as the issue was not before any of these courts.  Contrary to what the Claimants allege, the acts of non-organs can be subject to judicial review in Canada.

67. The Supreme Court made this clear in McKinney v. University of Guelph, explaining that the fact that an entity is a statutory body performing a public service and thus subject to judicial review “does not in itself make [it] part of government..."Footnote 119  In their Reply, the Claimants imply that this is no longer good law in Canada and that the Supreme Court reconsidered this decision in Godbout v. Longueuil (City).Footnote 120  This is simply wrong. In fact, a mere four paragraphs after the quotation that the Claimants have extracted and inserted in their Reply, the Supreme Court expressly reaffirmed its decision in McKinney on this point quoting the exact paragraph that Canada quoted in its Counter- Memorial, and itself adding emphasis on the text quoted above.Footnote 121   Accordingly, the Claimants have failed to meet their burden of showing that the JRP is a de jure organ of Canada. If anything, the authorities that they cite actually support Canada’s position in this matter.

2. The JRP Was Not Exercising Governmental Authority With Respect to Any of the Alleged Breaches

68. In their Reply, the Claimants again fail to offer an explanation as to how any of the complained of acts of the JRP were carried out in the exercise of the limited governmental authority delegated to it.Footnote 122 There is no dispute between the parties that the JRP performed and was mandated to perform a public service for Canada and Nova Scotia in gathering information during the EA and coming up with its recommendations for government decision makers to consider. Nor is there a dispute that this was its only function and purpose.  However, as Canada explained in its Counter-Memorial, none of these facts are relevant.  The sole issue is whether any of the complained of acts of the JRP were in the exercise of delegated governmental authority.Footnote 123 As Canada explained in its Counter-Memorial, they were not.Footnote 124

69. The decision of the Tribunal in the Jan de Nul v. Egypt arbitration clearly supports Canada’s position in this regard.  In its Reply, the Claimants suggest that Canada has misrepresented the Jan de Nul decision.  This is simply not true. The Tribunal in Jan de Nul considered at length the issue of whether the acts of the Suez Canal Authority could be attributed to Egypt, and it decided that they could not be on exactly the grounds Canada has described.Footnote 125

70. In fact, it appears that the Claimants are confused about some basic facts in Jan de Nul.  The Claimants refer to a paragraph in the decision that describes a separate entity than the one referred to in the paragraphs Canada cites.  While not clear from the particular paragraph the Claimants reference, it appears from earlier in the decision that this “Second Panel of Experts” was expressly delegated the authority by the court “to determine the damage elements, assessment of same and causes thereof, if any, incurred by the plaintiff companies as a result of the contract works.” Footnote 126  (emphasis added). If the JRP in this case had been delegated the authority to “determine” issues that would otherwise fall to government decision makers, there would be little question as to Canada’s responsibility for its acts in making such a determination.  However, it was not so empowered. All it could do was gather information and make recommendations.  Such activities cannot be considered an “exercise” of government authority because they simply do not entail a power over some third party. Accordingly, the decision in Jan de Nul is in fact the perfect example of Canada’s position – the acts of a private entity are not attributable to a State just because it provides a public service. Rather, they are attributable only when that entity exercises its delegated governmental authority.

71. In attempting to escape from these requirements of international law, the Claimants refer to domestic Canadian law and suggest that Canadian courts applying domestic Canadian law would find the JRP to have been exercising a governmental function, and thus subject to laws that typically only apply to government bodies.Footnote 127  First, this point is irrelevant. The question here is whether, as a matter of international law, which the Tribunal is bound to apply, the JRP could be deemed to be exercising delegated governmental authority.

72. Second, even if Canadian law were considered, the very case cited by the Claimants to support their arguments, Godbout v. Longueuil, suggests that relevant factors to consider in assessing whether an entity is performing a governmental function include whether the entity is “appointed and removable at pleasure” by the government and whether the “government may at all times by law direct its operation.” Footnote 128  While the JRP was appointed by the governments of Canada and Nova Scotia, its members were not removable at the governments’ pleasure and nor were the Governments of Canada and Nova Scotia able to “direct its operations.” Footnote 129 As such, the JRP would not meet the test under Canadian law outlined in the very cases the Claimants cite.

3. The JRP Was Not Acting Under the Instructions or Effective Control of Canada When It Committed the Complained of Acts

73. For the first time in their Reply, the Claimants allege that the acts of the JRP are attributable to Canada because it was acting under Canada’s instructions. The Claimants do not describe what the test is at international law for such a determination. Moreover, they make no efforts to even apply any test whatsoever. This is clearly insufficient and their arguments should be dismissed on this ground alone.

74. Even considered on its merits, this argument is baseless.  Article 8 of the International Law Commission’s Articles on State Responsibility provides:

The conduct of a person or group of persons shall be considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct.Footnote 130

75. In the Genocide Convention case, the ICJ explained that in order to meet this standard, it would have to be shown that the person or group of persons “acted in accordance with that State’s instructions or under its ‘effective control.’ It must however be shown that this ‘effective control’ was exercised, or that the State’s instructions were given, in respect of each operation in which the alleged violations occurred, not generally in respect of the overall actions taken by the persons or groups of persons having committed the violations.” Footnote 131 (emphasis added)

76. The Claimants have offered no evidence – and none exists – which would prove that Canada or Nova Scotia instructed the JRP to engage in each of the decisions which is alleged to be a violation of NAFTA.  While the JRP operated within the general mandate of its Terms of Reference (which could be considered general instructions), the JRP was an autonomous body.  It organized its own internal procedures, determined how it would conduct the hearing, and decided itself on what it believed to be the appropriate approach to topics such as a cumulative effects analysis, the precautionary principle, adaptive management, mitigation measures, and information requests of the Claimants.  Neither Canada nor Nova Scotia had any role in instructing the JRP with respect to any of these complained of acts.  Accordingly, despite the Claimants’ assertion to the contrary, as a matter of international law, the complained of acts of the JRP are not attributable to Canada on these grounds.

4. Canada Has Not Acknowledged or Adopted Any of the Complained of Acts as its Own

77. Also for the first time in their Reply, the Claimants allege that the complained of acts of the JRP are attributable to Canada under Article 11 of the ILC’s Articles on State Responsibility because Canada, though apparently not Nova Scotia, accepted the recommendations in its report.  Once again, however, the Claimants fail to even describe the applicable legal test for attribution under this rule.  Simply asserting a legal conclusion is insufficient to meet their burden of proof, and on this ground alone, the Claimant’s arguments should be dismissed.

78. Even if the allegation is examined, it becomes clear that it has no legal merit. Article 11 of the Articles on State Responsibility provides:

Conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own.Footnote 132

79. As the official commentary to Article 11 explains, international law requires a “clear and unequivocal” acknowledgement or adoption of the “conduct in question” in order for this rule to apply.Footnote 133  It further clarifies that the “language of ‘adoption’ carries with it the idea that the conduct is acknowledged by the State as, in effect, its own conduct.” Footnote 134

80. On December 17, 2007 Canada issued its response to the report of the JRP, in which it concluded, after having “carefully considered” the report, that it “accepted” and “supported” the ultimate recommendations made by the JRP. In this response, there is no acknowledgement or adoption at all, let alone a clear and unequivocal one, of the conduct that the Claimants complain about regarding the JRP hearing process, or its particular decisions as to the approach that it would adopt on questions such as cumulative effects, precautionary principle, adaptive management, mitigation measures and information requests.  Indeed, there is no evidence whatsoever that it acknowledged this particular conduct “as its own.”  Merely accepting a recommendation is not enough, at international law, for all of the acts of the entity that made that recommendation to be attributed to the State.  Accordingly, the complained acts of the JRP cannot be considered acts of Canada under this rule of attribution.

D.  The Tribunal Does Not Have Jurisdiction to Consider Measures not Capable of Causing Damage

81. In its Counter-Memorial, Canada explained that the Federal Government’s decision to accept the recommendation of the JRP was rendered moot by the decision of Nova Scotia to do the same a month earlier.  Accordingly, the Federal Government “decision” was actually incapable of causing loss or damage to the Claimants; and thus, pursuant to Article 1116(2), this Tribunal does not have jurisdiction to hear claims relating to it.Footnote 135

82. In their Reply, the Claimants allege that “Nova Scotia’s acceptance of the JRP’s first recommendation to reject Bilcon’s application was not dispositive of the application.”Footnote 136 However, they cite no evidence to support this incredible assertion. There can be no question in this case that the Claimants were interested only in constructing a quarry and a marine terminal together.Footnote 137 As Mr. Buxton told the Community Liaison Committee in January 2003, “unless you can ship it [the rock] no one will produce it.”Footnote 138 There can also be no serious question that in order to operate the quarry at Whites Point a provincial permit was required.  On November 20, 2007, nearly a month before the federal Cabinet (the federal decision-maker), met to consider the JRP’s Report, Nova Scotia publicly announced its decision to accept the JRP’s recommendation that the project not be approved, which meant no provincial permit would be issued.Footnote 139 The provincial rejection of the quarry did more than simply “hurt the investment”Footnote 140 – it definitively stopped the project from proceeding.  In short: no provincial permit, no quarry; no quarry, no project.

83. This is not to say that the Federal Government did not have its own decision to make.  It did.  However, as Canada explained in its Counter-Memorial, and as Mr. Smith has explained in his first Expert Report, given that the project had already been definitively stopped over a month earlier, the federal decision as to whether or not to issue any requested authorizations was academic.Footnote 141

84. The Claimants’ only response to this conclusion is to rely on spectacularly speculative theories imagined by their two experts based on a distorted understanding of the facts.  First, both Mr. Estrin and Mr. Rankin speculate that the fact that Nova Scotia and federal officials were communicating about their respective decisions meant that they were aligning them.  There is no evidence of this, and in his second Affidavit, Chris Daly makes clear that “Nova Scotia was not looking to align its decision with that of the Federal Government.”Footnote 142

85. Second, both Mr. Estrin and Mr. Rankin speculate further that Nova Scotia would not have rejected the quarry unless and until the Federal Government also decided to accept the JRP’s recommendation.Footnote 143 Again, there is absolutely no support in the record upon which such speculation could be based.  In fact, as pointed out above, Nova Scotia made and announced its decision before the federal Cabinet even met to consider the Federal Government response.  As Mr. Daly explains in his Second Affidavit:

Mr. Estrin’s speculation misconstrues the Nova Scotia Minister’s responsibilities in responding to a report of a JRP, which are to consider the recommendations in the report and to either approve or reject the undertaking in issue, in accordance with our governing legislation.Footnote 144 This is a Nova Scotia only decision, one distinct from and independent of the decision to be made by the federal government under its own legislation.Footnote 145

86. In short, the Claimants cite no evidence to support their bald assertion that the Federal Government decision to refuse to issue the authorizations and approvals requested by the Claimants “caused additional damage to Bilcon.”Footnote 146 No such evidence exists. Accordingly, as it was not a measure even capable of causing damages to the Claimants, this Tribunal has no jurisdiction to hear claims that the decision of the Federal Government in December 2007 was a violation of NAFTA.

E.  Conclusions

87. The Claimants have made numerous claims in respect of measures that are simply outside the jurisdiction of this Tribunal and they have failed to discharge their burden of proving anything to the contrary.  For the reasons Canada has explained above, the Tribunal should recognize the limitations over its jurisdiction and refuse to hear each and every one of these claims.

IV. Canada has not Violated its NAFTA Obligations

A.  The Claimants Have Failed to Demonstrate a Violation of Article 1105(1) – Minimum Standard of Treatment

88.  In its Counter-Memorial, Canada identified the numerous ways in which the Claimants failed to discharge their burden of proving that Canada has breached Article 1105(1). In their Reply, the Claimants largely gloss over Canada’s response and simply re-package the arguments already presented in their Memorial. In so doing, they continue to misrepresent the applicable standard of treatment under Article 1105(1).

89. In particular, the Claimants continue to ignore the express wording of Article 1105(1) and the binding nature of the Free Trade Commission’s 2001 Note of Interpretation (“FTC Note”). They also conflate the role of this Tribunal in applying the customary international law minimum standard of aliens with the role of a domestic court in applying the domestic standard of judicial review under Canadian administrative law.Footnote 147  NAFTA Chapter Eleven does not duplicate or internationalize domestic Canadian law and procedure, and NAFTA tribunals are not to assume the role of domestic courts in reviewing administrative decisions.Footnote 148  The evidence on the record shows that Canada acted consistently with its obligations under Article 1105(1).

1. NAFTA Article 1105(1) Requires Canada to Accord the Customary International Law Minimum Standard of Treatment of Aliens

90. As Canada explained in its Counter-Memorial, the FTC Note establishes that Article 1105(1) requires no more and no less than the customary international law minimum standard of treatment of aliens.Footnote 149 In the most recent Chapter Eleven award, Mobil v. Canada, the Tribunal explained:

In light of the FTC’s interpretation and the binding form of that interpretation on this Tribunal by virtue of Article 1131(2), the Tribunal joins all previous NAFTA tribunals in the view that Article 1105 requires no more, nor less, than the minimum standard of treatment demanded by customary international law.Footnote 150

91. The Claimants suggest in their Reply that this Tribunal should be the first tribunal to ignore the content of the FTC Note and its binding effect on the basis that: (1) pursuant to the customary international law of treaty interpretation, the FTC Note is only one source of interpretation for Article 1105(1);Footnote 151 and (2) the FTC Note is so at odds with the plain meaning of Article 1105(1) that it is not a bona fide interpretation but rather an illegal amendment of NAFTA that should be given no effect by the Tribunal.Footnote 152 In the alternative, the Claimants suggest that even if it was binding, the FTC Note itself requires that it be treated as only one source of interpretation.Footnote 153 As Canada explains below, none of their arguments withstand scrutiny.

a) The FTC Note is Binding and Clear

92. The Claimants assert that an interpretation of the FTC rendered under Article 1131(2) is merely “one source of interpretation that a treaty interpreter is required to take into account”.Footnote 154  In essence, their position is that Article 1131(2) merely restates Article 31 of the Vienna Convention, which directs a treaty interpreter to take “into account, together with the context: any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions.”

93. This argument ignores the express wording of Article 1131(2) which provides that an “interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section.” (emphasis added)  Contrary to the Claimants’ suggestion, it does not say that such an interpretation shall only be “taken into account.”  If the NAFTA Parties had simply wanted to restate the rule in Article 31 of the Vienna Convention, they would have done so. They did not.  In short, a binding Note of Interpretation leaves no space for the application of customary international law rules of treaty interpretation. If it were permissible for NAFTA tribunals to take into account other sources of interpretation and to interpret Article 1105(1) in a way other than that set out in the FTC Note, then the Note would not, in fact, be binding at all.

b) The FTC Note Must be Given Effect by this Tribunal

94. The Claimants further argue that even if, in general, an interpretation by the FTC is binding, this particular FTC Note is not binding because it is so at odds with the plain meaning of Article 1105(1).Footnote 155 They assert that this Tribunal should find that the FTC Note is not an interpretation at all, but rather an amendment that is outside the FTC’s mandate.Footnote 156 On this basis, they claim that the FTC Note “has no legal force or effect.”Footnote 157 Their argument must be rejected for two reasons.

95. First, given the clear wording of Article 1131(2), it is not this Tribunal’s place to question the validity of the FTC Note.  The ADF Tribunal was faced with a similar objection, and summarily refused to consider it, explaining that it lacked jurisdiction to make a ruling on the validity of the FTC Note. It explained:

Nothing in NAFTA suggests that a Chapter 11 tribunal may determine for itself whether a document submitted to it as an interpretation by the Parties acting through the FTC is in fact an ‘amendment’ which presumably may be disregarded until ratified by all the Parties under their respective internal law.Footnote 158

96. Similarly, the Methanex Tribunal considered the FTC Note to be “entirely legal and binding on a tribunal seized with a Chapter Eleven case.”Footnote 159Indeed, since its issuance over a decade ago, not one tribunal under Chapter Eleven has found that it was not bound to apply the FTC Note when interpreting Article 1105(1).

97. Even the scholars that the Claimants cite in support of their position acknowledge that the FTC Note definitively establishes the meaning of Article 1105(1).  For instance, while they cite to Professor Schreuer’s work,Footnote 160 they fail to note his observation that in light of the Note “it may now be regarded as established that, in the context of Article 1105(1) NAFTA, the concept of fair and equitable treatment is equivalent to the minimum standard of treatment under customary international law.”Footnote 161 Similarly, while the Claimants refer to a 1999 UNCTAD Report in support of their positionFootnote 162 – a report written two years before the FTC Note was issued – when UNCITRAL revisited the issue in 2012, it stated that “the NAFTA Free Trade Commission, composed of representatives of the three NAFTA countries, issued in 2001 the Notes of Interpretation, which rejected any notion that NAFTA Article 1105 contained any elements that were ‘additive’ to the international minimum standard.”Footnote 163

98. Second, it is clear that the FTC Note is, in fact, an interpretation, which clarifies the meaning of Article 1105(1) that was always intended by the NAFTA Parties.  This is evident from the statements of interpretation made by all of the NAFTA Parties in the years before the FTC Note was issued.  For example, in the years preceding issuance of the Note, each of the three NAFTA Parties filed non-disputing party submissions emphasizing that Article 1105(1) was intended to prescribe the customary international law minimum standard of treatment of aliens.Footnote 164

99. Once again, the Claimants seek to buttress their arguments by referring to scholarly works, but they do so in a way that misrepresents the true conclusions reached by those writers. For example, they cite to Professor Schreuer’s view that it is “inherently implausible” that a treaty would use the words “fair and equitable treatment” if the intention were to refer to the minimum standard of treatment in customary international law.Footnote 165 What they fail to acknowledge, however, is that several pages later Professor Schreuer engages in an extensive discussion of why the specific features of the text of Article 1105(1) “suggest that under this provision, fair and equitable treatment is part of international law, specifically of its rules on the minimum standard of treatment.”Footnote 166

100. Similarly, they claim that Professors Dolzer and Stevens “confirm the implausibility of the drafters of the NAFTA intending to confine the scope of ‘fair and equitable treatment’ standard only to customary international law.”Footnote 167 And yet, when the passage the Claimants cite is read in its entirety it is clear that Professors Dolzer and Stevens hold the exact opposite view to that held by the Claimants. Specifically, Professors Dolzer and Stevens conclude the particular passage partially quoted by the Claimants by saying “[h]owever, in the North American Free Trade Agreement (NAFTA), the fair and equitable treatment standard is explicitly subsumed under the minimum standard of customary international law.”Footnote 168

101. Accordingly, the Claimants have not, and cannot, provide support for their claim that the FTC Note should not be given effect.  The Note is binding, and makes it clear that Article 1105(1) requires no more than the customary international law minimum standard of treatment.

c) The FTC Note Does Not Require Article 1105(1) to be Interpreted With Other Sources of International Law

102. The Claimants also argue that “[e]ven if the Note is valid and binding, and the Tribunal is required only to interpret NAFTA Article 1105(1) in accordance with customary international law, it may nonetheless do so with reference to the full array of sources of international law”Footnote 169  because it is “customary” for international legal disputes to be resolved in accordance with all the rules and principles of international law.Footnote 170

103. This circular argument produces an absurd result.  If correct, Article 1131(2) would require the Tribunal to apply the Note and not the customary international law rules of interpretation, only to then have the Note require the Tribunal to apply the customary international law rules of interpretation.  There is no reason to think that the NAFTA Parties intended such an irrational result. If the NAFTA Parties had wished tribunals to apply the customary international law rules of interpretation to Article 1105, there would have been no need to issue the FTC Note at all.

104. Second, contrary to what the Claimants assert, the FTC Note itself does not prescribe that Article 1105 must be interpreted in accordance with customary international law. The Note clarifies that the standard of treatment guaranteed under
1105(1) is the customary international law minimum standard of treatment of aliens. This substantive standard does not require an arbitral tribunal to interpret language in a treaty using all of the sources of international law. It is not, as the Claimants suggest, an interpretive tool; rather, pursuant to the Note itself, it represents the substantive content contained in Article 1105(1).

105. Third, the Claimants appear to misconstrue the colloquial term “customary” with the legal term “customary international law.”Footnote 171The simple fact that tribunals usually or typically resolve disputes based on a reference to all sources of law, does not mean that there is a customary international law rule requiring them to do so. The Claimants have done nothing to even attempt to prove that this purportedly typical approach to dispute resolution is in fact a rule of customary international law.

2. The Claimants Bear the Burden of Proving the Rules of the Customary International Law Minimum Standard of Treatment of Aliens they Allege Have been Breached

106. As Canada’s Counter-Memorial explains, it is a well-established principle of international law that the party alleging the existence of a rule of customary international law bears the burden of proving it.Footnote 172 In this claim, this principle requires the Claimants to prove that customary international law has evolved to include the elements they claim are protected.  This fundamental principle is not simply “a matter of interpretation”Footnote 173but rather a substantive requirement for the Claimants to prove their claim.

107. In their Reply, the Claimants seek to evade this burden by arguing that Article 1105(1) is a treaty standard, not a standard of customary international law.  In this context, they suggest, the burden is shifted on to the Tribunal or Canada.Footnote 174 This is incorrect. As the party alleging the breach, the Claimants bear the burden of proving why the conduct in question breaches the treaty obligation contained in Article 1105(1).  To discharge this burden requires them to prove the content of that treaty obligation, which necessarily entails a determination of the content of customary international law.  This is not merely a question of law to be decided by the Tribunal.Footnote 175 As the Cargill Tribunal observed: “ascertainment of the content of custom involves not only questions of law but primarily a question of fact, where custom is found in the practice of States regarded as being legally required by them.”Footnote 176

3. The Threshold for Establishing a Breach of Article 1105(1) is High

108. Canada explained at length in its Counter-Memorial that the threshold for a breach of the customary international law minimum standard of treatment under Article
1105(1) is high.Footnote 177  Consistent with other NAFTA awards, the award in Mobil reaffirmed this principle.  Specifically, the Mobil Tribunal concluded that Article 1105(1) “protects against egregious behavior” such as “conduct attributable to a NAFTA Party and harmful to a claimant that is arbitrary, grossly unfair, unjust or idiosyncratic, or is discriminatory and exposes a claimant to sectional or racial prejudice, or involves a lack of due process leading to an outcome which offends judicial propriety.”Footnote 178

109. In their Reply, the Claimants persist in claiming that the threshold for a breach of Article 1105(1) is lower than claimed by Canada. Surprisingly, they allege that the Mobil tribunal “acknowledged that the gravity or severity of the breach need not be ‘egregious’ or ‘shocking’.”Footnote 179  As shown above, this is simply false. The Mobil tribunal concluded that “egregious” behaviour was required and the Claimants fail to point to a single NAFTA award since the FTC Note that has not endorsed this threshold.

110. Instead, the Claimants rely solely on arbitral awards interpreting treaty standards that are not related to the customary international law minimum standard of treatment.Footnote 180 fair and equitable treatment standard.Footnote 181  In so arguing, they urge the Tribunal to reject Canada’s “formalistic view”Footnote 182 requiring proof of customary international law by proving the existence of state practice and opinio juris and to instead look to these arbitral awards.

111. As Canada explained in its Counter-Memorial,Footnote 183 and as recognized by both scholarsFootnote 184 and tribunals,Footnote 185 while investment arbitration awards may contain valuable analysis of State practice and opinio juris, they are not a substitute for actual evidence of State practice and opinio juris. The cases cited by the Claimants do not hold otherwise. For example, in the Gulf of Maine Case, the ICJ relied on one of its previous decisions not because it created customary international law, but because the decision contained an analysis of state practice and opinio juris in relation to maritime boundaries.Footnote 186

112. Moreover, as Canada explained in its Counter-Memorial, non-NAFTA arbitral awards interpreting autonomous treaty clauses guaranteeing fair and equitable treatment are not of any persuasive value here.Footnote 187>  They apply a different treaty standard than the one guaranteed by NAFTA.  In their Reply, the Claimants attempt to argue there is no material difference between the customary international law minimum standard of treatment in Article 1105(1) and the standard guaranteed by BITs containing autonomous fair and equitable treatment clauses.Footnote 188  However, they fail to cite to a single award interpreting a treaty with a customary international law minimum standard of treatment provision that supports their conclusion.  In fact, NAFTA tribunals interpreting Article 1105(1) have rejected the relevance of cases interpreting the autonomous fair and equitable treatment standard.  As the Glamis Tribunal explained “arbitral decisions that apply an autonomous standard provide no guidance inasmuch as the entire method of reasoning does not bear on an inquiry into custom.”Footnote 189

113. None of the awards cited by the Claimants undertake the requisite examination of state practice and opinio juris to establish that the customary international law minimum standard of treatment of aliens has the same substantive content as the autonomous fair and equitable treatment standard. In fact, to the extent that they address the relationship at all,Footnote 190 often they simply assert that the two standards are the same with no real analysis.Footnote 191  For example, the CMS Gas Tribunal summarily stated that in the particular context in front of it, the customary international law minimum standard of treatment was the same as the standard of fair and equitable. However, the Tribunal limited its decision to the facts in front of it which involved specific legal and contractual commitments. It explained that “[w]hile the choice between requiring a higher treaty standard and that of equating it with the international minimum standard might have relevance in the context of some disputes, the Tribunal is not persuaded that it is relevant in this case.”Footnote 192

114. Further, the Claimants ignore the fact that in other awards interpreting an autonomous fair and equitable standard, arbitral tribunals have concluded this standard is not the same as the standard contained in Article 1105(1).  For example, the Claimants mistakenly rely on the award rendered by the Saluka Tribunal to attempt to establish a standard of mere “reasonableness.”Footnote 193 Yet, the Saluka Tribunal specifically distinguished the treaty clause it had to apply with the standard guaranteed under NAFTA:

Whichever the difference between the customary and the treaty standards may be, this Tribunal has to limit itself to the interpretation of the “fair and equitable treatment” standard as embodied in Article 3.1 of the Treaty. That Article omits any express reference to the customary minimum standard. The interpretation of Article 3.1 does not therefore share the difficulties that may arise under treaties (such as the NAFTA) whichexpressly tie the “fair and equitable treatment” standard to the customaryminimum standard. Avoidance of these difficulties may even be regarded as the very purpose of the lack of a reference to an international standard in the Treaty. This clearly points to the autonomous character of a “fair and equitable treatment” standard such as the one laid down in Article 3.1 of the Treaty.Footnote 194(references omitted and emphasis added).

115. Similarly, in the MTD Equity award, a decision on which the Claimants also rely,Footnote 195  the Tribunal noted “that there is no reference to customary international law in the BIT in relation to fair and equitable treatment.” Footnote 196

116. In sum, the Claimants have failed to call into question that the threshold for a breach of the customary international law minimum standard of treatment under Article 1105(1) is high.  And as Canada shows below, the evidence in this case establishes that none of the treatment of which the Claimants complain rises to this threshold.

4. The Claimants Have Still not Established that Any of the Measures they Complain of Rise to the Level Required to Breach Article 1105(1)

117. The Claimants allege that a number of measures of the governments of Canada and Nova Scotia taken throughout the Whites Point EA violated Article 1105(1).  They also continue to assert that certain acts of the Whites Point JRP breached Canada’s Article 1105 obligation.  As Canada has shown in its Counter-Memorial, and shows again below, none of the decisions that the Claimants complain of in the Whites Point EA breached the minimum standard of treatment obligation under Article 1105(1).

118. The disorganization of the Claimants’ Reply, and the fact that they have merely re-packaged a number of their complaints against measures already challenged in their Memorial, make it difficult to respond to their allegations.  For example, the Claimants argue that Canada violated Article 1105(1) as a result of: (a) measures taken by DFO and NSDEL prior to the JRP process;Footnote 197 (b) the acts of the JRP prior to the issuance of its report;Footnote 198 (c) the approach taken by the JRP in preparing its report;Footnote 199 and, (d) the government decisions in responding to the JRP’s report.Footnote 200 They also make overarching allegations of lack of full transparency,Footnote 201  abuse of process,Footnote 202arbitrariness and discrimination,Footnote 203 and delay.Footnote 204  Given the overlap in many of these claims, Canada responds to all of them in the context of its response to the treatment the Claimants complain of in categories (a) through (d) above.  Canada then responds to the Claimants’ claims that Canada failed to provide them full protection and security and a stable legal environment,Footnote 205 and denied the Claimants’ legitimate expectations.Footnote 206

119. Each and every one of the measures in issue was rational in light of the facts and legitimate in light of applicable law and policy.  None of them were wrongful, arbitrary or unfair, or of the shocking nature required for a breach of Article 1105.

a) The Measures Taken by DFO and NSDEL Prior to the JRP Process Did Not Breach Article 1105(1)

120. While the Claimants advance a multitude of complaints over DFO and NSDEL decisions made prior to the JRP process in their Reply, they generally appear to take the position that Canada’s obligations under Article 1105(1) were breached as a result of: (1) the blasting conditions and setback distances to which Nova Stone’s proposed blasting activity was subjected; (2) DFO’s decision not to discuss mitigation measures with Nova Stone on its 3.9 ha quarry in the form of revised setback distances; (3) DFO’s inclusion of the Whites Point quarry in the scope of project for the purposes of the Whites Point EA; and (4) the manner in which the Whites Point project was referred to a review panel.

121. Canada has already explained in its Counter-Memorial why most of these decisions did not violate Article 1105(1).  However, to the extent that the Claimants have advanced new arguments in their Reply, they are addressed below.

(1)  The Blasting Conditions and Setback Distances to Which Nova Stone’s Proposed Blasting Activity was Subjected Did Not Breach Article 1105(1)

122. The Claimants allege that DFO “brought itself into the process”Footnote 207  of NSDEL’s review of Nova Stone’s proposed quarrying activity on the Whites Point project site, and somehow “imposed blasting conditions” on Nova Stone “that it had no authority to impose.”Footnote 208 As explained in Canada’s Counter-Memorial, the record does not bear out the Claimants’ allegations.Footnote 209 As Lawrence Smith explains, the fact that Nova Scotia consulted DFO in issuing the industrial approval was “a constructive arrangement” that is “the antithesis of obstructionism.”Footnote 210

123. Moreover, as Mr. Petrie has explained in his second Affidavit, DFO only became involved in the review at his request, as a part of his “due diligence” to make sure that he “understood and considered all of the potential impacts of the proposed activities before making a decision on the requested industrial approval.”Footnote 211 Mr. Petrie adds that under the circumstances, he decided that inclusion of the blasting conditions in Nova Stone’s conditional approval “was the only responsible course I could take.”Footnote 212 The exercise of “due diligence” and the taking of “responsible decisions” by the authority empowered to issue the required approval cannot possibly result in a violation of Article 1105(1).

124. Nor did the blasting conditions or setbacks, relate to “spurious aquatic issues” as alleged by the Claimants.Footnote 213 To the contrary, they were grounded in concerns expressed by officials responsible for reviewing and evaluating Nova Stone’s proposed blasting activity.  Bob Petrie has explained these concerns in his first and second Affidavits.Footnote 214 DFO scientists also expressed concerns over the potential impact of the blasting activity on marine mammals from the very outset.Footnote 215 These concerns were also shared by Dr. Brodie, a consultant retained by Nova Stone, who advised that “a high level of caution is necessary in planning any long-term industrial venture within or proximal to [North Atlantic Right whale] habitats.”Footnote 216> Even Nova Stone itself recognized from the very beginning that its blasting activity could have an adverse impact on whales.Footnote 217 

125. When DFO calculated setback distances for Nova Stone’s quarry, it did so out of a bona fide concern over the potential impacts of Nova Stone’s blasting activity on endangered iBoF salmon and whales that could be found in close proximity to the site of the blasting.Footnote 218 Contrary to what the Claimants allege,Footnote 219  the mere fact that DFO’s opinion on the issue of blasting evolved does not impugn the validity of its concerns at the beginning of the process. To conclude otherwise would be to insist “that the cart should be placed before the horse.”Footnote 220   In this context, the Claimants’ characterization of the blasting conditions and setback distances as “needless requirements”Footnote 221 is evidence only of their disregard for the EA process.  They obviously disagree with these measures. However, this Tribunal “does not have an open-ended mandate to second-guess government decision making.”Footnote 222

(2)  DFO’s Decision Not to Discuss Mitigation with Nova Stone on its 3.9 ha Quarry in the Form of Revised Setback Distances Did Not Breach Article 1105(1)

126. The Claimants allege that Canada violated Article 1105(1) as a result of DFO’s decision not to discuss revised setback distances with Nova Stone in the summer of 2003. This claim is also devoid of any merit.

127. DFO’s decision not to discuss setback distances with Nova Stone can only be understood in the context of the Claimants’ fragmented approach to seeking regulatory approval for the Whites Point project.  Had the Claimants not proposed to build the Whites Point project on the same site as Nova Stone’s 3.9 ha quarry, there would have been no reason for DFO to refrain from discussing setback distances with Nova Stone.  In this regard, both the blasting conditions and DFO’s initial setback distance of 500 meters related to Nova Stone’s 3.9ha quarry only.Footnote 223 But as Mr. McLean and Mr. Chapman explain in their second Affidavits, by the time DFO determined a revised setback might be feasible, the Whites Point project had been referred for referral to a review panel.Footnote 224

128. Because the environmental effects of both the smaller and larger projects were expected to be the same, the Agency recognized that Nova Stone’s 3.9 ha quarry could be scoped within the terms of reference of the joint review panel being established to assess the Whites Point project.  This outcome was all the more probable given that DFO had determined blasting on the 3.9 ha quarry – the exact same activity being contemplated for Whites Point project – would require a s.32 authorization under the Fisheries Act and therefore necessitate an EA.Footnote 225 The Agency accordingly advised DFO to not engage in discussions with Nova Stone regarding its proposed blasting until it was determined whether the 3.9 ha quarry would indeed be assessed as part of the Whites Point EA.Footnote 226 Recognizing the reasonableness of this request, DFO agreed.Footnote 227

129. As explained in the second Affidavit of Stephen Chapman, DFO’s decision to not discuss setbacks safeguarded the integrity of the EA process in two ways.  First, if Nova Stone’s blasting was to generate data for the EA of the Whites Point project, the Agency was of the view that the joint review panel, which would conduct the EA, should have the opportunity to comment on whether or not the information that could be generated by test blasting was required.Footnote 228 Second, if Nova Stone’s project was simply the first step in the Whites Point project, which had been referred to a review panel, “then for DFO to take action which could lead to the development of that part of the project would be contrary to the purposes, if not the letter of the Canadian Environmental Assessment Act.”Footnote 229

130. In light of the above, DFO’s decision to not discuss mitigation measures with Nova Stone on its 3.9 ha quarry in the form of revised setback distances was entirely reasonable and in keeping with an overarching purpose of the CEAA – to “ensure that the environmental effects of projects receive careful consideration before responsible authorities take actions in connection with them.”Footnote 230 While the Claimants argue that DFO should have been wilfully blind to the fact that Nova Stone sought to conduct the very blasting activities that were to be assessed in the Whites Point EA their contention cannot provide the basis for an Article 1105(1) claim.

(3)  DFO’s Inclusion of the Whites Point Quarry in the Scope of Project for the Purposes of the EA Did Not Breach Article 1105(1)

131. The Claimants’ allegations regarding DFO’s inclusion of the Whites Point quarry in the scope of project for the purposes of the Whites Point EA are not worthy of any further comment.  Canada has completely addressed the Claimants’ allegations in its Counter-Memorial, as has Mr. Smith in both of his Expert Reports.Footnote 231

(4)  The Manner in Which the Whites Point Project was Referred to a Review Panel Did Not Breach Article 1105(1)

132. In their Reply, the Claimants appear to take the position that Canada breached a transparency obligation owed to the Claimants because Bilcon was “not provided a ‘heads up’” about the referral of the Whites Point project to a review panel, and that “it was continuously led to believe otherwise.”Footnote 232

133. Even if the Claimants could prove that Article 1105(1) includes a transparency obligation, which they have not,Footnote 233  the fact that the Whites Point project was referred to a review panel should not have come as a surprise to the Claimants.  Canada has already described how government regulators made it absolutely clear that the Whites Point project could always be referred to a review panel.Footnote 234  Moreover, this possibility would have been apparent to any CEAA practitioner − as Lawrence Smith explains, “[a]ny proponent should expect a project with the potential for significant adverse environmental effects, and which has attracted widespread public controversy, to have a high likelihood of being reviewed in a public hearing process.”Footnote 235 Accordingly, the Claimants’ allegation that the referral of the project to a review panel was “entirely unexpected”Footnote 236  is neither credible, nor grounds for a claim under Article 1105(1).

b) The Claimants Have Not Established that the Acts of the JRP Prior to the Issuance of its Report Breached Article 1105(1)

134. The Claimants complain that they were denied due process, natural justice, fairness and reasonableness before the JRP.Footnote 237 These complaints are difficult to reconcile with the fact that they were given full opportunity to engage in all steps in the JRP’s process – from commenting on the draft EIS Guidelines,Footnote 238  to attending the public scoping meetings the JRP held before finalizing the EIS Guidelines, to participating in the JRP hearings in the summer of 2007.Footnote 239

135. Specifically, the Claimants have complained that Bilcon was prevented from adequately preparing for the JRP hearing because the JRP failed to ensure that it would be provided with all presentations and expert CVs within a reasonable time before the hearing.Footnote 240 Their complaint should be dismissed as it is based on a misunderstanding of the role of the JRP in the EA process. To ensure the efficiency of the hearings, the JRP issued operational procedures requesting participants scheduled for thematic sessions “to provide written summaries (hard copy and electronic) to the Panel Secretariat 10 days in advance of their scheduled presentation.”Footnote 241    However, at the same time, the procedures recognized that the JRP process is by nature not akin to a court of law – its purpose is to gather information.  As such, the JRP’s operational procedures noted that “the hearings will not conform to the strict rules of procedure and evidence required in a court of law”Footnote 242 and that the JRP chair retained discretion to “alter or waive specific procedures if, in the Panel's opinion, hearing objectives might be better met with that change.”Footnote 243;The operational procedures thus did not impose a rigid obligation on hearing participants to provide summaries, let alone the full version of the presentations, in advance of scheduled presentations.

136. Moreover, at no time did Bilcon voice a concern that it was prevented from adequately preparing for the hearings, or that its experts were not afforded a fair opportunity to present their evidence.Footnote 244  If it had such concerns, it was fully entitled to request additional time from the JRP.  It did not, and its failure to do so does not elevate this trifling issue to the level of an international wrong.Footnote 245

137. The Claimants’ allegation that they did not have an opportunity to address the concept of “community core values” is similarly without merit.Footnote 246 As explained by Lawrence Smith in his Rejoinder Expert Report, this position “ignores completely the fact that every component of what the JRP discussed as community core values was identified in detail in the ‘Final EIS Guidelines’ which, as the title suggests, was supposed to guide Bilcon in the preparation of its evidence.”Footnote 247 The Claimants had several opportunities to comment on or question the EIS Guidelines but did not.  They then had over a year to prepare an EIS that responded to instructions such as:

Provide historical, current and projected information as to the health and importance of social and economic issues which broadly encompass and affect people and communities in the study area. Use a comprehensive and holistic approach that acknowledges any distinctiveness in economy, life style, social traditions or quality of life, along with any criteria
requirement for their maintenance and enhancement. Consider the status, health, persistence, vulnerability and resilience of the local economy, especially in relation to the physical and biological environments. Provide context-specific information in sufficient detail to address a range of public interests and concerns, as well as to assist in recognition of the varying significance of the potential impacts on communities throughout the region.Footnote 248

138. Finally, the Claimants appear to believe that the information they provided to the JRP was sufficient and convincing, and point to the volume of information as proof of its weight.Footnote 249 However, the number of pages submitted is not proof of the quality of the information contained in those pages.  There is no dispute that the JRP questioned the adequacy of the “evidence” put forward by the Claimants.Footnote 250 But, it was their role to review, evaluate and ultimately weigh the information the Claimants provided.Footnote 251 The fact that they were not convinced is not evidence that they mistreated the Claimants. To the contrary, it is evidence only that they did their job.Footnote 252 

c) The Approach Taken by the JRP in Preparing its Report Did Not Breach Article 1105(1)

139. In their Reply, the Claimants continue to allege that the approach taken by the JRP breached Canada’s obligations under Article 1105(1).Footnote 253  Most of their claims simply retread over the same ground that they outlined in their Memorial.  In particular, they continue to allege that the JRP failed in almost every respect – from ignoring evidence, to drawing conclusions and making recommendations not based on fact or applicable law and in contravention of their mandate.Footnote 254

140. Canada has already explained in its Counter-Memorial why these complaints are without merit.Footnote 255  In what follows, Canada will thus only address several new allegations made by the Claimants and reiterate a few of the overarching failures of their arguments.

141. First, it is unsurprising that the Claimants continue to insist that the information they presented to the JRP was compelling and did not warrant the recommendation that was made on the Whites Point project.  However, the fact is that the JRP members, based on their specific expertise in the relevant fields, disagreed.Footnote 256  As Canada explained at length in its Counter-Memorial, and as Mr. Smith has explained in both of his Expert Reports, in coming to this conclusion the JRP accorded the Claimants all the due process required.Footnote 257 In particular, the JRP adopted a careful and methodical approach which considered the voluminous, though often irrelevant and unresponsive, evidence contained in the Claimants’ EIS and in their responses to information requests, the oral presentations from 77 registered participants during a two week public hearing, and the written submissions from 126 interested members of the public.

142. It is clear that the Claimants believe that information they and their experts presented to the JRP was entitled to some sort of special deference and that the JRP should simply have overlooked the deficiencies in their submissions and afforded them the benefit of the doubt.Footnote 258 They are wrong.  As Canada’s experts have explained, a JRP is required to independently analyze all of the information available to it, apply its expertise, and make a recommendation accordingly.Footnote 259 Its role is not simply to parrot the “science” and “conclusions” put forward by a proponent and then rubber stamp their proposal.

143. Second, the Claimants also continue to allege that the JRP’s recommendation that the project be rejected based on its inconsistency with the relevant community core values breached Article 1105(1).  Canada has already explained in its Counter-Memorial, and Mr. Smith has explained at length in both his Expert Reports, why the JRP’s consideration of the community’s core values in the EA should not only be given deference by this Tribunal, but was also wholly consistent with its mandate and the relevant Nova Scotia and Canadian legislation.Footnote 260;

  • 144. In their Reply, the Claimants now argue that the JRP’s conclusion was improper because it failed to find that the project’s significant adverse environmental effects on community core values rose to the level of “major or catastrophic” as required under the CEAA.Footnote 261  In making this argument, the Claimants once again ignore the fact that this was a joint review panel.  As such, it had a dual mandate and as explained in its report, the JRP applied the definition of “significant” set out in the Nova Scotia EA Regulations. Those Regulations do not require that an adverse effect rise to the level of a “major or catastrophic” for it to be deemed “significant.”Footnote 262  As the JRP had to satisfy the requirements of both the federal and provincial regulatory frameworks, it was entirely reasonable for it to use the definition of “significant” that afforded the highest standard of environmental protection.

145. The Claimants also attack the JRP’s conclusion with respect to community core values on the ground that it gave a veto to those opposed to the project.Footnote 263 There is no evidence in the JRP’s report to support this allegation.  In fact, the JRP devoted the entire third chapter of its report to detailing the reasons why it concluded that the project would be inconsistent with the community’s core values.Footnote 264  As Mr. Smith explains, “[t]he Panel’s rigorous and deliberate review and analysis of a broadly based government and municipal planning framework, in my view, is the antithesis of a simple referendum-style tally of the Project's opponents and supporters at a hearing.”Footnote 265;

146. Third, the Claimants also continue to take issue with a number of other minor conclusions of the JRP during the course of the EA relating to the JRP’s understanding of and approach to the precautionary principle,Footnote 266adaptive management,Footnote 267 mitigation measuresFootnote 268 and an alleged (but unsubstantiated) failure to take note of evidence provided by the Claimants.Footnote 269 However, they fail to show how any of these measures played into the JRP’s recommendation that the project should be rejected because it was inconsistent with the community’s core values. They also fail to show that the JRP’s approach to these issues was the sort of “shocking repudiation” or “gross subver[sion]” of the policies and goals underlying EA in Canada that could support a claim under Article 1105(1).Footnote 270

147. For the purposes of completeness, Mr. Smith has explained at length in both of his expert reports why, as a matter of Canadian law, there was nothing unusual, unlawful or inappropriate about the approach of the JRP to any of these issues.Footnote 271Ultimately, however, their complaints here are no more than a sideshow – and while the principles at issue may be of academic and practical interest to Canadian EA practitioners, they have no relevance to this arbitration.

d) The Decisions made by the Governments of Nova Scotia and Canada in Responding to the JRP’s Report Did Not Breach Article 1105(1)

148. The Claimants allege that the decisions of Nova Scotia and Canada to accept the recommendation of the JRP breached Article 1105(1), both in terms of how those decisions were made and the basis upon which they were made.Footnote 272 Their allegations have no merit.

149. In particular, the Claimants assert that the decisions of both the Provincial and Federal Governments to hear no further oral representations from Bilcon once the JRP issued its recommendations were a “denial of natural justice.”Footnote 273 However, as Mr. Smith explains, there is no requirement in Canadian law that Ministers must receive comments or hear views from the various stakeholders on a JRP’s recommendations.Footnote 274 The decision-making process after the release of a JRP Report is not an occasion to conduct yet another hearing of the issues raised before the JRP; nor is it an occasion for proponents to offer new or further evidence, or to appeal recommendations that they disagree with.  The simple fact is that at some point in any decision-making process, the doors have to close, and the decision-maker has to retire to its deliberations.  As such, Article 1105(1) does not require government decision-makers to grant endless audiences only to hear the same positions repeated ad nauseum, and the Ministers’ decisions not to meet with the Claimants, or with any other interested party for that matter, were reasonable, fair and in conformity with the minimum standard of treatment.

150. In any event, the Claimants are wrong to allege that “there is no evidence to suggest that the ministers considered the evidence Bilcon tried to convey”.Footnote 275  As Canada noted in its Counter-Memorial, the written evidence shows that the Nova Scotia Minister did in fact review the numerous written submissions that the Claimants sent detailing what they alleged were errors committed by the JRP.  The transcript of Minister Parent’s conversation with Mr. Buxton, which the Claimants wrongfully sought to withhold from production in this arbitration, further reinforces the fact that the Minister gave careful consideration to the Claimants’ complaints.Footnote 276;The fact that he did not find those complaints justified, or even if justified, sufficient to cause him to reconsider his decision, cannot be grounds to find a breach of Article 1105(1).

151. With respect to the government decisions to accept the JRP’s recommendations, the Claimants summarily allege that “neither minister had a proper basis upon which to make his decision.”Footnote 277;However, they offer no reasoning in their Reply to support their assertion that the Nova Scotia Minister was not permitted to make his decision based
upon what their own expert has acknowledged is clearly a matter falling within provincial jurisdiction.Footnote 278They have not done so, because they cannot.  As Mr. Smith explains, “Nova Scotia's rejection of the Project was unimpeachable.”Footnote 279

152. With respect to the federal decision, Canada has already shown in its Counter- Memorial, and through the Expert Reports of Mr. Smith, that the decision of the federal cabinet to accept the JRP’s recommendationFootnote 280on the basis of the project’s inconsistency with the community’s core values was entirely within its jurisdiction.Footnote 281;There is no need to repeat these arguments here.

e) The Claimants Have Failed to Establish that Canada Did not Afford them or their Investments Full Protection and Security

153. In their Reply, the Claimants allege that, in violation of Canada’s obligation to provide full protection and security, the treatment they received was substantially different from the treatment they claim they were promised in a series of statements by the Province of Nova Scotia.Footnote 282

154. However, they have not responded to the fundamental point that the obligation to provide full protection and security extends only to guaranteeing the physical security of investors and their investments.Footnote 283 They specifically provide no evidence of state practice and opinio juris to support their assertion that the customary international law minimum standard of treatment includes an obligation to provide a stable legal environment for investors.  Nor have they addressed the fact that the Mobil Tribunal recently rejected such an unqualified obligation, finding that Article 1105 “is not, and was never intended to amount to, a guarantee against regulatory change, or to reflect a requirement that an investor is entitled to expect no material changes to the regulatory framework within which an investment is made.”  To the contrary, “[w]hat the foreign investor is entitled to under Article 1105 is that any changes are consistent with the requirements of customary international law on fair and equitable treatment. Those standards are set, as we have noted above, at a level which protects against egregious behavior.”Footnote 284

155. The Claimants’ assertion that Canada breached the obligation of full protection and security is not only not supported by law, it also has no basis in fact.  While they claim to have been denied a stable legal environment because political interference allegedly derailed their EA process,Footnote 285 they provide no serious evidence in support.  Nor have they rebutted the testimony that Canada provided in this arbitration, including the testimony of those purportedly involved in the scheme they allege, that there was no conspiracy.Footnote 286; In the end, as Mr. Smith has explained, “[t]o ascribe a ‘political agenda’ of anti-American discrimination to these activities, or to characterize them as being outside of a proponent’s reasonable expectations, systematically strains credulity.”Footnote 287

f) The Claimants Have Still Not Established that Legitimate Expectations are Protected by Article 1105(1), or that they Had any Legitimate Expectations to Begin With

156. The Claimants persist in asserting that Article 1105(1) includes a standalone obligation protecting legitimate expectations. However, they again fail to provide any evidence of state practice and opinio juris establishing the existence of such a rule of customary international law. In several recent NAFTA awards, including the recent Mobil award, tribunals have held that a breach of legitimate expectations is not itself a breach of Article 1105(1), though it can be a relevant factor in considering whether a measure amounts to the type of egregious conduct that would.Footnote 288; As Canada explained in its Counter-Memorial, for any of the Claimants’ “expectations” to be a relevant factor, they must demonstrate that they had objective expectations which arose from specific assurances made by Canada in order to induce their investment at Whites Point.Footnote 289 They have not discharged this burden.

157. All the Claimants have done in their Reply is claim that “Nova Scotia represented to the Investors that Whites Point was an appropriate site to develop and operate a quarry by granting an approval to construct and operate a quarry.”Footnote 290 In other words, they appear to be saying that their “expectation” was that they would be permitted by both Canada and Nova Scotia to develop a 152ha quarry and a 170m long marine terminal that would operate for 50 years, all because Nova Scotia issued a conditional approval to Nova Stone for a 3.9 ha quarry at the Whites Point project site.Footnote 291 This assertion is absurd.

158. First, the mere issuance of a conditional approval does not give rise to an objective expectation arising from a specific assurance. As the Feldman Tribunal explained, to make out such a claim, the government assurances have to be definitive, unambiguous, repeated, and given by an entity that had the authority to do so.Footnote 292  There is no evidence that the relevant authorities made any such assurances to the Claimants.

159. Moreover, Nova Stone’s conditional approval could not lead to the objective expectation that the Claimants would be entitled to develop their larger project.  Put simply, a conditional approval for a 10-year, 3.9ha quarry issued under one set of regulations does not give rise to any objective expectation that Nova Scotia would approve, under a different regulatory framework, a quarry on the same location that was nearly 40 times as large and would last 5 times as long.  Nor could Nova Stone’s conditional approval give rise to an objective expectation that the Federal Government would issue the required permits for the project.  If this is what the Claimants did expect, their expectations were not only objectively unreasonable, they were irrational.

5. Conclusions

160. As they did in their Memorial, the Claimants have attempted to convert every act, decision or recommendation made in the Whites Point EA, with which they happen to disagree, into a violation of Article 1105(1).  While some of their complaints may serve as the basis for academic debate amongst Canadian EA practitioners, absolutely none of them have a place before this Tribunal, let alone as the basis for a claim under Article 1105(1). Each and every one of the Article 1105 allegations made in the Claimants’ Memorial and Reply are devoid of merit and must be rejected.

B.  Canada Has Not Breached NAFTA Articles 1102 or 1103

161. As Canada has explained, to make out a claim under Articles 1102 and 1103, the Claimants bear the burden of showing that: (1) a government accorded them or their investment “treatment” and the same government accorded treatment to another domestic or foreign EA proponent; (2) the treatment was “less favourable” than that accorded to
the other EA proponent; and (3) the treatment in issue was accorded “in like circumstances.”Footnote 293 The Claimants advance several new theories and arguments as to why decisions made in the Whites Point EA violated Articles 1102 and 1103.  However, none of the arguments they advance discharge their burden. Ultimately, they have failed to demonstrate that they suffered any discriminatory treatment on the basis of their nationality.

1. The Claimants Fail to Demonstrate Canada and Nova Scotia Accorded “Treatment”

162. In their Reply, the Claimants allege that the Whites Point JRP’s approach to cumulative environmental effects, the precautionary principle, adaptive management, mitigation and the making of information requests violated Canada’s obligations under Articles 1102 or 1103.Footnote 294  They advance similar claims with respect to the decisions of the governments of Nova Scotia and Canada on the issues of blasting, scope of project and type of assessment.Footnote 295 The Claimants also persist in arguing that the “duration” of the Whites Point EA itself constitutes “treatment.”Footnote 296 While some of the acts described above may constitute treatment in some contexts, much of what the Claimants complain of
cannot possibly be considered treatment for the purposes of a NAFTA claim.

a) “Duration” is not “Treatment”

163. The Claimants persist in wrongly claiming the “duration” of the Whites Point EA constitutes “treatment” that is by itself sufficient to support a claim for a breach of Articles 1102 and 1103.  It is not.  The Glamis award, which the Claimants cite in support of their argument that the duration of a regulatory process constitutes treatment, actually arrives at the exact opposite conclusion.  The Claimants assert the Glamis Tribunal “confirmed that delay is a measure under the NAFTA” by finding that “delays must be more than ‘a little slow’ if they are to constitute a breach.”Footnote 297 The Glamis Tribunal made no such finding.  In fact, it merely observed the regulatory process in that case was “proceeding a little slowly” but that this was understandable given that regulatory authorities were dealing with “a particularly complicated, contested issue in which numerous parties took an interest.”Footnote 298 What the Glamis Tribunal actually found was that any “arguments with respect to this asserted delay are to be evaluated solely when the Tribunal assesses the acts of the federal and state governments together, as part of a possible pattern of practice.”Footnote 299  (emphasis added)  Accordingly, as Canada has explained, and as the Tribunal in Glamis confirmed, it is the “acts” of a State during a regulatory process, not the amount of time the process takes, that constitute “treatment” under NAFTA.

b) “Treatment” Accorded by Different Levels or Combinations of Government Cannot be Compared

164. The Claimants also continue to compare treatment accorded in the Whites Point EA with that accorded in other EAs by different levels or combinations of government. As the Merrill & Ring Tribunal explained, “treatment accorded to foreign investors by the national government needs to be compared to that accorded by the same government to domestic investors … just as the treatment accorded by a province ought to be compared to the treatment of that province in respect of like investments.”Footnote 300 This same logic applies when treatment is accorded concurrently by two jurisdictions, as was the case with much of the treatment the Claimants complain of in the Whites Point EA.Footnote 301 

165. There are good reasons for this requirement, especially in a federal state like Canada.  Articles 1102 and 1103 do not require uniformity across the various autonomous levels of government in Canada.  Indeed, those provisions do not take away the discretion of governments to make the policies and decisions that they believe will best serve the interests of the public who democratically elected them.  In the context of EA, in a country as large and ecologically diverse as Canada specifically tailored principles and rules are what make EA work.  Put simply, the approach taken to EA in British Columbia might not be appropriate for EA in Nova Scotia, and it is the role of elected governments to make such policy determinations.  Articles 1102 and 1103 do nothing to change that – what these provisions prevent is nationality based discrimination, and for such discrimination to occur, it must be one actor according both the more favourable and the less favourable treatment.  Differences in treatment accorded by different levels, or combinations, of government are both inevitable and important in a federal democracy.  But they cannot serve as the basis for a NAFTA claim.

166. The Claimants attempt to circumvent this logic by arguing that because of the shared federal-provincial jurisdiction over the environment in a federal state,Footnote 302 “[a]ll applicants come before the governmental authorities in similar situations seeking the same treatment, and in relation to this treatment, must be considered to be in like circumstances.”Footnote 303 This argument conflates the two distinct requirements of demonstrating “treatment” and establishing that treatment was accorded in “like circumstances.”  The Claimants must first demonstrate that treatment was accorded by the same level or combinations of government before any consideration can be made of whether the treatment was accorded in like circumstances.  The fact that the environment is a matter of shared federal-provincial jurisdiction in Canada has no bearing on these requirements.

167. As such, it is inappropriate to compare the federal-Nova Scotia decisions the Claimants complain of in the Whites Point EA with decisions made in other EAs by the Federal Government only, the Provincial Government only, or by the Federal Government jointly with a province other than Nova Scotia.  For example, the joint federal-Nova Scotia decision to include the quarry and marine terminal in the scope of the JRP of the Whites Point project cannot be compared with a federal decision alone to not include the Tiverton Quarry in the scope of the federal-only EA of the Tiverton Wharf repair project,Footnote 304  as the “treatment” in these two cases accorded by different combinations of government actors.

168. For the same reasons, the Claimants’ attempt to compare the JRP’s approach to conducting the EA under terms of reference based on federal and Nova Scotia law, with the approach employed by government authorities or review panels operating in or under different provincial jurisdictions, must fail.  For example, it is inappropriate to compare the Whites Point JRP’s approach to cumulative environmental effects with that of the federal authorities that conducted the comprehensive studies of the Eider Rock project in New Brunswick,Footnote 305  the Belleoram Marine Terminal in NewfoundlandFootnote 306 or the Deltaport Third Berth project in British Columbia.Footnote 307   Nor can the Whites Point JRP’s approach to cumulative environmental effects be compared to the approach of the JRP constituted under the CEAA and the Newfoundland Environmental Assessment Act that assessed the Voisey’s Bay project.Footnote 308 Similarly, the manner in which the Whites Point JRP dealt with the adaptive management concept in its EA cannot be compared to how DFO or NSDEL approached adaptive management in the provincial EAs of the Elmsdale Quarry, the Glenholme Gravel Pit Expansion, or the Lovett Road Aggregate Pit Expansion.Footnote 309 In each case the Claimants seek to compare the decisions of different actors operating under different regimes.  Discrimination cannot result from the acts of these different actors.

2. The Claimants Fail to Demonstrate they were Accorded Treatment “Less Favourable” than that Accorded to Other Domestic or Foreign EA Proponents

169. The deficiencies in the Claimants’ approach to demonstrating “treatment” are compounded by their inability to demonstrate the treatment they were accorded was “less favourable.”  As Canada explained in its Counter-Memorial, in order to make out a claim under Articles 1102 and 1103, the Claimants must show that they suffered discriminatory treatment on the basis of their nationality. There are two elements the Claimants must prove in order to satisfy this requirement.

170. First, the Claimants must show that the treatment they were accorded was, in fact, less favourable than that accorded to domestic investors. This requires more than a mere allegation that this is the case.  Second, the Claimants must show that the less favourable treatment was accorded to them on the basis of their nationality.  The Claimants allege that Canada’s inclusion of this element in the test for “less favourable treatment” requires them to prove a subjective intent to discriminate on the part of regulators in the Whites Point EA.Footnote 310 This is not true, and Canada made no such assertion in its Counter- Memorial.  What the national treatment and MFN obligations do require of the Claimants is objective evidence that they have been discriminated against by reason of nationality. As shown below, the Claimants have failed to meet this burden.

a) The Claimants Fail to Establish that the Treatment They Were Accorded was “Less Favourable”

171. The Claimants suggest that the phrase “treatment no less favourable” means that Canada is to provide them with “equality of competitive opportunities.” They further suggest that such “equality” requires “that Canada accord Bilcon treatment that is the same as the best treatment received by domestic investors that are in direct competition with Bilcon.”Footnote 311  (emphasis added)  In fact, they go so far as to baldly assert that a demonstration of mere “differences in treatment between firms in the same economic sector shift the burden on the respondents to show the treatment is no less favourable.”Footnote 312They are wrong on all counts.

172. As a preliminary matter, in some instances the Claimants have failed to even show that the treatment they were accorded was actually different than the treatment accorded in other EAs. For example, with respect to the consideration of cumulative environmental effects, the Claimants complain that the Whites Point JRP considered “hypothetical projects” when there was no reasonable certainty that such projects would be developed (in actual fact the Whites Point JRP concluded that “the establishment of future quarries is reasonably foreseeable,”Footnote 313  not “hypothetical”).  In contrast, the Claimants say, the cumulative environmental effects standard employed in other EAs did not focus on hypothetical projects and was less stringent.  However, in support of their arguments, they cite to the Eider Rock EA which appears to have employed the very same “reasonably foreseeable”Footnote 314 standard that the Whites Point JRP used, and also considered “potential future projects” in its cumulative environmental effects assessment.Footnote 315 The Claimants also cite to the Deltaport Third Birth EAFootnote 316  even though that EA also considered, as part of its cumulative environmental effects assessment, the expansion of a terminal that it deemed to be “hypothetical.”Footnote 317

173. Similarly, the Claimants complain about the referral of the Whites Point project to a review panel, but in support of their claim they cite to a list of six projects that were also referred to review panels.Footnote 318 In addition, they make cryptic and unsubstantiated complaints about the Prosperity Gold-Copper Project,Footnote 319  ignoring the fact that it was also referred to a review panel and was hence accorded treatment equal to that accorded to the Claimants.

174. Even where the Claimants have been able to identify different treatment, they fail to meet their burden of showing that the different treatment they were accorded was less favourable.  As Canada explained in its Counter-Memorial, in order to show that treatment is in fact “less favourable” for the purposes of these provisions, a claimant must do more than merely point to differences in treatment.  “Different” is not presumed to be “less favourable” or “unequal”.  Rather, it is up to the Claimants to demonstrate the different treatment is, in fact, less favourable.Footnote 320

175. The Claimants fail to discharge this burden.  In their Reply, they identify treatment accorded in other EA processes that was different than the treatment they were accorded with respect to concepts such as cumulative environmental effects, the precautionary principle, adaptive management, and mitigation measures.Footnote 321   They point to another JRP that allegedly requested less information than was requested of them by way of information requests.Footnote 322 And they highlight different government decisions for different projects regarding the issues of blasting, scope of project and type of assessment.Footnote 323 Again, leaving aside the fact that none of this alleged treatment was accorded in “like circumstances,” a point which Canada addresses below, the fact is that no two EA panels will ever proceed in exactly the same way with respect to each and every procedural or analytical detail.  The Claimants have not shown that the minor differences in approach that they have identified negatively impacted the outcome of the Whites Point EA such that they constitute less favourable treatment for the purposes of Articles 1102 and 1103.

176. Nor have the Claimants proven that they were accorded less favourable treatment because they were denied competitive opportunities.  Absolutely none of the proponents in the comparator EAs invoked by the Claimants were engaged in competition, let alone “direct competition”, with Bilcon.  The comparator EAs include projects such as a port facility expansion, diamond, nickel, gold and gypsum mines, oil refineries and marine terminals, liquid natural gas terminals, pipelines, repairs to an existing wharf and harbour facility, and small quarries providing aggregate for local use.  The Claimants offer no explanation for how they lost “competitive opportunities” because the proponents of, for example, a diamond mine in northern Ontario or a port facility in Vancouver were not required to consider “reasonably foreseeable projects” in their cumulative environmental effects analysis.Footnote 324 

177. In the end, none of the treatment that the Claimants complain of ultimately affected their opportunity to develop their proposed project.  For example, as Canada has explained above, DFO’s decision to scope the Whites Point quarry into the EA was rendered moot by the referral of the EA to a JRP, and hence it had no practical effect on the Claimants.  Further, the government of Nova Scotia did not reject the Whites Point project because Bilcon failed to consider reasonably foreseeable projects in its cumulative environmental effects analysis, or to provide adequate information for the purposes of the precautionary principle or adaptive management.  Nor did the government of Nova Scotia reject the project because Bilcon did not adequately answer all of the JRP’s information requests.  As none of the treatment that the Claimants complain of actually denied them the opportunity they sought, it cannot be considered “less favourable” treatment.

b) The Differences in Treatment Identified by the Claimants do not Amount to Nationality-Based Discrimination

178. Even if the Claimants could demonstrate that the treatment they were accorded was objectively less favourable than that accorded to other domestic or foreign investors, they have still failed to demonstrate that they were accorded this treatment because of their nationality.Footnote 325  As the Tribunal in Loewen explained, Articles 1102 and 1103Footnote 326 are directed “only to nationality-based discrimination and . . . proscribe only demonstrable and significant indications of bias and prejudice on the basis of nationality.”Footnote 327 

179. In their Reply, the Claimants allege only that the treatment they were accorded was less favourable than some of the treatment accorded to a small sample of other EAs hand-picked in support of their claim. They ignore the fact that, as Canada explained in its Counter-Memorial,Footnote 328  they were accorded the same treatment as many other domestic EA proponents. In doing so, they seem to claim that these instances of equal treatment are irrelevant because Articles 1102 and 1103 require that Canada provide them with the “best” treatment, i.e. treatment no less favourable than every single domestic investor.Footnote 329  This is an absurd and untenable interpretation of Articles 1102 and 1103.

180. In the application of every regulation, some investors will benefit, and some will not.  That is simply a fact of life, not a wrong that has to be corrected.  If all a claimant can establish is that some Canadian investors were accorded better treatment than foreign investors, some were accorded worse treatment, and some were accorded the same treatment, they have proven nothing more than that a regulatory program was applied in a completely non-discriminatory way.Footnote 330

3. The Claimants Fail to Demonstrate the Treatment they Challenge Was Accorded “In Like Circumstances” to the Treatment Accorded to Other EA Proponents

181. In addition to failing to establish that the acts they complain of constitute “treatment” that was “less favourable” than that accorded to other EA proponents, the Claimants also fail to establish that the treatment in issue was accorded “in like circumstances.” Their approach of comparing treatment selected from a host of EAs across Canada to that accorded in the Whites Point EA on the basis of the simplistic proposition that all enterprises subject to an EA are “in like circumstances” does not withstand scrutiny.  It is conducted in a total vacuum, irrespective of the specific factors that are determinative of the decisions made in each EA process.Footnote 331  It also ignores how the quality of the information and evidence a proponent supplies can affect the administration of the EA process.

182. NAFTA Chapter Eleven cannot be interpreted in a manner that would negate the flexibility of the EA regime to adapt to the multitude of different projects that are proposed in a country as large and ecologically diverse as Canada.  On this ground alone the Claimants’ national treatment and MFN claims must be rejected.

a) The Claimants Ignore that “In Like Circumstances” Mandates Consideration of the Specific Context, Facts and Policy Objectives Relating to the Treatment in Issue

183. The Claimants’ national treatment and MFN claims continue to rest on the flawed premise that “it is appropriate to consider all enterprises affected by the environmental assessment regulatory process to be in like circumstances with Bilcon.”Footnote 332 This interpretation glosses over the ordinary meaning and context of the words appearing in Articles 1102 and 1103.

184. As Canada explained in its Counter-Memorial, every EA process is driven by a host of environmental, economic, social, legislative and policy factors unique to the project under assessment and the environment for which it is proposed.  The issue of whether treatment in two EA processes was accorded “in like circumstances” necessarily hinges on how these factors influenced the treatment in issue, not the mere fact that the treatment was accorded in an EA process. To conclude otherwise would take away the flexibility that regulators need when making decisions in an EA process.

185. Contrary to what the Claimants assert, this does not mean “that what places two investors in ‘like circumstances’ or not is the way in which Canada treats them.”Footnote 333 It is the circumstances underlying the way in which Canada treats two investors that are determinative of whether or not treatment was accorded in like circumstances.  Nor do the words “in like circumstances” require a showing of “identical” or “most like” circumstances.Footnote 334 What they require is full consideration of all of the factors underlying the treatment in issue, including consideration of a State’s policy objectives in according the treatment in question.  While the Claimants argue that a State’s policy objectives are irrelevant,Footnote 335  they fail to provide a single award of a NAFTA tribunal that, if interpreted correctly, would support their position.

186. For example, the Claimants suggest the S.D. Myers Tribunal qualified the relevance of policy objectives by observing they should only be taken into account “inasmuch as those objectives are not contrary to the principle of national treatment.”Footnote 336 But this only illustrates Canada’s point – a policy objective that is consistent with the principle of national treatment (i.e., not motivated by discrimination on the basis of nationality) can result in legitimate differences in the treatment, whereas a policy objective that is discriminatory cannot.

187. The Claimants also suggest that the GAMI Tribunal held that policy objectives are not to be considered in determining whether the impugned treatment was accorded “in like circumstances”.Footnote 337 However, the GAMI Tribunal found that it “has not been persuaded that GAM’s circumstances were demonstrably so “like” those of non- expropriated mill owners that it was wrong to treat GAM differently.” (emphasis added) It added that the measure in issue, which distinguished between the Claimant’s and comparator investments “was plausibly connected with a legitimate goal of policy … and was applied neither in a discriminatory manner nor as a disguised barrier to equal opportunity.”Footnote 338

188. In a further attempt to avoid the fact that factors such as policy objectives must be considered in assessing “like circumstances,” the Claimants assert that Canada did not take a reservation under NAFTA for decisions made in the EA process, or for those sectors that might be subject to the EA process.Footnote 339 They argue that as Canada had full opportunity to take such reservations, Articles 1102 and 1103 should not be subject to “a
new unwritten public policy exception.”Footnote 340 This confused argument must be rejected. NAFTA reservations were taken in respect of measures that discriminate between investors on the basis of nationality − for example through limitations on foreign ownershipFootnote 341 − and that would otherwise breach the national treatment or MFN obligations.  These reserved measures are entirely different from a measure taken on legitimate policy grounds, that results in differential treatment of EA proponents, but that is not nationality based and hence does not need to be reserved.  The implications of the Claimants’ proposed approach are that the NAFTA Parties would have to take reservations for all regulations which might differentiate between investors on non- discriminatory grounds.

189. Finally, the WTO case law the Claimants cite in support of their argument that the only factor that matters in an Article 1102 or 1103 analysis is “equality of competitive opportunities”Footnote 342 is irrelevant.  As Canada has explained above, the Claimants fail to demonstrate how the proponents in the comparator EAs actually competed with Bilcon.

190. More importantly, however, WTO standards are not applicable in the interpretation of the NAFTA provisions in issue.  Articles 1102 and 1103 are to be interpreted in accordance with their ordinary meaning, in their context and in light of the object and purpose of the NAFTA.Footnote 343 The Claimants argue this context includes WTO agreements containing national treatment and MFN obligations because these Agreements “were negotiated concurrently with NAFTA.”Footnote 344  However, they fail to explain why the provisions of these Agreements, which deal with entirely different subject matter and employ different wording, should inform the meaning of Articles 1102 and 1103.  Nor can they cite any NAFTA award in support of their proposition.Footnote 345 In fact, they ignore the Methanex Tribunal’s ruling that “[i]nternational law directs this Tribunal, first and foremost, to the text; here, the text and the drafters’ intention, which it manifests, show that trade provisions were not to be transported to investment provisions.”Footnote 346

191. In the end, all the Claimants have offered is a series of flawed theories on the meaning of “like circumstances” that do not withstand scrutiny.  The Claimants fail to establish that “like circumstances” requires anything less than a detailed consideration of the facts underlying the treatment in issue in each case.  As Canada explains below, when such facts are considered here, it is clear that the treatment the Claimants challenge was not accorded in like circumstances to that accorded in the comparator EAs.

b)  The Treatment in Issue Here was not Accorded “In Like Circumstances”

192. Below Canada demonstrates how the Claimants fail to show that any of the alleged instances of treatment in the Whites Point EA were accorded “in like circumstances” to those accorded in the comparator EAs.  Each instance of alleged treatment was a product of the specific project under review, the environment for which it was proposed and the array of scientific, socio-economic, statutory and policy considerations that these factors presented to the officials and experts responsible for administering the EA.  Decisions taken in the EA process cannot be classified as “right or wrong” or “black and white.”  They are rather based upon the professional judgment of officials and experts, as informed by the unique facts of each case, and as long as they are rational, in light of these facts, they are not to be second-guessed by a NAFTA Tribunal.

(i) The JRP’s Administration of the EA of the Whites Point Project Was Not Carried Out in Like Circumstances with the Administration of other EAs

193. The Claimants attack five separate instances of allegedly less favourable treatment that was accorded to them by the Whites Point JRP during the EA of the Whites Point project. These are: the JRP’s consideration of cumulative environmental effects;Footnote 347 its application of the precautionary principle;Footnote 348 its consideration of adaptive management;Footnote 349 its consideration of potential mitigation measures;Footnote 350 and, the manner in which it dealt with information requests.Footnote 351

194. At their core, all of the Claimants’ complaints appear to boil down to an allegation that the Whites Point JRP required a level of proof and certainty that was not required of other EA proponents.  However, the EA process must be flexible enough to adapt to the nature of the project in issue, the environment for which it is proposed, the public concerns it has engaged, and the applicable legal and regulatory system or systems involved.  It must also be flexible enough to accommodate the fact that the evidence that proponents put before EA authorities will inevitably vary in quality and impact the outcome of each EA process differently.  The Claimants’ arguments fail to acknowledge that the treatment in each of the comparator EAs was accorded in significantly different circumstances that were influenced by the kinds of factors outlined above.

195. For example, the Claimants complain that, in contrast to the Whites Point JRP, the Sable Gas JRP accepted a far greater degree of uncertainty with respect to the pipeline being proposed in that EA.Footnote 352  But as Lawrence Smith explains, while the Whites Point and Sable Gas JRPs “come to different conclusions … that is not surprising since they were two fundamentally different projects with different impacts.”  Mr. Smith adds that:

It is obvious that the practical burdens on public land use, planning, tourism and fisheries would be quite different between these two very different projects.  For example, post-construction, there is a significant difference in the physical effects of a buried, underground pipeline … and a large scale, above ground quarrying operation with daily rock crushing, bi-weekly blasting, marine loading, and almost weekly shipments of post- Panamax-size freighters in and out of the Bay of Fundy continuously for a period of 50 years.  The physical impacts and the impacts on “rural quality of life” of the operational phase of the two projects upon the local communities and their value systems are simply not comparable.Footnote 353

196. The Claimants also complain that the Whites Point JRP considered not just reasonably certain projects in its cumulative environmental effects assessment, but also reasonably foreseeable projects.  The Whites Point JRP, they say, took a more stringent approach to cumulative environmental effects than that taken in other EAs.Footnote 354 What the Claimants ignore however, is that the Whites Point JRP’s cumulative environmental effects analysis, which was entirely consistent with Agency policy,Footnote 355>  was based upon specific evidence put before the JRP that led it to conclude that the establishment of additional quarries on the Digby Neck was reasonably foreseeable. That evidence included statements of government officials pointing to expressions of interest by other potential proponents in establishing coastal quarries in the region,Footnote 356  the abundance of quality rock on the Digby Neck, the proximity of the Bay of Fundy to a major export market, the fact that earlier quarrying proposals had been made on the Digby Neck, and the proponent’s own statement that it was far more difficult to get a quarrying permit in the United States than in Nova Scotia.Footnote 357

197. By contrast, in the comparator EAs cited by the Claimants, the entities responsible for the EA had no such evidence before them. For example, the Victor Diamond Mine Comprehensive Study ReportFootnote 358  concluded that “there are no anticipated additional mines or development in the area.”Footnote 359  (emphasis added)  Likewise, in the Belleoram Marine Terminal EAFootnote 360  there appears to have been no evidence that expanded or additional quarries were reasonably foreseeable as a result of the project.Footnote 361  The Voisey’s BayFootnote 362 JRP’s report is also devoid of such evidence.Footnote 363

  • 198. In another instance, the Claimants have compared the Whites Point JRP’s decision not to detail mitigation measures in its report despite its negative recommendation, with the decision of the Kemess, Prosperity Mine and Lower Churchill JRPs to do the opposite.Footnote 364 In doing so however, they entirely ignore the relevant legal frameworks of these different JRPs.  The Terms of Reference for the Whites Point JRP mandated that it “recommend either the approval, including mitigation measures, or rejection of the Project.”Footnote 365  (emphasis added)  If the JRP’s conclusion was that the Whites Point project should be rejected – which it was – its Terms of Reference did not give it the mandate to suggest potential mitigation measures.Footnote 366 By contrast, the terms of reference in the other EAs referenced above expressly mandated the identification of significant adverse environmental effects and of potential mitigation measures.Footnote 367

199. Finally, the Claimants complain that as opposed to what happened in other EAs, the Whites Point JRP applied an overly cautious and restrictive interpretation of the precautionary principle,Footnote 368  leading to the JRP’s alleged “hostility” to the adaptive management strategy being advanced by BilconFootnote 369 and to its alleged non-consideration of Bilcon’s proposed mitigation measures.Footnote 370 They also suggest that the Whites Point JRP made or permitted too many information requests, relative to other JRPs.Footnote 371

200. Contrary to what the Claimants allege, the JRP was not “hostile” to the conc ept of adaptive management.  It was actually very interested in the issue of adaptive managementFootnote 372  in light of how heavily Bilcon proposed to rely on the concept in monitoring the effects of the Whites Point project.  The JRP also considered mitigation measures throughout its report in assessing the significance of the environmental effects of the Whites Point project.Footnote 373 However, the JRP had serious questions about the quality of the information that had been provided by Bilcon through the EA process, noting that:

while the environmental impact statement provided considerable data, in many ways the information provided by the Proponent was inadequate for the requirements of an environmental assessment.  The Proponent declined to provide some of the information requested by the Panel, forcing the Panel to obtain required information from government officials, interveners and holders of traditional knowledge, during public hearings. The Panel believes that while it acquired adequate information to assess the likely environmental effects of the Project, a more adequate EIS document and responses to information requests would have facilitated the review process.374Footnote 374

201. Given the poor quality of the information presented by Bilcon during the EA, including its lack of responsiveness to relevant information requests,Footnote 3705  the JRP noted that “the accumulation of concerns about adequacy leads the Panel to question the Project.”Footnote 376 Also, in light of these concerns, the JRP was not satisfied that Bilcon had proven itself capable of using either adaptive management or mitigation as effective tools for monitoring and responding to unforeseen environmental effects.Footnote 377 For example, the JRP observed that while the “EIS makes many references to the need for continuous monitoring and implementation of adaptive management as a tool to rectify unexpected environmental changes,” it “often appeared inadequate for evaluating the long-term processes described throughout the EIS.”Footnote 378 Mr. Smith describes this as a “key point” with which the Panel was concerned.  As he explains, “merely offering to monitor and then to implement adaptive management measures does not adequately address uncertainty or insufficient information regarding the environmental effects of a project, the significance of those effects and appropriate mitigation measures required to eliminate, reduce, or control those effects.”Footnote 379

202. While the Claimants may have been satisfied with their EIS and felt entitled to ignore or not respond to certain information requests that they deemed to be “indiscriminate,”Footnote 380 EA is not a self-judging process.  The JRP found the information the Claimants presented to be deficient and obviously considered the information requests to which they were to respond relevant and valid.  The lack of quality and responsive information provided by the Claimants during the EA was one of the most important circumstances governing how the Whites Point JRP managed the process. As Mr. Smith explains, it was thus unsurprising “for the Panel to have been critical of Bilcon, or to have expressed some frustration, when after repeated requests, such information was still lacking.”Footnote 381 By contrast, there is no evidence in the record of such similar overriding concerns regarding the quality and responsiveness of the information provided by the proponents in the comparator EAs cited by the Claimants.

203. The Claimants were not entitled to simply sail through an EA providing what they themselves deemed to be information that was good enough for the JRP.  A proponent in an EA reaps what it sows, and the Claimants need look no further than their own approach to the EA and the insufficient information they provided in order to fully understand the reasons for how the JRP managed the process.  In light of these factors, the various decisions that the Whites Point JRP made in administering the EA process were not made in like circumstances to decisions made in the administration of any of the comparator EAs.  The Claimants’ complaints about these decisions must accordingly fail.

(ii)  The Decisions of Government Regulators in the Whites Point EA Were Not Made in Like Circumstances To Decisions Made in Other EAs

204. In their Reply, the Claimants allege that Canada violated NAFTA as a result of divergences in the approach regulators took on the issues of blasting, scope of project, and type of EA for the Whites Point project, relative to the approach taken on these issues in the review of other projects including Tiverton Quarry, Tiverton Harbour, Belleoram, Keltic, Victor Diamond, Diavik Diamond and Surface Gold Mine projects.  However, in advancing their claims on the issues of scope of projectFootnote 382> and type of EA, the Claimants continue to rely on the same allegations that they made in their Memorial. Canada has already explained why decisions made in the Whites Point project with respect to these issues were not accorded in like circumstances with decisions made in these comparator projects. There is no need to repeat those explanations here.Footnote 383

205. The only new allegations the Claimants have made in their Reply relate to alleged divergences in the approach regulators took at Whites Point on the issue of blasting, relative to that taken with respect to the Tiverton Quarry, Tiverton Harbour, Belleoram, North Head Harbour, and Miller’s Creek Gypsum Mine projects.  However, again the Claimants gloss over the relevant details of these projects, the environments for which they were proposed, and the inherent complexity of blasting – as Dennis Wright, the author of the DFO Blasting Guidelines explained at the time Nova Stone’s blasting plan was under review, “there is much uncertainty concerning how explosives behave when detonated in or near water and how fish and marine mammals will react to the shock waves produced by the detonation of explosives…. To provide guidelines to cover all species and size ranges for all possible explosive use situations is virtually impossible.”Footnote 384 Given the many variables that can affect the use of explosives in different environments, none of the decisions regarding the issue of blasting were made in like circumstances.

206. For example, conditions similar to those in the industrial approval issued to  Nova Stone were not included in the industrial approval for the Tiverton Quarry, but NSDEL and DFO personnel certainly considered the potential impact of blasting on the Tiverton Quarry, ultimately concluding that it would not engage the fisheries concerns that were engaged by Nova Stone’s proposal.Footnote 385 Unlike Nova Stone’s proposed quarry – the first step in a 50 year operation on 152 ha of land – the Tiverton project was confined to 1.8 ha, was of limited duration,Footnote 386 and was to be used for armourstone.Footnote 387 The Tiverton blasting activity was also to be conducted much further back than at Nova Stone’s proposed quarry, which was just 35 metres from the Bay of Fundy.Footnote 388 In light of all of these considerations, a June 2003 NSDEL briefing note stated that, with respect to Tiverton, “[d]ue to differences in the nature and scope of the project, DFO has not required any special conditions regarding blasting.”Footnote 389

207. This relevant context explains any differences in the initial blasting conditions to which Nova Stone and the Tiverton Quarry proponent were subjected when they received their industrial approvals.  The Claimants complain in their Reply that their request that the conditional approval issued to Nova Stone should “be amended to reflect the terms and conditions of the nearby Tiverton Quarry” was “never granted.”Footnote 390 However, in light of the “differences” between the Nova Stone and Tiverton projects outlined above, they fail to explain why there was anything improper about this decision.  The Nova Stone Quarry and the Tiverton Quarry were different projects and engaged different considerations.Footnote 391

208. The Claimants also assert that DFO used the issue of the effects of blasting on iBoF salmon to “stall” Nova Stone’s attempts to blast while “iBof salmon was never an issue at the Tiverton Quarry.”Footnote 392 Again, they ignore the relevant circumstances and distort the relevant facts.  As explained in the second Affidavits of Stephen Chapman and Mark McLean, DFO did not engage in discussions with Nova Stone on how to mitigate the effects of blasting, once the potential presence of iBoF salmon became an issue at Whites Point, because Nova Stone’s quarry was on the site of the larger Whites Point project which had been referred to a JRP.Footnote 393 There was therefore a legitimate policy reason underlying the decision not to discuss mitigation on Nova Stone’s quarry. As
noted by Lawrence Smith in his Rejoinder Expert Report, “[g]iven that the activities described by Mr. Buxton were about to be assessed by the review panel that was in the process of being convened, I am not surprised that both DFO and the Agency took the cautious approach that they did …”Footnote 394

209. The Tiverton Quarry, by contrast, never engaged such a concern and was accordingly not in like circumstances.  But in any event, once iBoF salmon became an issue for DFO at Whites Point, no blasting took place before DFO conducted a review of the blasting design and setback distances at the Tiverton Quarry and determined that there would be no adverse impacts on iBoF salmon or other endangered species.Footnote 395

210. Regarding the EA of the Tiverton Harbour, the Claimants complain that this project entailed blasting in the water, while blasting was not permitted on Nova Stone’s proposed quarry.Footnote 396 But they again ignore the relevant context, specifically that blasting at Tiverton was only authorized once appropriate mitigation measures – including those that would avoid adverse environmental effects on endangered species like iBoF salmon and the North Atlantic Right whale – were developed through the EA process.Footnote 397 As explained in the second Affidavit of Mark McLean, DFO was initially willing to discuss the implementation of mitigation on the proposed Nova Stone quarry, but was unable to do so given that this quarry was contained in the Claimants’ larger Whites Point project which had by that point been referred to a JRP.Footnote 398 Again, Nova Stone’s quarry was in entirely different circumstances than the Tiverton Harbour and this explains the differences in how mitigation was addressed on each project.

211. The unique circumstances engaged by the other projects invoked by the Claimants dictated the different approaches to dealing with blasting in the comparator EAs.  In the Belleoram Marine Terminal EA for example,Footnote 399  there was no active fishery in the vicinity of the proposed blasting,Footnote 400  no evidence that blasting would adversely impact species at risk such as Right Whales,Footnote 401  no local whale watching and ecotourism industry and a resultant absence of public concern.Footnote 402  There was therefore no need for blasting conditions at Belleoram similar to those included in Nova Stone’s conditional permit.

212. Regarding the North Head Harbour project, the Claimants cite to mitigation measures identified during the EA that would allow for blasting to be carried out in the water.  They complain, without offering anything more, that “Bilcon was never permitted to conduct any blasting.”Footnote 403  They forget however that Bilcon was ultimately not permitted to conduct blasting, not because there were no measures that might mitigate the effects of the blasting, but rather because its project was rejected by the JRP on grounds that were simply not engaged by the North Head Harbour project.

213. Regarding the Miller’s Creek Gypsum Mine Extension, it is not clear how the Claimants propose to compare the treatment accorded in respect of the blasting there with the treatment of blasting at Whites Point.  Ultimately, blasting was permitted at Miller’s Creek, but the project is not, as the Claimants allege, located in or even as near to the Bay of Fundy as was the proposed Whites Point project.Footnote 404 Moreover, the proposal under consideration was the extension of an existing gypsum mine that already occupied 477 ha of land and that had been in operation since the 1950s.Footnote 405 Accordingly, any blasting there did not give rise to the same concerns as the blasting at Whites Point.

4. Conclusions

214. The Claimants are free to take issue with decisions made in the Whites Point EA, but under Articles 1102 and 1103 they cannot do so in a vacuum.  Rather, they must demonstrate that the acts they complain of actually constitute “treatment” covered by these provisions, and that the alleged treatment was “less favourable” than that accorded “in like circumstances” to other EA proponents.  These terms require detailed consideration of all factors giving rise to the treatment in issue. To require anything less would prevent regulators from making determinations on the basis of the factors in an EA that inevitably result in differential treatment. This would not only subvert the objectives of EA, it would render the EA process meaningless. At best, the Claimants have shown that in some cases different approaches were taken and different decisions were made in the Whites Point EA relative to the comparator EAs.  Far more is required of the Claimants in making out a claim under Articles 1102 and 1103.

V. Order Requested

215. Canada respectfully requests that this Tribunal render an award:

  • Dismissing the Claimants' claims in their entirety; and
  • Ordering the Claimants to bear the costs of the arbitration in full and to indemnify Canada for all of its legal costs, disbursements and expenses incurred in the defence of this claim, as well as the costs of the Tribunal, plus interest.Canada also request the opportunity to make submissions on the costs that it has been forced to incur as a result of this claim.
  • Dated: March 21, 2012

Respectfully submitted,

Sylvie Tabet
Scott Little
Shane Spelliscy
Reuben East
Jean-Francois Hebert
Stephen Kurelek
Adam Douglas
Jennifer Hopkins

On behalf of the Respondent, The Government of Canada

Footnotes

Footnote 1

See Canada’s Counter-Memorial, ¶¶ 5, 106. See also, letter from Paul Buxton to Derek McDonald, copied to Christopher Daly, attaching third project description, March 10, 2003, Exhibit R-181.

Return to footnote 1 referrer

Footnote 2

See Canada’s Counter-Memorial, ¶¶ 22-32.  See also Affidavit of Neil Bellefontaine, ¶¶ 25-28.

Return to first footnote 2 referrer

Footnote 3

Claimants’ Reply, ¶ 36. See also footnote 21 of the Supplemental Witness Statement of Paul Buxton which references “The Bay of Fundy Video for NAFTA Tribunal, Bilcon et al v. Canada December, 2012, Videographed by: Warren Jefferies, Narrated by: John Baillie (Investors’ Schedule of Documents Tab C 910).”

Return to first footnote 3 referrer

Footnote 4

 Canada’s Counter-Memorial, ¶¶ 22-32.  See also Affidavit of Neil Bellefontaine, ¶¶ 25-28.

Return to first footnote 4 referrer

Footnote 5

 See Affidavit of Bob Petrie, ¶ 14.

Return to first footnote 5 referrer

Footnote 6

See footnote 134 of the Claimants’ Memorial, wherein it is asserted that “There was no empirical evidence of any public concern” over the Whites Point project.

Return to first footnote 6 referrer

Footnote 7

As reflected by the following excerpt from the November 24, 2004 CLC minutes which record comments made by the Claimants’ representative, Paul Buxton, to the CLC:
[Y]ou can refer to the Canadian Environmental Assessment Act and the verbiage that goes with it….  It essentially says that the Canadian Environment Assessment Agency is to ensure that projects are carried out in an environmentally safe manner. He further noted it does not say that CEAA will determine whether or not a project will go ahead.
Mr. Buxton noted this project is a legal project and there is nothing in law to prevent this project from going ahead.  He noted there are hoops to jump through and satisfy to obtain permits but there is nothing to say that the quarry can’t proceed at Whites Cove.
See CLC Minutes, November 24, 2003, p. 234, Exhibit R-299.

Return to first footnote 7 referrer

Footnote 8

See Notes of Helen MacPhail, June 14, 2002, Exhibit R-171.  See also first Affidavit of Christopher Daly
¶¶ 24-25 and Canada’s Counter-Memorial, ¶92.

Return to first footnote 8 referrer

Footnote 9

See Thomas Wheaton’s notes of meeting between DFO and GQP, July 25, 2002, p. 3, Exhibit R-27. See also first Affidavit of Mark McLean, ¶ 25 and Canada’s Counter-Memorial, ¶¶ 93-94.

Return to first footnote 9 referrer

Footnote 10

See Whites Point Quarry – Project Description, faxed from Paul Buxton to Helen MacPhail, September
30, 2002, Exhibit R-129. See also Canada’s Counter-Memorial, ¶ 95.

Return to first footnote 10 referrer

Footnote 11

See letter from Paul Buxton to Derek McDonald, copied to Christopher Daly, January 28, 2003, attaching draft project description, January 28, 2003, Exhibit R-180.  See also Canada’s Counter-Memorial, ¶ 103.

Return to first footnote 11 referrer

Footnote 12

 See letter from Paul Buxton to Derek McDonald, copied to Christopher Daly, attaching third project description, March 10, 2003, Exhibit R-181.  See also Canada’s Counter-Memorial, ¶106

Return to first footnote 12 referrer

Footnote 13

See Claimants’ Reply, ¶ 12(c) (“The quarry and an adjacent marine terminal were scoped into one joint environmental assessment.”) See also Claimants’ Reply, ¶ 17 (“This remains the only quarry application in Canada that was ever referred to a Joint Review Panel.”) See also, Reply Expert Report of David Estrin, ¶ 56 (“Bilcon came to Nova Scotia to extract rock, not to build a dock.”)

Return to first footnote 13 referrer

Footnote 14

See for example, Claimants’ Memorial, ¶ 75. See also Expert Report of David Estrin, ¶¶ 96, 135, 153.

Return to first footnote 14 referrer

Footnote 15

As explained by Mr. Buxton, “Quite frankly, if they cannot put in a wharf structure they are not interested in the quarry.” See Thomas Wheaton’s notes of meeting between DFO and GQP, July 25, 2002, p. 3, Exhibit R-127.

Return to first footnote 15 referrer

Footnote 16

See Canada’s Counter-Memorial, ¶¶ 33-42 and the Exhibits cited therein.  As explained in the first Affidavit of Bob Petrie, this conditional approval was issued to Nova Stone only. Under the NSEA industrial approvals cannot be transferred, sold, leased, assigned, or otherwise disposed of without the consent of the Minister. See first Affidavit of Bob Petrie, ¶¶ 15-16.

Return to first footnote 16 referrer

Footnote 17

 See first Affidavit of Bob Petrie, ¶¶ 16-17 and first Affidavit of Stephen Chapman, ¶ 36. See also letter from Paul Buxton to Jean Crépault, August 17, 2004, Exhibit R-94 and Lease Agreement between Bilcon of Nova Scotia and the Linebergers and Johnsons, May 1, 2004, Exhibit R-95.

Return to first footnote 17 referrer

Footnote 18

See first Affidavit of Bob Petrie, ¶¶ 4-14, which explains how Nova Stone deliberately applied to Nova Scotia for an approval of a quarry whose size was just under the threshold that would require an EA under Nova Scotia law.  See also Nova Stone Approval to Construct and Operate a quarry near Little River, Digby County, April 30, 2002, Exhibit R-87 and Canada’s Counter-Memorial, ¶¶ 63-81.

Return to first footnote 18 referrer

Footnote 19

The Claimants complain about the amount of time it took for DFO to arrive at a decision on Nova Stone’s blasting plan which had to be filed as part of the conditional approval for the 3.9 ha quarry (see for example, Claimants’ Reply, ¶ 57).  But in doing so they ignore the fact that Nova Stone took almost five months before filing a rudimentary and incomplete blasting plan to DFO (see Canada’s Counter-Memorial, ¶ 86), and then had to be prompted by DFO for an additional two months before finally providing the missing information (see Canada’s Counter-Memorial, ¶¶ 86-90).

Return to first footnote 19 referrer

Footnote 20

See Notes of Helen MacPhail, June 14, 2002, Exhibit R-171 and first Affidavit of Christopher Daly ¶¶ 24-25 and Canada’s Counter-Memorial, ¶ 92. See also Thomas Wheaton’s notes of meeting between DFO and GQP, July 25, 2002, p. 3, Exhibit R-127 and first Affidavit of Mark McLean, ¶ 25 and Canada’s Counter-Memorial, ¶¶ 93-94.

Return to first footnote 20 referrer

Footnote 21

See Whites Point Quarry – Project Description, faxed from Paul Buxton to Helen MacPhail, September 30, 2002, Exhibit R-129. See also Canada’s Counter-Memorial, ¶ 95.

Return to first footnote 21 referrer

Footnote 22

See second Affidavit of Stephen Chapman, ¶¶ 4-10 and first Affidavit of Mark McLean, ¶¶ 43-44.

Return to first footnote 22 referrer

Footnote 23

See second Affidavit of Stephen Chapman, ¶¶ 6-8 and second Affidavit of Mark McLean, ¶ 5.

Return to first footnote 23 referrer

Footnote 24

See second Affidavit of Stephen Chapman, ¶ 7.

Return to first footnote 24 referrer

Footnote 25

See second Affidavit of Stephen Chapman, ¶ 7, and second Affidavit of Mark McLean, ¶ 8.

Return to first footnote 25 referrer

Footnote 26

See Memorandum for the Minister – Referral of Proposed Whites Point Quarry and Shipping Terminal to the Minister of the Environment for a Panel Review, June 25, 2003, Exhibit R-72 (“DFO believes that the project as proposed, is likely to cause environmental effects over a large area of this rich and diverse marine and terrestrial environment as well as on fisheries and tourism, the two largest economic sectors…. This proposal has generated extensive public and media attention related to its potential environmental and social impacts.  Concerns include impacts on lobster, herring and endangered Bay of Fundy stock of Atlantic salmon, fisheries, marine mammals including the endangered right whale, release of ballast water and introduction of exotic species, loss of tourism and disruption of the local community.” (emphasis added))

Return to first footnote 26 referrer

Footnote 27

See generally, Canada’s Counter-Memorial, ¶¶ 92-115. See also Expert Report of Robert Connelly, ¶¶ 38-40 and first Affidavit of Christopher Daly, ¶ 4, 7.

Return to first footnote 27 referrer

Footnote 28

With respect to the requirement to conduct an EA under the CEAA see generally, Expert Report of Robert Connelly, ¶¶ 34-41 and first Affidavit of Mark McLean, ¶¶ 28 and 35. With respect to the requirement to conduct an EA under the NSEA see first Affidavit of Christopher Daly, ¶¶ 4, 24-32.

Return to first footnote 28 referrer

Footnote 29

For example, in his Reply Expert Report, David Estrin spends 100 paragraphs and 30 pages calling DFO’s scope of project determination into question.  See Reply Expert Report of David Estrin, ¶¶ 28-128.

Return to first footnote 29 referrer

Footnote 30

See Canada’s Counter-Memorial, ¶¶ 116-121.  See also Affidavit of Neil Bellefontaine, ¶¶ 29-34, first Affidavit of Mark McLean, ¶¶ 36-42, first Expert Report of Lawrence Smith, ¶¶ 96-116, and Expert Report of Robert Connelly, ¶¶ 42-46. See also letter from Phil Zamora to Paul Buxton, May 29, 2003, Exhibit R- 55. DFO found that a Fisheries Act authorization was required for blasting on Nova Stone’s 3.9 ha quarry, and as this project was part of the larger Whites Point project it was concluded that there was a Fisheries Act authorization required for the larger quarry − see email from Derek McDonald to Phil Zamora, June 27, 2003, attaching Federal Coordination Request Chart setting out discussions between CEAA and DFO, Exhibit R-552 (“DFO determined that it had a Fisheries Act s. 32 trigger in relation to the blasting plan for a provincially approved 3.9 Ha quarry contained within the proposed 380 acre main quarry site. Since 3.9 Ha quarry will ultimately be part of the larger main quarry, DFO determined that therefore it likely also has a Fisheries Act s. 32 trigger for the main quarry.”). See also letter from Phil Zamora to Stephen Chapman, September 17, 2003, Exhibit R-526 wherein Mr. Zamora advises Mr. Chapman that the 3.9 ha quarry would likely require a s. 32 authorization under the Fisheries Act and that the environmental effects of blasting on the 3.9 ha quarry were expected to be the same as those on the larger Whites Point quarry.

Return to first footnote 30 referrer

Footnote 31

See Canada’s Counter-Memorial, ¶¶ 46, 48. See also first Affidavit of Bob Petrie, ¶ 4 and first Affidavit of Christopher Daly, ¶ 7.  See also, Nova Scotia Environmental Assessment Regulations, Schedule ‘A’,(B)(2)(1) and ss. 9(1), Exhibit R-6.

Return to first footnote 31 referrer

Footnote 32

See Canada’s Counter-Memorial, ¶ 49.  See also generally, first Affidavit of Christopher Daly.

Return to first footnote 32 referrer

Footnote 33

See Canada’s Counter-Memorial, ¶ 45.  See also first Affidavit of Christopher Daly, ¶¶ 4, 7-17 and NSEA, ss. 31-32, Exhibit R-5.

Return to first footnote 33 referrer

Footnote 34

 Letter from Paul Buxton to Derek McDonald, copied to Christopher Daly and attaching third project description, March 10, 2003, Exhibit R-181.

Return to first footnote 34 referrer

Footnote 35

See Canada’s Counter-Memorial, ¶¶ 112-113 and first Affidavit of Mark McLean, ¶ 28. See also memo from Melinda Donovan of NWP to Paul Boudreau of DFO Habitat Management Division, February 17, 2003, Exhibit R-136.

Return to first footnote 35 referrer

Footnote 36

See Canada’s Counter-Memorial, ¶ 114 and first Affidavit of Mark McLean, ¶ 35. See also letter from Thomas Wheaton to Phil Zamora, April 7, 2003, Exhibit R-147. In their Reply, the Claimants assert that a s. 35 authorization for the marine terminal should not have been required, claiming that DFO’s Tony Henderson told Mr. Buxton in 2007 that “Bilcon should have never been required to file a HADD or design a compensation plan” for its marine terminal (Claimants’ Reply ¶ 86, and Supplemental Witness Statement of Paul Buxton, ¶ 31).  This is false. After being made aware of Bilcon’s misrepresentation of his statement, Mr. Henderson advised Mark McLean that he actually stated that “although each pile [used for the marine terminal] may not be a HADD individually, the number of pipe piles, as a whole, would exclude an area utilized by fish, and would lead to a HADD” (emphasis added) – see email from Tony Henderson to Mark McLean, November 20, 2007, Exhibit R-562.

Return to first footnote 36 referrer

Footnote 37

See Canada’s Counter-Memorial, ¶ 115 and first Affidavit of Mark McLean, ¶ 36. See also letter from Phil Zamora to Paul Buxton, April 14, 2003, Exhibit R-54.

Return to first footnote 37 referrer

Footnote 38

See Canada’s Counter-Memorial, ¶¶ 96-102 and 109-111. The decision to harmonize the EA processes was also consistent with one of the overriding purposes of CEAA – “eliminating unnecessary duplication in the environmental assessment process” – see also CEAA, s. 4(b.1), Exhibit R-1.

Return to first footnote 38 referrer

Footnote 39

See Canada’s Counter-Memorial, ¶¶ 146-151.

Return to first footnote 39 referrer

Footnote 40

See Thomas Wheaton’s notes of meeting between DFO and GQP, July 25, 2002, p. 3, (noting the Claimants’ inquiry as to “whether or not the Fed and Prov EA can be done as a joint effort.”) Exhibit R- 127. See also first Affidavit of Mark Mclean, ¶ 25. See also Lorilee Langille’s notes of January 6, 2003 meeting with JRP, Exhibit R-132.

Return to first footnote 40 referrer

Footnote 41

See JRP Agreement, Exhibit R-27.  See also first Expert Report of Lawrence Smith, ¶¶ 126-132 (“The scope of project selected for the joint panel review, which encompassed all aspects of Nova Scotia and federal jurisdiction, superseded any discussion or determinations made earlier by the DFO regarding the scope of the Project.”.

Return to first footnote 41 referrer

Footnote 42

See Expert Report of Robert Connelly, ¶ 102 (“[a]n assessment by a joint review panel must generate the type and quality of information required to meet the legal requirements of each party.  As such, in the terms of reference, the description of the scope of project, the listing of the factors to be considered in the assessment, and the requirements of the panel report will exceed that which would be required under just one of the involved jurisdictions.”).

Return to first footnote 42 referrer

Footnote 43

See letter from Paul Buxton to Christopher Daly, November 11, 2003, Exhibit R-229. See also Canada’s Counter-Memorial, ¶¶ 154-156.

Return to first footnote 43span class="wb-invisible"> referrer

Footnote 44

See Canada’s Counter-Memorial, ¶¶ 116-121.  See also Affidavit of Neil Bellefontaine, ¶¶ 29-34, first Affidavit of Mark McLean, ¶¶ 36-42, first Expert Report of Lawrence Smith, ¶¶ 96-116, and Expert Report of Robert Connelly, ¶¶ 42-46. See also letter from Phil Zamora to Paul Buxton, May 29, 2003, Exhibit R- 55. DFO found that a Fisheries Act authorization was required for blasting on Nova Stone’s 3.9 ha quarry, and as this project was part of the larger Whites Point project it was concluded that there was a Fisheries Act authorization required for the larger quarry − see email from Derek McDonald to Phil Zamora, June 27, 2003, attaching Federal Coordination Request Chart setting out discussions between CEAA and DFO, Exhibit R-552 (“DFO determined that it had a Fisheries Act s. 32 trigger in relation to the blasting plan for a provincially-approved 3.9 Ha quarry contained within the proposed 380 acre main quarry site. Since 3.9 Ha quarry will ultimately be part of the larger main quarry, DFO determined that therefore it likely also has a Fisheries Act s. 32 trigger for the main quarry.”). See also letter from Phil Zamora to Stephen Chapman, September 17, 2003, Exhibit R-526 wherein Mr. Zamora advises Mr. Chapman that the 3.9 ha quarry would likely require a s. 32 authorization under the Fisheries Act and that the environmental effects of blasting on the 3.9 ha quarry were expected to be the same as those on the larger Whites Point quarry.

Return to first footnote 44 referrer

Footnote 45

See Rejoinder Expert Report of Lawrence Smith, ¶4.

Return to first footnote 45 referrer

Footnote 46

See generally, Expert Report of Robert Connelly, ¶¶ 47-51.

Return to first footnote 46 referrer

Footnote 47

 See Canada’s Counter-Memorial, ¶¶ 133-151.

Return to first footnote 47 referrer

Footnote 48

See Reply Expert Report of David Estrin, ¶ 106.

Return to first footnote 48 referrer

Footnote 49

See Affidavit of Neil Bellefontaine, ¶¶ 36-37. See also email from Melinda Donovan to Tim Surrette, Neil Bellefontaine and others, March 4, 2003, Exhibit R-57.  See also letters of concern from April of 2002 to August of 2003, Exhibit R-170. See also “Expressions of Public Concern at the Whites Point JRP Hearing Over the Proposed Whites Point Marine Terminal, Exhibit R-535, which Canada has prepared for the purposes of the arbitration.

Return to first footnote 49 referrer

Footnote 50

See for example, Affidavit of Neil Bellefontaine, ¶¶ 23-28 and Sample Letters of Concern to Minister Robert Thibault on Whites Point Project, April – September 2002, Complied for Affidavit of Neil Bellefontaine, Exhibit R-53. See also letter from Paul Boudreau to Christopher Daly, June 20, 2003, Exhibit R-70 (“DFO believes that the Whites Point Quarry and Marine Terminal Project as proposed is likely to cause environmental effects over a large area on both the land and marine environments.”(emphasis added)).

Return to first footnote 50 referrer

Footnote 51

See Claimants’ Reply, ¶¶ 495-496.

Return to first footnote 51 referrer

Footnote 52

See Claimants’ Reply, ¶ 534.

Return to first footnote 52 referrer

Footnote 53

See Canada’s Counter-Memorial, ¶ 134 and Christopher Daly’s notes of January 6, 2003 meeting with GQP, Exhibit R-178, wherein the possibility of the Whites Point project being referred to a panel was discussed with Mr. Buxton (“Bill also talked about possibility of a panel > likely significant effects > public concerns.”). See also Canada’s Counter-Memorial, ¶ 137 and letter from Phil Zamora to Paul Buxton, April 14, 2003, Exhibit R-54, wherein Mr. Zamora advised Mr. Buxton that “although the type of assessment being used for this project is a CS [Comprehensive Study], CEAA (Section 23) includes the provision that the project could be referred to a mediator or review panel.”

Return to first footnote 53 referrer

Footnote 54

See for example Reply Expert Report of David Estrin ¶ 38 wherein Mr. Estrin uses the benefit of hindsight in criticizing DFO’s assumption of jurisdiction over the quarry by citing an internal 2007 DFO memorandum that “informed the ADM that DFO could not provide the Joint Panel with any definite predictions of harm to marine life from quarry blasting.  To the contrary, in DFO’s own words, “it is expected that any impacts would be minimal.”  This memo, issued over four years after NSDEL and DFO acted on their initial concerns over quarrying at Whites Point and with the benefit of the EA having run its course, in no way impugns the legitimacy of NSDEL’s and DFO’s initial concerns.

Return to first footnote 54 referrer

Footnote 55

Expert Report of Robert Connelly, ¶ 52.

Return to first footnote 55 referrer

Footnote 56

See for example, second Affidavit of Bob Petrie, ¶ 5. See also Affidavit of Neil Bellefontaine, ¶¶ 32-33.

Return to first footnote 56 referrer

Footnote 57

See Expert Report of Robert Connelly, ¶ 52 (“As noted by the Supreme Court of Canada in the Oldman River dam case, the environmental assessment process that ensues after the type of assessment decision is made serves the purpose of gathering the relevant information that will provide the decision-maker with an objective basis for ultimately granting or denying approval of a proposed project.”).

Return to first footnote 57 referrer

Footnote 58

See Expert Report of Robert Connelly, ¶ 103. See also Expert Report of Robert Connelly, ¶¶ 102, 104 and first Expert Report of Lawrence Smith, ¶132, 230-246 (“In this regard, it is important to recognize that as the review process was a joint process, it necessarily included all aspects of the Whites Point Project that required review under both the Nova Scotia Environment Act and the CEAA.”

Return to first footnote 58 referrer

Footnote 59

 See CEAA s. 2, Exhibit R-1. See also, Expert Report of Robert Connelly, ¶ 73 and first Expert Report of Lawrence Smith, ¶ 284.

Return to first footnote 59 referrer

Footnote 60

See NSEA s. 3, Exhibit R-5. See also first Affidavit of Christopher Daly, ¶ 5.

Return to first footnote 60 referrer

Footnote 61

 See Expert Report of David Estrin, ¶ 230 (“inconsistency with community core values … is a pure socio- economic effect”).  See also Reply Expert Report of David Estrin, ¶ 306 (“It is beyond debate that … whether the WPQ would offend the community’s core values, are purely local matters falling under the exclusive jurisdiction of the provincial government”) and ¶ 311 (“The only significant adverse environmental effects cited by the Panel were on community core values, matters of provincial jurisdiction.”).

Return to first footnote 61 referrer

Footnote 62

JRP Agreement, ¶ 4.1, Exhibit R-27.

Return to first footnote 62 referrer

Footnote 63

JRP Agreement, ¶ 6.3 and Appendix – Terms of Reference for the Joint Review Panel, Part III (“Scope of the Environmental Assessment and Factors to be considered in the Review”), Exhibit R-27.

Return to first footnote 63 referrer

Footnote 64

EIS Guidelines, p. 45, Exhibit R-210.  For an overview of the socio-economic factors that were to be addressed pursuant to the EIS Guidelines, see first Expert Report of Lawrence Smith, ¶¶ 262-275.

Return to first footnote 64 referrer

Footnote 65

See, e.g. Expert Report of David Estrin, ¶¶ 228-267 (see in particular, ¶ 237 – “the Panel had no legal basis to recommend rejection of the project under CEAA.”)

Return to first footnote 65 referrer

Footnote 66

See first Expert Report of Lawrence Smith, ¶ 290. See also ¶¶ 282-291.

Return to first footnote 66 referrer

Footnote 67

See Expert Report of Robert Connelly, ¶¶ 125-126, 130.

Return to first footnote 67 referrer

Footnote 68

See Expert Report of Robert Connelly, ¶ 131 (“if one jurisdiction decides that a project should not proceed or that a decision to enable a project to proceed should not be allowed, then the decision of the other jurisdiction effectively becomes moot.  A project cannot proceed in such a circumstance as the approval of both levels of government is required.”). See also Rejoinder Expert Report of Lawrence Smith, ¶¶ 206-209.

Return to first footnote 68 referrer

Footnote 69

Reply Expert Report of David Estrin, ¶¶ 301-318.

Return to first footnote 69 referrer

Footnote 70

See Rejoinder Expert Report of Lawrence Smith, ¶ 214.

Return to first footnote 70 referrer

Footnote 71

See Claimants’ Reply, ¶¶ 528-531 and Reply Expert Report of David Estrin, ¶¶ 301-318..

Return to first footnote 71 referrer

Footnote 72

See Thomas Wheaton’s notes of meeting between DFO and GQP, July 25, 2002, p. 3, Exhibit R-27. See also first Affidavit of Mark McLean, ¶ 25 and Canada’s Counter-Memorial, ¶¶ 93-94.

Return to first footnote 72 referrer

Footnote 73

See Rejoinder Expert Report of Lawrence Smith, ¶ 205. Notably, the Claimants’ Expert does not dispute that Nova Scotia had the authority to reject the project based on socio-economic effects. See Expert Report of David Estrin, ¶ 230 (“inconsistency with community core values … is a pure socio-economic effect”). See also Reply Expert Report of David Estrin, ¶ 306 (“It is beyond debate that … whether the WPQ would offend the community’s core values, are purely local matters falling under the exclusive jurisdiction of the provincial government”) and ¶ 311 (“The only significant adverse environmental effects cited by the Panel were on community core values, matters of provincial jurisdiction.”).

Return to first footnote 73 referrer

Footnote 74

 See for example first Expert Report of Lawrence Smith, ¶ 444 (“With the provincial decision having been made, the Project could not proceed. As noted, the Nova Scotia government rejected the Project prior to the federal government’s decision rejecting the project. Accordingly, the federal government decision, whether flawed or not (and I am of the opinion it was not), was somewhat of an academic point.”).

Return to first footnote 74 referrer

Footnote 75

See Reply Expert Report of David Estrin, ¶¶ 327-352, in particular ¶ 352.

Return to first footnote 75 referrer

Footnote 76

See second Affidavit of Christopher Daly, ¶ 4.

Return to first footnote 76 referrer

Footnote 77

See Canada’s Counter-Memorial ¶¶ 208, 212. See also letter from Minister of the Environment and Labour to Paul Buxton, November 20, 2007, Exhibit R-331, and News Release – The Government of Canada Accepts Panel Conclusion for the Whites Point Quarry and Marine Terminal, December 18, 2007, Exhibit R-161.

Return to first footnote 77 referrer

Footnote 78

Rejoinder Expert Report of Lawrence Smith, ¶ 211.

Return to first footnote 78 referrer

Footnote 79

See for example the documents cited in the Reply Expert Report of David Estrin, ¶¶ 333, 334, 336, 338, 339 and 341.

Return to first footnote 79 referrer

Footnote 80

See second Affidavit of Christopher Daly, ¶4.

Return to first footnote 80 referrer

Footnote 81

Vito G. Gallo v. Government of Canada, PCA Case No. 55798, Award, 15 September 2011, ¶ 277, RA- 87.

Return to first footnote 81 referrer

Footnote 82

 See Claimants’ Memorial, ¶¶ 459-460. See also Claimants’ Reply, ¶ 481.  These allegations are all made in support of the Claimants’ claim that Canada violated Article 1105.  They make a similar argument that the alleged imposition of blasting conditions in Nova Stone’s industrial approval violated Article 1102 – see Claimants’ Reply, ¶¶ 617-648.

Return to first footnote 82 referrer

Footnote 83

See Canada’s Counter-Memorial, ¶¶ 215-221.

Return to first footnote 83 referrer

Footnote 84

Claimants’ Reply, ¶ 698.

Return to first footnote 84 referrer

Footnote 85

Claimants’ Reply, ¶ 481.

Return to first footnote 85 referrer

Footnote 86

 See the facts set out in Canada’s Counter-Memorial, ¶¶ 63-81.

Return to first footnote 86 referrer

Footnote 87

 See Partnership Agreement between Bilcon and Nova Stone, May 2, 2002, Exhibit R-293.

Return to first footnote 87 referrer

Footnote 88

See first Affidavit of Bob Petrie, ¶ 15.  See also NSEA, s. 59(1), Exhibit R-5.

Return to first footnote 88 referrer

Footnote 89

Claimants’ Reply, ¶ 710.

Return to first footnote 89 referrer

Footnote 90

Impregilo S.p.A. v. Pakistan, ICSID Case No. ARB/03/3, Decision on Jurisdiction, April 22, 2005, ¶¶ 154-155, RA-88.

Return to first footnote 90 referrer

Footnote 91

See first Affidavit of Bob Petrie, ¶ 7 and Nova Stone, Application for Approval, February 18, 2002, Exhibit R-75.

Return to first footnote 91 referrer

Footnote 92

See first Affidavit of Bob Petrie, ¶ 8 and Nova Stone, Application for Approval, April 23, 2002, Exhibit R-78.

Return to first footnote 92 referrer

Footnote 93

See first Affidavit of Bob Petrie, ¶ 14 and Nova Stone Approval to Construct and Operate a quarry near Little River, Digby County, April 30, 2002, Exhibit R-87.

Return to first footnote 93 referrer

Footnote 94

See Canada’s Counter-Memorial, ¶ 217 wherein the Methanex Tribunal is cited as concluding that “If the threshold provided by Article 1101(1) were merely one of ‘affecting,’ as Methanex contends, it would be satisfied wherever any economic impact was felt by an investor or an investment.”

Return to first footnote 94 referrer

Footnote 95

Article 1116(2) provides that:  “An investor may not make a claim if more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.”

Return to first footnote 95 referrer

Footnote 96

See Canada’s Counter-Memorial, at ¶¶ 224-258. As noted in Canada’s Counter-Memorial, the disputing parties have agreed that the commencement date of this arbitration was June 17, 2008 – see letter from Meg Kinnear to Barry Appleton, June 18, 2008, Exhibit R-501 and letter from Barry Appleton to Meg Kinnear, August 5, 2008, Exhibit R-502.

Return to first footnote 96 referrer

Footnote 97

See Claimants’ Reply, ¶ 700.

Return to first footnote 97 referrer

Footnote 98

See Canada’s Counter-Memorial, ¶ 238, wherein it cited the Mondev Tribunal’s finding that “there is a distinction between an act of a continuing character and an act, already completed, which continues to cause loss or damage.” See also Mondev – Award, ¶ 58, RA-46.

Return to first footnote 98 referrer

Footnote 99

The Claimants blatantly misrepresent Canada’s position on the relevance of “continuing measures” to the analysis that must be conducted under Article 1116(2).  In ¶ 715 of their Reply the Claimants quote Canada as having “admitted” that the NAFTA “authorizes investors to make Chapter Eleven claims based on continuing measures.”  However, the paragraph references to Canada’s Counter-Memorial they cite in support do not reflect Canada as having made this statement.  Nor did it. Canada did acknowledge in ¶ 240 of its Counter-Memorial that the NAFTA Parties contemplated that measures which might be construed as “continuing” could be challenged under Chapter Eleven, given that Article 1101 provides that Chapter Eleven applies to “measures adopted or maintained” by a Party. However, the Claimants ignore the key point made by Canada in connection with this statement – notwithstanding that continuing measures may be the subject of a NAFTA claim, “[t]he running of the time bar is to be calculated from the “first” acquisition of relevant knowledge, not subsequent, repeated or ultimate acquisition of such knowledge” – see Canada’s Counter-Memorial, ¶ 240.

Return to first footnote 99 referrer

Footnote 100

 See Claimants’ Reply, ¶ 700.

Return to first footnote 100 referrer

Footnote 101

See Affidavit of Bob Petrie, ¶ 17 and Canada’s Counter-Memorial, ¶¶ 158-160.  In ¶ 721 of their Reply, the Claimants appear to cite the award of the Grand River Tribunal as support for their argument that measures taken in connection with the industrial approval for the 3.9 ha quarry are not time barred. However, the measures the Claimants complain of here are in no way like the measures at issue in the Grand River arbitration.  In that case, the Tribunal found that certain measures were not time-barred because they were taken within three years of the initiation of the claim - see Grand River – Jurisdiction Decision, ¶¶ 84-90, RA-30.  The same cannot be said for any of the measures the Claimants complain of in connection with Nova Stone’s industrial approval.

Return to first footnote 101 referrer

Footnote 102

See JRP Report, p. 14, Exhibit R-212.

Return to first footnote 102 referrer

Footnote 103

See Claimants’ Reply, ¶ 727.

Return to first footnote 103 referrer

Footnote 104

See for example, Grand River – Jurisdiction Decision, ¶ 77, RA-30 (“A party is said to incur losses, expenses, debts or obligations, all of which may significantly damage the party’s interests, even if there is no immediate outlay of funds or if the obligations are to be met through future conduct. Moreover, damage or injury may be incurred even though the amount or extent may not become known until some future time.”).  See also Mondev – Award, ¶ 87, RA-46 (“a claimant may know that it has suffered loss or damage even if the extent or quantification of the loss or damage is still unclear.”). See also UPS – Award, ¶ 29, RA-79 (“The fact that the exact magnitude of the loss was not yet finally determined would not have been enough… to avoid the time bar if the time bar otherwise would have applied.”).

Return to first footnote 104 referrer

Footnote 105

See letter from Paul Buxton to NSDEL, June 25, 2003, Exhibit R-382.

Return to first footnote 105 referrer

Footnote 106

Excerpt from 2003 Journal of Derek McDonald, June 10, 2003, Exhibit R-551.

Return to first footnote 106 referrer

Footnote 107

See Canada’s Counter-Memorial, ¶¶ 259-266.

Return to first footnote 107 referrer

Footnote 108

Claimants’ Reply, ¶¶ 700-703.

Return to first footnote 108 referrer

Footnote 109

See Canada’s Counter-Memorial, ¶ 238.

Return to first footnote 109 referrer

Footnote 110

Claimants’ Reply, ¶ 742.  Perplexingly, the Claimants also allege that these measures did not lead to loss or damage until the governments of Nova Scotia and Canada accepted the recommendations of the JRP Report. The Claimants have given no explanation why these extra costs and expenses that they allege do not constitute damages within the meaning of Article 1116(2). If the Claimants do not consider these costs and expenses as damages, then they should not be compensable in this arbitration.

Return to first footnote 110 referrer

Footnote 111

See Canada’s Counter-Memorial, ¶¶ 262-264.

Return to first footnote 111 referrer

Footnote 112

Canada’s Counter-Memorial, ¶¶ 267-270. To be clear, there is no dispute that Canada is responsible for the acts of DFO, the Agency and NSDEL, as such entities are organs of the governments of Canada and Nova Scotia. There is also no dispute that Canada is responsible as a matter of international law for the acts of the Minister of Fisheries and Oceans, the Minister of the Environment or the Nova Scotia Minister of Environment and Labour when they act in their Ministerial capacities. Finally, there is no dispute between the parties that Canada is responsible for the acts of Nova Scotia, one of its constituent political subdivisions.

Return to first footnote 112 referrer

Footnote 113

Canada’s Counter-Memorial, ¶¶ 271-297.

Return to first footnote 113 referrer

Footnote 114

 Claimants’ Reply, ¶¶ 747-750, 756-758. As Canada explained in its Counter-Memorial, at customary international law, an assertion that an entity is an organ of a State because it is recognized by that State’s internal law as such, is an argument that the entity is a de jure organ. See Canada’s Counter-Memorial, ¶ 272 and Genocide Convention case, ¶¶ 386, RA-12. Notably, in their Reply the Claimants seem to abandon any argument that the JRP should be considered a de facto organ of Canada. At least, none of the allegations made seem to relate to such an argument in any clearly discernable way. Regardless, even if they had intended to pursue this argument, they offer no evidence that would come even close to meeting their burden of establishing the JRP’s “complete dependence” on Canada, and Canada’s “complete control” of the JRP. To the extent necessary, Canada reiterates the arguments that it made on this point in its Counter-Memorial, ¶¶ 280-285.

Return to first footnote 114 referrer

Footnote 115

Claimants’ Reply, ¶¶ 751-755, 759-762.

Return to first footnote 115 referrer

Footnote 116

Claimants’ Reply, ¶¶ 763-764.

Return to first footnote 116 referrer

Footnote 117

As noted below, ¶¶ 773-782 of the Claimants’ Reply seem to be a response to Canada’s objection to the jurisdiction of the Tribunal to consider the decision of the government of Canada to refuse to issue the requested authorization on the grounds that the decision was not capable of causing the Claimants harm.

Return to first footnote 117 referrer

Footnote 118

Canada’s Counter-Memorial, ¶¶ 277-279.

Return to first footnote 118 referrer

Footnote 119

Mckinney v. University of Guelph [1990], 3 S.C.R. 229 at p. 48, Exhibit R-384.

Return to first footnote 119 referrer

Footnote 120

Claimants’ Reply, ¶ 758.

Return to first footnote 120 referrer

Footnote 121

Godbout v. Longueuil (City), 1997 CanLII 335 (SCC), [1997] 3 SCR 844, CA-214, ¶ 49.

Return to first footnote 121 referrer

Footnote 122

In certain instances, the Claimants appear to confuse the issue of delegated governmental authority with the question of whether an entity is an organ. See Claimants Reply, ¶¶ 759-760.  As the ICJ has made clear, these are distinct legal concepts, and exercising delegated governmental authority does not turn an entity into an organ of the government. See Genocide Convention Case, ¶ 397, RA-12.

Return to first footnote 122 referrer

Footnote 123

See Canada’s Counter-Memorial, ¶¶ 294-297.

Return to first footnote 123 referrer

Footnote 124

 See Canada’s Counter-Memorial, ¶¶ 289-293.

Return to first footnote 124 referrer

Footnote 125

Jan de Nul v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Award, November 6, 2008, RA-33, ¶¶ 155-174.

Return to first footnote 125 referrer

Footnote 126

 Jan de Nul, RA-33, ¶ 97.

Return to first footnote 126 referrer

Footnote 127

Claimants’ Reply, ¶¶ 756-761.

Return to first footnote 127 referrer

Footnote 128

Claimants’ Reply, ¶ 758, citing Godbout ¶¶ 44-45.

Return to first footnote 128 referrer

Footnote 129

See Canada’s Counter-Memorial ¶¶ 283-284.

Return to first footnote 129 referrer

Footnote 130

ILC Articles, RA-61.

Return to first footnote 130 referrer

Footnote 131

Genocide Convention case, RA-12, ¶ 400.

Return to first footnote 131 referrer

Footnote 132

ILC Articles, RA-61.

Return to first footnote 132 referrer

Footnote 133

 ILC Articles and Commentary to Article 11, Cmt 7, p, 53, RA-60.

Return to first footnote 133 referrer

Footnote 134

 ILC Articles and Commentary to Article 11, Cmt 6, p, 53, RA-60.

Return to first footnote 134 referrer

Footnote 135

 See Canada’s Counter-Memorial, ¶¶ 298-301.

Return to first footnote 135 referrer

Footnote 136

Claimants’ Reply, ¶ 779. Oddly and confusingly, the Claimants’ response comes in the section dealing with whether or not the acts of the JRP can be considered measures of Canada at international law. Claimants’ Reply, ¶¶ 773-782.

Return to first footnote 136 referrer

Footnote 137

 See Canada’s Counter-Memorial, ¶¶ 92-93.  See also Thomas Wheaton’s notes of meeting between DFO and representatives of the Claimants, July 25, 2002, Exhibit R-127.

Return to first footnote 137 referrer

Footnote 138

CLC Minutes, January 9, 2003, p. 109, Exhibit R-299.

Return to first footnote 138 referrer

Footnote 139

 Letter from Minister of the Environment and Labour to Paul Buxton, November 20, 2007, Exhibit R- 331.

Return to first footnote 139 referrer

Footnote 140

Claimants’ Reply, ¶ 779.

Return to first footnote 140 referrer

Footnote 141

 See Canada’s Counter-Memorial, ¶¶ 210 and 300. See also First Expert Report of Lawrence Smith, ¶ 444.

Return to first footnote 141 referrer

Footnote 142

See second Affidavit of Christopher Daly, ¶ 4.

Return to first footnote 142 referrer

Footnote 143

 Reply Expert Report of David Estrin, ¶¶ 327-352 and Expert Report of Murray Rankin, ¶ 164.

Return to first footnote 143 referrer

Footnote 144

See paragraph 6.7 of the “Agreement Concerning the Establishment of a Joint Review Panel for the Whites Point Quarry and Marine Terminal,” which required the Minister to “consider the recommendation of the Panel, and either approve with conditions, or reject the Project.” See Exhibit R-27.

Return to first footnote 144 referrer

Footnote 145

 See second Affidavit of Christopher Daly, ¶ 4.

Return to first footnote 145 referrer

Footnote 146

 Claimants’ Reply ¶ 782.

Return to first footnote 146 referrer

Footnote 147

Compare for example the Expert Report of Murray Rankin, ¶¶ 26, 174 (“The applicable standard of review the decisions made by the Ministers with respect to the Bilcon EA process is reasonableness…”) (sic); (“By not confining itself to the parameters of its enabling legislation and Terms of Reference, the JRP abused its discretion. And the manner in which it conducted its hearing was a flagrant violation of Bilcon’s rights of natural justice and procedural fairness.”); with the Claimants’ Memorial, ¶ 304: (“NAFTA Article
1105 […] confirms that treatment be in accordance with the requirements of jus aequum – fairness and reasonableness”) and Reply, ¶¶ 543, 508: (“All seven of the JRP recommendations exceeded the JRP’s Terms of Reference”); (“The Panel’s lack of impartiality was reflected in the content and tone of its Report.”).

Return to first footnote 147 referrer

Footnote 148

Article 3 of the ILC’s Articles on State Responsibility, RA-61 establishes a fundamental distinction between lawfulness as a matter of domestic law and as a matter of international responsibility: “The characterization of an act of a State as internationally wrong is governed by international law. Such characterization is not affected by the characterization of the same act as lawful by internal law.”

Return to first footnote 148 referrer

Footnote 149

See Canada’s Counter-Memorial, ¶¶306-312.

Return to first footnote 149 referrer

Footnote 150

 Mobil Investments Canada Inc. & Murphy Oil Corporation v. Canada (ICSID Case No.ARD(AF)07/4) Decision on Liability and on Principles of Quantum , 22 May 2012, ¶135, RA-89 citing to Cargill- Award, ¶268; see also ¶ 152 (“…the minimum standard of treatment guaranteed by Article 1105 is that which is reflected in customary international law on the treatment of aliens.”).

Return to first footnote 150 referrer

Footnote 151

Claimants’ Reply, ¶ 174.

Return to first footnote 151 referrer

Footnote 152

Claimants’ Reply, ¶¶ 176-188.

Return to first footnote 152 referrer

Footnote 153

Claimants’ Reply, ¶¶ 192-195.

Return to first footnote 153 referrer

Footnote 154

Claimants’ Reply, ¶174.

Return to first footnote 154 referrer

Footnote 155

Claimants’ Reply, ¶179.

Return to first footnote 155 referrer

Footnote 156

Claimants’ Reply, ¶188.

Return to first footnote 156 referrer

Footnote 157

Claimants’ Reply, ¶¶ 189, 191.

Return to first footnote 157 referrer

Footnote 158

ADF-Award, ¶ 177, RA-1.

Return to first footnote 158 referrer

Footnote 159

Methanex-Award, Part IV-Chapter C, ¶9, 20, RA-44.

Return to first footnote 159 referrer

Footnote 160

Claimants’ Reply, ¶ 179 (citing to Christoph Schreuer, “Fair and Equitable Treatment in Arbitral Practice”, 6:3, The Journal of World Investment & Trade (June 2005), 360).

Return to first footnote 160 referrer

Footnote 161

Christoph Schreuer, “Fair and Equitable Treatment in Arbitral Practice”, 6:3, The Journal of World Investment & Trade (June 2005), 361, RA-90.

Return to first footnote 161 referrer

Footnote 162

Claimants’ Reply, ¶ 182.

Return to first footnote 162 referrer

Footnote 163

See UNCTAD, Fair and Equitable Treatment – UNCTAD Series on Issues in International Investment Agreements II, UN Doc. UNCTAD/DIAE/IA/2011/5 (2012) at pp.23-24, RA-91.

Return to first footnote 163 referrer

Footnote 164

See e.g. S.D. Myers v. Canada, Mexico’s 1128 Submission (January 14, 2000), ¶28, RA-92 (“Article 1105 does not expand the standard of treatment recognized in customary international law. Rather, it is a minimum standard that reflects the expectation in international law that governments will act in good faith and will not subject foreign investors to abusive or discriminatory treatment, nor fail to accord them full protection and security.”); Methanex Corp v. United States, Second Submission of Canada Pursuant to Article 1128, ¶ 26, RA-93 (“Article 1105 incorporates the international minimum standard of treatment recognized by customary international law.”); Pope & Talbot v. Canada, Fourth Submission of the United States of America, pp.1-2, RA-104 ("the obligation of Article 1105(1), by its plain terms, is to provide 'treatment in accordance with international law.' '[F]air and equitable treatment' and 'full protection and security' are provided as examples of the customary international law standards incorporated into Article 1105(1). The plain language and structure of Article 1105(1) requires those concepts to be applied as and to the extent that they are recognized in customary international law." See also Mondev v. United States - Counter Memorial of the United States, pp.33-34, RA-105; Loewen v. United States-Counter Memorial of the United States, pp.170-171, RA-106; United Mexican States v. Metalclad Corp., Vancouver Registry No. L002904 (Brit. Colum. S. Ct .), Outline of Argument of Intervenor Attorney General of Canada at 17 ¶ 48, RA-94. For example, Canada’s Statement of Implementation for NAFTA indicates that the intent of Article 1105 is “to assure a minimum standard of treatment of investments of NAFTA investors” and to provide for “a minimum absolute standard of treatment, based on long-standing principles of customary international law.” Canada, Department of Foreign Affairs and International Trade, Statement of Implementation: North American Free Trade Agreement, vol.128, no.1 (Ottawa: Canada Gazette, 1994), p.149 (“Statement of Implementation: NAFTA”), RA-85.

Return to first footnote 164 referrer

Footnote 165

 Claimants’ Reply, ¶ 179 (citing to Christoph Schreuer, “Fair and Equitable Treatment in Arbitral Practice”, 6:3, The Journal of World Investment & Trade (June 2005), 360).

Return to first footnote 165 referrer

Footnote 166

Christoph Schreuer, “Fair and Equitable Treatment in Arbitral Practice”, 6:3, The Journal of World Investment & Trade (June 2005), 362, and generally 362-364, RA-90.

Return to first footnote 166 referrer

Footnote 167

Claimants’ Reply, ¶ 180.

Return to first footnote 167 referrer

Footnote 168

Rudolph Dolzer & Margarete Stevens, Bilateral Investment Treaties (London: Martinus Nihoff Publishers, 1995), 60. RA-95.

Return to first footnote 168 referrer

Footnote 169

Claimants’ Reply, ¶ 195.

Return to first footnote 169 referrer

Footnote 170

Claimants’ Reply,¶¶ 194-195 (“Resolving international legal disputes in accordance with all the rules and principles of international law is thus a part of customary international law.”). The Claimants’ reliance on ICJ Statute, section 38 is a non sequitur. The fact that the provision refers to all the sources of international law does not by itself establish the existence of a rule of customary international law.

Return to first footnote 170 referrer

Footnote 171

The Claimants’ confusion is made clear in the heading of the relevant section “It is Customary to Interpret Treaties in Accordance with All Sources of International Law”. It is also clear when the Claimants refer to “[t]he established practice” and “as is customary” in reference to their alleged rule. (see Claimants’ Reply, ¶¶ 192, 195).

Return to first footnote 171 referrer

Footnote 172

See Canada’s Counter-Memorial, ¶¶ 313-318.

Return to first footnote 172 referrer

Footnote 173

Claimants’ Reply, ¶240.

Return to first footnote 173 referrer

Footnote 174

Claimants’ Reply, ¶¶ 240, 242.

Return to first footnote 174 referrer

Footnote 175

Claimants’ Reply, ¶ 240.

Return to first footnote 175 referrer

Footnote 176

Cargill-Award, ¶271, RA-11

Return to first footnote 176 referrer

Footnote 177

Canada’s Counter-Memorial, ¶¶ 319-325.

Return to first footnote 177 referrer

Footnote 178

Mobil – Decision on Liability and on Principles of Quantum, ¶¶ 152-153, RA-89.

Return to first footnote 178 referrer

Footnote 179

Claimants’ Reply, ¶ 230.

Return to first footnote 179 referrer

Footnote 180

Claimants’ Reply, ¶¶ 196-209.

Return to first footnote 180 referrer

Footnote 181

 Claimants’ Reply, ¶ 200.

Return to first footnote 181 referrer

Footnote 182

 Claimants’ Reply, ¶ 202.

Return to first footnote 182 referrer

Footnote 183

See Canada’s Counter-Memorial, ¶ 314.

Return to first footnote 183 referrer

Footnote 184

Sir Hersch Lauterpacht, The Development of International Law by the International Court (London:Stevens, 1958), at p.20-21, RA-96: "[d]ecisions of international courts are not a source of international law…[t]hey are not direct evidence of the practice of States or of what States conceive to be the law”; Maurice H. Mendelson, “The Formation of Customary International Law” (1998) 272 Rec. des Cours 155 at p.202, RA-97; Mohamed Shahabuddeen, Precedent in the World Court, (Cambridge: Cambridge University Press, 1996) at p.71, RA-98; London Statement of Principles Applicable to the Formation of General Customary International Law, with commentary: Resolution 16/2000 (Formation of General Customary International Law), adopted on 29 July 2000 by the International Law Association: International Law Association, Report of the Sixty-ninth Conference, London, p.39 (“Although international courts and tribunals ultimately derive their authority from States, it is not appropriate to regard their decisions as a form of State practice”.) RA-99.

Return to first footnote 184 referrer

Footnote 185

Glamis-Award, ¶ 605, RA-29; Cargill-Award, ¶ 277, RA-11.

Return to first footnote 185 referrer

Footnote 186

Case Concerning Delimitation of the Maritime Boundary in the Gulf of Maine Area (Canada/United States of America), - Judgement, ¶¶ 91-92, RA-100. The ICJ referred to its prior decision in the North Sea Continental Shelf cases where the court held that the equidistance principle to delineate maritime boundaries is not a rule of customary international law based on state practice and a lack of opinio juris. North Sea Continental Shelf Cases – Judgement, ), [1969] I.C.J. Rep. 3, ¶¶ 60-82, RA-101. Similarly, the ADF Tribunal’s reference to judicial or arbitral case law as a source of customary international law cannot be understood to contradict this fundamental point and must rather be understood as a reference to awards and decisions analyzing state practice and opinio juris.

Return to first footnote 186 referrer

Footnote 187

Claimants’ Reply, ¶¶ 233-236.

Return to first footnote 187 referrer

Footnote 188

Claimants’ Reply, ¶¶ 205-209, 236.

Return to first footnote 188 referrer

Footnote 189

 Glamis-Award, ¶ 608, RA-29.  See also Cargill-Award, ¶ 278, RA-11.

Return to first footnote 189 referrer

Footnote 190

For example, there is no reference to the customary international minimum standard of treatment in the applicable BIT in the Bogdanov, Eureko, Continental Casualty, Azurix and Siemens arbitrations and those tribunals did not undertake any analysis of state practice or opinio juris.

Return to first footnote 190 referrer

Footnote 191

Azurix-Award, ¶ 361, RA-6; Rumeli Teledom A.S. and Telsim Mobil Telekomikasyon Hizmetleri A.S., v. Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008, ¶ 611, RA-107.

Return to first footnote 191 referrer

Footnote 192

CMS Gas – Award, ¶ 284, RA-102.

Return to first footnote 192 referrer

Footnote 193

 Claimants’ Reply, ¶ 233.

Return to first footnote 193 referrer

Footnote 194

Saluka-Award, ¶ 294, RA-86.

Return to first footnote 194 referrer

Footnote 195

Claimants’ Reply, ¶ 235.

Return to first footnote 195 referrer

Footnote 196

MTD Equity – Award, ¶¶ 111-112, RA-103.

Return to first footnote 196 referrer

Footnote 197

 Claimants’ Reply, ¶¶ 481-500.

Return to first footnote 197 referrer

Footnote 198

Claimants’ Reply, ¶¶ 501-507.

Return to first footnote 198 referrer

Footnote 199

Claimants’ Reply, ¶¶ 508-526.

Return to first footnote 199 referrer

Footnote 200

Claimants’ Reply, ¶¶ 527-531.

Return to footnote 200 referrer

Footnote 201

Claimants’ Reply, ¶¶ 532-536.

Return to footnote 201 referrer

Footnote 202

Claimants’ Reply, ¶¶ 537-544.

Return to first footnote 202 referrer

Footnote 203

Claimants’ Reply, ¶¶ 545-549.

Return to first footnote 203 referrer

Footnote 204

Claimants’ Reply, ¶¶ 550-552.

Return to first footnote 204 referrer

Footnote 205

Claimants’ Reply, ¶¶ 553-565.

Return to first footnote 205 referrer

Footnote 206

 Claimants’ Reply, ¶¶ 566-574.

Return to first footnote 206 referrer

Footnote 207

Claimants’ Reply, ¶483.

Return to first footnote 207 referrer

Footnote 208

Claimants’ Reply, ¶ 481.

Return to first footnote 208 referrer

Footnote 209

 See Canada’s Counter-Memorial, ¶¶ 336-338.

Return to first footnote 209 referrer

Footnote 210

 Rejoinder Expert Report of Lawrence Smith, ¶ 34.

Return to first footnote 210 referrer

Footnote 211

Second Affidavit of Bob Petrie, ¶ 5.

Return to first footnote 211 referrer

Footnote 212

Second Affidavit of Bob Petrie, ¶ 6.

Return to first footnote 212 referrer

Footnote 213

Claimants’ Reply, ¶¶ 494-500.

Return to first footnote 213 referrer

Footnote 214

See first Affidavit of Bob Petrie, ¶¶ 10-11 and second Affidavit of Bob Petrie, ¶¶ 4-5.

Return to first footnote 214 referrer

Footnote 215

See Canada’s Counter-Memorial, ¶ 72.  See also email from Brian Jollymore to Bob Petrie, April 26, 2002, Exhibit R-86 and first Affidavit of Mark McLean, ¶ 13. In their Reply, the Claimants make much of the fact that certain officials at DFO, including Rod Bradford and Jerry Conway, did not share the concerns held by others.  Claimants’ Reply, ¶¶ 58 and 494.  As Canada has consistently pointed out, that officials may differ on questions of science is unremarkable, and such debates are not a sign of any impropriety.  See first Affidavit of Mark McLean  ¶ 21; see also Affidavit of Bob Petrie, ¶ 5; Affidavit of Neil Bellefontaine, ¶¶ 32-33.

Return to first footnote 215 referrer

Footnote 216

See Canada’s Counter-Memorial , ¶¶ 83-85.  See also Report of Dr. Paul Brodie re: Proposed blasting activity at Whites Point, June 19, 2002, p. 4, Exhibit R-301.

Return to first footnote 216 referrer

Footnote 217Nova Stone, Application for Approval to Operate a Quarry, Little River, Digby County, February 18, 2002, Exhibit R-75.  See in particular s. 2.1.2.1 of Nova Stone’s Project Description, attached to its Application, which raised the concern of the impacts of blasting on whales.

Return to first footnote 217 referrer

Footnote 218

See first Affidavit of Mark McLean, ¶¶ 21, 40. See also email from Peter Amiro to Phil Zamora, May 27, 2003, Exhibit R-150. See also letter from Phil Zamora to Paul Buxton, Mary 29, 2003, Exhibit R-55; See also Rejoinder Expert Report of Lawrence Smith, ¶ 29.

Return to first footnote 218 referrer

Footnote 219

See, e.g. Claimants’ Reply, ¶ 497. DFO’s response to a question from the JRP at the end of the EA process, simply reflects the information that came to light and was learned during the EA. It was in no means a “concession” that DFO’s earlier concerns were unwarranted.

Return to first footnote 219 referrer

Footnote 220

Rejoinder Expert Report of Lawrence Smith, ¶ 62.

Return to first footnote 220 referrer

Footnote 221

Claimants’ Reply, ¶ 494.

Return to first footnote 221 referrer

Footnote 222

S.D. Myers – Partial Award, ¶ 261, RA-65.

Return to first footnote 222 referrer

Footnote 223

Letter from Phil Zamora to Paul Buxton, May 29, 2003, Exhibit R-55.

Return to first footnote 223 referrer

Footnote 224

See second Affidavit of Mark McLean, ¶¶ 4-5. See also second Affidavit of Stephen Chapman, ¶ 4.

Return to first footnote 224 referrer

Footnote 225

See second Affidavit of Stephen Chapman, ¶ 9.

Return to first footnote 225 referrer

Footnote 226

 See second Affidavit of Stephen Chapman, ¶¶ 8-10.

Return to first footnote 226 referrer

Footnote 227

See second Affidavit of Mark McLean, ¶ 5.  Note that in conformity with the Agency’s request, DFO was prepared to share the revised setback recommendations with Nova Stone on finalization of the JRP Agreement.  However, in February of 2004, GQP requested postponement of the constitution of the JRP pending resolution of issues relating to its business relationship with Nova Stone. Ultimately, DFO provided the revised setback recommendations to the Claimants on November 12, 2004, just over a week after the constitution of the Whites Point JRP, even though the 3.9 ha quarry permit had by then become void as a result of the transfer of the lease on which the 3.9 ha quarry was located (see second Affidavit of Mark McLean, ¶¶ 6-7).

Return to first footnote 227 referrer

Footnote 228

See second Affidavit of Stephen Chapman, ¶ 6. Contrary to the Claimants’ allegations in paragraph 532 of their Reply, DFO and provincial regulators did not tell Bilcon that it was impermissible for it to conduct a test blast for the purposes of the EA.  In fact, as Mark McLean made clear in his affidavit, DFO did not close the door on test blasting at any point. The simple fact was that the Claimants never actually sought to do any test blasting for the EA.  See also first Affidavit of Mark McLean, ¶ 44.

Return to first footnote 228 referrer

Footnote 229

See second Affidavit of Stephen Chapman, ¶ 7.

Return to first footnote 229 referrer

Footnote 230

See second Affidavit of Stephen Chapman, ¶7 and CEAA, s.4(a), Exhibit R-1; See also Rejoinder Expert Report of Lawrence Smith, ¶ 31 (“Given that the activities described by Mr. Buxton were about to be assessed by the review panel that was in the process of being convened, I am not surprised that both DFO and the Agency took the cautious approach that they did in deciding not to discuss potential mitigation measures that could allow for blasting to be conducted on the 3.9 ha quarry.”)

Return to first footnote 230 referrer

Footnote 231

Canada’s Counter-Memorial, ¶¶ 341-346; First Expert Report of Lawrence Smith, ¶¶ 96-133; Rejoinder Expert Report of Lawrence Smith, ¶¶ 41-77.

Return to first footnote 231 referrer

Footnote 232

Claimants’ Reply, ¶ 534.

Return to first footnote 232 referrer

Footnote 233

Other Chapter Eleven Tribunals have dismissed arguments that Article 1105 includes an obligation of transparency: Cargill – Award, ¶ 294, RA-11 (“The Tribunal holds that Claimant has not established that a general duty of transparency is included in the customary international law minimum standard of treatment owed to foreign investors per Article 1105’s requirement to afford fair and equitable treatment.”). See also Merrill & Ring – Award, ¶ 231, RA-28.

Return to first footnote 233 referrer

Footnote 234

 See Canada’s Counter-Memorial, ¶ 354. See also Christopher Daly’s notes of January 6, 2003 meeting with GQP, Exhibit R-178. See also letter from Phil Zamora to Paul Buxton, April 14, 2003, Exhibit R-54.

Return to first footnote 234 referrer

Footnote 235

See First Expert Report of Lawrence Smith, ¶ 12. On the lawfulness and reasonableness of the referral see also: Rejoinder Expert Report of Lawrence Smith, ¶¶ 78-100.

Return to first footnote 235 referrer

Footnote 236

Claimants’ Reply, ¶ 536.

Return to first footnote 236 referrer

Footnote 237

Claimants’ Reply, p. 134 (Heading “B”).pply

Return to first footnote 237 referrer