NAFTA - Chapter 11 - Investment
Cases filed against the Government of Canada
Windstream Energy LLC v. Government of Canada
Windstream Energy LLC (“Windstream”) is a U.S. company that, through its Canadian subsidiary, Windstream Wolfe Island Shoals (“WWIS”), applied to the Ontario Feed-in-Tariff (“FIT”) Program for a contract to develop an offshore wind energy facility. Windstream alleged that the Government of Ontario’s February 2011 decision to defer offshore wind development wrongfully frustrated its ability to obtain the benefits of the 2010 contract it signed with the Ontario Power Authority (“OPA”).
- 1102 (National Treatment)
- 1103 (Most-Favoured Nation Treatment)
- 1105 (Minimum Standard of Treatment)
- 1110 (Expropriation)
$475 million CAD
Lost. Tribunal awarded $25.2 million CAD in damages and $2.9 million CAD in costs to Windstream for a breach of Article 1105. The Government of Ontario paid the Award and interest in full.
On October 17, 2012, Windstream served a Notice of Intent to Submit a Claim to Arbitration on the Government of Canada. On January 28, 2013 it served a Notice of Arbitration where it alleged that Canada violated its obligations under the NAFTA, resulting in approximately CAD$475 million in damages to their investment.
The parties exchanged written pleadings and the Tribunal held a hearing on jurisdiction, merits, and damages in Toronto, Ontario, from February 15-26, 2016. The Tribunal issued its Final Award on September 27, 2016.
Factual overview and nature of the claim
In November 2009, Windstream submitted eleven FIT applications for wind power projects, including an application for a 300-megawatt, 130-turbine offshore wind project in the Wolfe Island Shoals of Lake Ontario, near Kingston. Having met the basic conditions of a FIT application, the OPA offered it a FIT Contract on May 4, 2010. Windstream did not sign back the contract immediately, but requested a series of extensions throughout the summer while the Government of Ontario undertook a policy review on offshore wind development. The Ontario Ministry of the Environment’s Offshore Wind Policy Notice explained that work on the regulatory framework for offshore wind projects remained incomplete. It noted that the Ministry would be engaging with other ministries to undertake the necessary regulatory work to develop the environmental rules and requirements, and it proposed a five-kilometer shoreline exclusion zone for offshore wind projects.
On August 20, 2010, prior to the finalization of the policy review on offshore wind, Windstream and the OPA signed the FIT Contract, which provided for fixed pricing for power generated over a 20-year period on the condition that WWIS brought its project into commercial operation by May 4, 2015. This included acquiring all of the necessary permits and approvals to develop the project.
The Ministry of the Environment’s Offshore Wind Policy Review closed on February 11, 2011, when the Government of Ontario decided to defer offshore wind development until the necessary scientific research is completed and an adequately informed policy framework can be developed.
Windstream alleged that the Government of Ontario acted in an expropriatory, arbitrary and discriminatory manner when it deferred offshore wind development, resulting in the loss of its investment. As a result, Windstream alleged that Canada had breached its NAFTA obligations Articles 1102 (National Treatment), 1103 (Most Favoured Nation Treatment), 1105 (Minimum Standard of Treatment), and 1110 (Expropriation). In particular, Windstream asserted that the decision was made in an arbitrary and political manner, with no intention of pursuing the science and developing the regulations required for a regulatory framework for offshore wind projects.
On September 27, 2016, the NAFTA tribunal issued its Final Award. The Tribunal dismissed the majority of the claims in their entirety, including with respect to Articles 1110 (Expropriation), 1102 (National Treatment) and 1103 (Most-Favoured-Nation Treatment). With respect to the claim alleging a breach of Article 1105 (Minimum Standard of Treatment), the Tribunal agreed with Canada that Ontario’s decision to adopt the moratorium for reasons of scientific uncertainty was not itself a breach of Article 1105. The Tribunal concluded, however, that the failure of the Government of Ontario to undertake the scientific work necessary to address this regulatory uncertainty did amount to a breach of Article 1105. The Tribunal awarded the Claimant $25,182,900 CAD in damages and $2,912,432 CAD in costs.
The Government of Ontario agreed to pay the Award and interest in full. Upon receipt of the funds from the Government of Ontario, the Government of Canada made payment to Windstream LLC on March 15, 2017, fully satisfying the Tribunal’s Award.
Legal documents (all documents are in pdf)
This case is governed by the arbitral rules of the United Nations Commission on International Trade Law. Additional documents related to this case can be viewed at the website of the Permanent Court of Arbitration.
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- ARCHIVED - Notice of Arbitration - Original (PDF Document - 4.71 MB) - January 28, 2013
- Date Modified: