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NAFTA tribunal begins hearing on wind power in freshwater

ISDS 101 infographic

A panel of arbitrators has begun its hearing into a US-based corporation’s USD$568 million NAFTA claim against Canada.

In October 2012, Windstream Energy LLC filed a North American Free Trade Agreement (NAFTA) investor-state dispute settlement (ISDS) challenge against Canada after the Ontario government placed a moratorium on off-shore wind power developments within five kilometres of land.

Windstream Energy had planned a 100-turbine off-shore wind power project in Lake Ontario near Wolfe Island. This island, which is situated just south of Kingston, is 29 kilometres long and varies in width from 9 kilometres to a few hundred metres. It has a population of about 1,400 people.

In February 2013, the Toronto Star reported, “In is request for arbitration, Windstream describes the offshore wind moratorium as ‘arbitrary, irrational and discriminatory’.” But Ontario’s energy minister at the time commented, “There isn’t a lot of science on freshwater offshore wind while there is tons of science on land wind farms. We need some time to review the science and we don’t have it today.” Yesterday, the Globe and Mail reported, “In its filings with the tribunal, the federal government said Ontario had the ‘right to proceed with caution’ on offshore wind, and NAFTA doesn’t prohibit ‘reasonable regulatory delays’.”

The newspaper adds, “A panel of international arbitrators is beginning a hearing Monday [Feb. 15] into a massive NAFTA claim by a company that says its planned offshore wind energy project in Lake Ontario was unfairly cancelled. Windstream Energy LLC is asking for damages of up to $568-million… A three-member panel convened by the Netherlands-based Permanent Court of Arbitration is set to hear arguments at a dispute resolution centre in downtown Toronto. The panelists are investment treaty law experts from Finland, Spain and the United States. Two weeks have been set aside for the hearing.”

The Council of Canadians has critiqued these panels.

Council of Canadians chairperson Maude Barlow has written, “Contrary to proponents’ claims that ISDS is a fair and independent dispute system, an in-depth investigation by Corporate Europe Observatory and Transnational Institute found that an elite coterie of lawyers, arbitrators and financial speculators are making a killing seeking out and actively recruiting corporations to sue governments around the world over new health and safety, labour or environmental rules. Just 15 arbitrators, almost all from Europe, Canada and the U.S. who can earn as much as $1 million (€1.5 million) per case, have decided 55 per cent of all the treaty disputes.”

Barlow quotes authors Pia Eberhardt and Cecilia Olivet who comment, “They have built a multi-million-dollar self-serving industry, dominated by a narrow exclusive elite of law firms and lawyers whose interconnectedness and multiple financial interests raise serious doubts about their commitment to deliver fair and independent judgements.”

In short, we reject the special status that has been given to foreign corporations that allows them to challenge laws through a special system outside established domestic courts. As the largest association of judges in Germany recently stated about a similar ISDS provision, “neither is there a legal basis nor the necessity” for it and “special courts for only certain groups are the wrong way”.

Additionally, while we support wind power as a sustainable energy alternative to the environmental harms associated with fossil fuels and hydroelectric power, we also recognize that any major project has environmental implications that must be fully assessed and that there could be ramifications relating to the generation of private power in the Great Lakes commons.

The NAFTA tribunal is expected to conclude its hearings by Feb. 26, but a date has not been given for the announcement of its ruling.