NAFTA tribunal rules against Mesa Power

[Oscar]

Split-decision by NAFTA tribunal rules against Mesa Power

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April 2, 2016 - 8:34 am

Billionaire T. Boone Pickens and his Texas-based company Mesa Power have lost their $658 million North American Free Trade Agreement (NAFTA) challenge against Canada.

In terms of background, the New York Times has explained, "[In 2011] the province of Ontario granted [Florida-based] NextEra $3.8 billion in energy contracts. [Pickens and his wind power company] Mesa Power contends that $18,600 in donations that NextEra made to the ruling Liberal Party in Ontario before elections in 2011 had undue influence on the auction. Mesa Power’s notice of arbitration also includes allegations of favoritism toward two Korean companies, Samsung C&T and Korea Electric Power Corp., that entered a separate energy deal with the [provincial] government."

The newspaper has also noted, "Mesa Power submitted several project proposals through the program. But when the first rankings came out in late 2010, its executives disputed the assessments, arguing that Mesa Power’s projects should have been higher. Ontario government officials have countered that Mesa Power did not submit its applications properly. ...Mesa Power later disputed an auction in the spring of 2011, complaining of a lack of transparency around the process of awarding contracts and insufficient time for public consultation."

The Huffington Post adds, "The suit also claims the Ontario government imposed a variety of 'prohibited' buy-local rules, which the suit says violates NAFTA rules." In December 2012 and May 2013, Ontario lost World Trade Organization (WTO) rulings that found that the 'domestic content' requirements in the Green Energy Act discriminated against foreign-owned firms and were a violation of trade agreements. By December 2013, Ontario's energy minister had announced the province would no longer require renewable energy developers to use local suppliers.

Now the Canadian Press reports, "Texas-based Mesa Power has lost its legal challenge under the North American Free Trade Agreement on how Ontario ran its renewable energy bidding process. The company filed the chapter 11 NAFTA claim in 2011, accusing the province of failing to conduct an open and fair procurement process."

The Globe and Mail notes, "The case was heard by a NAFTA arbitration tribunal, organized by the Netherlands-based Permanent Court of Arbitration, in October, 2014. It took the panel more than a year and a half to reach its decision. ...The full decision will not likely be released for at least a week, as the parties are allowed to remove any confidential business information before it is made public."

In a media release issued yesterday, Mesa Power states, "Mesa Power was disappointed by the split decision of the three-member tribunal organized under the North American Free Trade Agreement not to hold the Government of Ontario accountable for conducting an unfair competition for the awarding of renewable energy contracts under the provinces feed-in tariff (FIT) program in 2011. 'While we respect the tribunal and its process, we do think they got this one wrong', said Cole Robertson of Mesa Power. 'We are reviewing the decision, and the dissenting opinion, and will be evaluating our options.'"

The Canadian Press adds, "The federal government said in a release that it worked closely with the Ontario government on the case, and welcomed the decision that confirmed Canada was in compliance with its NAFTA obligations. The government said the tribunal also ruled that Mesa Power should pay the costs of the arbitration and a portion of Canada's legal defence for a total of $2.95 million."

That government media release also included a defence of the Chapter 11 investor-state dispute settlement (ISDS) provision in NAFTA. Global Affairs states, "NAFTA Chapter 11 establishes a framework that provides investors with a predictable, rules-based investment climate. While disputes are a normal part of every trade relationship, they represent a very small portion of the billions of dollars in investment that Canada attracts and the billions that Canadian companies invest abroad."

A similar ISDS provision exists in the yet-to-be-ratified Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the 12-country Trans-Pacific Partnership (TPP). (Emphasis Added. Ed.)

For our 101 overview on ISDS, please click here:
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Brent Patterson's blog
Political Director of the Council of Canadians
[ http://canadians.org/blogs/brent-patterson ]