Canada's Counter-Memorial on Merits and Damages
Total Page:16
File Type:pdf, Size:1020Kb
Public Version IN THE MATTER OF AN ARBITRATION UNDER THE AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE ARAB REPUBLIC OF EGYPT FOR THE PROMOTION AND PROTECTION OF INVESTMENTS AND THE ICSID CONVENTION BETWEEN: GLOBAL TELECOM HOLDING S.A.E. Claimant AND GOVERNMENT OF CANADA Respondent GOVERNMENT OF CANADA COUNTER-MEMORIAL ON MERITS & DAMAGES February 26, 2018 Trade Law Bureau Government of Canada Lester B. Pearson Building 125 Sussex Drive Ottawa, Ontario K1A 0G2 CANADA Public Version TABLE OF CONTENTS GLOSSARY OF KEY TERMS ......................................................................................... VIII CHRONOLOGY OF EVENTS ......................................................................................... XVI INTRODUCTION..................................................................................................................... 1 I. Overview ........................................................................................................................... 1 II. Materials Submitted by Canada....................................................................................... 11 FACTS ..................................................................................................................................... 11 I. Regulation of Wireless Telecommunications in Canada................................................. 11 A. The Relevant Regulatory Bodies and Their Roles ................................................. 11 B. Objectives of Canada’s Telecommunications Policy and Canada’s Approach to Wireless Telecommunications Regulation ........................................................ 14 II. Canada’s Wireless Telecommunications Market: Spectrum Concentration in the Hands of Three Incumbents............................................................................................. 16 III. The 2008 AWS-1 Auction ............................................................................................... 19 A. Legal and Policy Framework for Spectrum Licence Auctions .............................. 19 B. The AWS-1 Policy Framework was Developed to Sustain and Enhance Competition in the Wireless Market ...................................................................... 22 C. Industry Canada’s Consultation and Release of the AWS-1 Conditions of Licence ................................................................................................................... 26 D. The 2008 AWS-1 Auction Results......................................................................... 29 E. GTH’s Investment in Wind Mobile ....................................................................... 29 IV. Wind Mobile Had to Satisfy the Existing Canadian Ownership and Control Requirements ................................................................................................................... 33 A. The Existing Legal Framework Required that Both Industry Canada and the CRTC Conduct their Own Independent Reviews to Ensure that Wind Mobile was Canadian Owned and Controlled ....................................................... 34 B. The CRTC’s Ownership and Control Determination and Its Reversal by the Governor-in-Council .............................................................................................. 35 1. The CRTC is Arms-Length from the Government of Canada and Exercises Independent Quasi-Judicial Power ............................................... 35 2. To Conduct Its Review of Wind Mobile, the CRTC Determined that an Open Process Would be More Appropriate ............................................. 36 3. The CRTC Concluded that GTH had Control in Fact of Wind Mobile Because of Its Assessment of the Various Complex Relations Between OTHCL and Wind Mobile ............................................................................ 38 4. The CRTC Decision was Promptly Reversed by the Governor-in- Council ......................................................................................................... 39 -i- Public Version V. GTH Was Aware of the Conditions of Licence for Roaming and Tower/Site Sharing Prior to Its Investment in Wind Mobile ............................................................. 41 A. From the Outset it was Clear that Industry Canada Would Not Set Rates for Roaming and Tower/Site Sharing and that Disputes With Respect to Commercial Terms Would be Resolved through Arbitration ................................ 41 B. The Internal Documents Produced by the Claimant Confirm that Prior to Making Its Investment, the Claimant was Aware that the Mandatory Roaming and Tower/Site Sharing Provisions had Certain Limitations ................. 45 C. Comments Made by Globalive during the Consultations that Took Place Prior to the 2008 Auction Further Confirm that New Entrants Were Aware of the Limitations of the Mandated Roaming and Tower/Site Sharing Provisions ............................................................................................................... 48 D. Industry Canada Made Ongoing Efforts to Enhance Market Conditions Including With Respect to Roaming and Tower/Site Sharing ............................... 49 1. Industry Canada Provided Guidelines on the Existing Conditions of Licence on Tower/Site Sharing in April 2009 to Assist with Disputes Concerning their Interpretation .................................................................... 49 2. Industry Canada Regularly Provided Clarifications on What the Conditions of Licence Required in Order to Assist New Entrants and Incumbents with Their Negotiations ............................................................ 51 3. After a Review of Its Roaming and Tower/Site Sharing Conditions of Licence, Industry Canada Updated the Conditions of Licence in 2013 ....... 52 4. Canada’s Efforts to Address Competition Issues in Canada’s Mobile Wireless Market Evolved Over Time ........................................................... 57 VI. The Transfer of Wind Mobile’s Spectrum Licences to an Incumbent Was Always Subject to Ministerial Approval ...................................................................................... 60 A. Any Transfer of a Spectrum Licence, Including the Licences Issued to Wind Mobile, is at the Discretion of the Minister of Industry ......................................... 61 1. No Spectrum Licence Holder, including Wind Mobile, Has the Unilateral Right to Transfer its Spectrum Licences ..................................... 61 2. There was No Guarantee that Wind Mobile Could Transfer its Spectrum Licences to an Incumbent after the Five-Year Moratorium ......... 63 B. The Minister Has the Authority to Adopt Policies and Procedures Related to Spectrum Licence Transfers and to Impose and Change Related Conditions of Licence ............................................................................................................... 68 VII. Canada Adopted the Transfer Framework to Prevent Against Undue Spectrum Concentration in Pursuit of its Long-Standing Policy Objective of Promoting Competition ..................................................................................................................... 70 A. The Effect of Spectrum Concentration on Competition in the Wireless Market .................................................................................................................... 70 B. Industry Canada’s Concerns About Spectrum Concentration After the Five- Year Moratorium.................................................................................................... 72 -ii- Public Version C. The Transfer Framework Was Adopted to Prevent Undue Spectrum Concentration ......................................................................................................... 78 1. The Transfer Framework Clarified How the Minister’s Discretion over Spectrum Licence Transfers would be Exercised in order to Prevent Undue Spectrum Concentration ................................................................... 78 2. The Transfer Framework Was Adopted Following a Public Consultation in Which Wind Mobile Participated ....................................... 81 3. Wind Mobile Publicly Supported Industry Canada’s Decision to Adopt the Transfer Framework .................................................................... 84 D. The Transfer Framework Does Not Prohibit New Entrants from Transferring Spectrum Licences to Incumbents .................................................... 85 VIII. When It Made Its Investment, GTH Knew That Even if Foreign Investment Restrictions in Telecommunications Were Liberalized, There Was No Guarantee It Could Acquire Control of Wind Mobile ...................................................................... 86 A. Canada Liberalizes the Foreign Investment Restrictions in the Telecommunications Sector in June 2012 ............................................................. 87 B. The Liberalization Did Not Guarantee that GTH Could Take Control of Wind Mobile .......................................................................................................... 88 C. The Investment Canada Act Provides for the Review of Certain Foreign Investments in Canada ........................................................................................... 90 1. An Acquisition of Control of a Canadian Business is Subject to a Net Benefit Test .................................................................................................. 91 2. A Foreign Investment, Including one Made