A.
BETWEEN:
NAMES
PARTY:
ENTERPRISE:
INVESTOR:
CLAIMANT!
AND
TIlE
UNDER
ADDRESSES
NORTH
GOVERNMENT
Canada
KIA
Ottawa,
239
Justice
Deputy
Office
GOVERNMENT
Canada
M3B
Don
225
Suite
THE
1532382
Vito
SECTION
Wellington
0H8
Duncan
Mills,
G. AMERICAN
3K9
UNCITRAL
101
STATEMENT
of
Building
Attorney
Ontario OF
Gallo
the
oAc)
Ontario
Ontario
VITO
THE
Mill
B
Street
OF
OF
General
PARTIES
OF
Road
Inc.
G.
ARBITRATION
v
FREE
CANADA
CHAPTER
GALLO
CANADA
OF
of
CLAIM
TRADE
Canada
(“Canada”)
Ii
AGREEMENT
OF
RULES
AND
Investor Party 1. The Investor alleges that the Government of Canada has breached, and continues to breach, its obligations under Chapter 11 of the NAFTA, including, but not limited to:
(i) Article 1105, The Minimum Standard of Treatment (ii) Article 1110, Expropriation and Compensation
2. The relevant portions of the NAFTA are attached as “Appendix ‘A” hereto.
B. FACTS SUPPORTING THE CLAIM
B.I IDENTITY OF THE cLAIMANT, THE INVESTMENT,AND THE ENTERPRISE
3. This claim is brought on behalf of 1532382 Ontario Inc. (“the Enterprise”). The Enterprise was incorporated under the laws of Ontario on June 26, 2002.1
4. The Enterprise owns and controls what had been a licensed waste site whose lands included a former iron ore mine located in Northern Ontario, known as the Adams Mine Site (“the Investment”) The Adams Mine Site is approximately 10 kilornetres south-east of the town of2 Kirkland 3Lake. 5. . The Investor, Mr. Vito Gallo, is a national of the United States, resident in 4Pennsylvania. 6. Mr. Brent Swanick is the President and sole director of the Enterprise. Mr. Swanick is also a barrister and solicitor, licensed to practice law in the Province of Ontario.
7. On or about June 26, 2002, Mr. Swanick signed a declaration of trust that he held one common share in the capital of the Enterprise in Trust for Mr. 5Gallo. On or about September 9, 2002, Mr. Swanick transferred the share to Mr. 6Gallo.
8. Mr. Gallo is both the legal and beneficial owner of the Enterprise. He holds title to 100% of the issued common shares in the Enterprise. There are no other class of shares (either common
Corporation Profile Report, incorporation date June 26. 2002 2 To be clear, the character of the Investment is composed not only of its real property, but also of its intangibility roperties represented in its permits and any cause of action arising from their unjust revocation. Land Registry Property Identification for Adams Mine Site Passport of Mr. Vito Gallo Declaration of Trust signed by Mr. Brent Swanick, June 26, 2002 Certificate for Shares in 1532382 Ontario mc, June 26, 2002, Transfer of Shares, September 9, 2002
obligations
Partnership
open-pit
13.
Corporation
the
1532382
Sections
12.
1532382
1532382
Enterprise
the
1532382
10. Enterprise
control
Ontario
9.
person
or
Investment)
preferred)
Limited
The
B.2
Limited Under
115,
to
Limited
iron
Limited
retained
On
or
Mr.
the
the
Profile
Business
Limited
Adams
119
or
company.
ore
on
Enterprise
September
Board
Partnership.
separate
ENVIRONMENTAL
Gallo
WASTE
Partnership OVER
in
Management
Partnership
and
Christopher
June
issued
I
mine,
Report,
the
133
Mine
Partnership
of
Corporations
26,
Investment.
possesses
VIEWAND
under
of
DISPOSAL
occupying
by
agreement,
Directors.
incorporation
Agreement,
the
2002
Loan
Site
10,
Gordon
the
Agreement,
The
the
Ontario
2002,
Agreement, Enterprise.
was
and
1532382
(“Limited
legal
Limited
Associates
HIS
four Brent
Act.
continues
SiTE
an
Business
September the
date
APPRO
Enterprise
ps\
September
TORY
control
ideal
Limited
Enterprise
thousand
June
September
Swanick
Partnership
lie
Mr.
to
CorporationsAct Partnership”).
26,
C-TEt
VALS
location
OF
perform
10,
exercises
to
Management
Gallo
9,
of
2002
2002
hold
THE
entered
2002,
acres,
iSSUED
the
also
became
9,
consulting
2002
does
for those
ONTARIO
does
Enterprise
retained
For
with
control
waste
Agreement.
into
not
a
sole
The
positions. 8
TO
not
specified
superb
services
hold
a
OPERATE
disposal.
Director, on
the
Enterprise
hold
limited
GOVERNMENT
pursuant
the
Limited
these
rail
period
in
any
order
basis
and
as
partnership shares
It
of
ownership
THE
is
is
to
to
Partnership
well
time,
road
of
the
discharge
a
the
his
ADA
decommissioned,
in
the
as
General
access
trust
provisions
right
President,
Limited
MS
interest
known
is
to
for
and
to
MINE
Partner
manage
elect
any
high
as
in
of
of
other
the
and
the
the
the of capacity
iron ore Pit’)
volume
improvements 14.
Dagrams
was
ore
and
The
processed rail-haul
electrical
from
shipped
and
Adams
the
consisted,
photographs
the and
Adams
into
Mine
crushed
natural
steel.’2
that
inter
Site
of
a. b. Mine c.
d.
e.
f. g.
h.
i. k. j.
I.
the
would
gas had paved
paved
a
ore a high heavy a/ia, on-site considerable paved
perimeter water
on-site administrative Adams vehicle
gatchouse
two
Site’s
services.
considerable
on
of:
bay
otherwise roadway
line road
run-off
vehicles, on-site
Mine
daily
fuel
paved
and three,
doors,
rail
fencing;
access
Site
storage with
storage
operated
From
access
detention road
and spur;
deep
site
offices;
complete
cost
on
reinforced
weigh-scale
to
gravel
system;
access;
1965
tanks:
site
to
open-pits
and the
tens
trains
grid
areas
improvements
South
to
maintenance
parking
with of
power 1989,
concrete
millions
to
and infrastructure;
vehicle/crane
(“South Pit;
1-lamilton,
two areas;
catch
(electricity
flooring of
mining
buildings
that
Pit.
basins;
dollars
Ontario,
are
Central
capabilities;
companies
and
capable
required
to
with
natural
develop.
where
Pit,
high
of
for
and
extracted
gas)
servicing
the
ceilings,
a
These
4
Peria
large
iron
obtain
for
considered
19.
for
for
site
Keele
of
the
18.
Adams
next
Together,
York,
17. Valley
searching
material
capacity
waste
of
16.
15.
developing
Toronto
the
purchase
receiving
four
for
generation
several
Valley
In
each
Durham
Adams
Notre
the
The
In
Mine
waste
The
thousand
but
order
of
the
for
1986,
that
GTA.
and
year.
Enterprise’s
South
excluding
of at
began
Site
environmental
at
as
a
GTA
the
Mine
site,
for each
the
and least
the
waste
‘next
least
the
an
reached
The
acre The
Adams
the
Pit
GTA
located
working
Adams
municipalities
ideal
Peel,
Municipality
and
of
21
generation’
disposal
1,341,600
City
Adams
of
South
Adams
final
the
.9
predecessor
also
Regions.
the
candidate
its Mine
collectively:
m.
million
three
of
just
Mine
cover
approvals,
with
maximum
Pit
Adams
obtained
Toronto
readily
leachate
Mine
Mine
site.
Site
alone
north
tonnes
major
Toronto
landfill
of
Site
material.
launched
cubic
to
Site
as Metropolitan
Site
Mine
in
available
had
from
financed
a
of
satisfy
infrastructure
the
which
open
the
capacity
title,
of
time
to
from
meters,
with
the
to
a
Site
“GTA
non-hazardous
serve
‘next
Notre a
total
develop
pits
Notre
limited
had
North
city,
Toronto’s
other
Chevron
is
several
gravel/aggregate
in
as
generation’
ultimately
Government
including
been
approximately
municipalities”)
Toronto
for
the
was
Development
a
municipalities
America-wide
the
right
waste
late
$35
obtained
of
and
approaching
Adams
Request
the
of
municipal,
(“Toronto”)
1990s.
million
disposal
would
waste
Dofasco
landfill
first
engineering
of
by
Mine
200
Ontario
Corp.
for
stockpiles
refusal
and and
serve
near
in
Request
the
site.
site
in
Proposal.
full
metres
industrial
1996. Site
end
determined
the
daily
(“Notre”),
Toronto
1990,
as
for
to licensed
Notre
capacity
and
as
of
Province
waste
for
the
Notre
deep
the for
the
internwdiate
2001:
with
feasibility
Notre
Proposal
was
City
and
(the
GTA,
road
future
disposal
waste
and
identified
and
that
and
the
required
of
commercial
of
Regions
purchased
cover
is
intention
once
Toronto
disposal
Toronto
its
it
Ontario.
disposal
studies
for
capable
began
Keele
sites
cover
this
the
the
and
to of 21. the treatment basin Pit, 20. 23. by and Under three asking 22. Minister referred installed 2001 6
Approval Notice Order Ministry Permit
Golder
design
clay
deep
and
this
the
in a. Notre b. d. c. The The On
1.
to Requiring
Notre’s
at
of
Council
of
plant
Take
conditions
to then
EAB
Notre Approval A612007, Certificate 2000:15 Permit Associates open facility Certificate
Is method containment
of
December the
the
Environment
South
hydraulic
operate
the
submitted
waste
Water
Adams
pumped
prevent
Environment
to Approval,
pits the
proposed
application
acquired
Pit
to
under
a consider
any
Board
for
leachate
management of
of
Take
dated
is
in
containment of
Mine Ltd., of
17,
Provisional
the
leachate its
the
leachate designed
to
and
an
the Approval Southern
August
to
Approval
south
project
a
1997,
“hydraulic
Water
hold April
Adams initial
treatment
the
the
an collection
OWRA, leachate Site.
in
to
pit.
internationally following a
early
13,
from
generated
the Borderlands
Certificate hearing the
23, to
from under
environmental
Adams
systems.
to
1998 Ontario,
method
Mine,
operate
facility
to
Ontario
then
l999;’
December Approval treatment
operate
seeping
containment”
of
the
under
operate
the
Mine,
leachate
four Notre
Ontario of
and
from
for
South
as
Golder EAA,
the Approval
s9.2
Environmental a
storm
into
PTTW
from a
questions:
recognized
the
No.
plant. landfill
landfill
sought
1996. a
the rock
assessment
of
Pit,
that
dated
adjacent
Minister Adams
leachate
water
3250-4NMPDN, Associates
the
design
No.
deposited
No. the
PTTW
walls
will
Unlike
EAA,
Rather
site
approvals
00-P-6040,
using
facility, August
A612007,
Crown,
Mine
consulting
be
an
lands.
under
December
of
treatment
of
approval
Assessment
No.
generated
the
effective the
than
waste
Approval the
Ltd.
the
13,
Site
April
October hydraulic
the mature
only
Certificate
00-P6040,
Environment,
seek
1998;’
South
dated
designed was
16, is
EPA,
engineering
23,
application
facility
with
No.
solution
drained
at
1997
approval
18,
1999
analyzed
Board
the
July
3250-4NMPDN.
Pit
containment on
2000
respect
proposed
dated of
the the
and
and 9,
to
for
(the Norm
Approval
for 2001.
to
located a
firm
condition
systems
and
the
storm
the to
containment
October
the
each
“EAB’),’
the
reviewed
expert
site?
16
Sterling,
method.
leachate
Ontario
July
in
of
South
water
6
to
that No.
soil
9.
the
18,
be
in
“on
28.
containment
27.
to
conditions Notre
Notre’s
26.
Environment
EAB
25.
in
20
Site.
Government
24.
following
EAB
the
countering
were
most
application.
Decision:
Adams
and
The
The
The
Ontario’s
The
4.
application
3.
2.
experts
a
included
of
the
Conditions
EAB If
Approval
If
at
effective
If
Ministry
Ministry
design
full
EAB
of
Mine
was
Notre
the the
the
the
the
Ministry
opposition
Ontario.
hearing
in
accepted
Ministry
proposed
answer answer
is
answer
represented
issues
Development
Site.
is
and
a
engineering
solution
an
of
of
requirement
set
an
in
the
the
independent
the
effective
at
of
The
out
Schedule
to
to
raised,
the
to to
of
Kirkland
site?
set
the
Environment
Question
Environment
Question in
EAB
for
the
Question
the
Corporation
Ministry
of
by
Schedule
Environment)
and
the
jointly
Environment
solution
that
the
granting
two
approved
A-i,
L.ake
containment
waste
adjudicative
Notre
1
3
MOE
expert
of
or
is
1
is
A-l
agreed
EA-97-O1.
also
which
for
or
submitted
“No”.
additional
the
“No”,
treatment
of
Notre’s
purchase
appropriate?
2
containment
[Ministry
called
environmental
to
Environment’s
supported
a
upon
is
lasted
is
and
attach waste
in
June
tribunal
“Yes”,
there
application whole
three
to
Conditions,
and
collection
recommended
surrounding
19.
17
the
to disposal
of
an
Notre’s
1998
an
days,
and
expert
are
that
or
any
the
EAB
alternative
in
lawyers.
submissions,
in
collection
the
operates
of
person
by
involved
Certificate
Environmentj
part,
would
technical
application
license.
that
Government
leachate
decision
attached
conditions
what
“the
during
visit
method
you
autonomously
of
40
The
that
witnesses
leachate.”
of
holding
EA-97-Ol
proposed
changes
impose?
to
draft
witnesses,
and
the
Approval.
the
(agreed
of
will
that
provided
Ministry
assisted
Ontario
course
Conditions
Adams
be
in
would
to
to
hydraulic
in
part
generated
between of
from
the
support
1998,18
of
These
of
often
which
Notre
lands
Mine
be
that
draft
7
the
the
the
an of illuminating
following
Technical Ibid..
(b) (a) (j) (g) (d) (c) (1) (i) (1) (e) (u) (r) (o) (n) (k) (h) (t) (q) (p) (m) (v) (s)
at.
26
technical
Appendices,
confirmation
Technical Technical Technical Technical Technical Technical Technical Technical Technical Addendum Technical Technical Addenda Technical Technical Technical Addendum Addendum Technical Technical Technical Addendum
documents2°
Addendums
F5-7
Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix
Al G1 G2 Cl
of — — — —
the
and
Bird
Public
Surface Surface
inter
viability
A
D C B G F N H G E M J I L K P 0
Response
Hazard —
-Archaeology — — — — — — — — — — —
— a/ia: — — —
Agriculture
and
Geology/Hydrolgeology
Noise
Transportation
Heritage Bird Design
AMSAP Air
Biology Surface Economics Surface Local Social
Water Water
Planned
Agency
Quality
of
to
Hazard and
(1995)
Transportation
Ministry
(1995
Quality Hydrology
and the
Water Water
(1995)
(1995)
Health Public Land
(1995)
proponent’s consultation (1995) Operations (1996)
(1995)
and
of
Use (1995) (1995) Route
(1996)
and
(1996)
Environment
Health
(1996)
(1995)
Agency
Study
Attachments
(1995)
(1995)
(1996) (1995)
design”)9
(1995)
Consultation
Attachments
Notre
(1995)
submitted
8
the 9
(w) Addendum HI — Aquatic Biology (1996)
(x) Attachment Hi E to Addendum Hi — Aquatic biology (1996)
(y) Addendum H2 — Terrestrial Biology (1996)
(z) Response to Ministry of Environment and Energy letter/Sensitivity Analyses — Early Closure and Low Filing Rate Scenarios 29. The Environmental Assessment Board’s 2decision provided, inter alia: As no evidence was provided substantiating an alternative method for the containment and collection of leachate, this decision focused on Question 1, and related conditions. The Board’s response to Question 1, is a conditional “Yes”.
The Board found that, on balance, the evidence indicated that the proposed hydraulic containment design would be effective. A question arises however, concerning the long term maintenance of hydraulic containment (that is, in the gravity drainage phase after the 100-year pumping phase), from the results of tests of groundwater levels in at the single deep angled borehole drilled under the South Pit. Accordingly, Condition of Approval number 10, requests as a condition of proceeding with the proponent’s application for a Certificate of Approval, that two additional deep angled boreholes be drilled under the South Pit, and that “no waste shall be placed in the South Pit until the Director evaluates the results of the tests and determines, without reservation, that the recorded groundwater levels will sustain hydraulic containment in the South Pit such that the environment will be protected, during both pumping and gravity drainage phases.”
The Board’s decision is subject to the Notre Development Corporation meeting, in all, twenty-six conditions, under the following themes:
Monitoring/Operating and Remedial Action and Contingency Plans
Contaminating Lifespan
Financial Assurance
Community Consultation and Participation
Conditions 22 to 26 set out the requirements of a self-managing Community Liaison Committee providing ‘a credible and meaningful opportunity for the people and communities who would be affected by any failure of hydraulic containment to participate in the decision-making process of the landfill project.”
EAB Decision: Notre Development Corporation EA-97-Ol, June 19, 1998, Executive Summary, pp. 1-2. 10
th, 30. On July 8 1998, a group of opponents appealed the EAB decision to the Minister of the
Environment (Minister Sterling) under s. 11(2) of the Ontario Environmental Assessment Act. The Minister denied their request that the Certificate of Approval to be quashed on August 18, 1998. The group attempted to have the Certificate of Approval cancelled by the Ontario Divisional Court immediately thereafter. Its application for an interim injunction was dismissed on April 22, 199922and the application for judicial review was dismissed in its entirety on July
13, 1999: The Ministry of the Environment continued to support Notre throughout the appeal and judicial review process.
31. On April 23, 1999, Notre received the required Certificate of Approval from the Ontario Ministry of the Environment to operate a 24landfill. In Ontario, Certificates of Approval to operate a waste site have conditions which regulate how much waste and what kinds of waste can be disposed both annually and in total over the lifetime of the waste site, as well as the local area which can be serviced by the waste facility. The Certificate of Approval granted to Notre following its environmental hearings, provided, inter alia:
Service Area
12. Wastes may be received at this Site only from within the Province of Ontario.
Ivlaximuin Fill Rate
15. The maximum rate at which the Site can receive waste is 1,341,600 tonnes per year
Waste Placement in the South Pit
34. The total waste disposal volume is 21.9 million cubic metres. This volume includes waste and daily/intermediate cover material and excludes final cover.
32. Certificates of Approval also regulate the geographic boundaries from where the waste site may accept waste, usually from municipalities close to the waste site. Rare among Certificates of Approval, the Adams Mine Site, served by rail-line, was licensed to accept waste
Adams Mine Intervention Coalition v. Ontario (EnvironmentAssessment Board) [1999] O,J. No. 2886 Div. Ct, Adams Mine Inien’ention coalition v. Ontario (Environment Assessment Boardi [1999] O.J. No. 2701 Div. Ct, Ministr of Environment Provisional Certificate of Approval No. A612007. April 23, 1999
expropriation
opposition
Resources
38. the
His
public
opposition
37.
as
Waste
would
36.
Adams
sent Toronto.
35.
complete
together
Ontario),
34.
for
increasingly
Proposals 33.
from
from
RailCycleNorth.
early
opposition
long
for
anywhere
any
protests
Management.
As
also
Following
The
Under
In
Mine
In recycling
term
1990s.
The
to
rail-haul
the
in
2000,
for
Member
location
described
April,
to
adopt
option
offer
October
of
urgent
compacted Canadian
disposal
Disposal
Site;
this
against
the to
the
in
the
making
or
1999,
the
the
to
Ontario.
waste
solution,
Adams
Investment
included in
and
of
being
need
Ontario
Canadian
the
in
2003,
submission
rail
waste
the
Provincial
capacity
followed
National
then
Toronto
more
solution.
waste
use
City
Province
for
option.
deposited
could
Mine
waste
David
being
added
unloaded,
Northland
of
a
that
National
of
detail
would
for
the
replacement
in
Railway
Parliament, issued
be
of
would
Toronto
shipped
Site,
Toronto
Ramsay
This
would
October,
of
capacity,
Adams
sent
into
the
below,
then
Ontario.
sorted
joint
Transportation
Railways,
a
and
RailCycleNorth
to
the
be
soon
and
Request
to
be
had
and
the
Mine
was
compacted
South
1999
the facility
was
in
would
once
venture
loaded
the
and
Adams
follow.
been
Any
the
placed
the
Adams
Site
actively
Enterprise’s
and
and
Pit.
separated,
for
he
waste
expectation
received.
non-hazardous
for
onto
become
as
involving
by
Mine
Ontario
became
Expressions
and
in Commission
Mine
a
the
proposal,
February,
a involved
specially
waste
from
transferred
position
Site.
Keele
with
Site.
predecessor
the
Northland
Ontario’s
Notre,
treatment
that
neighbouring
opponents
key
waste
2000,
in designed
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David
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ONTARIO
the
private
Adams
could
infrastructure
could
tonnage
car contingency
crisis
to
facility.
project
study.
a
solid report
Mine
collection
2004
demand
was
develop
systems,
disposal
that
and Mine
for receive
not
that
Mine
waste
if
available
non- experiencing
site.
of
The
rate
the
were
INC.
are the dated
through
pit
continue
at
negotiations
Site
for
Site:
border
the
consulting
uniform:
licensed
January
to
Adams
18
to
to
with
take
was
the
the
an
by
the
that
64.
stating
Environment
63.
October
00-PP-6040)
the
62.
complete
facility
assuming 61.
Letter
Notre.
uses
its Adams
from
PTTW
By
in
Notre
Renew
Permits
made by
1532382
30,
part:
the
its
able
which
Providing
within
local
As
Ministry ownership
suggest
definite taking,
October that
for
taking The
April,
Mine
2001.
letter
responded,
had
that
of
would
you site
Permit
the
to
to
PTTW
no
environment
the
PTTW
2004.
Ontario
be
Site
over
applied
Take
six regardless of preparations
had
appear
need
that commencement
of
30,
water local
Environment
reviewed
be
that
January
and
to
as
months
a
originally
we
2001.
application
Water
reviewed,
for
00-P-6040
Take
five
a
again
not
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environment
for
Inc.
control,
was
waste
retain
the
of
to
year
a
Permits
details
remained
and
Water
15,
(“PTTW”)
of
purchased
taking.
and
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new the
to
taken
have
disposal your
Notre,
been
2002,
with
the
the
period
Director
the
use,
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of
requests
turn
PTTW
Mandated
of
an
approval
to
under dewatering
anticipated
application
remained
Enterprise prompt
January
issued
based
and
the
this
unchanged
immediate the
Take
are
and
the
facility
Ministry
David
by
cannot
Adams
taking
a
time
PTTW
on,
indicates Adams
15,
Water
to
approval,
Permit
letter
issued
by unchanged
2002
this Notre
required
EAB
began
limited
activities.
on
Hollinger,
commencement
be
or
and
from Mine
dated
of
are 00-P-6040,
new
file
promptly.
maintained
definite
to
Mine
Approval
the
that
the
on
so
taking
not
cover
in
and
your
Site
PTTW
January
a
Environment
long
November
uses no
the
from
renewal
Further, Site
issued
by
ask
need
into
date
original
Province
the
12
as
letter
ofAdams
being
the
application on
which
in
that
4,
the of
a
months
for
remaining
to
has
the
of
original
September
functioning
we
2002.
dated
water
you
reserve
details
this
1,
made
absence
the
submission, yet
had
of
expired
understand
2000
Mine
notify
Permit,
Ontario.
of
PTTW
The
been
January
promised
will
taking.
submission
of
of
water
water
steps
and
Site
of
Ministry
the
9,
the
waste
be
set
on
us
a
(PTTW
I
2002.
taking
expired
required
To
15,
to
disposal
prepare
2002
Notre
made
of
19
Upon
and
NO.
the
on to preparatory
65. 2003 for 2000, 2003. PTTW
PTTW, 67. 66. enclosed application. surrounding Jhidp. 5SCN9N.4’
Permit Letter Letter
the
to
stating
On remained
from Purchase from On In
Gartner
taking, 3 to
October the
The
Take
July
July
1996, that previously environment, Dewatering prior will 6040, understanding which at Please Certificate still intensive Specifically, on
November
Gordon
Gordon
Ministry
work
in
the the
accompanying
7. file
Lee
Water,
as
7,
in part:
the
be 2003
to
30,
unchanged
Notre oft/ic
same
but
with
Report. 200338, Adams
entailed
McGuinty
McGuinty force,
it could
commencement
accept
the
details
Permit
2004. monitoring
intended
of
did
planned.
of
the
rate 14,
of
Borderlands
same dewatering
had
the
July
and
Approval
be
not that the
the
Number
MOE.
remain Mine
again
2003,
this
temporary to
to
(0.3
of
Environment
from
4.
expert discovered
completed,
Ministry Enterprise
its Ministry
South
proceed
(at
all
to
2003,
this
There
m3/sec)
program
letter
corresponding
to
commence
in Site 4121-5SCN9N that
the
the
of
no
will
Director p.
environmental
taking, unchanged
as Pit
the
of of
4 original dewatering
is
originally
head
pumping
property 3250-4NMPDN at
mandated
Environment
Environment
in
was
be
submitted time as
course
that
anticipating
remains
that
issued
accomplished
previously
support
and
of previously
Hollinger.
operation
to
the
supporting
time.
the
monitoring
of
approved
install
granted a to
the
at
by
from
Government
appropriate.
enclosing
enclosing
an
Permit
report4°
an
the
tailings
the
EAR
This
of
uses
Application
that
approved.
ordinary
the
The end
as
approved
for
the Central
the
within
approval
documentation
to reapplication
by
to
a
application
Gartner being necessary dewatering
the of confirmed
plan
Enterprise
area),
waste
Take
the
application.
various
October.
The
original
of discharge
review
the
Ministry
The
Pit will
under
made Lee
for
Ontario
Water,
ofAdams
contingency and
disposal
12
and
remains
Report
instrumentation
a
discharge
be
mining
that
identified
month
could
PTTW
of demonstrates
PTTW
the fee,
of
followed submission.
is
of
of
Permit
It
an
the
dated
leases
July
the
presently
previous
site
water
the
Mine
period,
begin
is
Application viable.
from
companies
application
00-P-
7,2003
point
plan,
local
July
Environment
as
a
our
number
for Site
as definite
is
soon October
4,
in
with
2003
the
October
20
as
4121
lands
and for for
(“the need
30,
the
in
a
a 21
Borderlands”), were about to expire and began exploring the possibility of purchasing or leasing the Borderlands from the Govermnent of Ontario in order to support the Adams Mine 42Site.
68. Notre’s Certificate of Approval to operate the Adams Mine Site as a waste facility provided, as one of the conditions. that Notre purchase the Borderlands. The purchase condition in the Certificate of Approval read, in part:
Tailings Area
Prior to the receipt of waste for disposal at this Site, the Owner shall acquire legal access to the portions of the existing tailings area not currently controlled by the Owner (described in Schedule “A”, Item 16, Tab 1) and required for the management and discharge of surface water and the treatment and discharge of drainage layer effluent, including constructed wetlands and a constructed channel to direct treated leachate to the tailings pond upgradicnt of Dam #6 and subsequently into the Miserna River via Moosehead Creek.
69. On February 17, 2003, the Ontario Ministry of Natural Resources offered to sell the Borderlands to the Enterprise. Ontario had already completed a supplementary environmental review and obtained an independent property appraisal. The Enterprise accepted the offer, which stated, in part:
As outlined to you, our original offer to you for the lands was $96,000 plus GST and this offer included the trees situated on the lands. As discussed yesterday, due to concerns recently raised as a result of our supplemental environmental review we are prepared to (and you stated your agreement to) finalize the sale to you at this time for the appraised market value of the land only ($48,000.00) plus GST for a total price of $51,360.00. Please note that this offer will be valid for a period of three months from the date of this letter. [Emphasis in the original]
70. On April 10, 2003, the Enterprise delivered a certified cheque to the Ministry of Natural Resources, along with a covering letter 44stating:
Referring to your letter dated February 17, 2003, we enclose herewith the following:
1) Application for Crown Land executed in triplicate
Letter from Notre to Ministry of Natural Resources, October 1. 1996 Letter from Ministry of Natural Resources to Gordon McGuinty, February 17, 2003 Letter from Gordon McGuinty to Ministry of Natural Resources, April 10. 2003 2) The Agreement executed in Triplicate
3) Our certified cheque for S51,360.0O (includes S3,360 GST)
4) A copy of the Company’s Corporate Profile.
Trusting the above is sufficient to complete the transaction if otherwise, please advise. Please return a copy of the finalized documentation for our files, when executed and registered.
71. By tendering full payment on the Ministry of Natural Resources (Crown in Right of Ontario) acceptance of all conditions by the Province of Ontario, at law and/or in equity, the Enterprise was the owner in title of the Borderlands and had met the purchase of the Borderlands condition set out in the Certificate of Approval.
72. Contrary to its obligations under the agreement, the Ministry of Natural Resources failed to transfer title to the Borderlands. As a result, the Enterprise commenced action against the Province of Ontario in the Superior Court of Justice of Ontario of the District of Algoma on October 9, 2003 (Court File Number 4522368/A3). t did so only after having provided the Province of Ontario with the legally required 60 days notice before issuing its statement of claim, as required by the Proceedings Against the crown Act.
73. In its lawsuit against the Province of Ontario, the Enterprise sought the following relief, inter alia:
The [Enterprise] makes the following claims and requests the following orders as against the Defendant:
a. An Interim Declaratory Order that the [Enterprise] is entitled to receive immediate transfer from the [Province of Ontario] of the ownership in fee simple of all the lands set out in Schedule “A”, (the “Lands”), attached hereto;
b. A permanent Declaration that that the [Enterprise] is entitled to receive from the [Province of Ontario] an immediate transfer of the ownership in fee simple of all of the lands;
c. Damages for breach of an Agreement of Purchase and Sale entered into between the [Enterprise] and the [Province of Ontario] wherein the
Notice of Claim. by 1532382 Ontario Inc.. July 28. 2003 and Statement of Claim, Court File No. 22368/A3. October 9. 2003 23
[Province] was to transfer the lands to the [Enterprise]. damages being in the amount of $301,000,000.00:
d. Punitive and exemplary damages in the amount of $1.000,000.00;
e, Pre-judgment and post-judgment interest pursuant to the Courts of Justice Act and Rules of Practice in effect in Ontario
f. Such further and other relief as this Honourable Court deems appropriate in the circumstances.
74. The Attorney General for Ontario filed a Statement of Defence on November 18, 2003.36 stating baldly that there was no agreement between the Enterprise and Ontario and that the Enterprise did not suffer any damages.
75, On March 3, 2004, the Enterprise served a motion for Summary 47Judgment before the Ontario Superior Court of Justice, seeking, inter a/ia:
Partial summary judgment in the form of a Declaratory Order that the [Enterprise] is entitled to receive immediate transfer from the [Province of Ontario] of the ownership in fee simple of all of the [Borderlands].
76. The motion was scheduled to be heard on March 11, 2004 but was adjourned at the request of the Province of Ontario.
77. The Liberal Party of Ontario was elected as a new provincial government in October 2003. During the election, David Ramsay, the incumbent Liberal candidate for the area where the Adams Mine Site is located, pledged to put the project “to bed once and for all” and stated that “we’ve got to kill that 48project.”
78. After Mr. Ramsay was appointed Minister of Natural Resources, on October 23, 2003, he fomented a political crisis and threatened to resign from Cabinet unless the Province of Ontario terminated the Adams Mine 49project. This manufactured crisis reached its climax after the Enterprise’s Permit to Take Water was issued by the Ministry of Environment on November 14, 2003.
Statement of Defence, Court File No. 22368/A3, November 18, 2003 Motion Record of 1532382 Ontario Inc. re: Summary Judgment, returnable March 11, 2004 Northwatch News, “Northeast Goes Tory-Free in Liberal Election Sweep”, URL: http:/!www.web.ca/-.nwatch/nwatchnews/NN Fall 2003 .PDF, accessed June 23, 2008 Benzie, Robert (Nov. 19/03) “Ramsay vows to quit if mine plan proceed”. Toronto Star. 24
79. The exact nature of the process undertaken by the new government in Ontario is unknown to the Investor and Enterprise who will seek full production and discovery during the course of the arbitration.
B. 6 THE ENACTMENT OF THE ADAMS MINE LAKE ACT
80. Unexpectedly and without warning the new government introduced and gave First Reading to Bill 49 on April 5, 2004, “An Act to Prevent the Disposal of Waste at the Adams Mine Site” (“Bill 49”), which is a modern day bill of attainder.
81. The Bill was introduced less than six months after the new government was elected. The bill was introduced without any notice or consultation, even without the required notification required pursuant to the Ontario Environmental Bill of Rights which provides:
Proposals for policies and Acts
15. (1) If a minister considers that a proposal under consideration in his or her ministry for a policy or Act could, if implemented, have a significant effect on the environment, and the minister considers that the public should have an opportunity to comment on the proposal before implementation, the minister shall do everything in his or her power to give notice of the proposal to the public at least thirty days before the proposal is implemented. 1993, c. 28, s. 15 (1).
Exception ) Subsection (I) does not apply to a policy or Act that is predominantly financial or administrative in nature. 1993, c. 28, s. 15 (2).
82. No studies were published and no internal analyses were released regarding Bill 49.
83. In the provincial debates that followed, Jim Flaherty, who is currently the Minister of Finance of the Government of Canada but was then an opposition member of the Ontario Legislature, commented on Bill 49 on May 3, 2004:
I’m pleased to have an opportunity to speak to [Bill 49j today. It’s an important bill, not particularly because it deals with the Adams mine, but because of the principles that are being violated by this bill relating to the property rights of individuals and corporations in the province of Ontario A huge process was followed: experts on all sides all kinds of evidence, the whole thing according to the rule of law, according to the rules in the 25
province of Ontario. A conclusion was reached. Today, the Liberal government comes before the Legislature and says we should throw all that out the window. ... Then they say, “Oh. OK. compensation. You might want some compensation because we’re changing the rules retroactively, which has substantial financial consequence. You were successful in your application when you followed all the rules back in 1998, six years ago. Now we’re changing the rules. We’re going to limit what you can do. We’re going to say that you lose the fundamental right, which people have in the province of Ontario, to go to court” — Magna Carta, redress, the opportunity, the fundamental principle of the rule of law, that people who have suffered harm at the hands of others may go to court and seek redress. But the Liberals won’t even give them that. They retroactively changed the law vis-à-vis the environment and then they said:” “We won’t let you go to court. We’re going to tell you the kind of compensation you’re entitled to. You’re not going to be allowed to take legal proceedings,” and so °5on. 84. John Baird, the current Minister of the Environment of the Government of Canada and then a member of the Ontario Legislature, stated on May 5, 2004, the following in opposition to Bill 49:
I have some very serious concerns with respect to Bill 49 and they’re twofold. The first concern is with respect to property rights and the second concern is with respect to the political nature of the approval of garbage disposal that this government is engaging in. I’d like to talk first, if I could, about property rights. Section 5 of this bill is outrageous. It says that individuals involved in this dispute can’t even seek the remedy of the courts, that they can’t even seek legal recourse for any dispute. I think property rights are incredibly important. They’re every bit as important as the other rights enumerated in our Charter of Rights and Freedoms. I’m disturbed by this government’s attempt to use legislation to curtail law- abiding citizens’ views and their intervention into the legal process.
Norm Sterling, . . .[isj not just a lawyer, he’s not just an engineer, a former Attorney General and a former Minister of the Environment, but someone who I think most members on all sides of the House would acknowledge has certainly followed environmental issues for many years. ... He spoke of the political meddling involved in this bill. I’m glad to see the member for Timiskaming here. This bill, among some, has been called the “David Ramsay Career Protection Act,” because David Ramsay made commitments and the government is bailing him out from certain electoral defeat on this issue. As Mr. Sterling said, the government wants to throw
°° Hansard Excerpt, May 3, 2004 26
aside proper and due process and inject its political will on the people of Ontario. Section 5 of the bill extinguishes the right of the proponent to legal recourse with regard to what the government has done for this Very political process, and that does cause those of us on this side of the House substantial concern.
85. Bill 49 was enacted on June 17, 2004. It received Royal Assent on the very same day and was immediately proclaimed in force. The effect of Bill 49 was far reaching, cancelling all of the environmental approvals that had been obtained or were pending, Section 3(1) thereof stating:
The following are revoked:
1. The approval dated August 13, 1998 that was issued to Notre Development Corporation under the Environmental Assessment Act, including any amendments made after that date.
2. Certificate of Approval No. A 612007, dated April 23, 1999, issued to Notre Development Corporation under Part V of the Environmental Protection Act, including any amendments made after that date.
3. Approval No. 3250-4NMPDN, dated July 9, 2001, issued to Notre Development Corporation under section 53 of the Ontario Water Resources Act, including any amendments made after that date.
4. Any permit that was issued under section 34 of the Ontario Water Resources Act before this Act comes into force in response to the application submitted by 1532382 Ontario Inc. for New Permit #4121- 5SCN9N (00-P-6040) and described on the environmental registry established under the Environmental Bill of Rights, 1993 as EBR Registry Number XAO3EOO19.2004,
No permit for spec Uled application
(2) No permit shall be issued under section 34 of the Ontario Water Resources Act after this Act comes into force in response to the application referred to in paragraph 4 of subsection (1).
86. Bill 49 went on also to extinguish the agreement of purchase and sale to purchase the Borderlands in Article 4 thereof
4. (1) An agreement entered into by Notre Development Corporation or 1532382 Ontario Inc. after December 31, 1988 and before this Act comes
Hansard Excerpt, May 5, 2004 27
into force is of no force or effect if the agreement is with the Crown in right of Ontario and is in respect of,
(a) the purchase or sale of the lands described in Schedule I or any part of those lands;
(b) the granting of letters patent for the lands described in Schedule 1 or any part of those lands; or
(c) any interest in, or any occupation or use of, the lands described in
Schedule 1 or any part of those lands.
SCHEDULE 1
The lands described as:
Location CL 411-A, Boston Township, District of Timiskarning, containing 387.48 hectares;
Location CLM 104, McElroy Township, District of Timiskaming, containing 238.72 hectares;
Parts 1, 2, 3, 4, 5, 6, Plan 54R-2947, Boston Township, District of Tirniskaming, containing 14.58 hectares;
Parts 1, 2, 3, Plan 54R-1694, Boston Township, District of Tirniskaming, containing 18.76 hectares;
Location CL 936, Plan TER-670, Boston Township, District of Timiskaming, containing 33.46 hectares;
Parts 1, 2, Plan 54R-1807, Boston Township, District of Timiskaming, containing 37.10 hectares;
Parts 1, 2, 3, Plan 54R-1693, Boston Township, District of Timiskaming, containing 12.12 hectares;
Parts 1, 2, Plan 54R-2322, Boston Township, District of Tirniskaming. containing 18.69 hectares;
Part 1, Plan 54R-l540. Boston Township, District of Timiskarning. containing 14.48 hectares;
Location CL 1584, Part 1, Plan 54R-151 1, Boston Township, District of Timiskaming, containing 16.06 hectares;
Location CL 1221, CL 1222, Parts 1, 2, Plan 54R-1291, McElroy Township, District of Timiskaming, containing 34.02 hectares; in above:
87.
the
Statement
Bill
Application Township, containing Location Enactment person against Parts Mine whole the of Executive Extinguishment provision before (2) respect (3) Same (5) from lands 5. Same subsections to (4) section to
49
in the in
(1)
also
lands
Without
Subject Subsections
No
subsection
subsection
1.
described
site
any
of
Crown
or
this
Any
referred
the 35 of
2,
terminated
cause
in Claim
CL
or
of
described
3, any
Council, of aboriginal
43.28
District
Act
of
Crown
part,
cause
to
apply
the
this
Plan
limiting
the
this
in
1220,
representation
section
comes
of
in of
to
lands
that
(1),
right
(1), (1) Act.
Constitution from hectares.
Act
54R-l619,
of
action Schedule causes
to
in
in
of
the
or
and in
Parts and action
was
as
a
right
subsection
Timiskaming,
the or
described
of
into
anything 6,
an
cause cause
Schedule
a
no
treaty Ontario
(2) no
arises
of
generality employee issued
direct
force.
of
1,
that
cause
action
1
compensation
do
McElroy
or
of of Ontario,
Act,
2, is
that
right
exists other
after
in hereby
not
or action
action
(1)
on
3,
in
1
of
Schedule
1982.
indirect
if
4, respect
occurred containing
or
October apply
in of
action
this that
conduct,
on
the
Township.
a
5, agent
including,
respect
in extinguished. subsections
member
the
6,
Act
cause respect
is
to
is
arises
result
of
1.
day
7,
or recognized
payable after 9,
a
the
that comes
of
102.62
cause
Plan
2003 former
of
this
or
District
against
without
of the
of
Adams
December
is
action
(1),
former
the
any
Act
related
54R-1292,
by
Adams
of in
into
hectares;
employee
(2)
enactment
the
action
a
and
a
agreement,
of comes
limitation, Mine
would
person
force
person
member
and
Timiskaming,
circumstances
to
31,
Mine
affirmed
the
that
site
(4), into
against
McElroy
1988
or
arise,
referred referred
Adams
of
site
of or
arises
agent
those the
force
or
any and
the the
by
or
in
in
relief
a
described
sought
28 29
(6) Without limiting the generality of subsections (1), (2) and (4), those subsections apply to a cause of action arising in contract, tort, restitution. trust, fiduciary obligations or otherwise.
Legal proceedings
(7) No action or other proceeding shall be commenced or continued by any person against a person referred to in subsection (I) in respect of a cause of action that is extinguished by subsection (1) or a cause of action that, pursuant to subsection (2) or (4), does not arise.
Same
(8) Without limiting the generality of subsection (7), that subsection applies to an action or other proceeding claiming any remedy or relief, including specific performance, injunction, declaratory reliet any form of compensation or damages, or any other remedy or relief.
Same
(9) Subsection (7) applies to actions and other proceedings commenced before or after this Act comes into force.
88. Bill 49 also included a provision declaring that the statute itself does not constitute an expropriation, even though it constitutes an expropriation or conduct tantamount to expropriation at international law:
5(10) Nothing in this Act and nothing done or not done in accordance with this Act constitutes an expropriation or injurious affection for the purposes of the Expropriations Act or otherwise at law.
89. The amount of compensation under the Statute was unduly limited and in no manner compensated the Enterprise, stating, inter alia:
Compensation
6. (1) The Crown in right of Ontario shall pay compensation to 1532382 Ontario Inc. and Notre Development Corporation in accordance with this section.
Amount
(2) Subject to subsection (3), the amount of the compensation payable to a corporation under subsection (1) shall be determined in accordance with the following formula: 30
A+B+C
where,
A = the reasonable expenses incurred and paid by the corporation after December 31, 1988 and before April 5, 2004 for the purpose of using the Adams Mine site to dispose of waste,
B = the lesser of.
i. the reasonable expenses incurred by the corporation after December 31, 1988 and before April 5, 2004, but not paid before April 5, 2004, for the purpose of using the Adams Mine site to dispose of waste, and
ii. $1,500,000, in the case of Notre Development Corporation, or $500,000, in the case of 1532382 Ontario Inc.,
C = the reasonable expenses incurred by the corporation on or after April 5. 2004 for the purpose of using the Adams Mine site to dispose of waste, if the expenses arc for legal fees and disbursements in respect of legal services provided on or after April 5, 2004 and before this Act comes into force.
Same
(3) The amount of the compensation payable to 1532382 Ontario Inc. under subsection (1) shall be the amount determined for that corporation under subsection (2), less the fair market value, on the day this Act comes into force, of the Adams Mine site.
90. Bill 49 also specifically states that no payment will be made for any loss of goodwill or possible loss of profits:
Loss of goodwill or possible pro!Its
(8) For greater certainty, no compensation is payable under subsection (1) for any loss of goodwill or possible profits.
91. The intent of Bill 49 was clear and beyond dispute: to eliminate the Investment as a solid waste landfill site and to destroy its value for the Enterprise, while preserving its title in order to ensure that any ongoing liabilities in respect of the land would be borne by the Enterprise rather than the Province of Ontario. The statute specifically:
a. Revoked each of the certificates of approval and licenses that the Enterprise held to operate the Adams Mine Site as a waste disposal site:
context
conclusive
authentic
and
in
95.
restated
international
94.
Article
provides
applicable
with
93.
C.
since
92.
good
in
the
THE
passage
the
The
in
Construed
NAFTA
Interpretation
102(1).
f e.
d.
c.
in b.
faith
The
NAFTA
expression
which
that
Articles
of
light
rules
any
and
the
Restricted Extinguished
was
Court
NAFTA
Extinguished
applicable Cancelled
cancelled
Terminated
Government
the
law’
in
of
NAFTA
future,
recovery
specifically
before
of
accordance Article
the
Bill
of
obligations
of
within
and
31
includes
its
subject
international
Justice
AND
of
49.
the
of
and
the
including
damages
stated
rules
the
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of a 34 international law, the fair and equitable treatment standard establishes a floor below which no State conduct shall fall. Application of the standard is normally dependent upon a detailed appraisal of the factual context, but in no case can a State satisfy its obligation to accord fair and equitable treatment by providing only a ‘minimal’ level of treatment, rather than the ‘minimum’ that is required under customary international law and NAFTA Article 1105.
105. The State’s obligation to accord fair and equitable treatment is not fixed in time. The content of the standard continues to evolve, as expectations reasonably held by the international investment community increase over time. Under Article 1105, Canada is required to act in accordance with the customary international law principle of good faith; to provide a stable, transparent and predictable regulatory and business environment for foreign investment; and to accord both substantive and procedural due process in exercising its legislative, judicial and administrative functions.
Article 1/JO: Expropriation
106. As Article 1110 of the NAFTA explicitly provides, “no Party may directly or indirectly expropriate an investment of an investor of another Party in its territory or take a measure tantamount to the expropriation of such investment except for: a public purpose; on a non discriminatory basis; in accordance with due process of law; on payment of compensation.”
A measure constitutes an indirect taking or act tantamount to expropriation when it substantially interferes with the investor’s ability to derive the full economic benefit of its investment in the host State.
107, Canada breaches its obligation under Article 1110 when it enacts a measure that constitutes an indirect expropriation or an act tantamount to expropriation but for which it has either failed to pay compensation to the investor or has failed to pay compensation that is “equivalent to the fair market value of the expropriated investment immediately before the expropriation took place” or where has failed to pay compensation that does not “reflect any change in value occurring because of the intended expropriation and valuation criteria must include going concern value, asset value and such other criteria as appropriate to determine fair market value.” Canada must also ensure that expropriatory measures are executed in accordance with due process of law; arc not otherwise discriminatory or not for a public purpose. 35
108. A measure constitutes an indirect taking or act tantamount to expropriation when it substantially interferes with the investor’s ability to derive the full economic benefit of its investment in the host State.
Damages
109. Under customary international law, which constitutes applicable international law under
Article 1131(1), Canada is required to make full reparation for the harm caused to the Enterprise, placing it in the position it would have been in but for Canada’s breach of NAFTA Article 1105
and/or Article 1110. Under customary international law, the standard of compensation for a breach of Article 1105 may be the same as the compensation stipulated under Article 1110(2). In circumstances such as the instant case, the only appropriate compensation for total deprivation of one’s enjoyment of the intended use of an investment is payment of fair market value of that investment as of the date immediately before the measure was enacted and harm caused thereby.
D. APLICATION OF THE NAFTA AND INTERNATIONAL LAW TO THE FACTS OF THIS CASE
Jurisdiction
110. Mr. Vito Gallo is a national of the United States of America. He therefore qualifies as an investor of another Party with respect to Canada. Mr. Gallo owns 100% of the issued common
shares of the Enterprise, 1532382 Ontario Limited. The Enterprise was constituted and is organized under the laws of Ontario. The Enterprise therefore qualifies as an investment in the territory of Canada. At all relevant times, the Enterprise has owned and controlled the lands that form the subject of this claim, i.e. the Adams Mine Site, as well as all of the Certificates necessary to permit the establishment and operation of the Landfill Site.
111. This claim has been brought by Mr. Gallo on behalf of the Enterprise. under NAFTA Article 1117, for loss and damage suffered by the Enterprise arising from imposition of Bill 49. and the steps taken by the Government of Ontario to frustrate and delay the Enterprise’s ability to operate or obtain returns from its investment, including the Government’s failure to honour its good faith obligation to transfer the Borderlands to the Enterprise pursuant to the contract between them. Accordingly, the Tribunal has jurisdiction to hear the claim. 36
Article 1105
112. The measure purports to deny all access to the Courts of Ontario for vindication of a claim for damages concerning the Adams Mine Site. The measure thus constitutes a prima fade denial of justice, contrary to customary international law generally and the standard of fair and equitable treatment in particular, contrary to NAFTA Article 1105. In no uncertain terms, Bill 49 was contrived to deny the Enterprise from having sits day in court’ in respect of the destruction of the investment.
113. At the time the investment was acquired, there was no reason to expect that the Government of Ontario would not abide by the terms of the Certificates its own officials had lawfully and properly issued for its operation as a waste landfill, or to perform the undertakings provided under contract to the Enterprise for transfer of the Borderlands. No foreign investor could have reasonably anticipated that the Government of Ontario would abrogate each of those Certificates by legislative fiat, well aware that investments had been made in reliance upon the existence of those Certificates and undertakings.
114. Such conduct constitutes an obvious failure by Canada to accord fair and equitable treatment to the Enterprise, because the Enterprise was entitled to reasonably expect that it could rely upon the good faith of the Government of Ontario in respect of the permits that had been issued for operation of the investment.
115. Moreover, no foreign investor should have expected that the Government of Ontario would engage in tactics of obfuscation and delay, impairing the Enterprise’s ability to obtain redress before its courts, while drafting legislation that would purport to annul any right to redress in its entirety. Such conduct constitutes a breach of the customary international law standard of fair and equitable treatment because it demonstrates a lack of good faith.
116. It was also not unreasonable to expect that the Government of Ontario would negotiate and honour its obligations, in good faith, transferring the Borderlands it had promised in sale to the Enterprise, for expansion of the Adams Mine Site. The Government’s conduct in this regard further demonstrates a lack of good faith contrary to the general international law principle of good faith and the principle of transparency referenced in NAFTA Article 102(1), both of which inform the standard of fair and equitable treatment set out in Article 1105. Such conduct 37 accordingly further breached Canada’s obligation to accord fair and equitable treatment under Article 1105 and under customary international law.
117. It is not necessary to establish that substantial interference or total deprivation has occurred to establish liability under Article 1105. Any level of unlawful interference is prohibited under international law. Nonetheless, in this case the measure does totally deprive the Enterprise of the highest and best use of the Adams Mine Site, which was also the basis upon which the investment was established: as a fully-permitted mega landfill waste treatment site.
Article 1110
118. The purpose and effect of the measure was to totally deprive any owner of the Adams Mine Site of the right to operate it as a waste landfill facility. Bill 49 also reduced the asset value of the investment to a negative amount, and in no case more than nil, because of taxes and the ongoing costs associated with maintaining the site.
119. While the Government of Ontario could have directly expropriated the investment with its measure, it did so indirectly for one simple reason. By leaving title to the Adams Mine Site with the Enterprise, the Government was able to encumber the Enterprise with the on-going costs of maintaining the site. The intent behind the measure was to definitively limit any compensation payable under domestic law, while nonetheless ‘killing the project.’ The measure is accordingly an indirect expropriation and a measure tantamount to expropriation under NAFTA Article 1110 and customary international law.
120. Article 1110(l)(a) provides that a measure must be imposed for a public purpose. Bill 49 was not implemented for a public purpose because it was not a measure of general application and was issued contrary to the principles of economic efficiency and sustainable development. Article lllO(l)(a) provides that a measure must not be discriminatory. Bill 49 is discriminatory because it was targeted specifically at the Enterprise and the investment, rather than at the industry generally.
121. NAFTA Article 11lO(l)(c) provides that a measure must be imposed in accordance with due process of law. Bill 49 purports to eliminate all claims for damages that might lie for the Enterprise under domestic law and purports to relieve the Government of Ontario from its 38 obligations to produce witnesses in any domestic legal proceeding arising in respect of imposition of the measure or its application to the Adams Mine Site. As such, the measure is designed to completely deprive the Enterprise of any kind of due process rights under domestic law.
122. Finally, NAFTA Article 1110(l)(d) provides that an expropriatory measure must not be imposed without payment of compensation in accordance with Article 1110(2). To be clear, Article 1110 provides that compensation must be paid regardless of whether the measure was for a public purpose, was not discriminatory and was in accordance with due process of law. The provision clearly states that compensation must be paid in the event of a finding of expropriation, whether direct or indirect. Article 1110(2) also establishes that valuation criteria shall include “fair market value,” which obviously contemplates recognition of lost future cash flows as part of the valuation ana1ysi. Bill 49 directly contradicts Article 1110(2) by specifically provides that “no compensation is payable ... for any loss of goodwill or possible profits.”
123. That the measure constitutes an illegal expropriation, contrary to Article 1110 and customary international law, is not seriously in question. The Government of Ontario’s has admitted as much by publicly proclaiming, with imposition of the measure, that it the measure could not be considered an expropriation under its own law.
Damages
124. The fair market value of the Investment, as it existed on June 3, 2004, must be determined on the basis of the Investment’s highest and best use. Its best use was as a high volume, waste-by-rail, landfill disposal facility. The value of the site resided in its right to accept waste and the extent and density of its “air space” as defined by its certificate of approval. The volume established by the Adams Mine Site certificate of approval was 1,341,600 tonnes per year. This amount constituted a “mega landfill” disposal facility, as understood in the waste management industry.
125. In Ontario, both today and at all relevant times, demand for waste disposal has far exceeded the supply. Permitted mega landfill disposal facilities are readily saleable and a market exists for them both within the vicinity of Toronto and throughout North America. Because high 39 barriers to entry characterize the market for waste landfill facilities in North America. permitted air space is considered within the industry to be a scarce commodity with very high demand.
126. The introduction and subsequent passage of the Adams Mine Lake Act destroyed the fair market value of the permitted air space for the Adams Mine Site by canceling the Certificates of
Approval and all other permits that had been granted for its operation as a waste landtill facility.
The measure did not provide for compensation to the Enterprise or the Investor. Instead, it statutorily barred the payment of just compensation on a timely basis and purported to remove all causes of action for such compensation under applicable domestic law.
127. The estimated fair market value of the investment, as of the moment immediately before the measure was announced, is US$355,100,000.00.
E. THE ISSUES
128. There are three issues in this claim:
(i) Does the measure breach Article 1105 by arbitrarily depriving the Enterprise from recourse to a civil court for the loss and damage it causes?
(ii) Does the measure breach Article 1105 because Canada failed to provide the lnvcstor and Enterprise with a transparent and predictable regulatory environment upon which to establish and maintain the investment?
(iii)Does the measure indirectly expropriate the investment by depriving the Enterprise of its use without payment of prompt, adequate and effective compensation contrary to Article 1110(2)?
F. RELIEF SOUGHT AND DAMAGES CLAIMED
129. The Investor claims damages on behalf of the Enterprise for the following:
a. Payment of not less than US$355,100,000.00 as compensation for the damages caused by, or arising out of, Canad&s measures that are inconsistent with its obligations contained in Part A of Chapter 11 of the North American Free Trade Agreement;
b, Out-of-pocket costs incurred by the Enterprise in opposing imposition of the measure:
c. Compensation for any on-going or future liabilities arising from the Adams Mine site including, without limitation, for its environmental remediation;
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1 Corporation Profile Report, incorporation date June 26, 2002
2. Land Registry Property Identification for Adams Mine Site
3. Passport of Mr. Vito Gallo
4. Declaration of Trust signed by Mr. Brent Swanick, June 26, 2002
5. Certificate for Shares in 1532382 Ontario Inc. June 26, 2002
6. Sections 115, 119 and 133 of the Ontario Business Corporations Act
7. 1532382 Limited Partnership Agreement, September 10, 2002
8. 1532382 Limited Partnership Loan Agreement, September 9, 2002
9. 1532382 Limited Management Agreement, September 9, 2002
10. Diagrams and photographs of the Adams Mine Site
11. Order in Council Approval, August 13, 1998
12. Ministry of Environment Provisional Certificate of Approval No. A612007, April 23, 1999
13. Permit to Take Water for the south pit, Adams Mine, PTTW No. 00-P-6040, October 18, 2000
14. Approval to operate a leachate treatment facility and storm water facility, Approval No. 3250-4NMPDN, July 9, 2001
15. Notice Requiring the Board to hold a hearing under s.9.2 of the EAA, December 16, 1997
16. EAB Decision: Notre Development Corporation EA-97-0l, June 19, 1998
17. Technical Appendices, Addendums and Response to Ministry of Environment
18. Adams ji,’fineIntervention Coalition v. Ontario (Environment Assessment Board) [1999] O.J. No. 2886 Div. Ct.
19. Adams Mine Intervention coalition v. Ontario (Environment Assessment Board) [1999] O.J. No. 2701 Div. Ct.
20. Letter from Golder Associates to Mayor Mel Lastman, City of Toronto, September 15, 2000 45
21, Letter from Garner Lee Limited to Mayor Mel Lastman, City of Toronto, September 14, 2000
22. Letter from Ministry of Environment to Algonquin Nation Secretariat, July 17, 2001
23. Earth Tech Canada Inc. Summary Report: Availability of Landfill space in Ontario, January 2004
24. Report to Works Committee, City of Toronto, June 20, 2003
25. City of Toronto Commissioner of Works to Works Committee, City of Toronto, August 20, 2003
26. Minutes of Meeting of GTA Waste Coordination Meeting, July 3, 2003
27. Memorandum of Understanding regarding a cooperative Effort to Develop Contingency Waste Planning, August 23, 2003
28. Gartner Lee Report — GTA Municipalities Solid Waste Disposal Contingency Plan, January 2005
29. Letter from Ministry of Environment to Notre, January 15, 2002
30. Letter from Gordon McGuinty to Ministry of Environment enclosing Gartner Lee Report dated July 4, 2003 and application, July 7, 2003
31. Permit to Take Water, Permit Number 4121-5SCN9N
32. Letter from Notre to Ministry of Natural Resources, October 1, 1996
33. Letter from Ministry of Natural Resources to Gordon McGuinty, February 17, 2003
34. Letter from Gordon McGuinty to Ministry of Natural Resources, April 10, 2003
35. Notice of Claim, by 1532382 Ontario Inc., July 28, 2003
36. Statement of Claim, Court File No. 22368/A3, October 9, 2003
37. Statement of Defence, Court File No. 22368/A3, November 18, 2003
38. Motion Record of 1532382 Ontario Inc. re: Summary Judgment, returnable March 11, 2004
39. Northwatch News, “Northeast Goes Tory-Free in Liberal Election Sweep”, URL: http://www.web.cak-nwatch/nwatchnews/NN Fall 2003 .PDF, accessed June 23, 2008 46
40. Benzie, Robert (Nov. 19/03) “Ramsay vows to quit if mine plan proceed’. Toronto Star.
41. Hansard Excerpt, May 3, 2004
42. Hansard Excerpt, May 5, 2004