Claimant alleges that it has, through its Canadian subsidiary, contractual interests relating to an oil and gas exploration licence located in the St. Lawrence River which was revoked following the coming into force of the Act to limit oil and gas activities. Claimant alleges that the revocation of the river licence expropriated its investment without any compensation, which amounts to a violation of Canada’s obligations under Chapter 11 of the NAFTA which caused it damages (USD$118.9M).
In response, the Government of Canada alleges that the Act is not a measure that affects Claimant because it is not the holder of the exploration licence owned by Junex. Moreover, according to the Government of Canada, the Act is not an arbitrary, unfair or inequitable measure but rather a legitimate measure of public interest that applies indiscriminately to all holders of exploration licences located fully or partially in the St. Lawrence River. The Government of Canada also alleges that the minimum standard of treatment guaranteed in Article 1105 of NAFTA does not protect investors’ legitimate expectations. Even if this were the case, Claimant could not have had such legitimate expectations regarding the development of hydrocarbon resources that may be found beneath the St. Lawrence River. Finally, the Government of Canada alleges that Claimant did not have an investment that was capable of being expropriated. Even if this were the case, the disputed measure did not substantially deprive it of its investment because the Act revoked only one of the five exploration licences that are the subject of the farmout agreement with Junex. Furthermore, passing the Act is a legitimate exercise of the Government of Quebec’s police power and, thus, the measure cannot constitute an expropriation. Lastly, the Government of Canada believes that the damages claimed by the claimant are highly exaggerated.
Jean M. Gagné acted as an expert witness on the legal framework applicable to oil & gas exploration and production activities in Québec in the context of an arbitration pursuant to Chapter 11 of the NAFTA.
Emilie Bundock acted as a research assistant (legal sources, doctrinal sources and case law) supporting the preparation of the expertise on the legal framework applicable to oil & gas exploration and production activities in Québec in the context of an arbitration pursuant to Chapter 11 of the North American Free Trade Agreement (NAFTA).