The Attorney General of Canada v. S.D.Myers, Inc. - Chapter 4 - Investment Arbitration Decisions

Noah Rubins is a Partner in the Paris office of Freshfields, where he is a member of the international arbitration and public international law groups. Mr. Rubins is a U.S. qualified lawyer and has advised and represented clients in arbitrations under ICSID, ICC, ICDR, SCC and UNCITRAL rules. He specializes in disputes in the former Soviet Union and investment treaty arbitration. In addition to advising clients, Mr. Rubins has served as arbitrator in a range of disputes, conducted under the ICC, ICSID, LCIA, SCC and UNCITRAL rules.

Observations by:

Rajeev Sharma is currently Senior Corporate Counsel at Bayer Inc. in Toronto, Canada. Formerly, he practiced international arbitration, international trade, competition/anti-trust and government procurement law in the Toronto office of Heenan Blaikie LLP. Mr. Sharma has been counsel in numerous NAFTA Chapter 11 and other investor-state arbitrations under the UNCITRAL and ICSID rules. He is grateful to Teresa Ramnarine of Heenan Blaikie LLP, for her excellent research and assistance in the writing of this case comment. Any errors or omissions are, of course, the author’s alone. The views expressed here are only those of the author and should not be attributed to his current or former employers.

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Originally from Investment Arbitration Decisions

THE ATTORNEY GENERAL OF CANADA V. S.D. MYERS, INC. DOCKET T-225-01, T-81-03 ORDER OF CANADA’S FEDERAL COURT ON 13 JANUARY 2004

Subject matters:

(1) Scope of judicial review of a NAFTA arbitral award.

(2) Whether a US party is an “investor” under Chapter 11 of NAFTA and whether a Canadian company owned, not by the US party, but by the shareholders of the US party, is an “investment of the investor”.

(3) Whether the company’s activities are properly characterized as cross-border trade in services and therefore not arbitrable since governed by Chapter 12 of NAFTA, not Chapter 11.

Findings:

(1) Article 34 of Canada’s Commercial Arbitration Code does not allow for judicial review if the decision is based on an error of law or an erroneous finding of fact if the decision is within the jurisdiction of the arbitral tribunal. The principle of non-judicial intervention in an arbitral award within the jurisdiction of the tribunal has been ofted repeated by Canadian courts.

(2) The NAFTA definition of “investment of an investor of a party” means an investment owned or controlled directly or indirectly by such an investor. In the present case, whether the US company indirectly controlled the Canadian company was a question of fact. The broad nature of “investor” and “investment of an investor” reasonably support the arbitral tribunal’s findings that the US company was an investor and the Canadian company an investment of an investor.

(3) The different chapters of NAFTA overlap and NAFTA rights are cumulative, unles there is a direct conflict.The US company had an investment in Canada and is entitled to the protection under Chapter 11 with respect to its investment as well as by Chapter 12 with respect to its trade in services. The rights and obligations under Chapter 12 are not mtually exclusive or inconsistent with the rights and obligations under Chapter 11.

Table of Contents:

IV. The Attorney General of Canada v. S.D.Myers, Inc.

Docket T-225-01, T-81-03

Order of Canada's Federal Court on 13 January 2004

Observations by Rajeev Sharma