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Award on Jurisdiction and Liability

G LOSSARY OF D EFINED T ERMS
ANFO Ammonium Nitrate Fuel Oil
Bilcon Bilcon of Nova Scotia, a limited liability company incorporated on 24 April 2002 in Nova Scotia and a wholly owned subsidiary of Bilcon of Delaware
Blasting Conditions Blasting conditions added to the Approval dated 30 April 2002 by the Province of Nova Scotia "for the construction and operation of a Quarry, at or near Little River, Digby County in the Province of Nova Scotia" pursuant to Part V of the Nova Scotia Environment Act
Blasting Guidelines Guidelines for the Use of Explosives In or Near Canadian Fisheries Waters, Canadian Technical Report of Fisheries and Aquatic Sciences 2107 by D.G. Wright and G.E. Hopky, 1998
CEA Agency Canadian Environmental Assessment Agency
CEAA Canadian Environmental Assessment Act, S.C. 1992, c. 37 (in force until 6 July 2012)
Counter-Memorial Respondent's Counter-Memorial dated 9 December 2011
DFAIT Canada's Department of Foreign Affairs and International Trade
DFO Canada's Department of Fisheries and Oceans
Draft EIS Guidelines Draft Environmental Impact Statement Guidelines released for public comments on 10 November 2004
EA Environmental Assessment
EIS Environmental Impact Statement
EIS Guidelines Environmental Impact Statement Guidelines issued by the Joint Review Panel for the Whites Point project on 31 March 2005
Fisheries Act Fisheries Act, R.S.C. 1985, c. F-14, as in force from 11 May 2000 to 31 March 2003
FTC Notes Notes of Interpretation of Certain Chapter Eleven Provisions, Free Trade Commission, 31 July 2001
GQP Global Quarry Products, Partnership between Nova Stone and Bilcon of Nova Scotia entered into on 24 April 2002
ha Hectare
HADD Harmful alteration, disruption or destruction of fish habitat
ILC Articles Articles on Responsibility of States for Internationally Wrongful

Acts, adopted by the International Law Commission (ILC) in 2001
iBoF Inner Bay of Fundy
Investors' Article 1128 Response Investors' Response to the Submission of the United States of America pursuant to NAFTA Article 1128, dated 17 May 2013
JRP Joint Review Panel
JRP Hearing Transcript Whites Point Quarry and Marine Terminal Public Hearing Transcript
JRP Report Environmental Assessment of the Whites Point Quarry and Marine Terminal Project: Joint Review Panel Report, October 2007, submitted to the Canadian Minister of the Environment and the Nova Scotia Minister of Environment and Labour
Memorial Investors' Memorial, dated 25 July 2011
NAFTA North American Free Trade Agreement, entered into force on 1 January 1994
Notice of Intent Notice of Intent to submit a Claim to Arbitration, dated 5 February 2008
Nova Stone Nova Stone Exporters, Inc., a corporation formed pursuant to the laws of Nova Scotia, Canada
NSDEL Nova Scotia Department of Environment and Labour
NSEA Nova Scotia Environment Act, S.N.S. 1994-95, c. 1
NWPA Navigable Waters Protection Act, R.S.C. 1985, c. N-22 (as in force from 1 March 1999 to 10 May 2004)
PCA Permanent Court of Arbitration
Rejoinder Respondent's Rejoinder Memorial, dated 21 March 2012
Reply Investors' Reply Memorial, dated 21 December 2011
TOR Terms of reference of the Joint Review Panel
UNCITRAL Rules Arbitration Rules of the United Nations Commission on International Trade Law, 1976
US Article 1128 Submission Submission of the United States of America pursuant to NAFTA Article 1128, dated 19 April 2013
Whites Point project A quarry and a marine facility proposed to be constructed and operated by Bilcon at Whites Point in Digby Neck, Nova Scotia

I. INTRODUCTION

A. THE PARTIES

1.
The Investors acting as claimants in the present arbitration are Messrs. William Ralph Clayton, William Richard Clayton, Douglas Clayton and Daniel Clayton, all nationals of the United States of America, as well as Bilcon of Delaware, Inc., a limited liability company incorporated under the laws of the State of Delaware. The Investors' addresses for service are as follows:

Mr. William Ralph Clayton Bilcon of Delaware, Inc.

Mr. William Richard Clayton 1355 Campus Parkway

Mr. Douglas Clayton Monmouth Shores Corporate Park

Mr. Daniel Clayton Neptune, NJ 07753

PO Box 3015 United States of America

Lakewood, NJ 08701

United States of America

2.
The Investors are represented in these proceedings by Mr. Barry Appleton of Appleton & Associates, 77 Bloor Street West, Suite 1800, Toronto, Ontario, M5S 1M2, Canada.
3.
The Respondent in the present arbitration is the Government of Canada. Its address for service is Trade Law Bureau (JLT), Department of Foreign Affairs and International Trade Canada, 125 Sussex Drive, Ottawa, Ontario, K1A 0G2, Canada.
4.
The Respondent is represented in these proceedings by the following counsel at the Trade Law Bureau:

Ms. Sylvie Tabet Mr. Scott Little Mr. Shane Spelliscy Mr. Reuben East Mr. Jean-François Hébert

5.
The Parties'1 dispute revolves around the Investors' proposal to operate a quarry and a marine terminal2 in Nova Scotia at Whites Point in Digby Neck ("Whites Point project"). Beginning in 2002, the Whites Point project underwent a lengthy environmental assessment ("EA") by Nova Scotia and the Canadian Federal Government. Both governments rejected the project on environmental grounds in line with the recommendations of a Joint Review Panel ("JRP") at the end of 2007. The Parties differ starkly as to the appropriateness of various aspects of the EA and the treatment that the Investors received during this process. While the Investors contend that the treatment they received at every stage of the EA was unfair, politically biased and discriminatory, the Respondent maintains that the relevant authorities dealt with the proposal fairly and professionally. In the Respondent's view, it was the Investors who acted unprofessionally at various stages of the EA.

B. THE ESSENCE OF THE INVESTORS' CASE

6.
The Investor's position is essentially as follows.
7.
The Clayton Group of Companies, founded over fifty years ago, are principally engaged in supplying building materials, including concrete. The Clayton Group was managed by Mr. William Ralph Clayton, and his three sons, Mr. William Richard Clayton, Mr. Douglas Clayton and Mr. Daniel Clayton were also involved in the corporate operations. In 2008 the senior Mr. Clayton reduced his workload and transferred his interest in the Clayton Group to his sons. The Clayton Group requires a substantial, secure and economical supply of aggregate for its projects. The Clayton Group has a long history of providing needed products in a lawful manner. Its activities help to supply the roads, bridges and buildings needed by both the public and private sectors.3 The Clayton Group has been recognized for its leadership in corporate social responsibility, especially in the areas of health and education.4
8.
As will be described later in detail, Bilcon of Delaware, Inc., is a member of the Clayton Group and was incorporated under the laws of Delaware in 2002. The shareholders are the Clayton brothers. In the same year, Bilcon of Delaware, Inc., in turn incorporated as a subsidiary a new Nova Scotia company, Bilcon of Nova Scotia ("Bilcon"), to operate the Whites Point project, the purpose of which was to provide a reliable supply of aggregate for Bilcon of Delaware and the Clayton Group of Companies. Bilcon entered into a partnership with a Nova Scotia company, Nova Stone Exporters, Inc. ("Nova Stone"), to develop a quarry and marine terminal at Whites Point Quarry. The partnership was acquired entirely by Bilcon in 2004.
9.
For the purposes of its Chapter Eleven claims, the Investors are defined as Bilcon of Delaware and four individual investors, Messrs. William Ralph Clayton, William Richard Clayton, Douglas Clayton and Daniel Clayton. The Investors define their Investment as including Bilcon of Nova Scotia and the tangible and intangible property of the Investors associated with the Whites Point project.5
10.
Bilcon submits that the Province of Nova Scotia had a publicly stated policy of encouraging investment in its mining industry. Its political and technical officials were informed of the interest by Bilcon in developing a mining quarry and marine terminal at Whites Point, in Digby County, Nova Scotia. They welcomed Bilcon's interest and provided political and technical support. The overall regulatory framework in place in Nova Scotia and federal Canada includes requirements for environmental assessment and approval. Both jurisdictions have legislated policies of "sustainable development". The core of this philosophy is to encourage and promote economic development while conserving and promoting environmental quality.6 Bilcon was from the outset committed to complying with the environmental processes and standards of both federal Canada and Nova Scotia. It expected that it could address all relevant concerns about potential adverse effects by consulting with the community, assembling expert evidence on physical, biological and social impacts, and putting in place appropriate plans to prevent and mitigate environmental harm. It was interested in sound environmental practices as a matter of its own sense of corporate social responsibility.
11.
Bilcon contends, however, that its legitimate expectations, created by the regulatory framework and specific expressions of encouragement by governments, were frustrated unfairly and in breach of the safeguard that Chapter Eleven of NAFTA provides for investors and investments concerning non-discrimination (Articles 1102 and 1103) and fair treatment (Article 1105).
12.
In 2001, the Investors began to consider a project at Whites Point, in Digby County, Nova Scotia. Nova Stone applied to Nova Scotia environmental regulators for approval of a 3.9 hectare ("ha") quarry at that location. Nova Scotia regulators recommended approval. Shortly thereafter, Bilcon entered into a partnership agreement with Nova Stone to develop and operate the Whites Point Quarry. Nova Stone's original application, however, was sent back as it turned out to actually exceed 4.0 ha.
13.
Nova Stone revised the application to meet the 3.9 ha ceiling, and attempted to obtain industrial approvals to operate a small quarry on the site of the eventual project. It wanted to conduct test blasts. The results would assist in planning the project and making the case to regulators and the public that the quarry would be safe for the environment. Even though a small land-based quarry is ordinarily within provincial jurisdiction, Nova Scotia regulators stipulated, unlawfully, contends Bilcon, that blasting could only be carried out in accordance with federal Canada's guidelines on marine blasting.
14.
Approval to conduct the test blast, however, was never obtained. First, federal Canada's officials wrongly stated that Bilcon needed to conduct the blasts as far as 500 metres from the shore. The officials later realized that this was a mistake and the blasting guidelines only required a 100 metre setback but, they delayed disclosing the truth to Bilcon. The key federal Canada official with respect to marine mammals, Mr. Jerry Conway, informed his colleagues that he had "no concerns" about the impact of blasting if care was taken to avoid blasting if whales were sighted within a kilometre from the test site. Again, disclosure of this fact to Bilcon was long delayed. Bilcon tried for several more years to obtain the cooperation of regulatory authorities to conduct test blasts, but eventually gave up. Concerns over the environmental impact of blasting, however, ended up being cited by the JRP that recommended against the project.
16.
According to Bilcon, JRPs were never used except with respect to projects of far greater risk or magnitude. Referring the Bilcon project to such a panel was in stark contrast to another project on the Digby Neck Peninsula, the Tiverton Quarry. The Minister supported that project, which was locally owned. Approval was promptly granted with respect to test blasting in that case, even though it involved carrying out explosions in the ocean rather than in a land area set back from the shore. The environmental assessment process used for the Tiverton project was a mere screening rather than a JRP.
17.
Bilcon argues that federal Canada officials knew full well that the referral to a JRP was unwarranted. Federal officials believed that the scope of any federal environmental assessment should be confined to the marine terminal, not the quarry.8 They were aware of court cases that had taught that environmental assessments by a provincial or federal government should not encroach on the authority of the other level of government. Under the federal laws of the time, federal Canada officials were also aware, contends Bilcon, that there was no basis to believe that any projected activities at the quarry triggered an environmental assessment under the CEAA. There was no reasonable basis to be concerned that blasting or other land activities would damage fish habitat or endanger marine mammals.
18.
Once the matter was referred to a JRP, Bilcon exercised every reasonable effort to address the issues identified by federal Canada's and Nova Scotia's environmental assessment laws and that were specifically mentioned in the Terms of Reference for the JRP. In 2006 Bilcon filed an Environmental Impact Statement ("EIS") of over 3,000 pages, comprising 17 volumes. It was the product of millions of dollars of work involving thirty-five experts.9 It attempted to address physical, biological and social impacts of the project. Bilcon responded to numerous requests from the JRP for additional information.
19.
The hearing itself, however, did not afford Bilcon a reasonable opportunity to present its case. Over the course of ninety hours of hearings, Bilcon's experts testified for only about ninety minutes. Instead, the Panel permitted the hearing to become a forum for the expression of antiAmerican venting by a variety of citizens, representatives of organizations, and politicians— including former Minister of Fisheries Mr. Robert Thibault. The Panel did not act to limit or criticize condemnations that were grounded in nationality-based bias and lacking in scientific merit, but instead at times displayed its own scolding and disrespectful tone.10
20.
During the hearing, the Chair of the JRP at one point referred to the process as "in a small way" a "kind of a referendum".11 The JRP Report in the end decided that "community core values" were the overriding consideration in assessing the project. The community, reported the JRP, had an "exceptionally strong and well defined vision of its future"12 that precluded the development. "The imposition of a major long-term industrial site would introduce a significant and irreversible change to Digby Neck and Islands, resulting in sufficiently important changes to that community's core values to warrant the Panel assessing them as a Significant Adverse Environmental Effect that cannot be mitigated".13
21.
In Bilcon's submission, the finding on "community core values" was indeed the overriding consideration in the JRP Report. The latter did not make clear and comprehensive findings on whether all the specific impacts of the project would leave "significant adverse effects after mitigation", which is the standard required under the CEAA. Instead, having decided that the project was incompatible with the "community's core values", the Panel found it unnecessary to methodically assess the project's impact in terms of identifying risks, likelihood of each risk, magnitude of the risk and the existence of measures that might prevent the risk from being realized or mitigate it by way of restorative measures or compensation. Instead, the Panel identified a series of risks, largely driven by worst-case-scenarios, but made no thorough evidence-based effort to measure them against the standard of the CEAA and make recommendations on how they could be addressed by the proponent.
22.
Bilcon submits that the JRP also misapplied the statutory requirements in other fundamental respects.14
23.
Bilcon contends that "community core values" are not among the environmental impacts that are the lawful or proper scope of an environmental assessment process under the laws of federal Canada or Nova Scotia.15 The guidelines for the JRP refer to various social effects, like impact on values such as "sense of place", but do not refer to the concept of "community core values" that was decisive for the JRP. While social impacts can be considered, it should be in the context of a rational and evidence-based process whereby specific effects are identified and measures to avert or mitigate them are considered. As the concept is used by the JRP, "core values" in effect grant to local opponents a veto over the project16 which cannot be addressed effectively by any possible measure involving consultation, investigation and planning. No preventive or restorative measure could possibly be put in place to overcome it.
24.
Bilcon contends that it was provided no notice that the concept of "core values" was a factor the Panel was going to consider,17 let alone a predominant one. Even within the ambit of its own overriding concern with "community core values", submits Bilcon, the JRP acted unfairly and unreasonably. Its conclusions disregarded the evidence before it that there were strong supporters, as well as opponents of the project;18 indeed, thirty per cent of the residents had signed a petition supporting the project. There was no basis to characterize opposition to the project as authorized to define the values of the community as a whole or to disregard the substantial measure of local support that existed and was publicly manifested, notwithstanding the intimidating tactics of some of the opponents.
25.
Following the submission of the JRP Report, Bilcon argues, the Governments of Nova Scotia and federal Canada each had a statutory duty to consider objections from Bilcon about flaws in the JRP's process or conclusions. Under the Nova Scotia Environment Act (" NSEA "), the Minister of the Environment had a duty to consider whether to approve the project and to impose such conditions as the Minister deems appropriate.19 When a project is rejected, the Minister must provide reasons in writing.20 The Minister, however, declined to meet with the proponent to hear its concerns, did not invite or receive any detailed written submission, and accepted the report.21 In this way, the Minister abdicated his responsibility to exercise his independent discretion, denied procedural fairness to Bilcon, and failed to explain his decision.22 The Government of federal Canada similarly abdicated its responsibilities, and instead "rubberstamped" the JRP's recommendations.
26.
It is Bilcon's perspective that its project was consistent with both environmental integrity and economic development. The quarrying would have taken place in modest increments each year, with each area restored after it was used up. Natural visual barriers and designed buffer zones could have protected the land areas from disruption, and the marine terminal would have been built and operated in a manner consistent with preserving the natural habitat and industries, such as ecotourism and marine resource harvesting. The project would have provided needed jobs in an area that was threatened with the ongoing loss of population due to insufficient economic opportunities. Bilcon was taking on the investment risk needed to create the economic development in accordance with general and specific encouragements from government officials at both the political and technical levels to pursue a coastal quarry investment in Nova Scotia and indeed at the Whites Point area. All concerned expected that the project would have to go through environmental assessment in accordance with the laws of federal Canada and Nova Scotia, but Bilcon did not expect that it would be subjected to an adverse process and standard of evaluation different from that accorded to other investors, including Canadian investors, and that was not legally mandated.

C. THE ESSENCE OF THE RESPONDENT'S CASE

27.
The essence of Canada's case is as follows.
28.
Canada submits that the site of the White Points Quarry was in an ecologically sensitive area.23 The site had not previously been home to industrial development of the nature of the proposed Bilcon project. Whatever encouragements of a general or specific nature from governments concerning mining and export projects were subject to the clear understanding that the proponent would have to comply with both federal and provincial laws concerning the environment.
29.
As officials of Nova Scotia and federal Canada became aware of the project, including by way of a request for permission to conduct test blasts, federal and provincial officials consulted with each other in a normal and lawful manner. It was reasonable and appropriate for Nova Scotia officials to consult with federal Canada officials on matters such as the potential damage to marine life and to draw on their expertise in matters such as the appropriate conditions to attach to test blasting.24
30.
Minister Thibault submitted a sworn affidavit25 to the effect that when he first heard of the project he remembers thinking that it might be good news for his constituents, but he also heard from the outset about opposition to it. He understood that environmental assessment should not be used for the purpose of either rubber stamping or stopping a project. While he wanted to stay informed about events in his own riding, as Minister of the Department of Fisheries and Oceans, at no time did he interfere with the work of public servants and only made decisions when they requested him to do so. He swore that he found it incomprehensible that anyone would think that it was in his interests to delay the environmental assessment of the project. Bilcon chose not to cross-examine Minister Thibault.
31.
Canada introduced affidavit evidence from a number of officials who were involved in the various decisions along the way from consideration of the test blast application to the decision to refer the matter to a JRP. Some of them appeared at the hearing and were subjected to rigorous cross-examination. Canada submits that unless it was demonstrated by Bilcon that these officials were not telling the truth, the conclusion must be that they indeed acted throughout in a reasonable and good faith manner.26 Canada argues that it is important, in assessing the various steps taken, to not view any particular observation or step in isolation, but to recognize that there was a collaborative process among officials carried out over a course of time. Various officials weighed in with their perspectives from time to time in light of a developing understanding of the facts and issues involved.27
32.
Canada contends that the decision to refer the project to a JRP must be appreciated in context. A marine terminal project of this size would, in any event, by law have to be subjected to a Comprehensive Study, which in itself is an extensive and rigorous kind of environmental assessment.28 Carrying out the most summary form of assessment, a screening, was not a lawful option. It was a lawful and reasonable interpretation of the CEAA, as then stated and interpreted by officials and judges, that the quarry would be assessed along with the marine terminal as the former was sufficiently connected with the latter and because the quarry raised concerns within the scope of federal jurisdiction, such as impact of blasting on marine mammals.
33.
The referral to a federal Canada Review Panel rather than a Comprehensive Study, was a lawful and reasonable decision in light of concerns about environmental impacts and concerns expressed by a number of members of the local community.29 Federal Canada officials and Nova Scotia officials concurred that a JRP would be an appropriate means of coordinating the assessments by the two jurisdictions.
34.
In Canada's submission, Bilcon's emphasis on alleged failures to comply with the CEAA was misguided. Both federal Canada and Nova Scotia had to approve of the project under their environmental assessment laws. The provincial law was more expansive than federal Canada's with respect to the scope of assessment. Nova Scotia had rejected the project following the submission of the JRP Report and before Canada's final decision. Any alleged errors in the JRP's application of federal Canada's law or by Canada in making a final decision were therefore moot.30
35.
Canada submitted a report by an experienced and independent expert that reviewed the procedural path and report of the JRP. In his opinion, the mandate of the JRP, the composition of the Panel and the manner in which it conducted the hearings were proper. The analysis and conclusions in the report were appropriate within the overall framework of federal Canada and Nova Scotia environmental assessment laws. Any Investors' complaints based on the alleged scope of assessments under the former were irrelevant in light of the latter. With respect to the "community core values" approach, the environmental assessment guidelines stipulated by the JRP provided adequate notice to Bilcon and the approach itself was consistent with both the mandate of the JRP and the overall framework of federal Canada and provincial law governing environmental assessments. The JRP did not treat the matter as a "referendum"; its lengthy and detailed final report in fact reviewed the environmental impact of the project in light of its thorough review of all the evidence. The Investors are responsible for the inadequacies in their own environmental impact statement, and the JRP had the duty to consider and take into account the submissions of community members, including information about "community core values" and the impact the project would have on them. After the JRP reported, the Investors had a fair opportunity to submit their position to federal Canada and Nova Scotia before the authorities arrived at their final determinations in light of the information and analysis provided by the JRP.
36.
With respect to any NAFTA challenge, Canada submitted a number of jurisdictional defences. Canada contended that part of the Investors' complaint concerned events that could not be the subject of a NAFTA claim because they were barred by the time limitation periods under Chapter Eleven. Further, argued Canada, the JRP was not an entity for which Canada was accountable in international law. To the extent that the JRP had jurisdiction over the various complaints by Bilcon, Canada argued that it was necessary to evaluate the facts in light of a proper understanding of the relevant norms for state conduct in Chapter Eleven. The "minimum international standard" is meant to address matters where state conduct is egregious. NAFTA precedents concerning the minimum standard under international law have consistently emphasized that there is a high threshold of seriousness that must be reached before alleged misconduct raises to a level that implicates international responsibility on the basis that it breaches the minimum international standard of fair and equitable treatment. While NAFTA does not require that local remedies be exhausted before bringing a complaint, the fact remains that any complaints of the Investors could have been considered in a judicial review process by Canadian courts under Canadian law and were not matters that triggered international responsibility.
37.
With respect to Article 1102, National Treatment, and Article 1103, Most Favored Nation, the cases invoked by the Investors did not involve investors in "like circumstances". It is important to appreciate the distinct facts of this case, which involved a long-term industrial scale marine terminal and quarry project in an environmentally sensitive area in which many members of the local community expressed strong concerns and objections. Consequently, a JRP was commissioned rather than some other mode of assessment.
38.
Canada submitted that Bilcon's complaint should be dismissed entirely at the liability stage, thereby concluding the matter.
39.
This Award addresses the Respondent's challenges to the Tribunal's jurisdiction as well as the Respondent's liability in principle pursuant to NAFTA Chapter Eleven. As agreed between the Parties, the quantification of damages will be dealt with in a separate phase of the present arbitration if and to the extent that the Tribunal finds liability in principle.

II. PROCEDURAL HISTORY

A. COMMENCEMENT OF THE ARBITRATION

40.
On February 5, 2008, the Investors served upon the Government of Canada a Notice of Intent to submit a Claim to Arbitration ("Notice of Intent") in accordance with NAFTA Articles 1116 and 1119 with respect to Respondent's alleged violation of its obligations under Section A of NAFTA Chapter Eleven.
41.
On 26 May 2008, the Investors filed a Notice of Arbitration pursuant to Article 3 of the UNCITRAL Rules and NAFTA Articles 1116 and 1120. On 5 August 2008, the Parties agreed that the effective filing date of the Notice of Arbitration was 17 June 2008.
42.
The Investors appointed Professor Bryan Schwartz as the first arbitrator. The Respondent appointed Professor Donald McRae as the second arbitrator. On 26 January 2009, the Parties invited Judge Bruno Simma to act as President of the Tribunal. On 29 January 2009, Judge Bruno Simma accepted the invitation. The Parties confirmed the proper constitution of the Tribunal at the first procedural meeting, as recorded in Procedural Order No. 1 of 9 April 2009.
43.
On 30 January 2009, the Investors filed their Statement of Claim.
44.
On 20 March 2009, the Parties and the Tribunal held a first procedural meeting in Toronto, Ontario, Canada.
45.
On 9 April 2009, the Tribunal issued Procedural Order No. 1, which fixed Toronto, Ontario, Canada as the place of arbitration and provided that the Permanent Court of Arbitration ("PCA") would administer the arbitral proceedings and provide registry services and administrative support.
51.
The Respondent submitted an Amended Statement of Defense on 18 December 2009.

B. DOCUMENT PRODUCTION

1. The Process for Document Requests and Objections

52.
Pursuant to the direction of the Tribunal in Procedural Order No. 3, the Parties exchanged requests for documents in the possession, custody or control of the other side on 2 July 2009.
53.
On 9 July 2009, the Respondent requested that the Tribunal order the Investors to amend their document production requests on the ground that they lacked the specificity required by the Tribunal's earlier direction. After receiving the views of the Parties, on 24 July 2009, the Tribunal issued Procedural Order No. 5, in which it ordered the Investors to revise certain document requests and invited the Respondent to interpret other requests "in light of the Disputing Parties' previous submissions (in particular, the Investors' Statement of Claim)".
54.
On 20 August 2009, following an exchange of documents, and notices from both sides refusing to produce certain documents, the Investors requested that the Tribunal grant an extension of time for it to comment on the Respondent's production, alleging that the Respondent's failure to provide an index of the documents that it had produced prejudiced the Investors in respect of their ability to respond. After receiving the views of both sides, the Tribunal issued Procedural Order No. 6 on 26 August 2009, denying the Investors' requested extension.
55.
On 11 September 2009, both sides submitted to the Tribunal an application in the form of a Redfern Schedule detailing requests for documents, the objections of the opposing side, and the requesting Party's replies thereto.
56.
On 16 October 2009, the Tribunal held a first case management meeting with the Parties in Toronto to discuss the process for their ongoing document production and explore ways in which the Parties' disagreement might be limited. The Tribunal was assisted in this regard by briefs submitted by the Parties on 13 October 2009.
57.
On 20 November 2009, the Tribunal issued Procedural Order No. 7, providing further instructions concerning document production. The Tribunal also defined a process for dealing with claims of cabinet privilege, political sensitivity, or legal privilege in a separate process.
58.
On 25 November 2009, the Tribunal issued Procedural Order No. 8, in which it provided guidance on the scope and nature of production and ordered the Parties to produce, by 18 December 2009, all remaining documents requested by the other side, with the exception of documents subject to a privilege claim. On 2 December 2009, the Respondent filed an application for an extension of the time period set out in Procedural Order No. 8 for it to complete its document review and production. The Respondent estimated that its lawyers were required to review at least 75,000 documents to respond to the Investors' requests.
59.
On 14 December 2009, the Tribunal revised the timetable for production set out in Procedural Order No. 8, fixing 25 April 2010 as the new deadline for the production of remaining documents (except for documents subject to privilege claims), and invited the Parties to report periodically on the progress made in the location, review and production of documents. The Parties filed their first reports in response to the Tribunal's invitation on 25 February 2010.
60.
On 12 April 2010, the Respondent reported again on the progress of its document production and requested "an indefinite extension" of the deadline for document production. The Tribunal denied the Respondent's requested extension by letter dated 11 May 2010. On 14 June 2010, the Respondent provided a third status report on document production.
61.
On 28 June 2010, the Tribunal held a second case management meeting with the Parties in Toronto to discuss the progress of the Parties' document production. On 16 July 2010, in light of the discussion at the meeting and following additional submissions from both sides, the Tribunal issued Procedural Order No. 9 giving guidance to the Parties on outstanding questions regarding document production, such as indexing and automized searches on the basis of date parameters and search terms. The Tribunal also established that some documents—Category A documents—would be produced as a matter of priority, whereas other documents—Category B documents—would be produced no later than the due date of the Respondent's CounterMemorial.
62.
Following a further status update from the Respondent on 19 August 2010, and additional communications from both Parties, the Tribunal issued Procedural Order No. 10 on 2 September 2010, in which it fixed a revised timetable for the remaining phases of document production.

2. Documents Not Produced for Reasons of Privilege

63.
In their 11 September 2009 request for the production of documents, and subsequent amended requests, the Investors objected to the Respondent's refusal to produce certain documents due to what the Respondent called their "special political or institutional sensitivity" as well as other documents over which the Respondent claimed solicitor-client privilege and attorney work product privilege.
64.
On 13 October 2009, further to a request by the Tribunal, each Party commented on the legal principles governing the Tribunal's consideration of claims of legal privilege and political sensitivity, as well as the process and schedule for the Tribunal's consideration of privilege objections. As noted above, following the 16 October 2009 case management meeting with the Parties, the Tribunal's Procedural Order No. 7 dated 20 November 2009 defined a process for the exchange of privilege logs justifying claims that documents should not be produced for reasons of privilege or sensitivity.
65.
On 10 March 2010, following a review of the Parties' document production status reports of February 2010, the Tribunal reiterated that the Parties would be invited to exchange privilege logs following the completion of document production by 25 April 2010.
66.
On 16 April 2010, the Investors requested that the Respondent be required to file an interim privilege log on all documents reviewed up to that date. The Respondent answered on the same day, arguing that the preparation of an interim privilege log would further delay the production of documents. On 6 May 2010, the Investors complained to the Tribunal that the Respondent had indicated it would not comply with the Tribunal's instruction to provide any privilege logs.
67.
Following the 28 June 2010 case management meeting, the Tribunal revised the timeline and procedure for the exchange of privilege logs, setting out these changes in Procedural Order No. 9.
68.
On 27 August 2010, the Tribunal denied a request by the Investors to require the Respondent to produce letters exchanged between Canada's Trade Law Bureau and other government departments, agencies and individuals. The Respondent had maintained that the disclosure of these letters served no useful purpose and that, in any event, they were protected by solicitor-client privilege and litigation privilege. The Tribunal considered that production of those letters would not assist the document production process.
69.
On 1 April 2011, the Investors informed the Tribunal that the Respondent advised them that it "may have inadvertently disclosed documents... which it now contends are covered by privilege". After reviewing the comments of both Parties on the matter, the Tribunal, on 19 April 2011, informed the Parties that it would take up the issue of the inadvertently disclosed documents together with the other issues of privilege.
70.
On 21 June 2011, the Investors requested an extension to file their Memorial to review the newly produced documents that the Respondent had belatedly located. The Tribunal granted the Investors' request on 29 June 2011.
71.
On 13 July 2011, the Investors filed a motion requesting that the Tribunal order that the Respondent explain all redactions, including the identity of those who made the determination that redaction was needed, the timing of the determination, and the criteria used for making the determination; that the Respondent produce non-redacted copies of all documents that had been redacted on any basis other than privilege; and that the Investors and their experts be entitled to adduce any resulting evidence in subsequent successive rounds of pleadings. In reply, the Respondent argued by letter dated 20 July 2011 that it had complied with its document production obligations by redacting documents that were either partially irrelevant or privileged.
72.
On 10 August 2011, the Tribunal issued Procedural Order No. 11, in which it directed that redactions made for reasons of privilege be noted in the Respondent's privilege log. It requested that, with regard to documents redacted on the basis of partial irrelevance, the Respondent provide the Investor with the full unredacted documents; however, if the Respondent had reason to believe that the disclosure of such information would prejudice a third party, the Respondent could apply for an exception to the direction.
73.
On 15 February 2012, the Investors filed a motion in which they requested that the Tribunal order the Respondent to make available for examination Mr. Yves LeBoeuf, Vice President of Operations at the Canadian Environmental Assessment Agency ("CEA Agency"), who provided a statement supporting the Respondent's representation of its privilege submission.
74.
On 16 February 2012, the Tribunal suspended the timetable of the Investors' replies on the Respondent's objections to production in respect of such documents for which the Respondent relied on Mr. LeBoeuf's affidavit to justify their privileged status. On 23 February 2012, the Tribunal informed the Parties that it would reserve its decision on the Investors' request concerning Mr. LeBoeuf until it had a full picture of the Parties' contested privilege claims and accompanying evidence.
75.
Following the submission of several revised privilege logs from the Parties and exchanges of views on each Party's privilege claims, on 2 May 2012, the Tribunal issued Procedural Order No. 12, in which it established standards to be applied to the Parties' claims regarding solicitor-client privilege and work product privilege, and determined that the Respondent had not waived privilege over the inadvertently disclosed documents. The Tribunal ordered that the Respondent review its claims of privilege in light of the elaborated standards and produce any documents that did not qualify for protection under those standards.
76.
On 17 May 2012, the Investors informed the Tribunal that they no longer wished to examine Mr. LeBoeuf at the procedural hearing planned for 8 June 2012. The Respondents asserted on 18 May 2012 that the procedural hearing was therefore "no longer necessary as all of the outstanding contested claims of privilege may be resolved without requiring the disputing parties to incur the significant costs of an oral hearing". On 23 May 2012, having considered the Parties' correspondence, the Tribunal informed the Parties that the 8 June 2012 procedural hearing would be maintained. The hearing was held in Toronto.
77.
On 11 July 2012, the Tribunal issued Procedural Order No. 13 addressing the objections to document production on the basis of special political or institutional sensitivity. It required that certain documents be reviewed again by the Respondent in light of the Tribunal's interpretation of the rules on privilege applicable in NAFTA Chapter Eleven arbitrations; and concluded that the Respondent had shown that other documents had been subject to sufficient review in good faith to be considered privileged and did not need to be disclosed.
78.
By separate letter also dated 11 July 2012, in response to a request by the Respondent concerning the Investors' blanket privilege claim over documents created after 1 October 2007, the Tribunal ordered the Investors to provide the Respondent with a supplemental privilege log listing all such privileged documents responsive to the Respondent's earlier document request.

3. Documents in the Possession of Third Parties

79.
During the 28 June 2010 case management meeting, and in two letters dated 30 June 2010 and 5 July 2010, as well as in a 16 July 2010 motion, the Investors requested that the Tribunal issue an interim award ordering that certain electronic records said to be under the control of former JRP members involved in the Whites Point project EA be preserved, and that the Investors be allowed to examine the JRP members.
80.
Having considered the views of both Parties, the Tribunal noted in its 27 August 2010 letter to the Parties that it did not consider it appropriate to make an order or to issue an interim award in respect of non-parties to the proceedings as requested by the Investors; however, the Tribunal asked the Respondent to undertake certain efforts to seek further information from the three former JRP members on the topic of the existence and preservation of electronic correspondence in respect of the Whites Point project.
81.
On 30 September 2010 and 14 October 2010, the Respondent provided the Tribunal and the Investors with copies of letters from the members of the JRP responding to the query set out by the Tribunal.
82.
On 3 November 2010, the Investors alleged that the JRP members did not fully answer the questions they were asked and, on 23 November 2010, the Investors filed a supplemental motion for the examination of the JRP members. On 9 December 2010, the Respondent provided additional correspondence from the JRP members in response to the questions put to them.
83.
Following a further exchange of views with the Parties, the Tribunal on 30 December 2010 stated that it would not require the examination of the JRP members at that stage and reserved the Respondent's request for the allocation of costs for further consideration.

4. Documents Post-dating 5 February 2008

84.
On 10 August 2012, the Investors sought an order from the Tribunal that the Respondent disclose documents dated later than 5 February 2008 (the date of the Notice of Intent). On 15 August 2012, the Respondent replied that it did not possess any such documents and noted its view that "anything that postdates February 5th, 2008, can't be relevant for this claim, can't be relevant or responsive to a document request for this claim".
85.
On 17 August 2012, the Tribunal asked the Respondent to clarify:

whether there are - or may be - any documents that are responsive to the Investors' request and were created after 5 February 2008. If that is the case, the Tribunal requests the Respondent to provide... a short submission... in support of its position that it need not produce any documents created subsequently to the Notice of Intent in the present proceeding.

The Tribunal invited the Investors to comment on the Respondent's clarification and/or submission.

86.
On 24 August 2012, the Respondent replied that it was not aware of any documents responsive to the Investors' request for documents created after the date of the Notice of Intent. In addition, according to the Respondent, the Investors had waived the question of a cut-off date by not raising the issue earlier in the proceedings. Finally, the Respondent argued that to carry out an additional search for such documents would be overly time-consuming and burdensome.
87.
Having considered the communications of both Parties, on 19 September 2012, the Tribunal issued Procedural Order No. 14. In this Order, the Tribunal affirmed the Parties' continuing duty to disclose new information relevant and material to the arbitration and responsive to an opposing Party's request. However, the Tribunal also considered that it "would not be productive for the Disputing Parties to conduct an additional search for documents post-dating February 5, 2008 that may be responsive to the opposing Party's document production requests", referring to procedural economy and the small likelihood that such a search would result in the production of new evidence of significant probative value. Without prejudice to this general direction, the Tribunal requested the Respondent to produce certain letters that the Respondent had already identified in prior correspondence, the identification of which accordingly did not require a new search.
88.
On 26 October 2012, the Investors informed the Tribunal that they believed that the Respondent had omitted certain non-privileged documents post-dating 5 February 2008 when it produced responsive documents on 19 October 2012 pursuant to Procedural Order No. 14. They requested that the Tribunal draw an adverse inference against the Respondent on the ground that its 19 October 2012 production did not include "relevant documents that obviously exist, or that must be taken to exist".
89.
On 15 November 2012, taking note of the Parties' correspondence regarding the "nonproduction of relevant documents", the Tribunal reserved its decision as to whether any adverse inference should be drawn from the Respondent's alleged non-production.

C. INTERROGATORIES

90.
On 9 May 2012, the Investors sought leave to issue a set of interrogatories to the Respondent including: questions seeking further document production or clarification regarding the existence of documents; questions seeking clarification of facts articulated in the Respondent's Counter-Memorial; and, questions related to information contained in witness affidavits.
91.
Following direction from the Tribunal at the 8 June 2012 procedural hearing, on 9 July 2012, the Respondent submitted its responses to the Investors' interrogatories. On 10 August 2012, the Tribunal requested that the Respondent provide more information in response to one of the Investors' interrogatories, regarding which the Respondent could likely provide an immediate response. The Respondent replied on 11 September 2012.
92.
On 11 January 2013, the Respondent filed an application for leave to file interrogatories directed to the Investors.
93.
On 23 January 2013, after receiving comments from both sides, the Tribunal issued Procedural Order No. 17, granting the Respondent leave to file a limited number of interrogatories and setting out the process in this regard.
94.
On 11 February 2013, the Investors submitted their responses to the Respondent's interrogatories.

D. WRITTEN PLEADINGS

95.
The Investors submitted their Memorial on 25 July 2011.
96.
The Respondent submitted its Counter-Memorial on 9 December 2011.
97.
After considering comments from the Parties concerning a proposed timetable, on 17 October 2012, the Tribunal issued Procedural Order No. 15 in which it adopted a revised procedural calendar and confirmed that the hearing on jurisdiction and merits would take place from 17 to 28 June 2013.
98.
On 21 December 2012, the Investors submitted their Reply.
99.
On 21 March 2013, the Respondent submitted its Rejoinder.
100.
On 28 March 2013, the Tribunal offered the non-disputing NAFTA Parties an opportunity to make submissions pursuant to NAFTA Article 1128. On 19 April 2013, the Tribunal received a submission from the United States of America.

E. HEARING ON JURISDICTION AND MERITS

101.
On 16 April 2013, the Tribunal issued Procedural Order No. 18, which addressed logistical and procedural matters concerning the hearing on jurisdiction and merits and which asked the Parties to provide an agreed timeline of facts relevant to the dispute.
102.
On 26 April 2013, pursuant to Procedural Order No. 18, each of the Parties identified the witnesses and experts it intended to cross-examine at the hearing on jurisdiction and merits.
103.
On 17 May 2013, each side provided the Tribunal with its version of a timeline of relevant facts.
104.
On 28 May 2013, the Tribunal informed the Parties that the hearing on jurisdiction and merits had to be postponed. On 17 June 2013, the Parties agreed to the Tribunal's proposed revised dates for the hearing: from 22 October to 1 November 2013.
105.
The hearing on jurisdiction and merits was held in Toronto from 22 October to 25 October 2013, and from 28 October to 31 October 2013. The following persons attended the hearing:

For the Investors:

Mr. Barry Appleton

Mr. Gregory J. Nash

Mr. Frank S. Borowicz

Dr. Alan Alexandroff

Mr. Kyle Dickson-Smith

Mr. Josh Scheinert

Ms. Celeste Mowatt

Mr. Chris Elrich

Professor Robert Howse

Ms. Sue Ki

Mr. Josh Hauser

Mr. John Evers

Mr. David Consky

Ms. Jessica McKeachie

Ms. Jennifer Montfort

Ms. April Jangkamolkulchai

Ms. Sandra Albia

Ms. Mary Grace Ruaya

Ms. Lauren Wilcocks

Mr. Michael Pogorzelski

Mr. Vasyl Didukh

Mr. William Richard Clayton

Mr. John Lizak

Mr. Paul Buxton

Mr. David Estrin

Professor Murray Rankin

For the Respondent:

Mr. Scott Little

Mr. Shane Spelliscy

Mr. Jean-François Hébert

Mr. Stephen Kurelek

Mr. Reuben East

Mr. Adam Douglas

Mr. Robert Connelly

Ms. Elizabeth Hrubesz

Ms. Cheryl Fabian-Bernard

Mr. Alex Miller

Ms. Chris Reynolds

Ms. Jasmine Rokolj

Mr. Alex George

Mr. David Bartol Mr. Kevin LeBlanc Mr. Neil Bellefontaine Mr. Stephen Chapman Mr. Christopher Daly Mr. Bruce Hood Mr. Mark McLean Mr. Bob Petrie Mr. Lawrence E. Smith

The Arbitral Tribunal:

Judge Bruno Simma Professor Donald McRae Professor Bryan Schwartz

For the Registry:

Dr. Dirk Pulkowski Ms. Kathleen Claussen

106.
On 20 December 2013 and 14 February 2014, the Parties submitted annotated versions of their opening and closing statements, respectively, as presented at the hearing.
107.
The Tribunal has made every effort to ensure that both Parties have had a full and fair opportunity to discover and present relevant evidence. It ordered the production of documents from both sides, an exercise which resulted in the identification and review of thousands of documents and the production to the other side of a great many of them. The Parties, with an exemplary level of diligence and skill, submitted detailed written submissions that reviewed the documentary evidence, identified and argued vigorously for their view of the law, and proposed how the law applied to the facts. The Parties then participated in an eight-day hearing on jurisdiction and merits in which they cross-examined selected witnesses from each side.
108.
The Tribunal has carefully studied the submissions of both Parties, both on fact and law. It listened attentively throughout eight days of the hearing on jurisdiction and merits and has reviewed the transcripts. In writing this Award, the Tribunal has attempted to provide a reasonably concise explanation of its reasoning and conclusions. The fact that not all evidence and arguments have been referred to in these reasons should not be construed in any way as an omission to take conscientiously into consideration the entire record in the course of its deliberation. The Tribunal has in fact reviewed with care all the material submitted. In presenting its conclusions, however, the Tribunal has attempted to proceed in a reasonably focused manner. It is hoped that this distilled approach will assist the Parties and the international community in understanding the Tribunal's conclusion and contribute to the understanding and development of the law in this area.

III. THE PARTIES' REQUESTS

A. THE INVESTORS

109.
The Investors request the following relief:

(a) A declaration that Canada has acted in a manner inconsistent with its Chapter 11 obligations of national treatment, most favored nation treatment, and international law standards of treatment, in breach of its obligations under NAFTA Articles 1102, 1103 and 1105;

(b) A declaration dismissing Canada's jurisdictional objections;

(c) A declaration that the claim proceed forthwith to the Quantification of Damages;

(d) Damages arising from the delays, suppression of evidence, and non-production of documents by Canada; and

(e) An award in favor of the Investors' for all costs, disbursements and expenses incurred in the merits phase of the arbitration for legal representation and assistance, plus interest, and costs of the Tribunal.31

B. THE RESPONDENT

110.
The Respondent requests the following relief:

Canada respectfully requests that this Tribunal render an award dismissing the Claimants' claims in their entirety and ordering the Claimants to bear the costs of the arbitration in full and to indemnify Canada for its legal costs, disbursements and expenses incurred in the defence of this claim, as well as the costs of the Tribunal, plus interest. Canada also requests the opportunity to make submissions on the costs that it has been forced to incur as a result of this claim.32

IV. STATEMENT OF FACTS

111.
The present arbitration results from the Parties' disagreement as to the appropriateness of the treatment accorded by the Respondent to the Investors in the context of the EA of the Whites Point project.
112.
As noted earlier, various corporate entities were involved in the project proposal on the Investors' side. Bilcon is a company incorporated in Nova Scotia; it is a wholly owned subsidiary company of Bilcon of Delaware, Inc., a company incorporated in Delaware, which is in turn owned and controlled by Messrs. Douglas Clayton, William Richard Clayton and Daniel Clayton.33
113.
Together with Nova Stone, also a company incorporated in Nova Scotia, Bilcon formed Global Quarry Products ("GQP"), a partnership registered in Nova Scotia in April 2002.34 On 1 April 2004, Bilcon acquired Nova Stone's interest in GQP. As a result, GQP was dissolved, and Bilcon itself entered into a lease agreement with the owners of the Whites Point property.
114.
In addition to members of the Clayton family, Mr. Paul Buxton, the registered agent and project manager for Bilcon, played a material role in the planning and application for regulatory approval of the Whites Point project. Much of the relevant communication in relation to the project application was relayed to Respondent's authorities through Mr. Buxton.
115.
Key actors on the Respondent's side include: Mr. Robert Thibault, former Department of Fisheries and Oceans ("DFO") Minister and the Member of Parliament for the riding in which the Whites Point project was located; the Honourable Kerry Morash, Minister of Nova Scotia's Department of Environment and Labour ("NSDEL"); and Mr. Gordon Balser, former Minister in Nova Scotia, who was the provincial member of the Nova Scotia Legislative Assembly for the constituency in which the Whites Point project was located.
116.
At the civil servant level, the Parties frequently refer to Mr. Robert ("Bob") Petrie, District Manager in the Regional Environmental Monitoring and Compliance Division at the NSDEL and Mr. Bruce Hood, former Senior Liaison Officer for Habitat Operations at the DFO in Ottawa.
117.
Two general remarks should be made at the outset. First, while the Investors' core claim stems from the decisions of Nova Scotia and Canada to reject the Investors' Whites Point project proposal, the Investors also advance numerous specific claims with regard to their treatment by the federal and provincial authorities from when these authorities began to evaluate a proposal by Nova Stone to operate a 3.9 ha quarry. The factual summary focuses mainly on the EA of the Whites Point proposal by Nova Scotia and Canada, and is hence not exhaustive. The Parties discuss many of the disputed facts in connection with their legal arguments. To limit repetition, the Tribunal summarizes certain facts in Part VI concerning the merits of the Investors' claims rather than in the present Part. Secondly, the Investors do not consistently distinguish between Bilcon and GQP. By contrast, the Respondent distinguishes these two different undertakings as it contests the standing of Bilcon to bring claims with respect to Nova Stone's industrial approval for the 3.9 ha quarry. For the sake of clarity and without prejudice to the Investors' position, the Tribunal follows the Respondent's terminology and distinguishes between the different undertakings, except when it quotes from the submissions of the Investors.
118.
For the purpose of the present Award, the Tribunal has reviewed a voluminous record of evidence, documenting all aspects of the case that the Tribunal has found to be relevant to the Parties' claims and defences in detail. Accordingly, the Tribunal is confident that it was put in a position where it was able to reach an informed determination of the facts, without the need to have recourse (as the Parties' have invited the Tribunal to do) to the drawing of adverse inferences.
119.
Due to the large number of disputed facts, the Statement of Facts is divided into four main sections, which are organized chronologically: the request for an industrial approval to operate a 3.9 ha quarry; the interactions between the government entities and the Investors in the lead-up to the EA; the referral to the JRP, the establishment and the work of the JRP; and finally the ministerial decisions following the recommendation made by the JRP.

A. THE REQUEST FOR AN INDUSTRIAL APPROVAL TO OPERATE A 3.9 HA QUARRY

1. Undisputed Facts

120.
On 6 February 2002, Nova Stone applied to the Canadian Coast Guard under s. 5 of the Navigable Waters Protection Act (" NWPA ") for a permit to build a "floating loading dock" in Nova Scotia at Whites Point in Digby Neck.35
121.
On 18 February 2002, Nova Stone applied to the NSDEL for a permit to construct and operate a quarry on the Whites Point project site. The NSDEL rejected this application on 15 April 2002 as it concluded that the proposed quarry exceeded 4 ha, the maximum size permitted through the basic NSDEL approval process.36 Any quarry greater than 4 ha requires an EA before it can proceed in Nova Scotia.37
122.
On 23 April 2002, Nova Stone submitted a new application for a permit to build a quarry at the Whites Point project site that was limited to 3.9 ha.38 The NSDEL issued this permit on 30 April 2002. The approval was made subject to certain blasting conditions added at the DFO's request (the "Blasting Conditions").
123.
The Blasting Conditions required Nova Stone to carry out blasting in accordance with Guidelines for the Use of Explosives In or Near Canadian Fisheries Waters (the "Blasting Guidelines"); and to submit a report in advance of any blasting activity verifying that the intended charge size would not have an impact on marine mammals in the area.39 As explained further below, the Parties disagree on whether the DFO had authority to attach certain of the Blasting Conditions to the permit and whether the concerns about the impact of blasting on marine mammals in the Bay of Fundy were genuine.
124.
Between September and November 2002, Nova Stone submitted three blasting plans to the NSDEL and the DFO in connection with Blasting Conditions applicable to the 3.9 ha quarry. The DFO requested additional information with regard to the first two blasting plans. As explained below, the Parties diverge on the reasons that led the DFO to request further information. While the third blasting plan was sufficiently detailed, the DFO did not allow Nova Stone to proceed with blasting, maintaining that the determination on the blasting plan had become tied to the determinations necessary for the EA of the Whites Point project.40
125.
On 29 May 2003, the DFO found that the proposed blasting activity on the 3.9 ha quarry required authorization under s. 32 of the Fisheries Act (" Fisheries Act ") and directed a setback distance of 500 meters from the shoreline.41
126.
Nova Stone's permit for the 3.9 ha quarry terminated on 1 May 2004.

2. Disputed Facts

127.
Several facts are in dispute: whether Digby Neck was already an industrialized area prior to Bilcon's investment or whether it was an area of particular environmental concern; whether provincial and federal authorities encouraged the investment in the area of Digby Neck in the summer of 2002; whether the DFO had authority to attach certain of the Blasting Conditions to the 3.9 ha permit of 30 April 2002; whether the concerns about the impact of blasting on marine mammals in the Bay of Fundy were genuine; and, whether the blasting plans submitted by Nova Stone were unfairly not approved.

(a) Whether Digby Neck was an Industrialized Area

i. The Investors' Position

128.
The Investors contend that Nova Scotia is "no stranger to industry".42 They maintain that rock quarries have a long history in Nova Scotia. The Investors point to documents made available by provincial entities such as a circular of the Nova Scotia Department of Natural Resources, entitled "Industrial Minerals in Nova Scotia,"43 its leaflet entitled "Minerals—A Policy for Nova Scotia,"44 and another leaflet entitled "Take Advantage of Mineral Exploration and Development in Nova Scotia".45 According to the Investors, these pamphlets illustrate the government's encouragement for and recognition of the mineral industry by exploration and mining activities as part of its overall industrial strategy. In these documents, the province recognized mineral exploration and mining "as a key sector contributing to jobs, wealth and a high quality of life for Nova Scotians".46
129.
The Investors further observe that the proposed site of the quarry is in a sparsely populated rural area separated from local communities by a mountain. According to the Investors, the quarry site had been clear-cut logged and used as a gravel pit to build roads and highways in Nova Scotia.47

ii. The Respondent's Position

130.
The Respondent emphasizes the importance and uniqueness of the biophysical and human environment in Digby Neck and the adjacent Bay of Fundy.48 It maintains that "there are no large-scale quarries or other industrial developments and no significant marine terminals [in the area of Digby Neck]. Further, efforts to establish such projects have been firmly resisted by the community".49 The Respondent argues that the Bay of Fundy is the habitat of many endangered species and the economy of the local area is based on the region's ecological assets. Fishing and ecotourism have been strong components of the local economy in recent years, according to the Respondent.50
131.
Accordingly, the Respondent alleges that:

Given the surrounding biophysical and human environment of the Digby Neck and the sheer magnitude of the Whites Point project, any proponent who had seriously considered the regulatory environment would have known that it was naive to believe that only a ‘minimal environmental assessment' would be required.51

(b) Whether the Investors were Encouraged to Invest in the Digby Neck Area

i. The Investors' Position

132.
The Investors allege that Nova Scotia actively solicited industrial-quarry investments.52 More specifically, the Investors submit that the Nova Scotia Department of Natural Resources encouraged the investment in Digby Neck. Gordon Balser, a minister in the Nova Scotia government, actively supported the project.53
133.
The Investors emphasize the special treatment shown to their staff and representatives. As the Tribunal heard at the hearing on jurisdiction and merits, when the Investors' geological expert visited the region, he was taken on a helicopter ride around potential sites in the region and provided with other "perks" that were, in his experience, unusual in that they "wouldn't happen [on the east coast] U.S" and impressive to the point where he stated that the access and treatment he received made it "kind of a dream project" or the "gem in the Crown".54

ii. The Respondent's Position

134.
The Respondent submits that the alleged "encouragement" or "invitation" to invest in Nova Scotia did not amount to more than standard investment promotion activities, falling far short of any specific inducement or assurance.55 In any event, according to the Respondent, investment promotion activities took place in late 2002 and 2003—after Bilcon had decided to invest.56
135.
Moreover, according to the Respondent, any encouragement that was made would have been made to Nova Stone, the entity that applied for, and was granted, the permit for the 3.9 ha quarry.57 That permit was never transferred to GQP and, as a result, Bilcon was never involved in the 3.9 ha quarry in any way.58

(c) Whether the DFO had Authority to Issue Blasting Conditions

i. The Investors' Position

136.
The Investors contend that they applied for a standard quarry permit for the 3.9 ha quarry on the understanding that no Blasting Conditions would be attached.59 According to the Investors, internal correspondence between the NSDEL and the DFO reveals that DFO "contrived to assert authority over the application on the pretext of the potential effect of blasting on whales".60
137.
The Investors contend that, even though the DFO admitted that there were no genuine concerns about such effects at Whites Point and hence "no legitimate federal government authority to apply the Fisheries Act to restrict blasting at Whites Point on the basis of risk to whales," the DFO still imposed blasting conditions.61 The Investors claim that internal departmental correspondence exchanged in relation to the NWPA floating dock application shows that the DFO saw "no real whale concerns in the Whites Point area".62
138.
Finally, the Investors maintain that "[i]t is extraordinary that a federal government department [the DFO] inserted itself into a wholly provincial approval process".63

ii. The Respondent's Position

139.
The Respondent alleges that it is common for small quarries to be subjected to conditions.64 Moreover, due to Canada's federal system, it is common for provinces to approach the DFO when a proposed project has the potential to impact either fish or fish habitat. In these cases "there is no such thing as a purely provincial assessment process".65 For Nova Scotia to reach out "for DFO's advice and expertise on blasting activities that had the potential to harm both fish and fish habitat on other Nova Scotia projects" was, according to the Respondent, standard practice.66
140.
The NSDEL, due to the proximity of the blasting operation to the Digby Neck coastline, raised concerns regarding the effect of the proposed blasting operation on the 3.9 ha quarry on marine mammals in the Bay of Fundy.67 Therefore, "NSDEL reached out to DFO for advice and input. Specifically, on April 9, 2002 NSDEL's Brad Langille contacted DFO's marine mammals advisor, Jerry Conway, to discuss whether Nova Stone's proposed blasting engaged DFO concerns".68
141.
According to the Respondent, the DFO was concerned about the potential impact of the blasting on marine mammals, including the endangered North Atlantic Right Whale.69 The Respondent maintains that these concerns were heightened because the DFO was aware that the project would not be limited to "just a few blasts" but involve "prolonged blasting activity" for the duration of "a 30 year lease agreement to extract aggregate from a 350 acre parcel of land".70 On the basis of these concerns, the DFO requested that any industrial approval issued to Nova Stone include Blasting Conditions.71 It was not unusual for the DFO to require that project proponents submit reports before any blasting activity takes place to show that the blasting will not result in any harmful alteration, disruption or destruction of fish habitat ("HADD"). S. 37 of the Fisheries Act expressly authorized the DFO to request reports.72

(d) Whether Nova Stone's Blasting Plans were Inappropriately Disapproved

i. The Investors' Position

142.
The Investors maintain that their blasting plans were sufficiently detailed to receive approval to blast.73 In the Investors' view, the real reason for the delay in approval of the plans was a political desire by the provincial and federal authorities to prolong the process as much as possible, and to prevent the project proponent from gathering data that was necessary to its EIS.74 The Investors maintain that internal correspondence shows that the DFO was satisfied with the second blasting plan submitted on 15 October 2002 but subsequently changed its position due to political pressure:

Having reviewed the blasting plan, Jim Ross, the section head of DFO's Habitat Management Division, wrote to Bob Petrie at NSDEL that the blasting plan "seems to be within the Guidelines ". This conclusion was shared by Dennis Wright, a co-ordinator of Environmental Affairs at DFO's Central and Arctic Region and a co-author of the DFO Guidelines referred to in 10.h.15. Mr. Wright also informed Mr. Ross that the DFO Guidelines "are designed chiefly to protect fish," adding "When we use them for protection of marine mammals, we are really flying by the seat of our pants". [...] Jerry Conway, a whale specialist at the DFO, wrote to Mr. Ross saying that "I have no concerns in respect to marine mammal issues in respect to this specific proposal".75

143.
On 3 December 2003, "the Minister of NSDEL, the Honourable Kerry Morash, wrote to Bilcon assuring it that a blasting permit would be issued upon satisfying conditions [the "Blasting Conditions"]."76 No such permit was ever issued. The Investors assert that DFO withheld necessary information that GQP required for the blasting permit.
144.
It is the Investors' position, therefore, that the Respondent deliberately delayed test blasting for 15 months,77 to deprive Bilcon of the opportunity to collect blasting data that were a necessary input for the EIS.78 In the meantime, the Respondent imposed overly onerous conditions in the form of an excessive setback distance79 for blasting for which the DFO refused to give any justification and, moreover, concealed from the Investors after confirming that the setback was in fact excessive.80

ii. The Respondent's Position

145.
The Respondent argues that it was only Nova Stone's third blasting plan of November 2002, submitted more than seven months after the issuance of the industrial approval that was sufficiently detailed for governmental review to commence. The delay due to the inadequacy of the two earlier blasting plans was, in the Respondent's view, Nova Stone's responsibility.81
146.
The Respondent contends that Nova Stone's first blasting plan of 17 September 2002 omitted the issue of marine mammals altogether.82 It was silent on the issue even though Nova Stone's own expert, Dr. Paul Brodie, had raised concerns regarding the impact of the quarry on marine mammals and examined possible steps to mitigate such impact.83 On 30 September 2002, noting "insufficient detail" in the second blasting plan, the DFO requested the "additional information that Nova Stone should have provided under the Blasting Guidelines".84
147.
On 15 October 2002, Nova Stone filed an additional one-page document regarding its blasting plan, again without information regarding the potential impact of blasting on marine mammals. On 30 October 2002, the DFO provided Nova Stone with further information about necessary components to the blasting plan, noting that this information was required before the plan could undergo internal review within DFO.85
148.
On 20 November 2002, Nova Stone submitted a third, more detailed, blasting plan. DFO review commenced immediately, according to the Respondent. "However... by the time the plan was submitted, GQP had already taken steps that triggered an EA of the Whites Point project, which subsumed the 3.9 ha quarry. As such, the outcome of DFO's review of the 3.9 ha quarry blasting plan became tied to the determinations that had to be made in connection with the EA of the Whites Point project".86
149.
The conditional industrial approval for the 3.9 ha quarry was obtained before the EA of the Whites Point project was under way.87 GQP could have still obtained a blasting permit for the 3.9 ha quarry, if the blasting plan had been appropriately modified and limited to gathering data for the EA. Based on Mr. Buxton's response to a request for information, the "proposed blasting on the 3.9 ha quarry was to be used to commence quarry operations and construct infrastructure for the larger project (which subsumed the 3.9 ha quarry and was now under EA)".88
150.
The Respondent contends that the DFO remained open to allowing a test blast on the 3.9 ha quarry site, as test blasts for the purpose of gathering data for an EA are not considered to "enable a project to proceed in whole or in part". However, Nova Stone never took steps to redesign the blasting plan as suggested by the DFO. Nor did it ever agree to limit blasting on the 3.9 ha quarry for the generation of data for the EA process. Further, neither Nova Stone, nor GQP, nor Bilcon, ever submitted a blasting plan describing a test blast or requesting a Fisheries Act authorization in connection with the impacts that a test blast might have on fish or fish habitat.89
151.
As for the setback distance, the Respondent maintains that the DFO calculated setback distances for Nova Stone's quarry out of a bona fide concern over the potential impacts of the blasting activity on endangered salmon and whales.90 It emphasizes that the setback affected only Nova Stone, not any of the claimants in these proceedings.91 The Respondent further attributes the lack of DFO communication, which it acknowledges, to the Investors' "fragmented" approach to seeking regulatory approval.92 The Respondent further notes that Mr. Mark McLean and Mr. Stephen Chapman testified that by the time DFO determined a revised setback might be feasible, the project was already under the review of the JRP.93

B. DEVELOPMENT OF THE PROJECT LEADING TO THE ENVIRONMENTAL ASSESSMENT

1. Undisputed Facts

152.
The Parties agree that, under s. 5 of the CEAA, industrial activity that affects rivers and oceans which are habitat for fish and marine life generally comes under federal legislative authority; put differently, and more specifically, the federal legislation sets out that a EA is required where the responsible federal authority concludes that a project poses a risk of destruction of fish, disruption of fish habitat, or a danger to marine life owing to work in navigable waters.94 These three potentialities are referred to as "triggers" for a federal EA. Industrial activity on land generally comes under provincial authority; there, a provincial authority may also conclude there is a need for an EA.95
153.
Between August 2002 and March 2003, GQP went through three rounds of filing project descriptions with NSDEL that would be used for an EA of the intended project.96 The final, accepted description included project infrastructure that consisted of a 152 ha quarry and a 170 m long marine terminal.97
154.
While the project description exchange was ongoing with the Nova Scotia authority, on 8 January 2003, GQP filed a Navigable Waters Protection Application with the Canadian Coast Guard related to the building of the marine terminal at Whites Point. On 17 February 2003, the Coast Guard determined that GQP's marine terminal required a permit under the NWPA which triggered a federal EA.
155.
In addition, on 7 April 2003, the DFO determined that the Whites Point project as described in its third project description submitted to NSDEL required a so-called HADD authorization under s. 35(2) of the Fisheries Act which is also a federal trigger for an EA. On 14 April 2003, the DFO advised GQP that the scope of the project for its EA purposes would include both the quarry and marine terminal.
156.
Once it is determined that a federal EA is required, the CEAA sets out factors for deciding the type of EA to be applied to the project. Relevant to the Whites Point project are the following determinations: (1) whether the project is included in the "Comprehensive Study List Regulations"; (2) the project's potential for "significant adverse environmental effects"; and (3) the "public concerns" associated with the project.98
157.
On 20 June 2003, the DFO and the NSDEL agreed to conduct a joint EA of the Whites Point project by way of a JRP. On 26 June 2003, Minister Thibault wrote to the federal Minister of the Environment, David Anderson, recommending that the Whites Point project be referred to a JRP. On 7 August 2003, Minister Anderson referred the Whites Point project to a JRP.

2. Disputed Facts

158.
The Parties differ on the following points: whether there was a sufficient basis to refer the project to a JRP; whether the Investors were led to believe that the EA would take the form of a comprehensive study and not a JRP; whether the scope of the EA was unnecessarily broad.

(a) Whether There Was Sufficient Basis to Refer the Project to a JRP

i. The Investors' Position

159.
The Investors take issue with the commencement of the EA for the Whites Point project in two principal respects. First, they maintain that Nova Scotia could only commence an EA of a quarry larger than four ha if they registered the Whites Point project as required under the NSEA ; thus, in their view, commencing the EA process was beyond the authority of the provincial government as the preliminary registration process was not carried out for the larger quarry until 2006 (the 3.9 ha quarry was exempt).99
160.
Secondly, the Investors dispute the federal government's "trigger" to carry out a federal EA. The Investors claim that the DFO had acknowledged to the NSDEL that it did not have any legislative basis to require an environmental assessment of the quarry under the CEAA.100 They maintain that the DFO "contrived internally" to create another pretext for carrying out an EA in the context of the NWPA application by determining that the dock was designed to handle vessels larger than 25,000 DWT [deadweight tonnage].101
161.
Even accepting that a federal EA was needed, the Investors note the rarity of JRPs as the adopted method for the EA and argue that their project did not fall within the small category of projects requiring JRP review. The Investors submit that there was insufficient evidence for the EA to take the form of a JRP as "there was no empirical evidence of any public concern" regarding the Whites Point project nor did the environmental impact of the project rise to the level of other projects subjected only to a comprehensive study.102

ii. The Respondent's Position

162.
The Respondent underscores that the Whites Point project would, at a minimum, have had to undergone a comprehensive study EA under federal legislation.103 It asserts that the project had attracted considerable scrutiny since its inception, and not just from those living in the Digby Neck area, but also from the people of Nova Scotia more generally.104 It contends that there was a "persistent flow of letters of concerns sent to both the federal and provincial governments"105 between July 2002 and October 2003. Many voiced criticism of the Whites Point project in the Community Liaison Committee that was established as part of a public information program under the conditional approval for the 3.9 ha quarry obtained by Nova Stone and in the months leading up to DFO's determination regarding the appropriate type of assessment to be used in March and May 2003. These events showed the DFO "how engaged and opposed the local community was to the project",106 precipitating the decision to carry out a JRP.
163.
As for environmental impact, it is the Respondent's position that the possibility of significant adverse environmental effects was high, considering the planned size of the full quarry and the fact that it would be the first large marine terminal to be constructed on the Digby Neck.107 The Respondent notes the concern raised among regulators in considering the ecological diversity of the area, as well.108

(b) Whether the Investors Were Misled About the Form the Assessment Would Take

164.
The Parties differ as to whether DFO officials made representations on what form the EA would take (i.e., comprehensive review or JRP) and on the exact content of such alleged representations.

i. The Investors' Position

165.
The Investors contend that the DFO led them to believe that the type of EA would be a comprehensive study109 and that federal officials "were manoeuvring behind the scenes to elevate the quarry proposal into a JRP".110 They argue that "political considerations affected the actions of officials involved in what was supposed to be an empirical process".111
166.
The Investors allege that, on 6 January 2003, the DFO, Environment Canada, the CEA Agency and NSDEL officials agreed in a meeting that the EA would be conducted as a purely scientific comprehensive study.112 GQP was told "that it had to submit a revised project description to initiate the environmental assessment process".113
167.
However, on 12 May 2003, DFO staff were instructed to "avoid stuff in writing" in relation to the Whites Point project.114 The Investors refer to DFO's briefing note dated 26 May 2003 to its Assistant Deputy Minister according to which "the DFO continued to maintain that the marine terminal would be subject to a Comprehensive Study. It also advised the ADM that it had ‘yet to be determined' whether both projects would be scoped together, even though by this time it had already told Bilcon it would do so".115
168.
According to the Investors, on 26 June 2003, internal correspondence of DFO officials confirms that Mr. Thibault, the Minister of Fisheries and Oceans, wanted to prolong the assessment process. They allege that the Minister "deliberately used his authority over the administration of the NWPA as the basis for changing the assessment of the Whites Point Quarry from a Comprehensive Study to a Joint Review Panel".116
169.
In support, the Investors rely on journal notes of Mr. Bruce Hood, Chief of the Environmental Assessment and Major Projects Branch of the DFO.117 Furthermore, the Investors contend that "Mr. Hood's notes also clearly show why, DFO Minister Thibault was so interested in the Whites Point Quarry project". In this context, the Investors highlight the following statements in Mr. Hood's journal notes: "Minister sensitive because [it's] in his riding",118 and that the DFO knew it "had no trigger for [the] quarry". According to the Investors, Mr. Hood's journal notes demonstrate "that political pressure was being put on the DFO by the CEA Agency and by the Province of Nova Scotia, to include the quarry within a federal environmental assessment".119

ii. The Respondent's Position

170.
The Respondent contends that at no point were GQP or Bilcon misled about the EA's likely character. It is the Respondent's position that government officials were consistent in advising the Investors that, given the nature of their project and the environment for which it was proposed, it could be referred to a review panel.120
171.
The Respondent explains that, due to the presence of the marine terminal as an integral part of the Whites Point project, officials concluded early on that the project would require at a minimum a comprehensive study.121 However, this determination was just a starting point:

From the time of their review of GQP's first rudimentary project description, government officials believed that these statutory grounds were likely to be engaged by this project. In particular, DFO officials commented early on that "given the level of public concern, potential for numerous federal CEAA triggers and environmental issues as well as the size, extent and duration of the overall project a Panel Review may be warranted". They even discussed this possibility with GQP representatives at their January 6, 2003 meeting.122

172.
The NSDEL first met with GQP on 14 June 2002123 and there advised GQP that the project would require a provincial EA and might also require a federal EA. A second meeting took place on 25 July 2002. The Respondent maintains that federal and provincial officials notified GQP that public concerns had already been raised and that DFO took public consultation "very seriously". It is the Respondent's position that there is no evidence that any representative of the Investors took issue with the potential approaches to an EA laid out by DFO.124
173.
The Respondent expressly rejects the Investors' interpretation of the content of the 6 January 2003 meeting: "The Claimants' assertion in their Memorial... that it was ‘agreed' at the January 6, 2003 meeting that the type of EA would be a ‘comprehensive study' is, thus, demonstrably wrong".125 According to the Respondent's account of this meeting with GQP on 6 January 2003, it informed GQP that a JRP remained a possibility:

... As to the type of EA that would be used, officials advised GQP that while "comp study is more than likely" there was "possibility of a panel" in light of the "likely significant effects" and "public concerns" being voiced over the project. So that a decision could be made on the type of assessment, officials requested GQP to submit a more thorough project description.126

174.
On 31 March 2003, an intergovernmental working group considered the third project description. Participants agreed in principle to harmonize the required federal and provincial EAs. A comprehensive study was considered to be "the most likely federal EA track" but participants recognize that public reaction "may influence [the] EA track decision".127 At this meeting, the possibility of referral to the JRP remained on the horizon:

a "Highlights and Action Items" summary prepared after the meeting acknowledged the possibility that the project could be referred to a review panel, indicating that "Comprehensive Study is the most likely federal EA track" but that "[p]ublic reaction to Scope and MOU may influence EA track decision". Mark McLean's notes of this meeting also indicate that "public review/concerns can bump CSR [Comprehensive Study Review] to panel" and "will be challenged on decision on comp study," implicitly acknowledging the public concerns that could warrant referral to a panel.128

175.
On 14 April 2003, the DFO wrote to Mr. Buxton, not only advising GQP that the scope of the project for EA purposes included both quarry and marine terminal, but also raising the possibility of the project being referred to a review panel. In this letter, DFO stated "that because of the size of the marine terminal ‘the type of screening used for the EA will therefore be a ‘comprehensive study'". However, it was made clear in the letter that "although the type of assessment being used for this project is a ‘comprehensive study', CEAA (s. 23) includes the provision that the project could be referred to a mediator or review panel".129
176.
In May 2003, DFO officials reached a decision to recommend that the Whites Point project be referred to a JRP on the basis that the statutory criteria had been satisfied.130 On 20 June 2013 the NSDEL confirmed that Nova Scotia was interested in participating in a JRP of the project.131 The Respondent describes the chain of events as follows:

Once Nova Scotia confirmed its interest, DFO officials prepared a briefing note for decision to DFO Minister Thibault, recommending that he refer the project to the Minister of the Environment for referral to a review panel. This was the first decision DFO officials had requested from their Minister in the context of the Whites Point EA. Over the course of the previous ten months, DFO officials had provided him with informational briefings to keep him and his office advised on the matter. Given that Minister Thibault was the Member of Parliament for Southwest Nova (which includes the Digby Neck), it is not surprising that he was interested in the proposal. However, as both Minister Thibault and Neil Bellefontaine make clear, the determinations made by DFO officials were their own, and Minister Thibault did not in any way interfere in the work of officials, or otherwise direct or instruct them in their work. The only guidance that the Minister ever offered was that the EA process used to review the Whites Point project would "need to ensure public concerns over the project were adequately heard and addressed" and that it was to be "a full and fair comprehensive environmental assessment of the proposal that strictly complied with the rules, did not cut any corners and allowed the public to have a voice".132

177.
Minister Thibault explains that he was convinced that the overwhelming amount of public concern that had been expressed over the project, as well as the significant environmental concerns associated with it, more than justified a referral to a review panel.

(c) Whether the Scope of the EA Was Overly Broad

i. The Investors' Position

178.
The Investors assert that the scope required for their EA was unnecessarily broad. They argue that the quarry was included in the assessment for purely political reasons.133 As noted above, a trigger is required to activate the jurisdiction of the federal government over the environmental aspects of a certain project. According to the Investors, as late as 2007, government officials admitted that the DFO had no trigger for the quarry.134 Correspondence among and notes of government officials suggest that the scope of the EA had been politicized.135

ii. The Respondent's Position

180.
The Respondent emphasizes that under Nova Scotia law, a quarry in excess of 4 ha requires approval of the Nova Scotia Minister of Environment and Labour which in turn requires that an EA must be conducted in accordance with Nova Scotia law.138 Thus, an EA would have to be conducted of the quarry regardless of the Investors' assertions that the federal government did not have a trigger in the quarry. According to the Respondent, because the federal and provincial officials decided to harmonize their EAs,139 this meant the scope would have to include both the quarry and the marine terminal.
181.
In any event, there was nothing improper in the Respondent's view of the manner through which the DFO asserted its oversight over the quarry component in the context of the EA.140 The Respondent observes that under CEAA, s. 15, the "scope of project" can include components of a project or projects in addition to those that triggered the CEAA in the first place.141 It notes that all officials involved in the reviewing process concluded that the scope of the project should include both the marine terminal and the quarry, and that GQP never challenged that determination.142
182.
The Respondent maintains that this decision was made for several reasons: First, the two elements were interdependent, even as presented by the proponent, and therefore should have been considered together for that reason.143 Secondly, the DFO had determined that the quarry might require authorization under the Fisheries Act so it was prudent to include it; in fact, DFO concluded in May 2003 that the proposed blasting at the 3.9 ha quarry would require authorization under the Fisheries Act, triggering an EA.144 The Respondent comments that the Investors' assertion that "DFO acknowledged the lack of a trigger for the quarry"145 identifies correspondence exemplifying an "academic discussion" occurring before any visit to the site.146

C. THE ESTABLISHMENT AND WORK OF THE JRP

1. Undisputed Facts

183.
The federal Minister of the Environment and the provincial Minister of the NSDEL released a draft JRP Agreement and the JRP's Terms of Reference ("TOR") for public comment on 11 August 2003. The final JRP Agreement and associated TOR were signed on 29 October and 3 November 2004 respectively.
184.
On 5 November 2004, the Minister of the Environment and the Minister of the NSDEL jointly announced the establishment of the JRP and the appointment of the panellists: Dr. Robert Fournier (as chair), Dr. Gunter Muecke and Dr. Jill Grant. Dr. Fournier is a professor of oceanography at Dalhousie University; he had prior experience as chair of another JRP. Dr. Muecke is a professor emeritus of geochemistry, geology and environmental studies at Dalhousie University. Dr. Grant is a professor at the School of Planning at Dalhousie University.
185.
On 10 November 2004, the CEA Agency and the NSDEL released draft EIS guidelines for public comment (the "draft EIS Guidelines"). After the JRP held four public scoping meetings on the draft EIS Guidelines in four different locations in southwest Nova Scotia from 6 to 9 January 2005, Bilcon submitted its comments on the draft EIS Guidelines. In total, the CEA Agency received 148 public submissions. On 31 March 2005, the JRP issued the final EIS guidelines (the "EIS Guidelines").
186.
On 26 April 2006, thirteen months after the issuance of the EIS Guidelines, Bilcon submitted its EIS to the JRP. A day later, the JRP invited the public and the governments of Canada and Nova Scotia to comment on Bilcon's EIS. Between June and July 2006, the JRP issued two sets of comments and information requests to Bilcon in relation to the EIS. By 11 August 2006, the closing date for comments by the public on Bilcon's EIS, the JRP had received about 250 comments.
187.
Between August 2006 and April 2007, Bilcon submitted its responses to the JRP's information requests and public comments. On 1 May 2007, the JRP announced two weeks of public hearings in Digby, Nova Scotia, commencing on 16 June 2007.
188.
The JRP held public hearings between 16 and 30 June 2007. On 22 October 2007, the JRP submitted its report to the federal Minister of the Environment and the Minister of the NSDEL, recommending that the Whites Point project not be permitted to proceed (the "JRP Report"). Specifically, the JRP concluded and recommended:

1. The Panel recommends that the Minister of Environment and Labour (Nova Scotia) reject the proposal made by Bilcon of Nova Scotia to create the Whites Point Quarry and Marine Terminal and recommends to the Government of Canada that the Project is likely to cause significant adverse environmental effects that, in the opinion of the Panel, cannot be justified in the circumstances.

2. The Panel recommends that the Province of Nova Scotia develop and implement a comprehensive coastal zone management policy or plan for the Province.

3. Because of the special issues associated with coastal quarries, the Panel recommends a moratorium on new approvals for development along the North Mountain until the Province of Nova Scotia has thoroughly reviewed this type of initiative within the context of a comprehensive provincial coastal zone management policy and established appropriate guidelines to facilitate decision-making.

4. The Panel recommends that the Province of Nova Scotia develop and implement more effective mechanisms than those currently in place for consultation with local governments, communities and proponents in considering applications for quarry developments.

5. The Panel recommends that the Province of Nova Scotia modify its regulations to require an environmental assessment of quarry projects of any size.

6. The Panel recommends that the Canadian Environmental Assessment Agency develop a guidance document on the application of adaptive management in environmental assessments and in environmental management following approvals.

7. The Panel recommends that Transport Canada revise its ballast water regulations to ensure that ships transporting goods from waters with known risks take appropriate measures to significantly reduce the risk of transmission of unwanted species.147

189.
On 23 October 2007,148 the Governments of Canada and Nova Scotia released the JRP Report to the public.

2. Disputed Facts

190.
The Parties disagree on the following issues: when the Investors were notified of the referral of the Whites Point project to a JRP; whether the appointment of the JRP members was fair; whether the Scoping Meetings, the EIS Guidelines and the JRP's considerations conformed to statutory requirements and the TOR; whether the Investors were unresponsive and acted unprofessionally in responding to requests for information, drawing out the EA; whether the hearing held before the JRP was conducted fairly and impartially; whether the JRP unlawfully recommended rejection of the project under the CEAA ; and whether the local community support for the Whites Point project was indeed extensive.

(a) When the Investors Were Notified of the Referral to the JRP

i. The Investors' Position

191.
The Investors take issue with being formally notified of the decision to refer the project to a JRP only on 10 September 2004,149 a month after the federal Minister of the Environment had taken it.
192.
According to the Investors, Bilcon only learned about the referral to a JRP when Mr. Buxton read about it in the Halifax Chronicle Herald on 7 July 2003. On 28 August 2003, Mr. Buxton met with representatives of the CEA Agency, the DFO and the NSDEL. When Bilcon asked why it had not been informed about the referral of the project to a JRP, Mr. Chapman, the CEA Agency Project Manager, told him that the recommendation process was not public.150
193.
The Investors maintain that, when the federal Ministry of the Environment and the NSDEL released the draft JRP Agreement and the draft TOR for public comments on 11 August 2003, Bilcon had yet to be: a) officially informed that the Project had been referred to a JRP; b) told of why the project had been elevated from a Comprehensive Study to a JRP; and c) told how it could comply with conditions that DFO itself had laid down for a separate quarry and that, without consultation, was being merged into the larger quarry.151
194.
The Investors also maintain that "despite its repeated requests, Bilcon was never informed of when, how, or why, the referral was accepted by the Minister of Environment".152

ii. The Respondent's Position

195.
The Respondent maintains that GQP was officially informed of the JRP Agreement and the TOR on 29 August 2003, when federal and provincial officials met with GQP "to discuss the JRP process and to invite comments on the draft JRP Agreement and Terms of Reference". Having received no comments, the Agency on 10 September 2003 asked the GQP again for input. Yet GQP once again remained silent.153 On 11 November 2003, "Mr. Buxton advised NSDEL that GQP ‘regarded the Draft Memorandum of Understanding as a reasonable document and hence did not feel the need for comment.' Mr. Buxton added that ‘[t]he fact that we did not comment should not be construed as a blanket endorsement of the document or of the fact that a Panel Review is required for this project.'"154

(b) Whether the Appointment of the JRP Members was Fair

i. The Investors' Position

196.
The Investors allege that the JRP lacked diversity, as all three members were "environmental activists, all from the same university".155 The CEA Agency "was aware that Robert Fournier and Gunter Muecke had both been Board Members of the Ecology Action Centre, a selfdescribed environmental activist organization".156 According to the Investors, "it was a notorious public fact that the Ecology Action Centre was an active and vocal opponent of the quarry".157 The Investors further refer to the following facts:

In 2002, the Faculty of Planning and Architecture of Dalhousie University, where Jill Grant was employed, together with the same Ecology Action Centre, organized a three-day conference that advocated for the "greening" of Nova Scotia. Jill Grant was a moderator at the Conference.

Question 8 of the CEA Agency's Panel Interview Questions, specifically asked potential panelists to address real, potential or perceived conflicts of interest. The candidates' answers have not been disclosed.158

197.
The Investors further submit that the CEA Agency rejected another candidate who was a professional engineer in Nova Scotia with over thirty years of professional experience with natural resource management and environmental planning.159 According to the Investors, in "internal e-mails the CEA Agency concluded that [this other candidate] was ‘bright and had a wealth of experience', ‘but may be too much in favor of industry'".160

ii. The Respondent's Position

198.
The Respondent stresses that JRP members were selected in accordance with the CEAA. JRP members must be "unbiased and free from any conflict of interest relative to the project and. have knowledge or experience relative to the anticipated environmental effects of the project".161 According to the Respondent, "[g]iven the nature of the Whites Point project, officials sought individuals with expertise in marine sciences, geology, mining operations, mineral engineering, and socio-economic studies".162
199.
The Respondent highlights the credentials of Drs. Fournier, Muecke and Grant and the reasons they were considered suitable for a position as JRP members.163 According to the Respondent, not only did Bilcon not raise any objection to the appointment of the JRP members when informed of their selection before the public announcement, but Mr. Buxton approved of the appointment of those members.164

(c) Whether the JRP's Work Conformed to Statutory Requirements and its TOR

i. The Investors' Position

200.
The Investors argue that the draft EIS Guidelines and the final EIS Guidelines exceeded the JRP's TOR,165 as well as the legislative framework for the EA, and imposed "onerous requirements" on them.166 Specifically, the Investors contend that the scoping meetings conducted by the JRP also focused on issues that were outside the TOR.167
201.
The Investors maintain that the final EIS Guidelines "departed substantially from the expected scientific and technical focus of an EIS, and also required Bilcon to address non-scientific and non-technical questions".168 These requirements included a distorted precautionary principle,169 "the influence of the NAFTA and the Kyoto Protocol on the Whites Point Quarry",170 the need to consider traditional knowledge,171 a strong emphasis on sustainable development,172 a more stringent ecosystem analysis approach,173 cumulative effects,174 as well as other improper considerations that influenced the JRP's recommendations,175 such as the precedential impact of approving the Whites Point project on access to the Canadian market under the NAFTA in relation to similar future projects.176

ii. The Respondent's Position

202.
The Respondent argues that the harmonized EA and the EIS Guidelines met the statutory requirements under federal and Nova Scotia law.177 Moreover, the Respondent submits that the "draft JRP Agreement and Terms of Reference were based on similar agreements and Terms of Reference prepared in other EAs and were consistent with the Agency's 1997 Procedures for an Assessment by a Review Panel ".178 Because the purpose of a JRP is to carry out the necessary review for both jurisdictions (federal and provincial), the Whites Point JRP was, according to the Respondent, necessarily mandated to review and assess information pertaining to any and all environmental effects under both the CEAA and the NSEA.179
203.
The Respondent emphasizes in particular that federal law required the EA to evaluate "‘any change that the project may cause in the environment' including ‘any effect of any change [in the environment]. on health and socio-economic conditions', and ‘physical and cultural heritage'".180 Similarly, Nova Scotia law required the EA to take into account "any change, whether positive or negative, that the undertaking may cause in the environment, including any effect on socio-economic conditions, on environmental health, physical and cultural heritage or on any structure, site or thing".181 The Respondent comments that the Investors' Expert, Mr. Estrin, acknowledged that as part of an EA in Nova Scotia, the necessary inquiry may include consideration of whether the effects of the project would be consistent with the community's core values.182
204.
As a result of these statutory requirements, the JRP Agreement signed between Canada and Nova Scotia made reference to the requirements of both the CEAA and the NSEA, that is, both environmental and socio-economic effects. Likewise the EIS Guidelines sought information on the "Existing Human Environment" and on "Social and Cultural Patterns".183 The Respondent also submits that GQP and Bilcon raised the respective concerns for the first time in this arbitration, noting again that GQP did not avail itself of the opportunity to comment on the JRP Agreement and the TOR at a meeting held on 29 August 2003 (see para. 195 above).
205.
The Respondent adds that, although the JRP released the draft EIS Guidelines for public comment on 10 November 2004, Bilcon provided no comments on the draft EIS Guidelines at the time.184 On 15 December 2004, the JRP requested Bilcon to review the draft EIS Guidelines and to provide comments. According to the Respondent, Bilcon provided "cursory" comments of two-and-a-half pages on the draft EIS Guidelines on 16 January 2005.185 Bilcon's principal comment was a request that the concept of "adaptive management" be included in the EIS Guidelines.186 The Respondent emphasizes that Bilcon never registered "a concern that the draft EIS Guidelines went beyond the scope of the JRP's Terms of Reference"187 and that Bilcon failed to object to the scope or content of the draft EIS Guidelines.188

(d) Whether the Investors Delayed the Review Process

i. The Investors' Position

206.
The Investors submit that they responded to all information requests made by provincial and federal government agencies and the JRP in a professional and timely manner.189 They underscore the quantity of documentation they submitted, and the cost and time incurred by GQP and Bilcon in putting together the extensive documentation required by the JRP.190 The Investors state that their EIS was over three thousand pages long, took 35 months to assemble, and involved 48 experts and 35 studies of the Whites Point project's environmental, social and economic impact.191

ii. The Respondent's Position

207.
In relation to the establishment of the JRP, the Respondent submits that the final JRP Agreement was ready for implementation by February 2004, but that a request by Bilcon, seemingly made without Nova Stone's knowledge, to stay the execution of the agreement pending the restructuring of the GQP partnership caused substantial delay.192 Once the GQP partnership had been dissolved, Bilcon was left as the sole proponent of the Whites Point project.193 As explained in more detail in the arguments on jurisdiction, the Respondent takes the view that under Canadian law, the conditional, and non-transferable industrial approval for the 3.9 ha quarry became null and void as of the date of GQP's dissolution. Thus, in the Respondent's view, any measures involving the 3.9 ha quarry would have no bearing on the present case for that reason, and also because the permit for the quarry terminated on 1 May 2004, which predates this Tribunal's jurisdiction.194 Bilcon did not apply for a new permit.195
208.
According to the Respondent, the EIS was finally submitted on 26 April 2006, six months after the date (24 November 2005) indicated by Bilcon.196 According to the Respondent, the delay caused by Bilcon reflects its cavalier approach to the preparation of the EIS and the EA.197 For most of the EA, Bilcon did not retain the services of an expert consulting firm.198 In reviewing the EIS, the JRP discovered "significant deficiencies" in substance and form, including Bilcon's failure to follow the EIS Guidelines, as well as "apparent contradictions".199
209.
As a result, the JRP requested additional information from Bilcon on 28 June and 28 July 2006. Bilcon again missed its self-imposed deadline, and filed what were, in the Respondent's view, "piecemeal responses" up until 12 February 2007.200 The Respondent alleges that Bilcon did not take the EA seriously, regarding it merely as "hoops to jump through" and "a mere licensing process"201 as reflected in the internal e-mail sent by Mr. Buxton to a colleague stating that they "need to cobble something together to satisfy the system".202 Insofar as the Investors now contend that they were misled into thinking it was a purely scientific exercise, the Respondent maintains they were poorly advised by Mr. Buxton, since the legislation expressly lists additional criteria for which they should have been prepared, including socioeconomic considerations. Bilcon's unprofessional behaviour during the course of the EA had a serious impact on the JRP's view of the Whites Point project. In sum, Bilcon's EA was "ill-prepared", "incomplete", "raised more questions than answers" and "eroded the JRP's confidence ‘in the conceptual design and associated quantitative underpinnings'".203

(e) Whether the Hearing Held before the JRP was Conducted Fairly and Impartially

i. The Investors' Position

210.
The Investors allege that they were not given a fair and impartial hearing by the JRP because: (i) Bilcon was not allowed sufficient time to present information;204 (ii) Bilcon's experts were examined only superficially;205 (iii) some of the supporters of the Whites Point project were denied the opportunity to speak;206 and (iv) the JRP "welcomed" biased, inflammatory and antiAmerican comments made against Bilcon.207
211.
More generally, the Investors allege that the hearing's atmosphere was hostile toward Bilcon.208 The hearing lacked any "significant consideration of the science", and "turned into a soap opera" for activist groups opposed to the quarry.209 The Investors point to the role played by former DFO Minister Thibault,210 and, more generally, Canadian and Nova Scotian politics in creating an inhospitable climate for Bilcon throughout the EA.211

ii. The Respondent's Position

212.
The Respondent takes the view that Bilcon had a "full opportunity, through its representatives and experts", to be heard and to challenge any presenter at the JRP's hearing.212 It is the Respondent's position that Dr. Fournier, the JRP's chair, "maintained order and efficiency [of the hearing], while doing what he was supposed to do—allow the public to provide their comments on the project".213 Bilcon was "ill-prepared" for the hearing, and thus unable to take full advantage of the opportunity offered by this process to engage with the JRP and the public.214

(f) Whether the JRP Unlawfully Recommended Rejection of the Project

i. The Investors' Position

213.
According to the Investors, the JRP Report was "based on the Panel's subjective views of the Whites Point Quarry" and not on "objective environmental factors".215 The JRP's recommendations included what were, in the Investors' view, six flawed public policy recommendations that exceeded the JRP remit.216 These six recommendations were also "in themselves fundamentally flawed".217 The Investors allege that the JRP was bound to base its recommendation exclusively on the "factors set out in s. 16 of the CEAA, and Part IV of the Nova Scotia Environment Act".218 It was impermissible for the JRP to consider the public interest beyond the requirements explicitly set out in the Act.219 The applicable test was whether the project has a "major or catastrophic" adverse environmental effect.220
214.
In failing to address the prerequisite mitigation measures, criticizing Bilcon's adaptive management approach,221 and relying on outside factors (such as public involvement, ecosystem approach, sustainable development, an improperly expansive precautionary principle, community core values and effects on future similar projects under the NAFTA),222 the JRP exceeded its TOR and effectively "advance[d] its own view of environmental law reform".223 The Investors take the view that the JRP's report contained numerous errors224 and was aimed at setting environmental policy.225

ii. The Respondent's Position

215.
The Respondent submits that the JRP's report complied with the requirement under the CEAA and the NSEA to assess any information that shed light on all possible environmental effects of the Whites Point project.226 The JRP determined, on the basis of the applicable federal and Nova Scotia law, that the project would lead to significant adverse environmental effects. The JRP was mandated under Part IV of the NSEA to consider the socio-economic effects of a project in particular, an inquiry that can include whether the proposed project goes against the community's core values.227 These requirements for the JRP to go beyond the impact of a project on the physical environment were also reflected in the EIS Guidelines, in particular the requirement for the proponent to provide information on the "Existing Human Environment" and on "Social and Cultural Patterns".228
216.
Moreover, the Respondent observes that the JRP makes only a recommendation and does not constitute in itself a legally binding determination on the Investors of which they can complain in this setting.229

(g) Whether the Local Community Support for the Whites Point Project was Extensive

i. The Investors' Position

217.
The Investors submit that there was strong community support for their project.230 Job creation would have been a significant benefit to the Digby Neck area flowing from the Whites Point project.231 According to the Investors, the high level of public support was reflected in the 316 signatures of a petition to the federal Ministry for the Environment, the NSDEL and the Chair of the JRP stating that the petitioners were of the opinion that jobs created by the project would be "vital to the economic future of this area".232

ii. The Respondent's Position

218.
The Respondent argues that the project lacked public support.233 At the 14 meetings of the Community Liaison Committee between July 2002 and October 2003, a "high level of public concern over the larger project proposal" emerged.234
219.
The Respondent highlights that most of the submissions received by the JRP were critical. The chief concerns expressed by many members of the community was the project's adverse impact on the marine environment, groundwater, tourism and the community's well-being.235

D. THE WHITES POINT EA GOVERNMENT DECISIONS

1. Undisputed Facts

220.
On 22 October 2007, the JRP submitted its report to the federal Minister of the Environment and the Nova Scotia Minister of Environment and Labour, recommending rejection of the proposal.236 Between 29 October and 16 November 2007, Bilcon requested in writing that the government of Nova Scotia dismiss the JRP's recommendations.237 Nevertheless, on 20 November 2007, Nova Scotia adopted the JRP's recommendations to reject the Whites Point project.238 The next month, the Canadian Government also accepted the JRP's recommendation and announced its decision not to issue the permits and authorizations that Bilcon had requested in connection with the Whites Point project.239

2. Disputed Facts

221.
The Parties differ on the following points: whether the decision of Nova Scotia and the involved federal departments to adopt the JRP's recommendations endorsed the JRP's recommendations and reasoning without reflection and consideration; and whether Nova Scotia's decision was independent of the federal Government's decision.

(a) Whether the Governments' Adoptions of the JRP's Recommendations were Appropriately Reasoned

i. The Investors' Position

222.
The Investors allege that the Nova Scotia Minister of Environment and Labour "blindly endorsed" the JRP Report, without giving Bilcon an opportunity to respond or to meet with the Minister.240 The Investors point to what they call a "failure" on the part of the Respondent to arrange for a face-to-face meeting between the Minister and the Investors during his decisionmaking.
223.
The Investors mount similar allegations in respect to the federal Minister for the Environment. According to the Investors, both tiers of government "failed to exercise the discretion they were obligated by law to exercise", a violation of the principles of natural justice.241 The Investors assert that the Respondent was obliged to provide detailed reasons as to why the project could not be justified.242

ii. The Respondent's Position

224.
The Respondent agrees with the Investors that a thorough consideration of the JRP's recommendations and independent decision-making was required of both levels of government,243 but submits that this standard was met.244 The Respondent distinguishes the EA process under the auspices of the JRP, which is focused on information gathering, from the decision-making involving the federal and Nova Scotia governments, which accepted the JRP's recommendation. While the JRP could only make recommendations,245 the second part of the process involved the two levels of governments making autonomous decisions in light of their respective legislative regimes.246 Still, the Respondent contends that accepting the JRP's recommendation is not akin to acknowledging and adopting the JRP's conduct in reaching that recommendation.247
225.
In respect of the Investors' concern regarding the absence of a face-to-face meeting, the Respondent maintains that Canadian law and natural justice "require one hearing, not two".248

(b) Whether the Federal and Provincial Governments Considered the JRP's Recommendations Independently

i. The Investors' Position

226.
The Investors contend that Nova Scotia and the federal Government did not independently adopt the JRP's recommendations. The Investors maintain that "Canada and Nova Scotia did not formulate their respective responses in isolation".249 The Investors conclude that the "fact that Nova Scotia happened to announce its decision first does not obviate Canada's responsibility for its decision".250

ii. The Respondent's Position

227.
The Respondent maintains that the federal and provincial governments decided independently,251 even though they agreed on a joint EA and were in regular communication throughout the EA process. Dual approval was required; Nova Scotia's decision to follow the JRP's recommendation "rendered any decision that could be made by the federal government moot, as the project could not proceed under Nova Scotia law".252

V. THE JURISDICTION OF THE TRIBUNAL

231.
These defences will be addressed in sequence.

A. WHETHER THE INVESTORS' CLAIM ‘RELATES TO' THE INVESTORS AND THEIR INVESTMENT

1. The Respondent's Position

232.
The Respondent's first jurisdictional objection arises from NAFTA Article 1101(1), which reads:

This Chapter applies to measures adopted or maintained by a Party relating to:

(a) investors of another Party;

(b) investments of investors of another Party in the territory of the Party; and

(c) with respect to Articles 1106 and 1114, all investments in the territory of the Party.

233.
The Respondent argues that the Investors' claim regarding the decisions and actions of the DFO in respect of the 3.9 ha quarry relate to Nova Stone only254 rather than to the Investors as required by NAFTA Article 1101. Nova Stone, not Bilcon, obtained the industrial approval for the 3.9 ha quarry from the NSDEL on 30 April 2002; Bilcon joined Nova Stone in partnership thereafter but it never had any rights over the 3.9 ha quarry.255
234.
The Respondent relies on the interpretation by the Methanex tribunal,256 according to which, Canada contends, the phrase "relating to" in Article 1101(1) requires a "legally significant connection between the measure and the investor".257 Thus, according to the Respondent, the Methanex tribunal plainly rejected the Investors' proposition that "NAFTA tribunals have interpreted Article 1101... by deciding that a measure ‘relates to' an investor or investment if it affects the investor or investment".258
235.
As the Methanex tribunal did not define "legally significant connection", the question whether a legally significant connection exists between an impugned measure and an investor or investment must be decided on a case-by-case basis.259 Here, the Respondent emphasizes that "the industrial approval was issued to Nova Stone and, as a matter of Nova Scotia law, neither the Claimants nor their investment had any rights or obligations under that approval."260 Moreover, the NSEA provided that Nova Stone was prohibited from transferring, selling, leasing, assigning or otherwise disposing of the approval without the written consent of the Nova Scotia Minister of Environment and Labour. Nor could the execution of the partnership agreement between Bilcon and Nova Stone, entered into on 2 May 2002, extend the protection of the treaty to Bilcon in respect of the 3.9 ha quarry, after the issuance of the industrial approval.261 In the Respondent's view, the industrial approval could not, therefore, have any "legally significant connection" to the Investors.
236.
On this basis, the Respondent concludes that the Investors lack standing since, under international law, a claimant does not have standing to bring a claim on behalf of or for losses or damages suffered by one of its partners.262

2. The Investors' Position

237.
The Investors argue, first, that the Respondent's measures fit the definition of "measures" in NAFTA Article 201(1), which defines measures as "any law, regulation, procedure, requirement or practice".263 The Investors then argue that "there is a direct and significant connection" between the Respondent's measures and their impact on the Investors and the investment:264

The failure to grant the license to operate a 3.9 quarry to Nova Stone on April 30, 2002 constitutes a measure which directly relates to the Investor and its Investment. The joint-venture agreement called for the initial operation of a 10 acre quarry. This direct inclusion in the agreement satisfies the test for a "legally significant connection" between the Investors and measure established in Methanex. Furthermore, the industrial approvals to operate a quarry were the contribution that Nova Stone was making to the joint venture. The failure to obtain licenses hence directly and specifically relates to the Investment the Investor was seeking to make. Bilcon was directly involved in this project from the beginning.265

238.
In any event, the Investors argue that "the drafters of NAFTA did not limit ‘relating to' with prefixes like ‘directly' or ‘substantially'".266 The Investors further argue that "Canada's Statement on Implementation supports the interpretation that NAFTA Article 1101 was intended to broadly bring foreign Investors and investments within Chapter 11's protection".267 The Investors refer to decisions in the Pope & Talbot and GAMI Investments cases, in which the tribunals accepted that a measure need not have a direct link to the investor or investment to be "relating to" it; "it is also a measure relating to investment insofar as it might affect an enterprise owned by an investor of a Party".268 The Investors submit that the NAFTA practice is consistent with jurisprudence from international dispute resolution bodies considering other international treaties.269
239.
The partnership agreement states that the partners agree to carry on a quarry and terminal business, that Nova Stone will transfer its lease over the property to the partnership as well as all necessary or desirable licenses or permits. Under the agreement, Bilcon would pay Nova Stone several hundred thousand dollars at an initial stage—until a mining license and dock permit were obtained—and then millions more, in stages, as the project progressed.270

3. The Tribunal's Analysis

241.
In the view of the Tribunal, Bilcon had a significant legal connection with the proposed 3.9 ha quarry—and with the larger quarry and terminal project—as a result of its partnership agreement with Nova Stone. At this point Bilcon qualified as an investor for the purposes of Chapter Eleven of NAFTA. Bilcon had standing to raise challenges under Chapter Eleven in respect to government measures addressing matters such as industrial permits sought by Nova Stone, transfers of such permits to the partnership, approvals sought by Nova Stone, and applications by Nova Stone or the partnership for environmental licenses.

B. TIMELINESS OF THE INVESTORS' CLAIMS

1. The Respondent's Position

242.
The Respondent's second jurisdictional objection arises from NAFTA Article 1116(2), which reads:

An investor may not make a claim if more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

243.
The Respondent argues that the Investors' claims are time-barred, referring to the NAFTA provision just quoted, which it asserts "requires an investor to challenge a measure within three years of its first acquiring actual or constructive knowledge: (1) of the measure giving rise to the breach; and (2) that it has incurred loss or damage as a result of the breach".272
244.
In the Respondent's view, the Investors, through Mr. Buxton, had actual knowledge of the measures upon which the Investors rely and of the alleged losses suffered at least five years before submitting their claim to arbitration on 17 June 2008.273 It is undisputed that the industrial approval for the 3.9 ha quarry was null and void as of 1 May 2004.274
245.
According to the Respondent, the Investors' interpretation of Article 1116(2), requiring a demonstration that a claimant had "concrete knowledge of actual loss",275 is contrary to the ordinary meaning as affirmed by other NAFTA tribunals. Concrete knowledge of the actual amount of loss or damage is not a pre-requisite to the running of the time period under Article 1116(2). In support of its interpretation, the Respondent relies on the NAFTA awards in Grand River, Mondev and UPS.276
246.
In the Respondent's view, a textual interpretation of the word "first" in NAFTA Article 1116(2) confirms that the word identifies the start of a period or event.277 While the NAFTA Contracting Parties contemplated that investors could challenge "continuing measures" under Chapter Eleven, the Respondent asserts that they "nonetheless addressed the precise moment at which the time bar applicable to such claims would apply. The running of the time bar is to be calculated from the ‘first' acquisition of relevant knowledge, not subsequent, repeated or ultimate acquisition of such knowledge".278 Thus, "[w]hether a measure continues or ends is irrelevant to the operation of the NAFTA time bar because calculation of the three-year period is triggered by ‘first' knowledge of breach and loss".279 The Respondent submits that all three NAFTA Contracting Parties support this interpretation of Article 1116(2), which also amounts to subsequent practice under Article 31(3)(b) of the Vienna Convention on the Law of Treaties.280
247.
The Respondent denies that the measures that pre-date 17 June 2005 were "continuing" and argues that the continuing "effects" of a measure do not transform it into a "continuing measure".281 The industrial approval and the Blasting Conditions contained therein were null and void by 1 May 2004 when Nova Stone withdrew from the project and ceased to control the 3.9 ha parcel.282 According to the Respondent, any loss or damage incurred from that measure had to be known by that date, as can be seen in a letter from Mr. Buxton to NSDEL of 25 June 2003.283 Mr. Buxton's letter states that:

There are serious financial consequences which arise from our inability to operate in accordance with the Permit, and we are imploring the Province to stand behind the authority and enforce the conditions of the Permit.

The Company has suffered significant costs due to the delay and the jurisdictional machinations employed by DFO. This Company has acted in good faith and we expect the same of the Province in interpreting and enforcing the Permit. We feel we have satisfied all conditions and we ask that you confirm that for us so that we may proceed with the work contemplated by the Permit. To do otherwise will make the Province complicit in the DFO conduct.

Failure to act will cause severe economic hardship to the Company and the project. It will also send a clear message on the excessive difficulty and high level of uncertainty that companies face when they seek to invest in Nova Scotia.284

Further, Bilcon entered into a new lease agreement with the owners of the land containing the 3.9 ha parcel that was subject to the industrial approval. It was thus Nova Stone and the Investors themselves who invalidated the industrial approval.285

248.
The Respondent also rejects the Investors' contentions that the Blasting Conditions allowed the DFO to refuse permission to Bilcon to carry out test blasting during the EA or prevented Bilcon from accumulating the necessary data.286 The Respondent submits that the Blasting Conditions had no impact on Bilcon's ability to gather the necessary data for its EA;287 as Mr. Buxton testified, the Investors did not attempt to carry out test blasting during the EA process, though they could have done so.288 Further, the "lack of test blasting" was not relied upon by the JRP as a reason to recommend against approval of the Whites Point project.289
249.
Finally, the Respondent argues that the DFO decisions to which the Investors refer for their claims in this case had no continuing aspect. The scoping decision was made with immediate effect on 14 April 2003; the decision that at least a comprehensive study would be needed was made also on 14 April 2003; the referral to a JRP occurred on 26 June 2003.290 To the extent that these decisions entailed additional cost or expense as alleged by the Investors, those were known or should have been known before 17 June 2005.291

2. The Investors' Position

250.
It is the Investors' position that there are two prerequisite conditions for the timing to commence on the three-year limitation period in NAFTA Article 1116(2). First, the investor must have acquired actual or constructive knowledge of the breach at issue. Secondly, the investor must have acquired knowledge that it has incurred loss or damage as a result of that breach. Only then does the period begin to run.292
251.
The Investors assert that they suffered numerous continuous breaches with ongoing and direct effect until the ministerial decision on 17 December 2007.293 Those breaches include:

a) The conduct of the federal Department of Fisheries and Oceans, the Nova Scotia Department of Environment and Labour, jointly and separately, in relation to Bilcon's attempt to operate a quarry at Whites Point, which was set in motion by the industrial approval of its application on April 30, 2002. This measure includes:

i) The ongoing effect of the imposition, interpretation and application of blasting conditions on the Investment such that they were never able to be satisfied;

ii) The taking of jurisdiction by the Department of Fisheries and Oceans to address questions outside of the purported marine issues when it lacked said jurisdiction;

ii. The ongoing effect of the requirement to subject the Investment to a Comprehensive Study.

b) The actions of the federal government and government of Nova Scotia, jointly and separately, to compel the Investors and the Investment to seek approval from the Joint Review Panel, which resulted in ongoing harm and damage to the Investors beginning on September 10, 2003 and continued through the Joint Review Panel process until the final Ministerial decisions. This measure includes:

i) Continuous unlawful and unilateral actions of the Department of Fisheries and Oceans

ii) The ongoing impact of the requirement that the Investment be referred to the Joint Review Panel;

iii) The application of the relevant domestic rules by failing to apply the binding transitional provisions of the Canadian Environmental Assessment Act to the Investment's permit application.294

252.
At the hearing on jurisdiction and merits, the Investors emphasized how their inability to carry out test blasting at the 3.9 ha site prevented them from gathering "valuable scientific data that [they] could use for the purpose of developing the larger parcel"295 as was seen in the JRP's criticism of the absence of appropriate data.296 The Investors likewise argued at the hearing that there was an "intimate link" between the smaller and larger quarries, contributing to their theory of a continuing act.297
253.
The Investors argue that in international law continuing measures are well recognized298 and "time limit rules do not prohibit claims challenging acts that are still continuing, because time limits only begin at the end of a continuing act".299 Referring to case law arising under the European Convention on Human Rights, such as De Becker, the Investors submit that "[i]nternational tribunals have consistently refused to bar claims challenging acts that are still continuing".300
254.
Moreover, the Investors maintain that NAFTA Article 1116(2) does not bar claims challenging continuing acts, pointing to the decisions in Feldman and UPS301 in which, they assert, the tribunals found that repeated action constitutes a separate breach each day it is repeated.302 In the Investors' view, the drafters intended for the NAFTA agreement to apply to continuing measures, which, in the context of the present dispute, are those that were brought into existence before 27 December 2003, but that the Respondent maintained beyond that date.303
255.
Referring to other NAFTA cases and Article 31(1) of the Vienna Convention on the Law of Treaties,304 the Investors submit:

It is precisely at this point where the concept of continuing breach dovetails with that of non-continuing breach. Bilcon could not know of the loss it incurred from Canada's continuing measures until those measures were actually applied to it in concrete situations. That is, the time-bar on continuing measures could not possibly start to run until those measures were applied to Bilcon in particular circumstances.305

The Investors differentiate the Grand River case on which the Respondent relies, on its facts.306

256.
In the alternative, the Investors submit that they only acquired knowledge that they incurred loss or damage at the moment in which they learned of the federal Minister's acceptance of the JRP Report.307 The DFO's refusal to authorize blasting did not cause any loss or damage and therefore did not trigger the limitation period to run.308 The Investors state that it was not until December 2007 that "it became official that the federal and provincial governments accepted the Joint Review Panel's recommendation to reject Bilcon's application; thereby, making it official, for the first time, that Bilcon would not be able to move forward in its planned investment".309
257.
The Investors argue that their interpretation of "loss or damage" under NAFTA is supported by decisions of NAFTA tribunals which require that the breach of NAFTA be the cause for the "loss or damage" suffered by the investor.310

3. The Tribunal's Analysis

C. ATTRIBUTION OF THE ACTS OF THE JRP TO THE RESPONDENT

1. The Respondent's Position

283.
The Respondent accepts that it is responsible for the acts of the following entities: the DFO, the Agency and NSDEL. There is also no dispute that Canada is responsible as a matter of international law for the acts of the Minister of Fisheries and Oceans, the Minister of the Environment or the Nova Scotia Minister of Environment and Labour when they act in their Ministerial capacities. Finally, there is no dispute between the Parties that Canada is responsible for the acts of Nova Scotia, one of its constituent political subdivisions.330
284.
However, in respect of the Investors' claim concerning the JRP, the Respondent advances four main arguments, referring to NAFTA Articles 1101 and 1116. First, the Respondent argues that the JRP is not an organ of the Government of Canada nor are the members of the JRP agents of the CEA Agency.331 Secondly, the JRP was not acting in a governmental authority in its role vis a vis the Investors' project.332 Thirdly, the JRP was not acting under the instructions or effective control of Canada when it committed the complained-of acts. Fourthly, Respondent has not acknowledged or adopted any of the complained-of acts as its own.

(a) The JRP is Not an Organ of Canada

285.
Referring to Article 4(2) of the ILC Articles and to the Genocide Convention case decided in 2007 by the International Court of Justice, the Respondent maintains that "a person or entity is an organ of a State at international law if it has the status of an organ in a State's internal law."333 The Respondent contends that neither JRPs as entities, nor the individual members of those panels, have that status in Canadian law nor do they meet the test articulated in the Genocide Convention case and adopted by certain NAFTA tribunals requiring that the entity act in "complete dependence" on the State.334 In its interpretation of the ILC Articles, the Respondent relies on the investment arbitration case Jan de Nul v. Arab Republic of Egypt.335
286.
The Respondent further submits that none of the key statutes of relevance in Canadian administrative law apply to a JRP or its members and that, therefore, they cannot be considered organs of the Government.336 At Canadian law, the Supreme Court has recognized that merely because an entity is subject to judicial review in Canada does not mean that it is a governmental entity.337
287.
The Respondent argues that not one of the instances of Canadian case law referred to by the Investors supports the proposition that a JRP is an organ of Canada.338 Moreover, the Respondent argues that in Canada, "judicial review is, in theory, available with respect to any entity that is a creature of statute. Thus, the mere fact that an entity is subject to judicial review in Canada does not mean that it is an organ of the government".339 The Respondent also relies on the Supreme Court of Canada decision in McKinney v. University of Guelph to argue that "the fact that an entity is a statutory body performing a public service and thus subject to judicial review ‘does not in itself make [it] part of government'".340
288.
The Respondent argues that, "while JRPs are created by government, they govern their own process from the time of their constitution until the time they finish their report. In particular, once the review panel is constituted, it takes no instruction from government, and operates completely independently".341 According to Respondent, "when a government organ offers evidence to the JRP on a topic within its expertise, it is treated as offering merely an expert opinion, not direction".342

(b) The JRP was Not Exercising Elements of Governmental Authority

289.
The Respondent submits that, "when a person or entity that is not an organ is empowered to exercise certain government authority, only actions that occur during the exercise of that authority are attributable to the State".343 Canada refers to Article 5 of the ILC Articles which summarizes this rule of customary law344 and to the Jan de Nul v. Egypt case in which the tribunal established a relevant two-part test: "first, the act must be performed by an entity empowered to exercise elements of governmental authority [and] second, the act itself must be performed in the exercise of governmental authority".345 The Respondent submits that a distinction should be drawn between public service and governmental authority as was done by the Jan de Nul tribunal. By evaluating information and making a recommendation to the government,346 the JRP was not exercising governmental authority in the exercise of public power, though it may have performed a public service.347 Thus, in the Respondent's view, applying the Jan de Nul test to this case shows that "none of the alleged wrongful acts committed by the JRP can be attributed to Canada".348
290.
The Respondent acknowledges that s. 35 of the CEAA, "invests JRPs with certain elements of governmental authority" to facilitate the collection and the control of the relevant evidence.349 Nevertheless, the governmental authority granted to the JRP is limited to the phase of information gathering. The Respondent further submits that during the Whites Point EA, the JRP did not exercise any of those functions.350 The fact that the JRP's "organization and conduct of the public hearings in the Whites Point EA were done in the general fulfillment of both the public and government interest in environmental assessment... is not enough to show that these actions are governmental in nature".351 The Respondent emphasizes that the decision on the EA, and whether to allow the project to proceed, remains exclusively with government organs.352
291.
With regard to the Investors' reliance on the decisions of Canadian courts to argue that the JRP is an organ of Canada, the Respondent submits that this point is irrelevant because "[t]he question here is whether, as a matter of international law, which the Tribunal is bound to apply, the JRP could be deemed to be exercising delegated governmental authority".353 The Respondent further submits that, even if Canadian law were considered, the factors to determine whether an entity is performing a governmental function stated in Godbout v. Longueuil show that the JRP did not perform a governmental function.354

(c) The JRP Did Not Act Under the Instructions or Effective Control of Canada

292.
The Respondent submits that the Investors fail to set out the applicable test under international law for a determination of whether the JRP acted under the instructions or effective control of Canada, and that their argument should be dismissed on the basis of this failure alone.355
293.
The Respondent refers to Article 8 of the ILC Articles and the Genocide Convention case in which the International Court of Justice elaborated on the notion of "effective control".356 Accordingly, the Respondent submits:

While the JRP operated within the general mandate of its Terms of Reference (which could be considered general instructions), the JRP was an autonomous body. It organized its own internal procedures, determined how it would conduct the hearing, and decided itself on what it believed to be the appropriate approach to topics such as a cumulative effects analysis, the precautionary principle, adaptive management, mitigation measures, and information requests of the Claimants.357

294.
Thus, even under the appropriate and applicable test, the JRP was not in dependence on Canada nor was Canada in control of the JRP.358 This conclusion is further supported by testimony that the JRP members wrote their report independent of any assistance from government liaisons.359

(d) The Respondent has Not Adopted Any of the Complained-of Acts

295.
The Respondent submits that the Investors failed to describe and apply the relevant test in international law regarding adoption by a State of action undertaken by a non-governmental entity pursuant to Article 11 of the ILC Articles.360 The Respondent refers to the commentary to Article 11, which explains that "international law requires a ‘clear and unequivocal' acknowledgement or adoption of the ‘conduct in question' in order for this rule to apply. It further clarifies that the ‘language of ‘adoption' carries with it the idea that the conduct is acknowledged by the State as, in effect, its own conduct.'"361
296.
The Respondent refers to the Minister's response to the JRP Report, issued on 17 December 2007, concluding that, after having "carefully considered" the report, as well as a series of letters from the Investors including their criticisms,362 the Government "accepted" and "supported" the ultimate recommendations made by the JRP. According to the Respondent, "there is no acknowledgement or adoption of the JRP's conduct."363

2. The Investors' Position

(a) The JRP is an Organ of Canada

297.
The Investors argue that the JRP is an "integral part of the government apparatus of Canada".364 The JRP is a governmental entity established under the CEAA from which it derives its powers, exercises an executive function, and contributes an essential step in the environmental assessment process.365 The Investors also contend that the JRP is an instrument of the CEA Agency and that the "members of the Joint Review Panel were individually and collectively agents of the CEA Agency".366
298.
The Investors submit that "the Canadian judiciary has confirmed that a Joint Review Panel comes within the meaning of a ‘federal board, commission or other tribunal' under the Federal Courts Act of Canada".367 This determination, according to the Investors, confirms that the JRP is "part of the executive branch of the Canadian government",368 and that it satisfies the requirements of Article 4 of the ILC Articles.369 The Investors reject the Respondent's reference to McKinney v. University of Guelph,370 maintaining that the relevant holding from that case was reversed in a later case.371 The Investors also note that the Respondent's expert "acknowledges that the Whites Point Quarry review panel was carrying out a ‘joint federal and provincial mandate '".372
299.
The Investors further argue that, had they been subjected to other environmental review processes under the CEAA, such as a screening or a comprehensive review, there would be no dispute that those reviews, which are "fully undertaken by civil servants", are attributable to the Respondent.373 Thus, the Investors submit that "[t]here is simply no basis to conclude that, because the Investor was subject to the higher standard, by decisions of the government, that the government can avoid responsibility for its actions".374

(b) The JRP Exercises Governmental Authority and is of a Public Character

300.
The Investors submit that the JRP "exercises government authority and is of a public character" in accordance with Article 5 of the ILC Articles.375 In support, the Investors refer to CEAA 's requirement for JRPs to hold public hearings;376 its authority with regard to witnesses and evidence;377 and that the JRP report "is an ‘essential.step' before a Minister can make a final determination".378 The Investors further argue that "each of the subject acts and omissions of the Joint Review Panel was in the purported exercise of governmental authority," such as its control of the hearings, and cannot be appropriately characterized as commercial or non-governmental.379 Thus, in the Investors' view, to "privatize" such acts of public power would be troubling and cannot be the intention of the relevant statute. Moreover, this is precisely the type of power Article 4 of the ILC Articles is meant to capture.380
301.
In addition, the Investors reject the Respondent's interpretation of the Jan de Nul v. Egypt case and argue that "in Jan de Nul, the tribunal actually recognized that a Panel of Experts appointed by a government ministry ‘to issue a report' was either an organ of the state within the meaning of Article 4 or exercised governmental authority under Article 5."381

(c) The JRP was Under the Instructions of Canada

302.
The Investors submit that the process and report of the JRP were carried out under the instruction of Canada, within the meaning of Article 8 of the ILC Articles.382 The Investors further argue that "the choice of JRP panel members, combined with the political interference in the regulatory process, and the rapid rubber-stamping of the JRP's Report" create a presumption that the Respondent sought to "procure a specific result from the JRP, namely the rejection of the Investors' proposal".383

(d) The Respondent Acknowledged and Adopted the Actions of the JRP

303.
The Investors also submit that, according to ILC Article 11, the actions of the JRP are attributable to the Respondent because the Canadian Cabinet adopted its Report and "[n]either Cabinet nor the Minister can issue an authorization without a Panel Report".384 According to the Investors, when Canadian Environment Minister Baird accepted the recommendation in the JRP Report, the Respondent "adopted the JRP's flawed understanding and application of the NAFTA as its own".385
304.
The Investors also refer to a presentation made on 19 June 2007 by Mr. Gilles Gauthier, a director at the DFAIT, to the JRP on NAFTA. The Investors contend that "Canada's presentation on the NAFTA demonstrates another example of its direct involvement in the JRP Process".386

3. The Tribunal's Analysis

305.
As a result of the Tribunal's ruling (above) to apply the time-bar to events predating 17 June 2005, the focus of the Tribunal's deliberations must necessarily shift to the JRP. Canada submits, however, that it is not responsible under NAFTA for the actions of the JRP. A party is only responsible for measures "adopted or maintained by a Party".
306.
The starting point of the Tribunal's analysis is Article 105 of NAFTA, which reads:

The Parties shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance, except as otherwise provided in this Agreement, by state and provincial governments.

In addition, the Tribunal has regard to relevant provisions of the ILC Articles, which provide as follows:

Article 4: Conduct of organs of a State

The conduct of any State organ shall be considered an act of that State under international law, whether that organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a territorial unit of the State.

An organ includes any person or entity which has that status in accordance with the internal law of the State.

Article 5: Conduct of persons or entities exercising elements of governmental authority

The conduct of a person or entity which is not an organ of the State under Article 4 but which is empowered by the law of that State to exercise elements of the governmental authority shall be considered an act of the State under international law, provided the person or entity is acting in that capacity in the particular instance.

307.
The ILC Articles quoted here are considered as statements of customary international law on the question of attribution for purposes of asserting the responsibility of a State towards another State, which are applicable by analogy to the responsibility of States towards private parties.387
308.
The Tribunal recalls the Investors' contention that the JRP is an "integral part of the government apparatus of Canada".388 Even if it were not, the Investors submit, it is empowered to exercise elements of Canada's governmental authority. The Tribunal agrees. The JRP is not a body with an existence that precedes the assessment of a particular project or survives after its tasks are completed. Its members are appointed by the Minister of the Environment for Canada.389 Panel members may be appointed from a roster established by the Minister.390 The members must be "unbiased and free from any conflict of interest relative to the project". A body that exercises impartial judgment, however, can well be an organ of the state; Article 4 of the ILC Articles, just quoted, specifically includes those exercising "judicial" functions. The functions that the JRP must discharge are of a governmental nature. According to s. 34 of the CEAA :

34. A review panel shall, in accordance with any regulations made for that purpose and with its terms of reference,

(a) ensure that the information required for an assessment by a review panel is obtained and made available to the public;

(b) hold hearings in a manner that offers the public opportunity to participate in the assessment;

(c) prepare a report setting out

(i) the rationale, conclusions and recommendations of the panel relating to the environmental assessment of the project, including any mitigation measures and followup program; and

(ii) a summary of any comments received from the public; and

(d) submit the report to the Minister and the responsible authority.

309.
The assessment referred to here must be "an assessment of the environmental effects of the project that is conducted in accordance with this Act and the regulations".391 To carry out this statutory responsibility, the CEAA cloaks a Review Panel with the powers of a court with respect to summoning witnesses to testify and produce documents.392 The members of a Review Panel are vested with immunity from "any action or other proceeding" against them during the course of or for the purposes of the assessment.
310.
The report of a Review Panel is an integral part of the process of decision-making by government. S. 37 of the CEAA provides that a Review Panel Report must be "considered" by the "responsible authority", that is, the part of the Canadian executive branch that makes the final decision over allowing the project to proceed. The responsible authority may issue approval if, after taking into account any mitigation measures it considers appropriate, that authority decides that:

the project is not likely to cause significant adverse environmental effects;

the project is likely to cause significant adverse effects, but these are justified in the circumstances.393

311.
The final decision of the responsible authority, when the assessment is made by way of a Review Panel, must be exercised with the approval of the Governor-in-Council—that is, the federal cabinet, the senior decision making body in the executive of Canada.394
312.
The report of the Review Panel, while not determinative, is therefore a mandated part of the environmental deliberation process.
313.
A Review Panel that is joint is similarly part of the apparatus of the Government of Canada and in any event exercising elements of Canadian governmental authority. The CEAA authorizes Canada to enter into agreements with authorities in other jurisdictions, including at the provincial level, to establish a JRP.395 A mandate of a JRP must always include the assessment of the project in accordance with the criteria set out in s. 16 of the CEAA.396 The chair must be appointed or approved by the Minister or else the Minister must appoint a co-chair. At least one other member of the panel must be appointed by the Minister. The Minister must fix or approve the terms of reference. The JRP has all the powers of summoning witnesses that the CEAA vests in ordinary review panels.397
314.
In respect of the particular JRP under consideration in the present case, a Canada-Nova Scotia Agreement provided that Canada and Nova Scotia would each make nominations to the Panel and agree on the choice of a chair. The federal Canada Minister of the Environment would appoint three individuals to serve. Nova Scotia was made responsible for establishing the Secretariat for the Panel. Costs of the Panel were shared between Canada and Nova Scotia.398
315.
The Respondent notes that various statutes, such as the Financial Administration Act and other statutes, among them the Freedom of Information Act, extend to a wide range of federal government entities, but do not apply to review panels.399 It has not been shown, however, that any of these broadly ranging statutes—which do not in all cases apply to the same set of government institutions—are intended to incorporate an exhaustive list of all the entities that Canada considers to be organs of government for the purposes of attribution in the context of State responsibility. In any event, the decisive issue is whether the JRP is part of the Government of Canada according to international law. As the commentary to the ILC Articles observes in relation to Article 4, "a state cannot avoid responsibility for the conduct of a body which does in truth act as one of its organs merely by denying it that status under its own law".400
316.
Canada refers to several cases in which the acts of a private entity were not attributed to a government.401 In Jan de Nul v Arab Republic of Egypt, the tribunal found that the acts of the Suez Canal Authority were not attributable to Egypt. With respect to ILC Article 4, the same tribunal found that the Suez Canal Authority had been established in the context of a law that, in the words of the Tribunal, "expressly insists on the commercial nature of the SCA activities and its autonomous budget".402 With respect to Article 5, the tribunal concluded that the Suez Canal Authority "[i]n its dealing with the Claimants during the tender process, acted like any contractor trying to achieve the best price for the services it was seeking. It did not act as a State entity".403 In the present case, however, the JRP neither generally engaged in commercial activities nor did it display any commercial character in conducting its hearings.
317.
Canada submits that in McKinney,404 the Supreme Court of Canada decided that the fact that an entity is performing a public service and is subject to judicial review is not sufficient in itself to make it part of government for the purposes of being bound by the Canadian Charter of Rights and Freedoms.405 The McKinney case concerned employment decisions of a University. The Supreme Court of Canada found that universities in Canada are not part of government, and that they are not exercising governmental functions in their employment of academic staff. Rather, they are, by tradition and law, self-governing institutions that pursue their own goals.
318.
A JRP by contrast is established, and its members appointed, by governmental authorities to contribute to government decision-making, rather than pursuing its own mission.
319.
Canada has also drawn to the Tribunal's attention several NAFTA decisions concerning attribution of an entity's conduct to a state. In Fireman's Fund, however, the issue was whether Mexico had expropriated an investment. An informal working group of officials from various Mexican state agencies had been involved in consultations with stakeholders and making recommendations to the government. The tribunal agreed with the investor that regardless of how the domestic law of Mexico characterized the role of the working group, Mexico could not escape responsibility for an entity that acted on behalf of Mexico vis-à-vis third parties.406 On the evidence, however, the tribunal was not able to identify any commitment to investors made by the working group on behalf of Mexico. It seems that the officials from the government and the private parties with whom they engaged in discussions regarded the process as incomplete.407 In the present case, by contrast, the JRP was de jure an organ of Canada, equipped with a clear statutory role that included making formal and public recommendations to state authorities which the latter were obliged by law to consider - and indeed ended up accepting.
320.
In the Gami case, the tribunal rejected the claim as to attribution in part because certain measures depended on consultations involving private actors as well as government, and it was not clear in this context that the treatment of the investment was directly attributable to the government.408 There is no such mix of actors with respect to the JRP in the present case. The members of the JRP were all appointed by governments for the specific purpose of discharging a set of governmental duties connected with the environmental assessment of the project. The source of the claimed injury was a governmental decision-making process in which the JRP had a statutorily mandated and important role.
321.
Even if the JRP were not, by its nature, a part of the apparatus of the Government of Canada, the fact would remain that federal Canada and Nova Scotia both adopted its essential findings in arriving at the conclusion that the project should be denied approval under their environmental laws. Article 11 of the ILC Articles provides as follows:

Article 11

Conduct acknowledged and adopted by a State as its own

Conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own.409

322.
It is possible to imagine a case in which a government arrives at the same conclusion as a recommendatory body, but in which the government does so by pursuing investigations and reasoning that are so distinctly its own that it might not be viewed as acknowledging and adopting the conduct of the recommendatory body. On the facts of the present case, however, Article 11 would establish the international responsibility of Canada even if the JRP were not one of its organs.
323.
The Government of Canada's response to the JRP Report noted that the government had studied the Report "carefully" and concluded in its next sentence that: "[t]he Government of Canada accepts the conclusion of the Joint Review Panel that the Project is likely to cause significant adverse environmental effects that cannot be justified in the circumstances."410 In his expert report commissioned by the Government of Canada, Mr. Smith proposed the general proposition, that "the Panel Report will provide ample analysis and reasoning for its recommendation. If accepted by the governments, the reasons for doing so are manifest on the face of the Panel Report."411 Mr. Smith's general proposition is applicable in the circumstances of this case. The JRP only made a specific finding of likely significant adverse effects after mitigation in respect of "community core values", and the reasonable inference is that the Government of Canada agreed with both the recommendation and the "community core values" approach that was at its foundation. There is no indication in the evidence of a level of independent fact-finding, legal analysis or other deliberation by the Government of Canada that would be inconsistent with the view that Canada was acknowledging and adopting the essential reasoning and conclusions of the JRP.
324.
The Nova Scotia Minister for the Environment informed Mr. Buxton by telephone that he had accepted the first recommendation of the JRP.412 In a separate letter of the same date, 20 November 2007, Minister Parent stated that the decision was ultimately for him to make as Minister, but that he had carefully considered the JRP Report and concluded that the project would have likely significant adverse effects after mitigation.413 Here again, the Tribunal concludes that the link between the findings and recommendations of the JRP and the Minister's final decision would be sufficient to constitute an acknowledgement and adoption for the purposes of Article 11 of the ILC Articles.

D. WHETHER THE FEDERAL GOVERNMENT'S DECISION CAUSED ANY DAMAGE

1. The Respondent's Position

325.
The Respondent refers to NAFTA Article 1116's requirement that an investor must have "incurred loss, or damage, by reason of, or arising out of" the alleged breach and argues that measures not capable of causing loss or damage may not be considered by the Tribunal.414
326.
The Respondent argues that the decision of the federal Government to accept the JRP's recommendation on 17 December 2007 did not cause the Investors loss or damage because one month earlier, on 20 November 2007, Nova Scotia's Minister of Environment and Labour had already rejected the proposal to construct and operate the Whites Point Quarry and Marine Terminal.415 According to the Respondent, once Nova Scotia decided to reject the proposal, the project was effectively terminated.416 Although the federal Government had to make its own decision, "the federal decision as to whether or not to issue any requested authorizations was academic".417 The Respondent also rejects the Investors' assertion that "the Federal Government decision to refuse to issue the authorizations and approvals requested by the Claimants ‘caused additional damage to Bilcon'".418
327.
Finally, the Respondent denies the Investors' assertion that Nova Scotia and federal officials aligned their decisions.419 It argues that this "speculation" has no support and that "Nova Scotia made and announced its decision before the federal Cabinet even met to consider the Federal Government response".420