The Investor argues in particular that the measures described have specific adverse effects on the conduct of its business in the province. This is so first because it considers the harvesting, sorting and booming requirements to be unfair as they impose additional restrictions on coastal log producers in the light of the Coast Domestic Market End Use Sort Descriptions,17 applicable only to coastal log producers such as the Investor is; they mandate scaling in accordance with the metric system, resulting in the need to re-scale for exports and the inevitable cost of time and money; they prevent the Investor from preparing the logs in the manner most suitable to its clients needs; and provide for minimum and maximum volumes of logs from remote areas.
Article 1102: National Treatment
1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
2. Each Party shall accord to investments of investors of another Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
Article 1106: Performance Requirements
1. No Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory:
(a) to export a given level or percentage of goods or services;
(c) to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
(e) to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
3. No Party may condition the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Party or of a non-Party, on compliance with any of the following requirements: [...]
Article 1110: Expropriation and Compensation
1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such investment ("expropriation"), except:
(a) for a public purpose;
(b) on a non-discriminatory basis;
(c) in accordance with due process of law and Article 1105(1); and
(d) on payment of compensation in accordance with paragraph 2 through 6.
Article 1105: Minimum Standard of Treatment
1. Each Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.
The Investor further argues that the ordinary meaning of fair and equitable treatment as an autonomous standard under international law has converged with that under customary law in the light of the evolution that has taken place in recent years to the point that there is no meaningful difference between the two, as held by numerous tribunals.84
In Canada’s argument, there is no such thing as a stand-alone obligation to provide a secure legal environment, nor is such an obligation part of customary international law. NAFTA Article 1105 is a different situation from that considered in CMS and Occidental under bilateral investment treaties unrelated to customary law.93 In addition, full protection and security does not refer to legal security, but to physical security, a matter which in this case is not an issue. Canada also asserts that there is no general prohibition of abuse of rights under Article 1105 and that its consideration in Azinian was again in the context of denial of justice.
(a) the fact that the regime, in application, may be said to benefit local sawmill processors;
(b) the regime’s cutting and sorting requirements for timber;
(c) the make-up and operations of TEAC/FTEAC;
(d) "blockmailing"; and
(e) the Investor’s legitimate expectations.
(a) of the seven members of TEAC/FTEAC specifically identified for criticism by the Investor by reason of partiality towards local sawmills, the two who were once employed by BC sawmills have now become independent consultants and log brokers, the third is the manager of a log broker which exports logs, the fourth purchases rough sawn lumber rather than logs, but is also a logging contractor whose interest is to get the highest possible price for logs and the fifth and sixth each have responsibilities in their respective organizations which would either favor allowing more exports and/or high prices for logs.158 In short, six of the seven industry representative members of TEAC/FTEAC who were singled out for criticism do not appear to have a particular interest in keeping log prices artificially low;
(b) on a number of occasions, following consultation with private landowners, including the Investor, representatives of private landholders have been invited by BC and Canada to become members of TEAC/FTEAC, but they have always declined;159
(c) TEAC/FTEAC have clear guidelines to deal specifically with any potential or perceived conflict of interest which require, ínter alia, that any committee member who has any business relationship with an advertiser or an offering mill to leave the committee meeting before any discussion of the matter starts. This has been the consistent operational practice of the committees and it means that those members will not know the reason behind any acceptance or rejection recommendation;160
(d) at each meeting of the relevant committee, and prior to any review of offers, the committee members engage in a detailed "log market review" which establishes the market price, during the period of advertisement, for an established range of logs of various types and grades. The market level is established by reference to what has been paid in the market; not what purchasers and sellers would have liked to pay or receive. This review is carried out at every meeting of the committee, regardless of whether offers for advertized logs are to be considered;
(e) logs typically are sold at prices around the median range of market prices for the relevant period. Ranges of price exist because prices vary even for logs of a similar type and quality. This occurs because of the nature of the log market where criteria such as the location of logs, transportation and weather considerations can affect price. An offer is thus considered fair if it falls within 5% of the current domestic market value. And while not set out in Notice 102, the 5% benchmark has long been in use and known to the industry;161 and
(f) contrary to the Investor’s assertions, the federal representative is always in attendance at meetings of FTEAC at which there are offers to consider for logs harvested from federal lands, either in person of via conference call.162
1. The claim is dismissed.
2. The parties shall bear the costs of the Arbitration in equal shares and any remaining balance will be refunded to the parties equally by the administering institution.
3. Pursuant to Article 40(3) of the UNCITRAL Arbitration Rules, the Tribunal fixes the following amounts as costs of the arbitration:
Administering institution charges and expenses: US$ 138,595.25
Tribunal’s fees and expenses: US$ 820,904.75
Professor Orrego Vicuña’s fees: US$ 365,200.00
Professor Dam’s fees: US$ 169,675.00
Mr. Rowley’s fees: US$ 235,895.00 Tribunal’s expenses: US$ 50,134.75
Total costs of the arbitration: US$ 959,500.00
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