13th November 2000 : USA Memorial on Jurisdiction and Admissibility. Also on 13th November 2000, Methanex and USA Joint Submission of Evidence, Vol 1.
12th January 2001 : Methanex Motion to Amend its Original Statement of Claim pursuant to Article 20 of the UNCITRAL Arbitration Rules, together with a Draft Outline of its Amended Statement of Claim.
12th February 2001 : Methanex Counter-Memorial on Jurisdiction and Draft Amended Statement of Claim.
12th April 2001 : USA Reply Memorial on Jurisdiction and Proposed Amendment.
30th April 2001 : Second Submission of Canada under Article 1128 NAFTA, addressing certain jurisdictional issues.
15th May 2001 : Mexico Submission under Article 1128 NAFTA also addressing certain jurisdictional issues.
25th May 2001 : Methanex Rejoinder Memorial on Jurisdiction and its Proposed Amendment.
27th June 2001 : USA Rejoinder Memorial on Jurisdiction and the Proposed Amendment.
(I) Methanex : As Counsel, Christopher F. Dugan, Esq., James A. Wilderotter, Esq., Melissa D. Stear, Esq., Nancy M. Kim, Esq., all of Jones, Day, Reavis & Pogue, 51 Louisiana Avenue NW, Washington, DC 20001-2113, USA;
(II) The USA : As Counsel, Ronald J. Bettauer, Esq., Mark A. Clodfelter, Esq., Barton Legum, Esq., Andrea J. Menaker, Esq., Alan Birnbaum, Esq., all of the U.S. Department of State, Office of the Legal Adviser, Suite 203, South Building 2430 E Street NW Washington, DC 20037-2800, USA;
(III) Canada: As Counsel, Mr Boris Ulehla, Counsel, Trade Law Division, Department of Foreign Affairs and International Trade, Department of Justice, 125 Sussex Drive, Ottawa, Ontario K1A 0G2, Canada; and
(IV) Mexico : As Counsel, Adriana González Arce Brilanti Esq., Secretariat of the Economy, Alfonso Reyes No. 30, Piso 17, Col Condesa, 06179, Mexico DF, Mexico; and Nancy Fisher, Esq., of Shaw Pittman, 3200 N Street NW, Washington DC 20037-1128, USA.
In addition, each Disputing Party was attended by other persons whose names are recorded in the files and need not be repeated here, including (for the USA) representatives from the US Department of State, the Office of the US Trade Representative, the US Department of Commerce, the US Department of Justice, the US Department of Treasury, the US Department of Labor, the US Enviromental Protection Agency, the California Environmental Protection Agency and the California State Water Resources Control Board.
20th July 2001 : Methanex Post-Hearing Submissions.
20th July 2001 : USA Post-Hearing Submissions.
27th July 2001 : Methanex Reply to Post-Hearing Submissions of the USA.
27th July 2001 : USA Response to Post-Hearing Submissions of Methanex.
31st July 2001 : USA Letter attaching Interpretation issued by the NAFTA Free Trade Commission (see further below).
18th September 2001 : Methanex Letter in Response to the NAFTA Free Trade Commission Interpretation.
26th October 2001 : USA Response to Methanex's Submission concerning the NAFTA Free Trade Commission Interpretation.
11th November 2001 : Methanex's Reply to the USA Response to Methanex's Submission concerning the NAFTA Free Trade Commission Interpretation.
21st November 2001 : Letter of Mexico concerning the Methanex Reply Submission of 11th November 2001.
17th December 2001 : USA Rejoinder to Methanex's Reply Submission concerning the NAFTA Free Trade Commission Interpretation.
8th February 2002 : Third Submission of Canada pursuant to NAFTA Article 1128.
11th February 2002 : Mexico's further submission under NAFTA Article 1128.
By order dated 11th March 2002, having previously intimated its intentions by order dated 28th November 2001, the Tribunal closed the file on any further written submissions relating to jurisdiction and admissibility, unless previously requested by the Tribunal; none were so requested.; and the file was formally closed by letter dated 25th July 2002.
"B. Minimum Standard of Treatment in Accordance with International Law
1. Article 1105(1) prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of another Party.
2. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.
3. A determination that there has been a breach of another provision of the NAFTA, or of a separate international agreement, does not establish that there has been a breach of Article 1105(1).
The adoption by the Free Trade Commission of this or any future interpretation shall not be construed as indicating an absence of agreement among the NAFTA Parties about other matters of interpretation of the Agreement."
This document had not been expressly foreshadowed in the USA's argument taking place at the oral hearing earlier that same month; but in the light of Methanex's submissions on Article 1105 NAFTA, it is possible that the timing was not a complete coincidence.
" The Legislature hereby finds and declares that the purpose of this act is to provide the public and the Legislature with a thorough and objective evaluation of the human health and environmental risks and benefits, if any, of the use of methyl tertiary-butyl ether (MTBE), as compared to ethyl tertiary-butyl ether (ETBE), tertiary amyl methyl ether (TAME) and ethanol, in gasoline, and to ensure that the air, water quality, and soil impacts of the use of MTBE are fully mitigated."
" The California Energy Commission (CEC), in consultation with the California Air Resources Board, shall develop a timetable by July 1, 1999 for the removal of MTBE from gasoline at the earliest possible date, but not later than 31st December 2002." (Paragraph 4)
" The California Air Resources Board and the State Water Resources Control Board shall conduct an environmental fate and transport analysis of ethanol in air, surface water, and groundwater. The Office of Environmental Health Hazard Assessment shall prepare an analysis of the health risks of ethanol in gasoline..." (Paragraph 10)
" The California Energy Commission (CEC) shall evaluate by December 31, 1999 and report to the Governor and the Secretary for Environmental Protection the potential for development of a California waste based or other biomass ethanol industry. CEC shall evaluate what steps, if any, would be appropriate to foster waste based or other biomass ethanol development in California should ethanol be found to be an acceptable substitute for MTBE." (Paragraph 11)
(I) "Loss to Methanex, Methanex US and Fortier of a substantial portion of their customer base, goodwill and market for methanol in California and elsewhere;
(II) Losses to Methanex, Methanex US and Fortier as a result of the decline in the global price of methanol;
(III) Loss of return to Methanex, Methanex US and Fortier on capital investments they have made in developing and serving the MTBE market;
(IV) Loss to Methanex due to the increased cost of capital;
(V) Loss to Methanex of a substantial amount of its investment in Methanex US and Fortier."
(This draft agenda has not been seen by the Tribunal; and Methanex has yet to tender the document into evidence).
"WHEREAS, Executive Order D-5-99, issued March 25, 1999, found that, "on balance," use of MTBE posed a significant risk to California's environment. The State Energy Resource Conservation and Development Commission (Commission) and the Air Resources Board (Board) were directed to develop a timetable for removing MTBE from gasoline at the earliest possible date, no later than December 31, 2002. The Board was directed to adopt regulations as needed to implement the Executive Order; and
WHEREAS, on December 9, 1999, the Board adopted regulations prohibiting the sale of gasoline containing MTBE in California after December 31, 2002; and
WHEREAS, Senate Bill 989 (Sher) of 1999 requires the Commission to develop a timetable for removal of MTBE from gasoline "at the earliest possible date" that will still ensure adequate supply and availability of gasoline. (Health & Saf. Code §43013.1.); and
WHEREAS, in order to comply with the federal requirements and also eliminate use of MTBE, California would need to import up to 900 million gallons of ethanol per year; and
WHEREAS, the current production, transportation and distribution of ethanol is insufficient to allow California to meet federal requirements and eliminate use of MTBE on January 1, 2003; and
WHEREAS, on June 12, 2001, the U.S. Environmental Protection Agency denied California's request for a waiver of the federal oxygen content requirement. As a result, if use of MTBE is prohibited January 1, 2003, California's motorists will face severe shortages of gasoline, resulting in substantial price increases; and
WHEREAS, strengthened underground storage tank requirements and enforcement have significantly decreased the volume and rate of MTBE discharges since Executive Order D-5-99 was issued in March of 1999;
NOW, THEREFORE, I, GRAY DAVIS, Governor of the State of California, by virtue of the power and authority vested in me by the Constitution and statutes of the State of California, do hereby issue this order to become effective immediately:
I FIND that it is not possible to eliminate use of MTBE on January 1, 2003, without significantly risking disruption of the availability of gasoline in California. This would substantially increase prices, harm California's economy and impose an unjustified burden upon our motorists.
IT IS ORDERED that by July 31, 2002, the board shall take the necessary actions to postpone for one year the prohibitions of the use of MTBE and other specified oxygenates in California gasoline, and the related requirements for California Phase 3 reformulated gasoline.
IT IS FURTHER ORDERED that the Board and Commission shall work with the petroleum industry to ensure that MTBE-free gasoline meeting California standards continues to be supplied to the Lake Tahoe region and any other areas of California currently receiving MTBE-free gasoline.
IT IS FURTHER ORDERED that the State Water Resources Control Board and the Department of Health Services shall work with California drinking water providers to ensure that the providers continue to take all appropriate measures to prevent discharge of MTBE into surface water reservoirs."
(For reasons that appear below, it proved unnecessary for the Tribunal's decisions in this Award to require the Disputing Parties to make any submissions on this new document. In regard to the next stages of these arbitration proceedings, the Tribunal may allow further submissions to be made as to the relevance and effect of both this document and the other documents to which it refers, in particular the US Environmental Protection Agency's decision of 12th June 2001).
"During the course of the arbitral proceedings either party may amend or supplement his claim or defence unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances. However, a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitration clause or the separate arbitration agreement."
Challenge I : Article 1116(1) NAFTA (No proximate cause);
Challenge II : Articles 1105 & 1110 NAFTA (No legal right impugned by US measures);
Challenge III : Article 1101(1) NAFTA (No legally significant connection between US measures and Methanex or its investments);
Challenge IV : Article 1116(1) NAFTA (No loss);
Challenge V : Article 1116(1) NAFTA (No claim for subsidiaries' losses);
Challenge VI : Article 1121(b) NAFTA (No waiver); and Challenge VII : Article 1102 NAFTA (No possible claim).
" The first - interpretation in good faith - flows directly from the rule pacta sunt servanda. The second principle is the very essence of the textual approach: the parties are to be presumed to have that intention which appears from the ordinary meaning of the terms used by them. The third principle is one both of common sense and good faith; the ordinary meaning of a term is not to be determined in the abstract but in the context of the treaty and in the light of its object and purpose. These principles have repeatedly been affirmed by the Court [i.e. the ICJ].3 "
"Any objection by the respondent to the jurisdiction of the Court or to the admissibility of the application, or other objection the decision upon which is requested before any further proceedings on the merits, shall be made in writing within the time-limit fixed for the delivery of the Counter-Memorial...." (emphasis added.)
This terminology has given rise to fine distinctions between jurisdiction and admissibility15; and a notorious example is the Barcelona Traction Case16. It can also give rise to equally fine distinctions between a preliminary objection to the admissibility of the claim and a defence on the merits. According to Rosenne (ibid): " As a rough rule-of-thumb, it is probable that when the facts and arguments in support of the objection are substantially the same as the facts and arguments on which the merits of the case depend, or when to decide the objection would require decision on what, in the concrete case, are substantive aspects of the merits, the plea is not an objection but a defence to the merits." It may therefore be doubted whether the USA's challenges would qualify before the ICJ as objections to admissibility falling within Article 79(1) of its Rules of Procedure. As we have already indicated, however, there is no equivalent rule on admissibility in the UNCITRAL Arbitration Rules.
" Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship22, whether contractual or not, concerning a subject matter capable of settlement by arbitration."
It is therefore not sufficient for the purpose of Article II(1) that there be a limitless agreement to arbitrate any future disputes that may ever arise between the parties. More is required for a valid arbitration agreement: the dispute must arise in respect of "a defined legal relationship "23.
The phrase "relating to conservation", interpreted in its context and in light of the purpose of the General Agreement, means that the measure being examined has a connection to conservation that is not incidental or tangential, but that does not have to be "necessary" or "essential "..." (paragraph 31).
The "normal context" interpretation does not appear materially different from the dictionary definitions; and the interpretation actually relied on by the USA is evidently specific to the particular context. This demonstrates the importance attributed by the USA to interpreting a term in its particular context and in the light of an instrument's object and purpose, an approach consistent with the USA's submissions in the present case. In the event, the WTO Appellate Body decided that Article XX(g) of the General Agreement required that a measure had to be "primarily related to conservation"26. That its interpretation in this respect was quite different from the interpretation in the Pope & Talbot case again confirms the need to interpret a term in accordance with the particular context, object and purpose.
" Article 1101 states that section A covers measures by a Party (i.e., any level of government in Canada), that affect27: investors of another Party...; investments of investors of another Party...; and... for purposes of the provisions on performance requirements and environmental measures, all investments... ".
This English text supports Methanex's interpretation, although the French text is, at best, neutral. Overall, the status of this succinct, unreasoned commentary by another NAFTA Party carries the argument little further; and it provides no sufficient reason to change the interpretation decided above.
(1) Admissibility: The Tribunal dismisses the USA's several challenges based on the "admissibility" of Methanex's claims;
(2) Jurisdiction - Original Statement of Claim: As regards the USA's jurisdictional challenge under Article 1101(1) NAFTA, the Tribunal decides that Methanex's Original Statement of Claim fails to meet the requirements of that provision; and, as there pleaded, the Tribunal would have no jurisdiction to hear Methanex's claims;
(3) Jurisdiction - Amended Statement of Claim: Subject to paragraph 4 below, as regards the USA's jurisdictional challenge under Article 1101(1) NAFTA, the Tribunal decides that Methanex's Amended Statement of Claim, as a whole, likewise fails to meet the requirements of that provision; and as there pleaded, the Tribunal would have no jurisdiction to hear Methanex's Amended Statement of Claim as a whole;
(4) As regards part of Methanex's Amended Statement of Claim (as subsequently supplemented by its written and oral submissions), the Tribunal decides that certain allegations relating to the "intent" underlying the US measures could potentially meet the requirements of Article 1101(1) NAFTA, thereby allowing part of Methanex's case to fall within the jurisdiction of the Tribunal.
It is impossible for the Tribunal now to make a ruling on jurisdiction in regard to this part of Methanex's case without a fresh pleading from Methanex accompanied by evidential materials, to be followed (subject to consultation with the Disputing Parties) by a pleading and evidential materials from the USA and an evidential hearing which may be limited to one or more threshold or determinative issues arising from Methanex's fresh pleading.
Accordingly, that jurisdictional ruling will be postponed by the Tribunal until one or more further awards pursuant to Articles 21(4) and 32(1) of the UNCITRAL Arbitration Rules;
(5) New Pleading: Within a period not more than ninety days from the date of this Award, Methanex shall submit a fresh pleading, complying with Articles 18 and 20 of the UNCITRAL Arbitration Rules and conforming to the decisions contained in this Award; and that pleading shall be accompanied by the evidential materials described in this Award;
(6) Amendment: Subject to Paragraphs 4 and 5 above, the Tribunal does not allow Methanex's application to amend its claim in the form of the Amended Statement of Claim;
(7) Other Jurisdictional Challenges: The Tribunal does not accept the USA's other jurisdictional challenges;
(8) Documentary Disclosure: The Tribunal makes no ruling for the time being on Methanex's Application for Documentary Disclosure, it being allowed to re-submit this application after serving its fresh pleading (if relevant); and
(9) Costs: The Tribunal makes no order for costs in this Award, reserving its power to do so in a later award.
Made by the Tribunal on... 2002, as at the International Centre for Settlement of Investment Disputes, the World Bank, Washington DC, USA.