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Source(s) of the individual document(s):

Lawyers, other representatives, expert(s), tribunal’s secretary

Award

List of Defined Terms
Advisory Power Advisory LLC
Aercoustics Aercoustics Engineering Ltd.
Aird & Berlis Aird & Berlis LLP
AOR Applicant of Record
APRD Approval and Permitting Requirements Document for Renewable Energy Projects issued 24 September 2009
Baird W.F. Baird & Associates Coastal Engineers
BLG Borden Ladner Gervais LLP
BRG Berkeley Research Group
CAD Canadian Dollar
CER Claimant’s Expert Report
CIA Customer Impact Assessment
Claimant (or Windstream) Windstream Energy LLC
cws Claimant’s Witness Statement
DCF Discounted Cash Flow
Deloitte Deloitte LLP
Deloitte reports Expert reports of Messrs Richard Taylor and Robert Low of Deloitte
Discussion Paper Discussion Paper on Offshore Wind Facilities Renewable Energy Approval Requirements posted for comment in June 2010 by the Government
EBR Environmental Bill of Rights
FIT Feed-in-Tariff
FIT Contract Feed-in-Tariff Contract
FIT Program Feed-in-Tariff Program in Ontario launched by the OPA on 1 October 2009
FTC Free Trade Commission of the North American Free Trade Agreement
GEGEA Green Energy and Green Economy Act 2009
Government (or Ontario) Government of Ontario
HGC HGC Engineering
Helimax Helimax Inc.
Hydro One The Ontario Government entity responsible for managing Ontario’s transmission system
ICSID International Centre for Settlement of Investment Disputes
IESO Independent Electricity System Operator
ILC Articles International Law Commission’s Articles on State Responsibility
MCOD Milestone Date for Commercial Operation under the standard FIT Contract
MEI Ministry of Energy and Infrastructure
MOE Ministry of the Environment
MNR Ministry of Natural Resources
MW Megawatt
NAFTA North American Free Trade Agreement
NTP Notice to Proceed
Offshore Wind Policy Proposal Notice MOE’s proposal notice dated 25 June 2010
Ontario (or Government) Government of Ontario
OPA Ontario Power Authority
OPP Ontario Provincial Police
Ortech ORTECH Consulting Inc.
PCA Permanent Court of Arbitration
Policy (or Wind Policy 4.10.04) Policy Number 4.10.04, Wind Power Development on Crown Land, issued by the MNR in March 2004
Project (or WWIS Project) Offshore wind electricity generation project in the Wolfe Island Shoals area in Ontario, Canada
REA Renewable Energy Approval
REA Regulation Renewable Energy Approval Regulation: Environmental Protection Act, R.S.O. 1990, c. E.19, O. Reg. 359/09 (in force since 24 September 2009)
RER Respondent’s Expert Report
Respondent Government of Canada
RFP Request for proposals
RWS Respondent’s Witness Statement
Setback Five-kilometer shoreline exclusion zone for offshore wind projects
SIA IESO System Impact Assessment
Supplementary Request Supplementary Request to Produce
Supplier FIT Contract holder
Sussex Strategy Sussex Strategy Group
TSA Turbine Sales Agreement
UNCITRAL Rules Arbitration Rules of the United Nations Commission on International Trade Law of 2010
Vienna Convention Vienna Convention on the Law of Treaties of 23 May 1969, 115 U.N.T.S. 331
WEI Windstream Energy Inc.
White Owl White Owl Capital Partners LLC
Wind Policy 4.10.04 (or Policy) Policy Number 4.10.04, Wind Power Development on Crown Land, issued by the MNR in March 2004
Windstream (or the Claimant) Windstream Energy LLC
WWIS Windstream Wolfe Island Shoals Inc.
WWIS Project (or Project) Offshore wind electricity generation project in the Wolfe Island Shoals area in Ontario, Canada
Dramatis Personae
Ian Baines President of WEI and a director of WWIS
Chris Benedetti Principal at Sussex Strategy Group, a consultancy used by Windstream for the Project
Remo Bucci Licensed Professional Engineer, Windstream’s expert on infrastructure projects related to power and utilities
Donna Cansfield Minister of Natural Resources
Perry Cecchini Former Manager RESOP/FIT in the Electricity Resources Contract Management group at the OPA
Rudolph Dolzer Professor of Law, Windstream’s expert on interpreting the scope of the fair and equitable treatment provision under Article 1105 of NAFTA
Brad Duguid Minister of Energy and Infrastructure
Doris Dumais Director of Environmental Approvals Access and Service Integration Branch at the MOE
Christopher Goncalves Managing Director of BRG, Canada’s expert on assessing damages
Jérôme Guillet Managing Director of Green Giraffe B.V., Canada’s expert on assessing damages
Brian Howe President of HGC, Windstream’s expert on evaluating the acoustic impact of the Project
Ian Irvine Director and founder of SgurrEnergy, Windstream’s expert on the technical feasibility of the Project
Paul Kerlinger Windstream’s expert on bird behavior, ecology and research design
Rosalyn Lawrence Assistant Deputy Minister of the Policy Division at the MNR
Richard Linley Special Assistant Policy at the MNR
David Livingston Chief of Staff to Ontario Premier Dalton McGuinty
Susan Lo Assistant Deputy Minister of the Renewables and Energy Efficiency Division at the MEI
Brenda Lucas Senior Policy Advisor at the MOE
David Mars Co-founder and Director of Windstream and its subsidiaries and principal at White Owl
Jim MacDougall Principal of Compass Renewable Energy Consulting Inc., Windstream’s expert on offshore wind FIT contract pricing; and former manager of the OPA
Craig MacLennan Chie of Staff to the Minister of Energy and Infrastructure
Dalton McGuinty Ontario Premier
Andrew Mitchell Senior Policy Advisor (Renewables) at the MEI
Sean Mullin Deputy Director of Policy to Ontario Premier Dalton McGuinty
Sarah Powell Partner with the law firm Davies Ward Phillips & Vineberg LLP, Windstream’s expert on environmental and energy law
Scott Reynolds Windstream’s expert on Physiological Ecology
Uwe Roeper President of Ortech, which acted as Windstream’s project manager for the Project
George Smitherman Deputy Premier and Minister of Energy and Infrastructure for the Province of Ontario
Richard Taylor and Robert Low Certified Public Accountants, Chartered Accountants and Certified Business Valuators with Deloitte, Windstream’s experts on quantum
Paul Ungerman Director of Policy at the MEI
Marcia Wallace Manager in MOE’s Environmental Programs Division
Steven Webster Principal investor in Windstream
John Wilkinson Minister of the Environment from 18 August 2010 to 20 October 2011
William Ziegler Co-founder of and majority investor in Windstream and principal at White Owl

I. INTRODUCTION

A. The Parties

1.
The present arbitration has been brought by Windstream Energy LLC ("Windstream" or the "Claimant"), a company incorporated in Delaware, the United States.
2.
The Claimant is the parent company of Windstream Wolfe Island Shoals Inc. ("WWIS"), a special purpose vehicle incorporated in Ontario, as well as Windstream Energy Inc. ("WEI"), which provides various services to WWIS under a Management Services Agreement. The Claimant in turn is managed by its managing director White Owl Capital Partners LLC ("White Owl"), a private equity firm based in New York City and founded in 2007 by Messrs David Mars and William Ziegler.
3.
The Claimant is represented in these proceedings by:

Mr John A. Terry

Ms Myriam M. Seers

Mr Nick E. Kennedy

Ms Emily S. Sherkey

Mr James Gotowiec

Ms Stéphanie A. Lafrance

Torys LLP

Suite 3000

79 Wellington St. West

Box 270, TD Centre

Toronto, Ontario, M5K 1N2

Canada

4.
The Respondent is the Government of Canada ("Canada" or the "Respondent"). The Respondent is represented in these proceedings by:

Ms Sylvie Tabet, General Counsel and Director

Mr Shane Spelliscy, Counsel

Mr Rodney Neufeld, Counsel

Mr Raahool Watchmaker, Counsel

Ms Heather Squires, Counsel

Ms Susanna Kam, Counsel

Ms Jenna Wates, Counsel

Trade Law Bureau

Department of Foreign Affairs, Trade and Development, Canada 125 Sussex Drive Ottawa, Ontario, K1A 0G2 Canada

B. The Dispute

5.
The dispute between the Parties arises out of an offshore wind electricity generation project in the Wolfe Island Shoals area in Ontario, Canada (the "Project" or the "WWIS Project"). The Project was undertaken following Ontario’s enactment of the Green Energy and Green Economy Act of 2009 ("GEGEA") and the subsequent promulgation of additional rules and regulations, creating a Feed-in-Tariff ("FIT") program (the "FIT Program") for the development of renewable energy projects, including onshore and offshore wind. According to the Claimant, following the award of a Feed-in-Tariff Contract (the "FIT Contract") to the Claimant, the Government of Ontario (also referred to as the "Government" or "Ontario") delayed the approval of the required permits and authorizations, including those allowing access to Crown land, and eventually, on 11 February 2011, imposed a moratorium on the development of offshore wind that frustrated the Claimant’s attempts to develop the Project.
6.
The Claimant argues that the conduct of the Government, including the Ontario Power Authority (the "OPA"), is attributable to the Respondent and contends that the measures taken by Ontario authorities are inconsistent with the Respondent’s obligations under Chapter 11 of the North American Free Trade Agreement ("NAFTA"), specifically Articles 1110 (Expropriation and Compensation), 1105 (Minimum Standard of Treatment), 1102 (National Treatment), 1103 (Most-Favored-Nation Treatment) and, to the extent that the OPA is a state enterprise as defined in NAFTA Article 1505, Article 1503(2) (State Enterprises).
7.
The Respondent disputes that it is in breach of any of its obligations under NAFTA. According to the Respondent, the Claimant was always aware of the regulatory risks related to the development of the regulatory processes and the significant scientific uncertainty regarding the effects of offshore wind projects on human health, safety and the environment. The Respondent contends that Ontario’s decision to defer the development of offshore wind was taken to allow the necessary scientific research to be completed and applied to all such projects and thus was not discriminatory, and fell within the legitimate policy-making power of the Government of Ontario to regulate in the public interest.

C. The Parties’ Requests for Relief

8.
The Claimant requests the following relief:

"a) a declaration that Canada has unlawfully expropriated Windstream’s investments in WWIS, the Project and the FIT Contract, contrary to Article 1110 of NAFTA;

b) a declaration that Canada has failed to accord Windstream’s investments fair and equitable treatment in accordance with international law, contrary to Article 1105 of NAFTA;

c) a declaration that Canada has failed to accord Windstream’s investments treatment no less favorable than that accorded, in like circumstances, to its own investors contrary to Article 1102 of NAFTA;

d) a declaration that Canada has failed to accord Windstream’s investments treatment no less favorable than that accorded, in like circumstances, to investors of any Party or non-Party, contrary to Article 1103 of NAFTA;

e) alternatively, a declaration that Canada has breached Article 1503 of NAFTA;

f) alternatively, a declaration that Canada has failed to ensure through regulatory control, administrative supervision or the application of other measures, that its state enterprise, the OPA, acts in a manner consistent with Canada’s obligations under Chapter 11 of NAFTA;

g) damages in the range of between CAD 357.5 and CAD 486.6 million, to be updated as at the time of the hearing, or alternatively between CAD 427.9 and CAD 568.5, to be updated as at the time of the hearing;

h) pre-and post-award interest at a rate to be fixed by the Tribunal;

i) all legal fees and costs associated with this arbitration; and

j) such other relief as the Tribunal considers appropriate."1

9.
The Respondent requests:

"that the Tribunal dismiss the Claimant’s claims in their entirety and with prejudice, order that the Claimant bear the costs of this arbitration, including Canada’s costs for legal representation and assistance, and grant any further relief it deems just and proper."2

II. PROCEDURAL HISTORY

A. Commencement of the Proceedings and Constitution of the Tribunal

10.
On 17 October 2012, the Claimant served upon the Respondent a Notice of Intent to Submit a Claim to Arbitration pursuant to Articles 1118 and 1119 of NAFTA. The Notice was served on the Claimant’s own behalf and on behalf of its subsidiary WWIS.
11.
On 28 January 2013, the Claimant fded a Notice of Arbitration pursuant to Articles 1116, 1117 and 1120 of NAFTA and Article 3 of the Arbitration Rules of the United Nations Commission on International Trade Law of 2010 ("UNCITRAL Rules"). In the Notice of Arbitration, the Claimant appointed Mr R. Doak Bishop as arbitrator.3
12.
On 26 April 2013, the Respondent fded a Response to the Notice of Arbitration. On the same date, the Respondent appointed Dr Bernardo Cremades as arbitrator.
13.
On 18 July 2013, the Parties agreed to appoint Dr Veijo Heiskanen as the Presiding Arbitrator.
14.
On 5 September 2013, the Tribunal held a first procedural meeting in Toronto and appointed the Permanent Court of Arbitration (the "PCA") as the administering institution. The PCA designated Mr Hanno Wehland, PCA Legal Counsel, to act as the Secretary of the Tribunal.4
15.
On 10 September 2013, the Parties informed the Tribunal that they had reached "an agreement on all of the remaining issues in Procedural Order No. 1" and submitted to the Tribunal a final agreed draft of Procedural Order No. 1 as well as a final agreed draft of a Confidentiality Order.
16.
On 16 September 2013, the Tribunal issued Procedural Order No. 1 which, inter alia, confirmed the proper constitution of the Tribunal and set the time frame for further proceedings. On the same day, the Tribunal also issued a Confidentiality Order.
17.
On 6 November 2013, with the Respondent’s agreement, the Claimant filed an Amended Notice of Arbitration pursuant to Article 22 of the UNCITRAL Rules. On 5 December 2013, with the Claimant’s agreement, the Respondent filed an Amended Response to the Notice of Arbitration.

B. Written Proceedings

18.
In accordance with the procedural timetable, between 16 October 2013 and 2 December 2013, the Parties exchanged document production requests in the form of Redfern Schedules.
19.
On 20 December 2013, the Claimant submitted its completed Redfern Schedule, setting out three document production requests to which the Respondent had objected and requesting a ruling from the Tribunal regarding the disputed requests. On the same day, the Respondent confirmed that there were no disputes relating to its document production requests left to be resolved by the Tribunal.
20.
On 12 January 2014, the Tribunal issued Procedural Order No. 2, approving one request made by the Claimant and denying the other two requests.
21.
On 14 April 2014, the Parties exchanged documents.
22.
On 25 April 2014, the Parties informed the Tribunal that they had agreed to amend the existing schedule of the proceedings. The Tribunal acknowledged and approved the Parties’ agreement the following day.
23.
On 19 August 2014, the Claimant submitted its Memorial with accompanying evidence.
24.
On 30 September 2014, the Claimant submitted a corrected version of its Memorial fixing various typographical errors in the original version. The Claimant also submitted a revised Procedural Order No. 1 and a revised Confidentiality Order. On 1 October 2014, the Respondent confirmed its agreement with the proposed changes to Procedural Order No. 1 and the Confidentiality Order. On 2 October 2014, the Tribunal issued the revised Procedural Order No. 1 and the revised Confidentiality Order incorporating the amendments agreed by the Parties.
25.
On 7 November 2014, the Claimant requested the Tribunal’s "assistance in connection with certain issues that have arisen among the parties during the document production process." According to the Claimant, the issues related to (a) a lack of documents produced by the Respondent from the Premier’s Office of the Government of Ontario, and (b) discrepancies between the amount of documents produced by the Respondent from the Government of Ontario’s Ministry of Natural Resources ("MNR"), Ministry of the Environment ("MOE") and Ministry of Energy and Infrastructure ("MEI"),5 when compared to the volume of documents obtained by the Claimant from these Ministries through access to information requests. The Claimant requested the Tribunal to issue various procedural orders to address these issues.
26.
Regarding the first issue, the Claimant requested that, "in lieu of documentary discovery, the Premier’s Office staff member who was the most closely involved with the decision to implement the moratorium be compelled to attend an examination for discovery in Toronto to answer questions about that decision, and the decision to apply the moratorium to Windstream." In this respect, the Claimant requested the Tribunal to order as follows:

"1) Canada shall disclose the identity of the individual from the Premier’s Office who was most directly involved with the decision to implement the moratorium on offshore wind development (whether it is Mr Mullin, Mr Steeve, Mr Morley or another individual);"

2) "The individual identified by Canada shall appear before a certified court reporter in Toronto, Ontario to be examined for discovery by counsel for Windstream to answer questions relating to the decision to implement the moratorium on offshore wind development;" and

3) "If that individual will not appear voluntarily to be examined for discovery, the Tribunal grants Windstream its approval to seek an order from the Ontario Superior Court of Justice for assistance in compelling the attendance of the individual."

4) Alternatively to the above requests, the Claimant requested the Tribunal to order that "the Premier’s Office [shall] restore the available back-up tapes and search the resulting restored documents for documents responsive to Claimant’s document request #25."6

27.
Regarding the second issue, the Claimant contended that the fact that it had received through two requests made under Ontario’s Freedom of Information and Protection of Privacy Act a number of documents from the MNR that "(1) [were] responsive to Windstream’s document requests, and (2) were not included in Canada’s productions... calls into question the comprehensiveness of Canada’s searches for documents." In this respect, the Claimant requested the Tribunal to order the Respondent to:

"1) Disclose to Windstream and to the Tribunal the search processes it used to identify documents responsive to document requests #22, 27, 28, 29 and 56;"

2) "Identify, and disclose to Windstream and to the Tribunal, the lacunae in its search processes that led to the above documents not being produced in response to document requests #22, 27, 28, 29 and 56;" and

3) "Conduct any further and better searches for documents responsive to requests #22, 27, 28, 29 and 56 as may be agreed with Windstream, or ordered by the Tribunal failing such agreement."7

28.
On 18 November 2014, the Respondent provided comments on the Claimant’s requests.
29.
On 24 November 2014, the Claimant submitted a reply to the Respondent’s comments.
30.
On 28 November 2014, the Respondent submitted a rejoinder to the Claimant’s reply.
31.
On 15 December 2014, the Tribunal requested the Respondent to clarify whether it was in a position to identify the individual in the former Premier’s Office who was most directly involved in the decision on the moratorium on offshore wind development.
32.
On 18 December 2014, the Respondent informed the Tribunal that at this time it was not in a position to do so and that it would update the Tribunal on its progress in this regard by 7 January 2015.
33.
On 22 December 2014, the Claimant informed the Tribunal that "new information" relevant to its requests had been disclosed as a result of a legal proceeding in Ontario, requesting an opportunity to submit it to the Tribunal. On 23 December 2014, the Tribunal invited the Respondent to provide its comments on the Claimant’s communication of 22 December 2014 by 30 December 2014. At the Respondent’s request, the Tribunal extended this deadline until 7 January 2015.
34.
On 7 January 2015, the Respondent informed the Tribunal that it was "not able to identify an individual in the former [Premier’s Office] who was directly involved in making the deferral/moratorium decision." In the same communication to the Tribunal, the Respondent objected to the Claimant’s request to submit the "new information."
35.
On 8 January 2015, the Tribunal decided to allow the Claimant to submit the "new information" referred to in the Claimant’s communication of 22 December 2014 and to give an opportunity to the Respondent to respond to the Claimant’s submission.
36.
On 9 January 2015, the Claimant submitted a search warrant issued by an Ontario judicial officer authorizing the search of the premises of the Ontario Provincial Government Cyber Security Branch, including the email accounts of, among others, Mr David Livingston, the former Chief of Staff to Ontario Premier Dalton McGuinty as the "new information" previously referred to. The Claimant also requested that, should the Tribunal decide to make the order requested by the Claimant in its letter of 7 November 2014, such order should name Mr Sean Mullin - who acted as Deputy Director of Policy responsible for the energy portfolio at the former Premier’s Office - as the appropriate witness to appear for discovery voluntarily or, if necessary, by being compelled to do so.
37.
On 14 January 2015, the Respondent submitted further observations on the Claimant’s requests and requested the Tribunal to dismiss the Claimant’s motion in its entirety.
38.
On 20 January 2015, the Respondent submitted its Counter-Memorial with accompanying evidence.
39.
On the same day, the Respondent requested that, given the pending dispute between the Parties as to what is confidential in the Claimant’s submissions, the timelines in paragraph 2 of the Confidentiality Order be suspended and that the Tribunal order the Respondent to designate confidential information in its written submissions within ten days from the date on which the disagreements between the Parties regarding the confidentiality designations in the Claimant’s submissions had been resolved.
40.
The Respondent also asserted parliamentary privilege with respect to certain information relied on by the Claimant in its written submissions and informed the Tribunal that it would be bringing a motion for an order to strike this material from the record.
41.
On 21 January 2015, the Tribunal invited the Claimant to provide its comments regarding the Respondent’s request relating to the suspension of timelines in paragraph 2 of the Revised Confidentiality Order and the designation of confidential information by 26 January 2015.
42.
On the same day, the Tribunal issued Procedural Order No. 3, deciding the Claimant’s requests of 7 November 2014. On the basis of the Parties’ submissions, the Tribunal decided as follows:

"a) The Claimant’s request that the Respondent be ordered to disclose the identity of the individual from the Premier’s Office who was most directly involved with the decision to implement the moratorium on offshore wind development is dismissed as moot.

b) The Claimant’s request that the individual identified by the Claimant shall appear before a certified court reporter in Toronto, Ontario, to be examined for discovery by counsel for the Claimant to answer questions relating to the decision to implement the moratorium on offshore wind development is dismissed for lack of jurisdiction.

c) The Claimant’s request that if the individual identified by the Claimant will not appear voluntarily to be examined for discovery, the Tribunal grants the Claimant its approval to seek an order from the Ontario Superior Court of Justice for assistance in compelling the attendance of the individual, is granted.

d) The Claimant’s alternative request that the Tribunal order the Respondent to restore the available back-up tapes and search the restored documents for documents responsive to the Claimant’s document request #25 is denied...

e) The Claimant’s request that the Tribunal order the Respondent to disclose to the Claimant and to the Tribunal the search processes it used to identify the documents responsive to documents requests #22, 27, 28, 29, and 56 is denied.

f) The Claimant’s request that the Respondent identify and disclose to the Claimant and to the Tribunal the lacunae in its search processes that led to the documents not being produced in response to document requests #22, 27, 28, 29, and 56 is denied; and

g) The Claimant’s request that the Respondent conduct further and better searches for documents responsive to requests #22, 27, 28, 29, and 56, as may be agreed with the Claimant, or ordered by the Tribunal failing such agreement, is denied."

43.
On 26 January 2015, the Claimant indicated that it had no objection to the Respondent’s requests regarding the suspension of timelines in paragraph 2 of the Revised Confidentiality Order and the designation of confidential information.
44.
On 27 January 2015, the Tribunal suspended the timelines in paragraph 2 of the Confidentiality Order for the filing of the Respondent’s confidentiality designations, and ordered that the Respondent designate confidential information in its written submissions within ten days from the date upon which the disagreements over designations in the Claimant’s submissions have been resolved.
45.
On 6 February 2015, the Respondent submitted a motion to the Tribunal, requesting that certain information and exhibits listed in an annex attached to the motion be disregarded and excluded from the record. On 9 February 2015, the Tribunal invited the Claimant to provide its comments on the Respondent’s motion by 13 February 2015. On 13 February 2015, the Claimant submitted a response to the Respondent’s motion, requesting that it be dismissed.
46.
On 12 February 2015, the Parties agreed on certain modifications regarding the time frame for the further proceedings. The Tribunal subsequently confirmed the revised procedural calendar.
47.
On 23 February 2015, the Tribunal issued Procedural Order No. 4, denying the Respondent’s request of 6 February 2015 that certain information and exhibits be disregarded and excluded from the evidence on the grounds of parliamentary privilege or political sensitivity.
48.
On 5 March 2015, the Claimant submitted a redacted version of its Memorial.
49.
On 30 March 2015, the Claimant wrote to Mr Bishop to request some clarification concerning a disclosure made by the Respondent’s expert, Mr Christopher Goncalves, in his report regarding his engagement in other matters in which Mr Bishop has acted as counsel or arbitrator. On 23 April 2015, Mr Bishop confirmed that Mr Goncalves was acting as an expert for a party represented by Mr Bishop.
50.
On 28 April 2015, the Claimant submitted a Supplementary Request to Produce (the "Supplementary Request"), requesting the Tribunal to "order the Respondent to produce the documents set out in the [Supplementary Request]... as soon as possible and in any event no later than within 30 days of the Tribunal’s decision on any disputed document request." On 29 April 2015, the Respondent informed the Tribunal that it would respond to the Supplementary Request within five business days pursuant to Section 12.1 of Procedural Order No. 1.
51.
On 5 May 2015, the Respondent submitted a response to the Supplementary Request.
52.
On 6 May 2015, the Claimant wrote to the Tribunal requesting a conference call "to address some of the issues raised in Canada’s letter and other issues related to document productions by Canada and Ontario." The Respondent objected to the Claimant’s request by email of the same date.
53.
On 8 May 2015, the Respondent produced certain additional documents to the Claimant.8
54.
On 13 May 2015, the Respondent submitted a redacted version of its Counter-Memorial.
55.
On 14 May 2015, the Parties jointly requested that certain amendments be made to the procedural calendar. On 15 May 2015, the Tribunal noted and confirmed the amendments to the procedural calendar requested by the Parties.
56.
On 15 May 2015, the Tribunal issued Procedural Order No. 5, denying the Supplementary Request and noting that its decision was "without prejudice to [the Tribunal’s] authority to order further production of documents on its own motion if so required, in accordance with Section 7.6 of Procedural Order No. 1." On 25 May 2015, following a request by the Claimant and in the absence of any objections from the Respondent, the Tribunal issued a revised version of Procedural Order No. 5.
57.
On 22 June 2015, the Claimant submitted its Reply Memorial with accompanying evidence. On 8 July 2015, the Claimant submitted an Addendum to the second expert report of Messrs Richard Taylor and Robert Low of Deloitte LLP ("Deloitte") (submitted with its Reply Memorial) to correct "three errors in the Economic Losses model."9
58.
On 30 September 2015, the Claimant submitted a redacted version of its Reply Memorial.
59.
On 6 November 2015, the Respondent submitted its Rejoinder Memorial with accompanying evidence.
60.
On December 17, 2015, Mr Bishop notified the Parties that he had appeared as counsel in cases in which he or his firm had used the same experts as the Parties. He noted that he did not believe this to fall within any of the grounds for disclosure in the 2014 International Bar Association Guidelines on Conflicts of Interest in International Arbitration and indicated that he was only raising it "as a matter of caution." He further noted that this would not affect his impartiality or independence.
61.
On 13 January 2016, the United States and Mexico, in their capacities as State parties to NAFTA, each filed a submission pursuant to Article 1128 of NAFTA. According to Article 1128, "[o]n written notice to the disputing parties, a Party may make submissions to a Tribunal on a question of interpretation of this Agreement."
62.
On 18 January 2016, the Respondent submitted a redacted version of its Rejoinder Memorial.
63.
On 28 January 2016, the Claimant wrote to the Tribunal requesting an opportunity to make submissions as to whether the Respondent should be required to disclose documents and information relied on by its experts (Green Giraffe and Berkeley Research Group ("BRG")) that were not submitted as exhibits with its Rejoinder. On 29 January 2016, the Tribunal confirmed that the Claimant could make the requested submissions by 2 February 2016, and set 5 February 2016 as the deadline for any reply by the Respondent.
64.
On 29 January 2016, the Claimant and the Respondent each submitted a Reply to the Article 1128 Submissions of the United States and Mexico.
65.
On 2 February 2016, the Claimant filed its submissions, requesting that the Tribunal order the Respondent to produce, subject to the Confidentiality Order, the documents and information relied on by its experts, Green Giraffe and BRG, to support certain statements that they made in their respective expert reports. The Claimant also requested that, if the Respondent did not produce the requested documents and information, the Tribunal exclude the relevant portions of the expert reports from the record or alternatively afford them no weight. On 5 February 2016, the Respondent submitted its response to the Claimant’s submissions.
66.
On 8 February 2016, the Tribunal declined to grant the Claimant’s request that the Respondent be ordered to produce the documents and information relied on by Green Giraffe and BRG. The Tribunal noted that it would "take into account, when assessing the weight to be given to the expert evidence in question in accordance with Article 27(4) of the UNCITRAF Rules, the fact that some of the underlying evidence and information has not been made available."
67.
On 14 February 2016, the Claimant and the Respondent submitted the Parties’ Joint Chronology.
68.
On 11 April 2016, the Claimant and the Respondent each submitted their respective Costs Submissions.
69.
On 26 April 2016, the Claimant and the Respondent each submitted their respective Reply Costs Submissions.
70.
On 18 May 2016, the Claimant wrote to the Tribunal stating that the Parties had agreed to certain corrections to the Claimant’s Reply Memorial and requesting that the Tribunal grant it permission to produce a letter from Mr Ian Irvine of SgurrEnergy correcting a typographical error in the Second Expert Report submitted by SgurrEnergy. The Claimant indicated that the Respondent had not consented to the request.
71.
On 20 May 2016, the Respondent submitted its comments on the Claimant’s request.
72.
On 23 May 2016, the Tribunal informed the Parties that it had decided to allow the Claimant to produce the letter from Mr Irvine, and invited the Respondent to comment on the letter within five business days of its production. The Tribunal indicated that its decision was without prejudice to its determination as to whether the correction related to a typographical error, and whether any further procedural steps might be required.
73.
On the same day, the Claimant produced the letter from Mr Irvine.
74.
On 27 May 2016, the Respondent submitted its comments on Mr Irvine’s letter.
75.
On 28 May 2016, the Claimant requested an opportunity to file a brief response to the Respondent’s letter. Upon the Tribunal’s approval, the Claimant filed its response on 31 May 2016.
76.
On 2 June 2016, the Respondent commented on the Claimant’s letter of 31 May 2016.
77.
On 3 June 2016, the Tribunal decided to admit Mr Irvine’s letter into evidence, without prejudice to its ultimate determination as to the evidentiary value of the letter. The Tribunal indicated that it did not consider it necessary to re-open the hearings at this stage.
78.
On 15 June 2016, the Claimant wrote to the Tribunal requesting directions with respect to an oral request it had received from the Ontario Provincial Police ("OPP") for documents produced, or produced and filed as exhibits, in this arbitration. The Claimant stated that it had been unable to resolve the issue with the Respondent.
79.
On 21 June 2016, the Respondent commented on the Claimant’s request, stating that the request was premature because the OPP had not yet put its oral request in writing and also unnecessary because the Claimant had not requested the Respondent’s consent to disclose any information.
80.
On 3 July 2016, the Tribunal noted that there had been no formal, written request from the OPP, and that accordingly it was unclear whether the OPP’s request covered information that could be considered confidential under the Tribunal’s Confidentiality Order. Noting the Respondent’s offer to cooperate with the Claimant in an effort to resolve any issues that might arise, the Tribunal considered that it was neither necessary nor appropriate for it to issue any directions as there was, as yet, no concrete issue to be resolved by the Tribunal.

C. Oral Proceedings

81.
On 22 January 2016, the Tribunal held a pre-hearing teleconference with the Parties. Prior to the teleconference, the Parties had notified the Tribunal of certain procedural and organizational issues on which they had reached agreement and provided a list of issues on which they were unable to agree. The two outstanding issues related to the introduction of new documents during the examination or cross-examination of witnesses at the hearing, and the use of PowerPoint presentations by experts at the hearing. On 25 January 2016, the Tribunal issued its decision on the two outstanding issues and provided a schedule for the hearing.
82.
An oral hearing was held on 15-19 and 21-26 February 2016 in Toronto, Ontario, Canada. In addition to the Members of the Tribunal and the Secretary of the Tribunal, the following individuals participated at the hearing:

For the Claimant:

Mr John A. Terry Torys FFP

Ms Myriam M. Seers Torys FFP

Mr Nick E. Kennedy Torys FFP

Ms Emily S. Sherkey Torys FFP

Mr David Mars Windstream

For the Respondent:

Ms Sylvie Tabet General Counsel and Director, Trade Faw Bureau

(JLT), Foreign Affairs, Trade and Development Canada

Mr Shane Spelliscy Counsel, Trade Faw Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Mr Rodney Neufeld Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Mr Raahool Watchmaker Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Heather Squires Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Susanna Kam Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Jenna Wates Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Valentina Amalraj Counsel, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Melissa Perrault Paralegal, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

Ms Darian Parsons Paralegal, Trade Law Bureau (JLT), Foreign Affairs,

Trade and Development Canada

83.
The following individuals were examined:

On behalf of the Claimant:

Witnesses of fact:

Mr David Mars Mr William Ziegler Mr Chris Benedetti Mr Ian Baines Mr George Smitherman Mr Uwe Roeper

Expert witnesses:

Ms Sarah Powell, Davies Ward Phillips & Vineberg LLP

Mr Andrew Roberts, WSP

Mr Mark Kolberg, Baird

Mr Brent Cooper, COWI

Mr Richard Palmer, Weeks Marine

Mr Ian Irvine, SgurrEnergy

Mr Remo Bucci, Deloitte

Mr Richard Aukland, 4C Offshore

Mr Robert Low, Deloitte

On behalf of the Respondent:

Witnesses of fact:

Mr Perry Cecchini Ms Rosalyn Lawrence Mr John Wilkinson Ms Marcia Wallace Ms Doris Dumais

Expert witnesses:

Dr Jérôme Guillet, Green Giraffe Mr Marc Rose, URS Mr Gareth Clarke, URS Mr Franz Barillaro, URS Mr Christopher Goncalves, BRG

84.
The hearing was streamed by live video feed to a separate room in Arbitration Place, the venue of the hearing, which was open to the public. The availability of the live video feed was notified to the public in a PCA press release on 1 February 2016.
85.
Prior to the hearing, on 11 January 2016, and in response to the Parties’ joint request, the Tribunal sent the Parties a list of questions to be addressed by them during their oral arguments. During the hearing the Tribunal sent further questions to the Parties.

III. FACTUAL BACKGROUND

A. The Regulatory Framework Governing Renewable Energy in Ontario

86.
In 2003, the Government of Ontario determined that without increasing electricity supply in the Province of Ontario, it would run a risk of electricity shortages.10 At the same time, the Government felt that the Province’s dependence on coal-fired power plants as an energy source gave rise to health and environmental concerns.11 Consequently, Ontario started exploring the use of alternative and renewable sources of electricity generation12 and adopting policies to promote renewable energy development.13 In the same year, Ontario’s Premier announced a plan to close Ontario’s coal-fired power plants.14
87.
In 2004, Ontario enacted the Electricity Restructuring Act that amended the Electricity Act of 1998, establishing inter alia the OPA as "an independent non-share capital corporation responsible for medium and long-term system planning, conservation, demand management and procurement of new generation through long-term power purchase agreements (PPAs)."15 The OPA had separate legal personality and could enter into electricity procurement contracts.16 The Minister of Energy could direct the OPA to undertake specific actions regarding its electricity procurement programs, but the Electricity Act specified that the OPA was "not an agent of the Crown."17
88.
Between 2003 and 2008, Ontario and the OPA ran a number of procurement programs to encourage the desired use of alternative and renewable energy sources. However, all these initiatives failed to produce the required level of new investment.18 On 1 January 2015, the OPA was merged with the Independent Electricity System Operator ("IESO") and the new entity kept working under the IESO name.19
89.
In Ontario, all lakebeds (with one exception that is not relevant) are Crown land.20 The MNR, among other things, exercises regulatory authority on behalf of Ontario for granting access to Crown land for offshore wind development.21 In March 2003, the MNR released for public comment a draft policy on the disposition of Crown land (including the beds of the Great Lakes) for wind energy development.22 In March 2004, the draft policy was finalized, and the MNR subsequently issued it as Policy Number 4.10.04, Wind Power Development on Crown Land ("Wind Policy 4.10.04").23 Wind Policy 4.10.04 established for the first time a set of standardized rules for wind developers to apply for the use of Crown land.24 Between 2004 and 2006, the MNR engaged in research regarding the potential environmental effects of offshore wind energy projects.25
90.
In November 2006, the MNR decided to defer its consideration of applications for access to Crown land to develop offshore wind power.26 In light of the "relatively little experience with understanding the positive and negative social and economic effects associated" with wind power, this deferral was meant to allow the further study of the effects of offshore wind as a source of energy generation.27
91.
In January 2008, following "considerable activity on the policy and resource analysis front," the MNR determined that the existing policy and Environmental Assessment processes "[were] sufficient to address site-specific issues and concerns related to offshore wind."28 On 16 January 2008, the Premier of Ontario, Mr Dalton McGuinty, informed the local media that "offshore wind could play an important role in the development of renewable energy resources in Ontario."29 He also stated that offshore wind power could be harnessed "in a way that does not compromise ecosystems."30 On 17 January 2008, the MNR announced the lifting of the deferral decision of November 2006.31
92.
The lifting of the deferral meant that new applications for access to offshore Crown land would be reviewed by the MNR.32 On 28 January 2008, Wind Policy 4.10.04 was updated and reissued to include offshore wind, and guidelines were published regarding the application of the Policy.33 On 23 April 2008, Ms Donna Cansfield, the Minister of Natural Resources, stated at an energy conference:

"For the past two years we’ve been assessing potential benefits and impacts of this technology. Our research made it clear that developing offshore wind potential would be practical and environmentally sound once the appropriate infrastructure is in place. As a result, we were able to lift the deferral last January and began accepting applications for exploration proposals."34

93.
On 30 June 2008, Minister Cansfield was quoted in the Toronto Star newspaper to the effect "that Ontario was ‘open for business’ when it comes to offshore wind."35 On 29 October 2008, at the annual Ontario Waterpower Conference, Minister Cansfield gave a speech in which she confirmed that "timely approval of applications to use Crown land for offshore wind energy development could be expected by those submitting applications."36
94.
On 20 February 2009, the Ontario Government announced a proposal to enact the GEGEA.37 The Government described the proposal as "sweeping new legislation to attract new investment, create new green economy jobs and better protect the climate."38 On the same date, the Deputy Premier, Minister George Smitherman, explained before the Toronto Board of Trade that the GEGEA meant that Ontario would "offer an attractive price for renewable power, including wind - onshore and offshore... and we’ll guarantee the price for decades."39
95.
On 21 February 2009, the Toronto Star newspaper published an interview with Minister Smitherman in which he stated that there were "wonderful opportunities for offshore wind" and the Government had been "making sure we’ll move those proposals along."40 On 23 February 2009, Minister Smitherman gave a speech at the Legislative Assembly of Ontario in which he stated that the GEGEA "would make Ontario the ‘destination of choice’ for green power developers, would ‘incent proponents large and small to develop projects by offering an attractive price renewable energy’ and would provide ‘the certainty that creates an attractive investment climate.’"41 He also stated that the GEGEA "would coordinate approvals from the Ministries of the Environment and Natural Resources into a streamlined process with a service guarantee,"42 adding that "so long as all necessary documentation is successfully completed, permits would be issued within a six-month service window."43
96.
On 14 May 2009, the GEGEA was approved.44 The GEGEA introduced the FIT Program and consolidated many of the provincial environmental approvals for renewable energy projects into a streamlined approval process, the Renewable Energy Approval ("REA") process, making the MOE the primary regulator in the renewable energy sector45
97.
The GEGEA authorized the MEI to direct the OPA to develop the FIT Program. On 24 September 2009, the MEI exercised its authority and the OPA began taking applications for the FIT Program on 1 October 200946 The launch of the FIT Program and the GEGEA was accompanied by a press release, published on 24 September 2009, which stated that "Ontario’s new regulations provide a stable investment environment where companies know what the rules are - giving them confidence to invest in Ontario, hire workers, and produce and sell renewable energy."47 On the same date, the OPA issued a press release announcing the adoption of the Renewable Energy Approval Regulation ("REA Regulation") and stating that the REA "[i]s coordinated with other provincial approvals to ensure a streamlined approach, providing a six-month service guarantee per project."48
98.
The OPA developed the FIT Rules, Standard Definitions and a standard FIT Contract, together setting out the terms and conditions for participating in the FIT Program49
99.
The FIT Contract was a standard long-term fixed-price contract that provided standard terms and conditions applicable to all FIT projects, as well as terms and conditions specific to different types of renewable energy fuels under the FIT Program.50 The FIT Program established a 20-year fixed premium price to be paid by the OPA for energy from renewable sources, including onshore and offshore wind, hydroelectric, solar, biogas, biomass and landfill gas.51 The goal of the FIT Program was to ensure that project "proponents could use their FIT contracts to secure long term limited recourse debt financing to fund the planning and construction of their projects."52
100.
FIT Contract holders (known as "Suppliers") were required to bring their project into commercial operation by what the standard FIT Contract referred to as the "Milestone Date for Commercial Operation" ("MCOD").53 The standard FIT Contract for offshore wind facilities provided for a MCOD four years after the contract date, and subjected a project to termination if commercial operation did not occur within eighteen months of the MCOD.54 At the moment of signing a FIT Contract, a Supplier would have to provide security, which would in principle be forfeited if the Supplier could not bring its project into commercial operation within the time frames specified in its FIT Contract.55
101.
Commercial operation under the standard FIT Contract was defined to be occurring when the following principal conditions were met:

"a) the Contract Facility has been completed in all material respects;

b) the Connection Point of the Contract Facility is that set out in the FIT Contract Cover page...; and

c) the Contract Facility has been constructed, connected, commissioned and synchronized to the IESO-Controlled Grid such that 90% of the contract capacity is available to deliver electricity to the grid."56

102.
The standard FIT Contract allowed Suppliers who were encountering difficulties in meeting their obligations under the Contract, including achieving its MCOD, due to factors outside their control, to invoke force majeure.57 In the event of force majeure, a Supplier would be excused and relieved from its obligation to achieve commercial operation by the MCOD for the duration of the force majeure status.58 Pursuant to Section 10.1 of the Contract, if one or more events of force majeure delayed commercial operation for an aggregate of more than 24 months after the original MCOD, both the OPA and the Supplier would be entitled to unilaterally terminate a FIT Contract.59 Similarly, both parties could unilaterally terminate a FIT Contract if one or more events of force majeure prevented the Supplier from complying with its obligations for more than an aggregate of 36 months in any 60-month period during the term of the FIT Contract.60 In both situations, when either party exercised its force majeure termination rights, the Supplier was entitled to the return of the security deposited at the moment of signing the FIT Contract.61
103.
Two key regulatory documents related to the FIT Program were the REA Regulation62 and the Approval and Permitting Requirements Document for Renewable Energy Projects ("APRD").63 The REA Regulation established the environmental approval requirements for wind, solar, thermal and anaerobic digestion energy facilities, setting out specific requirements for all types of wind facilities, including offshore wind projects, which it defined as "Class 5" wind facilities.64 The REA Regulation specified that proponents of offshore wind projects would be required to submit an Offshore Wind Facility Report, identifying potential negative environmental impacts which would result from proposed projects and mitigation measures.65 Between June 2009 and June 2010, the MOE posted four Environmental Bill of Rights ("EBR") notices regarding the REA Regulation and the regulatory framework that was to be developed for offshore wind.66
104.
The APRD described the requirements and approval process for matters falling under the responsibility of the MNR, specifying the requirements for completing the Offshore Wind Facility Report needed under the REA Regulation.67 The APRD requirements related primarily to the natural heritage component of the REA Regulation.68
105.
The FIT application process was identical for onshore and offshore wind projects.69 The initial FIT application period was opened by the OPA from 1 October 2009 to 30 November 2009.70 It generated significant interest from renewable energy investors around the world, receiving 454 applications in total.71 Offshore wind projects accounted for only a few applications: in addition to the Claimant’s application, only one other proponent filed a complete and eligible FIT application for an offshore wind project.72 In response to this first round of applications, the OPA offered 186 FIT Contracts.73
106.
According to the GEGEA, an offshore wind project proponent had to meet four requirements: (i) obtain a FIT Contract; (ii) obtain access to Crown land; (iii) obtain an REA; and (iv) obtain a grid-connection approval from the IESO (an entity that monitors the operation of Ontario’s power system and ensures its reliability).74
107.
In particular, project proponents building on Crown land had to apply for the "release" of the applicable sections of Crown land for wind testing and project construction and operation.75 The process of applying for permission to test or build on Crown land was called the Site Release process, and a project proponent obtaining Site Release was referred to as an Applicant of Record ("AOR").76 When the FIT Program was launched, the MNR had a three-stage process for establishing a wind project on Crown land under Wind Policy 4.10.04: (i) wind power testing application and review; (ii) wind power development review; and (iii) issuing permits and tenure for development of a wind farm on Crown land.77 The first two stages represented the Site Release process, through which the applicants for Crown land sought to obtain an AOR status in respect of specific "grid cells" or groupings of grid cells of Crown land. Obtaining an AOR status allowed an applicant to proceed to the third stage, at which it could request the permits and approvals necessary for the development of the wind project.78 AOR status gave sole right to apply for permits and approvals with respect to particular grid cells of Crown land,79 but was "not a disposition" and still required completion of "all [e]nvironmental [assessment requirements for the proposal prior to any authorizations or approvals being issued."80
108.
On 21 October 2009, Minister Cansfield gave a speech at a conference on Offshore Wind Energy in Coastal North America and the Great Lakes, stating:

"In 2006, my ministry placed a deferral on proposals for Great Lakes offshore development. We needed to get a better understanding of how offshore wind turbines might affect the surrounding environment. We also needed to assess the potential benefits and impacts of this technology. Our research made it clear that developing offshore wind potential would be practical and environmentally sound once the appropriate infrastructure is in place. As a result, the deferral was lifted in January [2008] and the province began accepting applications for project proposals.81

[W]e know that when it comes to new investment, one of the most important factors for investors is certainty. When companies know exactly what the rules are it instills greater confidence to invest in Ontario, hire workers and produce self-renewable energy.82

Offshore windpower is included in the Feed-in-Tariff program at 19 cents per kilowatt hour. Ontario is the first jurisdiction in North America to set a price for offshore windpower, reflecting our strong support for exploring offshore potential."83

109.
In a letter addressed to the Canadian Wind Energy Association dated 24 November 2009, the Assistant Deputy Minister from the MNR, Ms Rosalyn Lawrence, stated:

"Existing Crown land applicants who apply to FIT during the launch period, and who are awarded contracts by the OPA, will be given the highest priority to the Crown land sites applied for. This means that these applications will take precedence over all others for this site, and will receive priority attention from MNR."84

110.
The letter also specified that "an application for Crown land does not create a legal entitlement or confer rights" and that "the Minister of Natural Resources has the sole authority to approve or deny any application for the use of Crown land to support wind power testing or development."85
111.
The approvals process under the REA Regulation consists of several steps. First a project proponent had to conduct certain "pre-submission activities," including submitting to the MOE a draft project description report,86 conducting consultations with stakeholders and preparing a consultation report,87 and conducting a natural heritage assessment88 as well as a water assessment.89 The proponent then had to submit its application with the necessary accompanying materials to the MOE.90 If the application was found to be complete, it was reviewed by a team of inter-ministerial experts led by the MOE’s Environmental Approvals Branch to determine if the application met the regulatory requirements and "whether or not there [was] adequate information to allow the [MOE] Director to make a decision in the public interest to issue or not issue a REA."91 Once the technical review had been completed, the Director of the MOE was to make "an independent and discretionary determination of whether or not it [was] in the public interest to issue a REA."92 Subsequently, the applicant and any resident of Ontario might appeal that decision to the Environmental Review Tribunal.93
112.
Renewable energy proponents of projects larger than ten megawatts ("MW") were also required to obtain a connection assessment, which included an IESO System Impact Assessment ("SIA") and a Customer Impact Assessment ("CIA") from the relevant transmitter.94 The purpose of the SIA was to assess the impact of a project on Ontario’s integrated power system,95 while the purpose of the CIA was to assess the impact of the connection of a new project to the power grid on existing customers.96
113.
A project could only start after issuance of a Notice to Proceed ("NTP") by the OPA pursuant to Section 2.4 of the standard FIT Contract once the following requirements had been met: (i) receipt of the REA; (ii) submission of a financing plan including signed commitment letters from sources of financing representing at least 50% of the expected development costs; and (iii) submission of a domestic content plan explaining that the Project would meet a 50% Ontario content requirement.97
114.
On 1 March 2010, the MOE posted one of the aforementioned EBR notices entitled "Renewable Energy Approval Technical Guidance Bulletins" with six attached technical bulletins including "Technical Bulletin Six: Required Setbacks for Wind Turbines."98
115.
During the spring and summer of 2010, the MOE held technical workshops on topics concerning offshore wind such as noise, water quality and sediment management, and technical and safety standards.99 In particular, on 29 April 2010 and 23 August 2010, the MOE held workshops on the propagation of noise for offshore wind projects in Ontario.100 The workshops were not able to recommend an appropriate noise propagation model, instead recommending that research be conducted and empirical data be collected through measurements.101
116.
Similarly, on 16 July 2010 the MOE held a water quality and sediment management workshop, which indicated that several communities were potentially affected by offshore wind development in Ontario and might claim aboriginal title over the lakebed.102 The workshop concluded that "no development should be allowed within one kilometer of an intake protection zone 1... and... water quality modelling would need to be conducted within intake protection zones 2 and 3."103 and also that "it was necessary to conduct research to obtain baseline data for modelling."104 On 13 September 2010, the MOE held a workshop on technical specifications and safety issues which indicated that modifications of international design standards for offshore wind turbines "were necessary for the Great Lake context," and that "standards specific to all other offshore wind facility components... would require further study."105

B. The Wolfe Island Shoals Project

117.
Starting in 2008, Windstream began to invest in resource evaluation, engineering and technical reviews relating to the WWIS Project.106
118.
On 8 February 2008, Windstream submitted to the MNR Crown land applications to develop an offshore wind facility.107 Windstream proposed to construct approximately 100 wind turbines, capable of generating 300 MW of electricity, in Fake Ontario near Wolfe Island, south of the City of Kingston.108 Windstream applied for AOR status and submitted SIA applications to the IESO, together with other preparatory work regarding the Project.109
119.
In April 2008, the OPA received a document addressing the future of offshore wind in Ontario from wind energy consultant Helimax Inc. ("Helimax").110 Helimax had identified 64 offshore sites that were considered to have potential for wind project development in the Ontario Great Lakes region and had performed a technical assessment and ranking of these sites.111 The site of the Project was "[o]ne of the nine locations identified [by Helimax] as being most favourable for offshore wind development."112
120.
According to the Claimant, in October 2008, Mr Ian Baines, the President of WEI,113 met with the Assistant Deputy Ministers for Energy, Finance and Natural Resources. During that meeting the Assistant Deputy Ministers "indicated that they were determined to direct the OPA to take steps to facilitate renewable energy development in the Province."114
121.
On 24 September 2009, the MNR wrote to Windstream, acknowledging its Crown land applications.115 On the same day, Minister Cansfield informed Windstream that "in order to maintain priority position within MNR’s site release process, [Windstream] must submit an application to the FIT Program within the FIT launch application process."116
122.
The initial FIT application period was open from 1 October 2009 to 30 November 2009.117 According to the Claimant, by the end of October 2009, Windstream had met with a number of investors to attract potential partners in the Project and managed to secure additional investment from two investors, Mr Steven Webster and Lucky Star Shipping S.A.118 Windstream also retained ORTECH Consulting Inc. ("Ortech"), an environmental engineering firm specialized in renewable energy projects, to act as project manager and conduct the relevant development work.119
123.
On 27 November 2009, Windstream, through WWIS and other subsidiaries, applied to the OPA for eleven FIT Contracts: ten for onshore wind facilities and one for the Project.120 The Project was based on a subset of the grid cells for which Windstream had requested AOR status.121 Windstream posted with WWIS’s application a CAD 3 million letter of credit, as required by the FIT Program rules.122
124.
According to the Claimant, from 2009 until spring 2012, Windstream performed work to advance the Project, including wind resource/energy yield testing, the preparation of designs relating to the Project’s electrical system, a lake bottom investigation, financial assessments and the organization of specialized consultants.123
125.
On 8 April 2010, the OPA advised WWIS that it had approved WWIS’ FIT application.124 On 19 April 2010, Windstream representatives met with representatives of the MNR, the MEI, the MOE and the Ministry of Culture to discuss the Project and determine what information Ontario would need from Windstream to further advance the Project.125
126.
On 4 May 2010, the OPA offered WWIS a FIT Contract.126 In accepting the Contract, WWIS had to provide a CAD 6 million letter of credit to replace the CAD 3 million letter of credit paid to secure WWIS’s application.127 Pursuant to the FIT Rules, the offer to WWIS was open for a period of ten business days, i.e. until 18 May 2010.128 WWIS did not sign the contract by this deadline. According to the Respondent, the delay in signing was "due to the regulatory risk it [the Claimant] perceived and sought to resolve."129
127.
The OPA granted several extensions of the deadline to sign the contract, with the last one expiring on 12 August 2010.130
128.
On 21 May 2010, a representative of the MEI informed Mr Chris Benedetti, the principal of Sussex Strategy Group, a consultancy that had been engaged by Windstream,131 that the MEI and the MOE were working to finalize offshore REA guidelines and that "the guidelines would be available soon."132
129.
On 15 June 2010, Windstream representatives met with staff from the MEI, the MNR, the MOE and the Renewable Energy Facilitation Office.133 In the context of this meeting, Windstream put forward a proposal of "‘swapping’ the land that Windstream had applied for with other land further offshore in order to comply with a five-kilometer setback from shore, which at the time was rumored to be under consideration by the MOE."134 MNR staff promised to consider Windstream’s proposal for a possible "land swap" and to inquire about the status ofWindstream’s AOR application, while also offering to provide input on the field studies required for the Project.135 MOE staff indicated that guidelines for setbacks were being developed.136 In addition, MEI staff indicated that they would speak to the OPA about FIT Contract provisions dealing with Ontario content requirements and the need for flexibility on this issue for offshore projects.137
130.
On 23 June 2010, Windstream’s counsel spoke with the Director of the MNR’s Renewable Energy Program regarding the WWIS Project.138 According to the Claimant, the Director indicated to Windstream "that the Project was ‘special,’ and that he was ‘advancing’ Windstream’s proposal to swap grid cells selected for the Project."139
131.
On 25 June 2010, the MOE posted for public comment a further EBR notice, this time a policy proposal entitled "Renewable Energy Approval Requirements for Off-Shore Wind Facilities - An Overview of the Proposed Approach," which outlined its approach for developing the regulatory requirements and guidance in respect of offshore wind facilities ("Offshore Wind Policy Proposal Notice").140 Among other things, the draft policy proposed a five-kilometer shoreline exclusion zone for offshore wind projects ("setback"). The MOE proposed the five-kilometer exclusion zone "in light of its commitment to protect water bodies, including the Great Lakes, and to ensure that Ontarians enjoy safe drinking water, beaches, food and fish, and natural and cultural heritage."141
132.
The Offshore Wind Policy Proposal Notice further explained that "[partner] ministries [were] working together to provide greater certainty and clarity on off-shore wind requirements" and that the "Ontario Government [was] proposing an approach and [was] seeking input from interested members of the public, early in the process, to inform the work that will be completed to finalize the approach and the off-shore wind specific requirements under the REA regulation."142 The Notice indicated that "[the proposed] approach [would] also be supplemented by the outcome of research underway by the Ministry of the Environment, Ministry of Natural Resources (MNR), and Ministry of Tourism and Culture and will be the subject of subsequent Environmental Registry postings that [would] outline requirements for off-shore wind development."143
133.
Still in June 2010, Windstream informed the MEI and the MNR that it "believe[d] that [it] could work within the proposed 5 km set-back guidelines"144 and sent a proposal to the Government, suggesting that it "release its application for parts of the lakebed... that were within five kilometers of Wolfe Island in exchange for other lakebed lands further offshore."145
134.
On 5 July 2010, Windstream attended a meeting with senior staff from the MNR and the MEI, in the context of which it asked for clarifications with respect to the timing of receiving AOR status and requested an extension from four to five years of the MCOD specified in the FIT Contract.146 Mr Paul Ungerman, the MEI’s representative, committed to following up on the issues Windstream had identified regarding the Project.147 A further meeting was held with Mr Ungerman on 7 July 2010, to discuss the Project and the extension of the deadline for the Project to reach its MCOD.148 According to the Claimant, Windstream was told that "MEI representatives [would] speak to OPA representatives about extending the commercial operation date under the FIT Contract, and... [would] support Windstream in its discussions with the MNR on the process and methodology for the ‘land swap.’"149
135.
On 5 August 2010, WWIS sent a proposed layout and description of the grid cells required for the Project to be built outside the five-kilometer exclusion zone to the MNR.150 On 9 August 2010, with the approval of the MEI and the Premier’s Office, the MNR sent Windstream a letter confirming its willingness to discuss a reconfiguration of the Project site after the conclusion of the five-kilometer setback policy proposal and promising to move "as quickly as possible through the remainder of the application review process in order that [WWIS] may obtain Applicant of Record status in a timely manner."151
136.
On the same day, Windstream requested that the MCOD in the draft FIT Contract be amended.152 On 12 August 2010, the OPA confirmed to Windstream that it would issue a revised FIT Contract with a special term that extended the MCOD by a year from the standard offer, i.e. from four to five years from the contract date.153 On 18 August 2010, the OPA provided WWIS with a revised contract154 and granted it three additional business days to sign the contract.155
137.
On 20 August 2010, WWIS executed its FIT Contract156 and substituted the CAD 3 million letter of credit deposited when it applied for the FIT Contract with a letter of credit in the amount of CAD 6 million.157 Regardless of the extensions of the deadline to sign the Contract, its date remained the date of the original offer, i.e. 4 May 2010.158 Accordingly, the FIT Contract required WWIS to bring the Project into commercial operation by its MCOD, specified as 4 May 2015.159 The FIT Contract required the OPA to purchase all electricity generated by the Project at a rate of CAD 190 per MW hour, with full escalation for inflation until the Project’s commercial operation date, and escalation for inflation up to a maximum of 20% in total for the 20 years starting from the date of the Project’s commercial operation.160
138.
The public consultation period relating to the Offshore Wind Policy Proposal Notice was originally open for 60 days until 23 August 2010, but according to the Respondent, due to significant public interest, the MOE extended the consultation period by an extra fourteen days until 7 September 2010.161 The Respondent states that during the consultation period the MOE received 1,403 comments.162 Over 65% of respondents opposed offshore wind development, and a majority of respondents expressed concern either that the proposed five-kilometer exclusion zone might not be far enough from the shoreline, or that there were significant areas of scientific uncertainty requiring further study.163
139.
On 9 September 2010, Mr Uwe Roeper, the President of Ortech, and other representatives of Ortech met with MNR officials on behalf of Windstream "to discuss the technical studies that Ortech needed to carry out while MNR and MOE were considering the issues raised in... [the Offshore Wind Policy Proposal Notice]164 At this meeting, Ortech was informed that setting up an offshore wind measurement mast required a temporary land use permit, "which could not be granted until WWIS was given Applicant of Record status under the site release process."165 On 30 September 2010, Mr Baines wrote to the MNR and requested that WWIS "be allowed to erect a temporary wind monitoring mast to carry out wind speed testing."166 On 7 October 2010, Windstream formally applied to the MNR for the "swap" of Crown land grid cells, also reiterating its request to obtain AOR status.167
140.
On 8 November 2010, WWIS received a Notification of Conditional Approval for Connection from the IESO, allowing it to connect to the grid at the Lennox connection point.168 On the same day, Hydro One, the owner of the relevant power lines, issued a CIA for WWIS, which provided that WWIS was not expected to adversely impact transmission customers in the area of Lennox County.169
141.
On 22 November 2010, the MNR informed WWIS that the Government’s offshore wind power policy review was "still outstanding" and that it was "not yet able to consider advancing the Wolfe Island Shoals project through the Application of Record process, nor implement the potential exchange of grid cells."170 The MNR also informed WWIS that "no decision on... permission to conduct testing should be expected while the government’s offshore wind power policy review is still outstanding."171
142.
On 10 December 2010, WWIS claimed a force majeure event under its FIT Contract "on account of the lack of regulatory assistance from MNR and MOE."172 In its force majeure notice, WWIS indicated that "it was unable to advance further towards the milestone dates in the FIT Contract without being able to carry out wind testing, further defining of the project area, and related studies, all of which required that AOR status be granted."173 The force majeure event meant that the MCOD would be extended for its duration, but either Party could still unilaterally terminate the FIT Contract if the Project did not reach commercial operation within two years of the original MCOD, i.e. by 4 May 2017.174 Windstream had to maintain the CAD 6 million security deposit posted at the signature of the FIT Contract during the force majeure period.175
143.
WWIS subsequently proposed to MOE officials that the Project proceed as a "pilot project," generating scientific data to assist Ontario in determining how to proceed with future offshore wind projects.176 According to the Claimant, on 15 December 2010, Mr Baines discussed the pilot project proposal with a policy advisor from the MEI.177 The Claimant also states that on 21 December 2010, Mr Benedetti spoke with a policy advisor from the MEI "who told him the Ministry was receptive to the pilot project proposal, but it was unclear what the government’s timelines would be for moving the project forward."178
144.
The Claimant states that on 19 January 2011, Mr Baines met with MEI representatives who "confirmed that the pilot project concept was being favorably received" and told him to "leave it with [them]" and to "have faith."179 According to the Respondent, at the same time, the MNR and the MOE internally expressed. [REDACTED]180
145.
According to the Respondent, on 9 February 2011, the OPA announced that it would offer to amend the contracts of all FIT Contract holders who had not yet reached commercial operation so that they could extend their MCOD by up to one year. In the course of February and March 2011, the OPA contacted each FIT Supplier, including the Claimant, with an offer to execute an amending agreement that would extend the MCOD by up to one year in exchange for trade-offs by the Supplier on certain force majeure rights.181 WWIS did not accept this offer.182
146.
On 11 February 2011, officials from the MEI, the MOE, the MNR and the OPA held a conference call with the Claimant to inform the latter of a forthcoming announcement regarding a deferral on offshore wind projects and how it would affect Windstream.183 During the call, officials explained that the Government of Ontario had decided that it "will not be moving forward with offshore wind until further science regulatory work and co-ordination with our U.S. partners is complete."184 The impact of the deferral was described by the Government officials in the following terms:

"[Andrew Mitchell of MEI:] We set this call up today just to give you some notice about a decision of the Government of Ontario is going to be announcing this afternoon. And that decision is that we will not be moving forward with offshore wind until further science regulatory work and co-ordination with our U.S. partners is complete. Our feeling is that offshore wind in freshwater lakes is in its early developments and to date there are gaps that exist in the science that don’t support siting wind projects in freshwater at this time.... We acknowledge that your project is unique in that it has a FIT Contract and so that end Perry [of the OPA] is here but we’ve asked that the OPA sit down with you to negotiate a number of pieces including the force majeure provisions, the two-year force majeure termination clause associated with those provisions and the security deposits...,185

[Brenda Lucas of MOE:] We came out at the end of the summer as you know and we’ve proposed five fifty and did the EBR consultation and we had over 1400 people write in and we have a lot more questions than we have answers so the concern from the Environment Ministry’s perspective is a lot of questions, not enough information, not enough science to build an offshore specific REA regulation and similarly questions about how we would evaluate the reports and studies that any individual project brought in to us in terms of how they would be able to mitigate any of those concerns from you know fish and fish habitat to ice, freeze and thaw issues to noise issues over water, there’s just like I said, too much uncertainty for us to go forward on that now, so our part of the news today essentially is that we’re not ready with the REA regulation. We are going to take the time and do more science work.186

[Richard Linley of MNR]: [O]ur piece of the announcement is that MNR will be cancelling all existing Crown Land Applications for access to lake beds for offshore wind development but that does not mean those with the initial Feed in Tariff contracts which is yourselves, but this will include those without that kind of record status and we will not be accepting any new Crown Land Applications and to Brenda’s point, when there is greater scientific certainty, consideration of offshore wind development will resume."187

149.
After the announcement of the moratorium, the Claimant engaged in without-prejudice settlement negotiations with the OPA over its FIT Contract terms,191 which still provided that WWIS had to bring the Project into commercial operation by 4 May 2017 and maintain the CAD 6 million security deposit.192
150.
On 23 February 2011, Windstream made a proposal to the OPA, suggesting that "the force majeure situation persist until such date as Windstream elects to resume the Project, and that the OPA waive its force majeure termination rights under Sections 10.1(g) and (h) of the FIT Contract."193 Windstream also requested that "it be permitted to elect when to resume the Project"194 given the regulatory uncertainty,195 and that the security deposit be returned for the duration of the event of force majeure.196
151.
In its response dated 18 March 2011, the OPA rejected Windstream’s requests.197 The OPA offered "to extend the MCOD for the Proj ect to the earlier of (a) the date on which the Government of Ontario makes a definitive decision to either allow development of the Project or (b) the fifth year anniversary of the original MCOD for the Project (so, May 4, 2020)"198 and "to waive its force majeure termination rights under Sections 10.1(g) and (h) of the FIT Contract until the earlier of the dates in (a) or (b)."199 The OPA further offered to reduce WWIS’s security deposit to CAD 3 million.200
152.
Windstream subsequently approached the OPA with a proposal to replace the Project with a ground-mount solar photovoltaic project that would allow WWIS to preserve its rights under the FIT Contract.201 On 14 April 2011, Windstream gave a presentation to the OPA about its proposed solar project.202 However, the proposal was not received favorably, and the Claimant states that during a meeting on 30 May 2011, the OPA made it "clear" to Windstream that the proposed project would "not be considered."203
153.
Following the OPA’s rejection, by letter dated 7 June 2011, Windstream requested that the OPA remove its termination right prior to the NTP under Section 2.4 of the FIT Contract and "waive all reporting requirements on Windstream for the duration of the force majeure delay."204 In a further letter dated 13 June 2011, Windstream submitted a revised proposal regarding a ground-mount solar project "as an immediate alternative to the 300 MW offshore wind project."205 On 24 June 2011, in response to the two letters from Windstream, the OPA repeated its earlier position.206
154.
On 5 July 2011, Windstream informed the OPA that it was "prepared to accept the five-year extension provided that the force majeure could be further extended if the force majeure conditions were not resolved on time for the Project to achieve commercial operation before it risked triggering the termination provisions."207 Windstream also repeated its request that the security deposit be returned.208
155.
On 12 October 2011, the OPA responded stating that it had reviewed the content of the 5 July letter and has instructed that "the views of the OPA as set out in its letter of March 18 and June 24 remain unchanged."209
156.
After the deferral decision, the MOE developed a research plan to address the issues related to offshore wind development that had been identified as requiring further study, including noise propagation, water quality requirements, technical design requirements and safety issues.210 According to the Respondent, while a number of studies have in the meantime been completed, several others are still ongoing and are not expected to be completed before the end of 2016.211
157.
On 9 September 2011, the OPA advised Windstream of its recognition that the delays faced by the Project constituted a valid force majeure event from 22 November 2010.212 In the same correspondence, the OPA indicated that it would "determine the appropriate relief following the notice of termination of the force majeure event."213
158.
The Claimant notes that in October 2011, following the provincial election, Windstream renewed its efforts to have the WWIS Project proceed as a pilot project.214 Windstream also renewed its requests for a reconfiguration of its Crown land application and for approval to proceed with testing activities on the Project site.215 These efforts did not produce any results.216
159.
On 4 May 2012, Windstream sent a "final letter" to the Premier’s Office, asking "why after two years it was still unable to determine when and if the Project would ever be allowed to proceed."217 The Claimant states that it did not receive a response to this letter and there was no further correspondence with the Premier’s Office.218
160.
On 10 January 2014, the OPA refused to return WWIS’s letter of credit and waive its right to unilaterally terminate WWIS’s FIT Contract if the Project has not achieved commercial operation by 4 May 2017.219

C. The Parties’ Positions on the Disputed Factual Issues

1. The Claimant’s Position

(a) The level of uncertainty regarding the regulatory framework

161.
The Claimant contends that there was sufficient regulatory certainty at the time it decided to invest in Ontario.220 On 24 September 2009, when the FIT Program was launched, the MNR sent a letter to the Claimant acknowledging its Crown land applications and stating that WWIS was required to submit a FIT application within the initial FIT application period in order to maintain the priority position of its AOR application.221 The press release announcing the launch of the FIT Program and the GEGEA also indicated that Ontario provided "a stable investment environment where companies know what the rules are - giving them confidence to invest in Ontario."222 It was generally understood among developers that the MNR would align "its Site Release process and timelines with the OPA’s renewable energy procurement process."223
162.
The Claimant submits that the overall REA framework fully applies to offshore wind, including classified facilities and offshore wind facilities.224 According to the Claimant, the MOE document released on 20 September 2009, which explained to offshore proponents how to meet MOE’s requirements for offshore wind projects under the REA Regulation, made it clear that REA applications for offshore wind projects would be assessed based on site-specific considerations.225 Accordingly, the REA Regulation provided the Claimant with reasonable certainty regarding the required regulatory assessment process for the Project.226
163.
The Claimant submits that in deciding to apply for a FIT Contract it relied on the MNR’s letter of 24 September 2009, along with another letter from Minister Cansfield and Minister Smitherman’s February 2009 speech.227
164.
In the Claimant’s view, when it received the FIT Contract, the relevant authorities "all had extensive regulatory and scientific expertise with respect to in-lake developments."228 The Respondent had committed itself to developing setbacks and noise requirements for offshore wind energy projects which would have led a reasonable developer to expect that the applicable setbacks would be determined based on a project-specific assessment as part of the Offshore Wind Facility Report that project proponents were required to prepare.229 The REA Regulation and the APRD provided the provincial requirements for offshore wind energy projects, thereby providing the Claimant with reasonable regulatory certainty regarding the assessment process for offshore wind energy.230 The Claimant also alleges that large-scale offshore developments in the Great Lakes are common and regulators in Ontario have decades of experience in regulating water development as well as extensive knowledge of the Great Lakes ecosystem.231
165.
According to the Claimant, MOE officials repeatedly noted that the REA Regulation provided a rigorous approval process for offshore wind development.232 This ensured that there were protections in place to address any potential concerns.233 The MOE gave no indication that existing regulatory mechanisms were insufficient.234
166.
The Claimant further considers that the Respondent’s approach to the approval process was another tool for creating investor certainty. When the FIT Program was adopted, there was broad coordination across the Ontario Government to "streamline" approvals and to ensure that project proponents received the necessary approvals as expeditiously as possible.235
167.
While the Claimant concedes that the Respondent provided no "guarantee" that the proj ect would be built, it submits that "the Government committed to doing its part" to ensure that developers would meet the timelines under their respective FIT Contracts.236 Such commitment was in line with the main purpose of the FIT Program and the GEGEA, namely to get energy projects permitted and built as efficiently and expeditiously as possible.237 The Claimant points out that, as part of this commitment, the Government implemented a "six-month service guarantee for the issuance of the Renewable Energy Approvals."238
168.
The Claimant further relies on MNR emails, which indicate that as early as 2008 MNR officials were confident that existing regulatory mechanisms were sufficient to deal with site-specific concerns for offshore wind projects.239 Furthermore, during the Claimant’s discussions and interactions with representatives of all the involved Ministries, Government officials repeatedly stated that the Project had the full support of the Ontario Government, that they understood the need for certainty, and that the Government would work with the Claimant to resolve any permitting issues.240
169.
In the Claimant’s view, it was commercially reasonable to execute the FIT Contract despite the fact that certain regulations for offshore wind energy were not yet in place.241 The Claimant also rejects the Respondent’s claim that the Project would have been "first of a kind," maintaining that the "components proposed for this project have been used in many other applications."242
170.
The Claimant submits that the FIT Contract was generally viewed by members of the industry as the key requirement in the project development process that would have to be met before any other material milestone would be pursued.243 In addition, members of the industry understood that the MNR "would support Ontario’s commitment to renewable energy by aligning the Crown land access process with the OPA’s renewable energy procurement process" and that it "would have been commercially reasonable for a contractor who had been awarded a FIT Contract to assume it would receive Crown land tenure in a timely manner. "244 The Claimant’s expert witness Ms Sarah Powell testified that the regulated community had understood that once one had a FIT Contract, the Ministries would assist the developer with moving through the development process.245 Ms Powell added that the OPA generally took a pragmatic and commercial approach to contracting and worked cooperatively with FIT Contract holders, which suggested that if a delay had happened, the OPA would likely have considered some form of extension.246 Similarly, it would have been "commercially reasonable for a developer to assume that permitting of an offshore wind project could have been completed in approximately three years."247 A developer could not have reasonably anticipated that Ontario would later reverse its support for offshore wind projects.248
171.
The Claimant asserts that, by letter dated 9 August 2010, the MNR "provided explicit comfort to Windstream that MNR would not cause regulatory delays to Windstream’s site approval."249 According to the Claimant, the letter gave Windstream "comfort that MNR was planning to accommodate the proposed reconfiguration of WWIS’ Crown land applications within the evolving policy direction, and that it would grant Windstream AOR status in a timely manner once the policy review was complete."250

(b) The reasons for the moratorium

172.
The Claimant argues that, contrary to the Respondent’s official position,251 the need for further scientific research was not the motivation for imposing the moratorium.252 According to the Claimant, the Respondent’s suggestion cannot be reconciled with the fact that in 2008 Ontario had already lifted a previous moratorium on offshore wind development imposed in 2006, after confirming that such development was environmentally sound253 The Claimant also notes that Minister Cansfield announced at the time that the MNR had taken steps to address environmental concerns regarding the impact of wind power projects.254
173.
In the Claimant’s view, the moratorium was motivated by the rising costs of renewable energy electricity as well as by considerations of political expediency of the governing Liberal Party in the light of the 2011 elections.255 The assertion that further scientific research was required was only developed as a rationale of expediency after other potential rationales for regulating offshore wind had been abandoned as untenable.256 The process was driven not by the Ministries’ technical and policy experts but by the Premier’s Office, the ministers and their political staff257 The Claimant notes that there were documents in the Premier’s Office that were deleted, some of which may have been relevant to these proceedings. The Claimant requests that an adverse inference be drawn that the deleted documents would have further established that the Premier’s Office directed the adoption of the moratorium, and that it was motivated by concerns over costs and public opposition.258
174.
The Claimant takes issue with the reliability of Mr John Wilkinson’s testimony that the moratorium was decided by him, as the then Minister of Environment, and not the Premier’s Office.259 The Claimant notes that the main individual working on renewable energy policy within the MOE, Ms Marcia Wallace, testified that she had not been aware of the decision to defer offshore wind at the time that Mr Wilkinson alleges to have made the decision.260
175.
As to costs, the Claimant explains that the price for offshore wind power, including for the WWIS project, was CAD 190 per MW hour, and therefore significantly higher than the price of CAD 135 per MW hour to be paid for onshore wind power.261
176.
In addition, the Claimant contends that in 2010 and 2011 groups opposing wind energy were becoming increasingly active in Ontario.262 The Premier was frequently greeted by anti-wind protestors while on the campaign trail, and anti-wind groups had organized mail-in campaigns to facilitate complaints to elected officials about wind power and had begun to target the electoral ridings of various liberal members of the Provincial Parliament.263 When anti-wind opponents had mounted especially strong campaigns against offshore projects, the governing Liberal Party became sensitive to the offshore wind power issue and its perceived impact on the upcoming election.264
177.
The Claimant argues that political concerns were particularly influential during two parts of the offshore wind policy-making processes: the period from April to July 2010 when the five-kilometer setback proposal was being discussed and proposed to the MOE, and the period from November 2010 to February 2011, which led to the moratorium being imposed.265
178.
During the period from April to July 2010, before the proposed five-kilometer setback was posted for public comments, the proposal was being discussed in inter-Ministerial correspondence, which according to the Claimant underlines the absence of a scientific rationale supporting the proposal.266 According to the Claimant, "MOE employees were careful not to ‘rationalize’ the proposed setback on the basis of scientific reasons or to suggest that it was ‘a science-based number,"’267 and they were "looking for ecological reasons from MNR to rationalize the number."268 The Claimant concludes from the minutes of MOE meetings discussing the setback issue that "the concerns were focused on issues of ‘viewscape,’ as opposed to noise or scientific rationales."269 According to the Claimant, the setback of five kilometers was a number "pulled out of the air"270 in support of a political decision for an "aesthetic setback."271
179.
Specifically, the Claimant refers to internal MNR correspondence considering the setback discussion to be "driven politically"272 and the apparent concern of MNR officials that the five-kilometer setback would prevent all offshore wind projects from being developed.273 In addition, the Claimant relies on intergovernmental communication (including handwritten notes,274 emails,275 and draft communications276) to show that the Respondent was concerned about public opposition to offshore wind power.277
180.
As for the period between November 2010 and February 2011, the Claimant asserts that the Respondent was "looking for ways to move away from offshore development without sending a chill through the energy development and manufacturing markets."278 In doing so, officials initially considered a rationale of restricting offshore wind development on the basis of constraints in Ontario’s electricity transmission system.279 [REDACTED],280 the Respondent settled on scientific uncertainty as the basis for imposing the moratorium.281 The Claimant points out that this rationale was adopted despite MNR staff s repeated assertions that there were sufficient mechanisms to deal with the development of offshore wind projects.282
181.
The Claimant further submits that the Respondent’s significant experience with construction projects in fresh water lakes and rivers throughout the province also demonstrates that there was not, in fact, any significant scientific or regulatory uncertainty concerning permitting or environmental effects of offshore wind.283
182.
According to the Claimant, when it was awarded the FIT Contract, the Respondent had awarded 45 FIT Contracts for waterpower projects with considerable similarities with offshore wind projects.284 These projects were to be constructed in fresh water and involved similar construction techniques as well as nearly identical approval processes.285 Moreover, the Claimant contends that the Respondent is routinely requested to issue permits for complex construction projects in fresh water and has conducted extensive studies for these types of projects.286
183.
The Claimant further suggests that the MOE issued requests for further study proposals in 2013 merely "to give the impression that it is proceeding with the scientific research" and [REDACTED]287. In making this assertion the Claimant relies on an internal email exchange between MEI and MNR, which provides in relevant part: " Also, our ADM [possibly Susan Lo] is suggesting, and I would agree, [REDACTED] "288
184.
The Claimant also contends that the Respondent failed to complete the research that it planned to conduct289 and that even the completed research studies are unrelated to the Respondent’s stated scientific rationale for imposing the moratorium.290 The Claimant states that, to its knowledge, there are two studies that have been done (related to noise propagation and decommissioning), while there are six other studies which the MOE had in its research plan which have not been carried out—including the study on water and sediment quality, notwithstanding Mr Wilkinson’s statements as to his concerns about drinking water safety when allegedly making the decision to impose the moratorium."291 Additionally, the Respondent [REDACTED]292

(c) The Respondent’s conduct after the imposition of the moratorium

185.
The Claimant submits that the Respondent should have taken steps to ensure that it was not penalized as a result of the moratorium.293 Even if the Respondent’s intent was to halt the development of all offshore wind projects, the Respondent could have ensured that the Project would be "frozen" rather than "cancelled," by removing the contractual deadlines under the FIT Contract.294 According to the Claimant, by failing to ensure that the OPA amended the FIT Contract to insulate the Claimant from the effects of the moratorium, the Respondent failed to keep a number of promises it had previously made to the Claimant, in particular:

a. that the Project would be frozen rather than cancelled;

b. that the Claimant would be kept whole through the province negotiating an acceptable solution to ensure that the Claimant was "happy" with the process;

c. that the government would allow the Project to continue; and

d. that the OPA would enter into discussions with the Claimant that would include, among other things, constraining the OPA’s right to terminate the FIT Contract if the Project was delayed by more than two years.295

186.
According to the Claimant, the last issue was of particular importance because the FIT Contract terms allowed the OPA to terminate the Contract if the Project was delayed for more than two years from its MCOD.296 However, despite these commitments, the OPA rejected the Claimant’s proposals to amend the FIT Contract to ensure that it would not be subject to termination while the moratorium remained in effect.297
187.
In particular, the Claimant points out that in its first proposal it requested that it be permitted to elect when to resume the Project "given that it remains unclear at this stage when a commercially reasonable environmental approvals and Crown land site release process for fresh water off-shore wind will be completed, or what those processes will entail."298 It also requested the return of its completion and performance security for the duration of the event of force majeure.299 In its second proposal, the Claimant stated that it was prepared to accept the five-year extension proposed by the Respondent, "provided that the force majeure could be further extended if the force majeure conditions were not resolved on time for the Project to achieve commercial operation before it risked triggering the termination provisions."300
188.
The Claimant further contends that it was not in a position to accept what it considers an "unreasonable" offer from the OPA.301 Under the OPA’s offer, the Commercial Operation Date for the Claimant’s FIT Contract would have been extended by a maximum of five years while the Project remained under force majeure, but the Contract could still have been terminated if the Project did not achieve commercial operation by 4 May 2020.302 The Claimant explains that it properly decided not to accept this offer, because Ontario refused to specify the length of the moratorium.303 The Claimant notes that, in hindsight, the moratorium "did last longer than five years."304

(d) The current status of the Project

189.

The Claimant contends that, contrary to the Respondent’s assertions,305 the Project has effectively been "cancelled." This is because, even if the Respondent were to lift the moratorium, the Project could no longer be built before the OPA’s right to terminate the FIT Contract would be triggered.306 According to the Claimant, this right will inevitably arise when the Project fails to achieve commercial operation two years after the Project’s MCOD, i.e. by 4 May 2017.307

190.
In addition, the Claimant points out that the development and construction of the Project can no longer be financed, since the FIT Contract is subject to unilateral termination by the OPA.308 The Claimant highlights that the OPA has exercised the power to terminate projects that are delayed by more than 24 months in meeting their MCOD in the past.309 According to the Claimant, the fact that the OPA would be permitted to terminate the FIT Contract even if the Claimant built the Project and brought it into operation on a date after May 2017 has rendered the Project impossible to finance.310
191.
In addition, the Claimant argues that, even if the OPA were to waive its ability to terminate, the "uncertainty around offshore wind and mistrust in the investor community" would persist, so that "none of the strategic partners, banks, pension funds, and utilities that Windstream was negotiating with would entertain an investment in the Project."311 In particular, the Claimant points out that there was now a "[c]ontract [t]ermination [r]isk," "a massive amount of mistrust in the investor community," "a high level of counter party risk to the contract," "[p]olicy [u]ncertainty," "[s]upply [c]hain [d]estruction," and a general "[n]egative [p]ublic [p]erception" of the Project.312
192.
The Claimant further contends that, as a result of the moratorium and the Government’s refusal to insulate the Claimant against its consequences, the Project has become substantially worthless and not financeable.313 According to the Claimant, while "nominal value may be attributed to past costs incurred related to certain assets of the Project, including the meteorological tower and the studies performed," given that "a potential purchaser... would not be able to earn future profits from those assets" under the current circumstances, he "would not likely ascribe any value to these assets."314

2. The Respondent’s Position

(a) The level of uncertainty regarding the regulatory framework

193.
The Respondent contends that the Claimant was aware of the lack of necessary regulatory details at the time it made the decision to invest. The Government of Ontario had yet to finalize the guidance material for offshore wind and had no significant experience in regulating large-scale offshore wind projects.315 The Respondent maintains that the Project would have been "first of a kind" as no offshore wind project in Ontario had ever gone through an REA process or federal environmental assessment.316 In addition, not only would the Claimant’s Project have been the first offshore wind project in North America, it would have been only the second freshwater offshore wind project anywhere in the world.317 As to the Claimant’s assertion that the Project is not "first of a kind" because it comprises pre-existing components, the Respondent’s expert testified that these components have never before been merged together in an approvals process for offshore wind.318
194.
When the FIT Program was launched, "only two of the sixteen proponents that applied to MNR for Crown land to develop offshore wind projects by December 2008 applied for a FIT Contract, despite the fact that seven of them had already obtained AOR status and were therefore eligible to proceed to the permitting stage." With no experience having been developed in the Province (or anywhere else in North America), neither the industry nor the Government of Ontario was ready for the Project.319
195.
According to the Respondent’s account, the 19 April 2010 meeting was designed to discuss Ontario’s policy on offshore wind in general, as opposed to discussing the Claimant’s specific projects.320 The intention, according to the Respondent, was to provide the vision, while identifying the challenges faced by the Respondent.321
196.
In addition, the Respondent contends that the Claimant was aware of the lack of necessary details in the REA Regulation.322 The Claimant itself expressed concerns with regard to the absence of "established guidelines for access and control of off-shore property rights available for renewable energy projects, adding to the uncertainty of the REA process."323 According to the Respondent, the Claimant’s knowledge of the underdeveloped state of offshore REA requirements is likely the reason why the Claimant never formally initiated the process for applying for an REA - because it had difficulty discerning what information it would have to submit.324
197.
The Respondent refers to several documents to support its claim that the Claimant knew of the regulatory uncertainty prior to entering into the Contract.325 These documents include Ortech’s presentation prepared for the Claimant suggesting "concerns... over staff constraints at MOE to process REA applications"326 and Ortech’s letter dated 10 May 2011 indicating that the relevant agencies "do not have well established guidelines for off-shore project adding to the uncertainty of the REA process."327 The Respondent also refers to another letter from Ortech to the Claimant describing the timeline proposed by the MNR to review its policy on Crown land access as "too long"328 and a document prepared by the Claimant mentioning concerns about "A High Degree of Regulatory Uncertainty."329
198.
Indeed, the lack of regulatory certainty was the reason cited by the Claimant in its requests for FIT Contract signing extensions, including its requests after the MOE’s 25 June 2010 EBR posting.330 Under the circumstances, the Claimant could have no legitimate expectations that the introduction of the GEGEA and the mere existence of the REA Regulation meant that its project would be able to proceed quickly through the REA process.331
199.
The Respondent further contends that the Claimant had reason to be concerned about the development and construction risks of its Project.332 Such risks included seasonal construction restrictions and weather disruptions, the lack of available specialized vessels, and the time required for manufacturing the foundations for the wind turbines.333 Moreover, the Claimant had even more reason to be concerned when on 25 June and 18 August 2010, the MOE and the MNR, respectively, posted for public comment on the Environmental Registry policy proposal notices regarding offshore wind and access to Crown land for offshore wind projects.334 The Respondent highlights that the proposal notices explained that work on the regulatory framework for offshore wind development was ongoing, and that the requirements for offshore wind projects under the REA Regulation remained incomplete.335
200.
In light of this regulatory uncertainty, the Respondent submits that the Claimant made three requests to the Respondent, which the Respondent however was unable to accommodate.336 First, the Claimant requested to change its Crown land application to a different area. Second, it asked the MEI to instruct the OPA to provide the Claimant with additional time to complete the Project. Finally, the Claimant asked the MOE to confirm that the five-kilometer setback would not apply to the areas relevant to the Project.337 The Respondent further refers to an exchange that took place on 10 August 2010 between the Claimant and the OPA, in which the Claimant reiterated its concern with respect to the unresolved regulatory uncertainty.338
201.
The Respondent contends that the Government did not provide any assurances to the Claimant in the months preceding the execution of the Contract.339 In particular, contrary to the contention of one of the Claimant’s witnesses,340 MNR officials made no commitment with respect to facilitating access to Crown land.341 Indeed, according to the Respondent, the relevant MNR officials "rebuffed the Claimant’s attempts to extract assurances in relation to its applications for access to Crown land for the Project."342
202.
In the Respondent’s view, the Claimant assumed significant risks when it signed the FIT Contract on 20 August 2010 while the MOE was still receiving feedback from the public and conducting its own research.343 More specifically, the Respondent contends that, by signing the Contract, the Claimant accepted all the rights and obligations stipulated in the FIT Contract.344 Shortly after signing the FIT Contract, MNR officials reminded the Claimant that "there was no policy or procedure in place for offshore development."345 The Respondent refutes the suggestion by the Claimant that offshore wind projects are no different than onshore wind projects, referring to the evidence and testimony of its experts that described the differences in costs and construction.346
203.
The MNR also informed the Claimant that it was free to apply for permits to commence field studies, such as surveying or sampling, while the public consultations on offshore wind continued and the site release process was on hold. However, the Respondent insists that officials made it clear that the Claimant would proceed with any such studies at its own risk, given that the policy consultations were ongoing.347
204.
The Respondent further points out that the Claimant gambled that the MOE would adopt only a five-kilometer setback as a means of addressing all of the concerns raised by the public and the research.348 Given that 85% of the Crown land that the Claimant had applied for was located within the proposed five-kilometer setback, the Claimant also gambled that it would be allowed to swap its existing Crown land applications for Crown land located outside the proposed five-kilometer setback.349 Finally, in signing its FIT Contract, the Claimant accepted the OPA’s termination rights and gambled that it would be able to bring its project into commercial operation within five years, despite being well aware that the regulatory process for its permits and approvals was still under development.350
205.
In addition, the Respondent contends that the Claimant’s reliance on "general statements by ministers" was unreasonable.351 Specifically, the Respondent submits that Minister Cansfield’s statement referred to by the Claimant, according to which Ontario "was open for business" was made in 2008, prior to the development of the FIT Program.352 Similarly, the Respondent points out that Minister Smitherman’s representation that the GEGEA "provided certainty"353 was made prior to the GEGEA coming into force.354 According to the Respondent, this statement "could not accurately reflect Ontario’s efforts to operationalize the streamlined approvals process for renewable energy projects" and "could not have created a reasonable or objective expectation that the regulatory framework was or would be fully developed for offshore wind projects" at the time of the execution of the FIT Contract.355

(b) The reasons for the moratorium

207.
As such, the Respondent argues, the decision to defer offshore wind projects was grounded in the precautionary principle, which suggests waiting until sufficient research had been conducted, so that an adequately informed policy framework could be developed.363 While the Respondent concedes that data existed for onshore wind facilities, it submits that the MOE lacked the information required to understand the impact that the construction and operation of an offshore wind facility would have on the environment.364 Research was required to address numerous concerns, including noise emissions, water quality, disturbance on benthic life forms, and the potential of structural failure.365
208.
The Respondent submits that Ontario was in collaboration with [REDACTED].366367. The Respondent acknowledges that [REDACTED] did not go as planned, but argues that this cannot be said to "indicate that Ontario never intended to undertake the science necessary to lift the deferral."368
209.
Specifically, in the Respondent’s view, the decision not to proceed with offshore wind was necessary to allow the regulator sufficient time to determine the rules, requirements and standards that the proponent of an offshore wind facility would have to satisfy prior to the issuance of an REA.369 Since the regulatory requirements could be the subject of "intense" scrutiny by stakeholders and potential litigation, the Respondent submits that it needed to ensure that the approval process was based on solid policy and scientific grounds.370
210.
The Respondent further points out that it is continuing to pursue the necessary research for the development of the regulatory framework for offshore wind facilities.371 In particular, the Respondent claims that it is currently conducting noise and decommissioning studies which will assist with policy development.372 As to Mr Wilkinson’s concerns about drinking water, the Respondent submits that these were "partially addressed" in an internal study on water quality impact within Lake Ontario (which provided a preliminary conclusion that the impact of an offshore wind turbine would likely be quite small).373
211.
At the hearing, the Respondent confirmed that Ontario is "not planning to commence further scientific studies in the near term."374 However, the Respondent argues that it "should not be faulted for not prioritizing this work."375 This is because, the Respondent argues, "[g]iven the Claimant’s decision not to freeze its FIT contract, no project will be proceeding in the near future."376 That is, given the Claimant’s "admission" that it could not proceed with developing its project after May 2012, the Respondent submits that "any science that Ontario plans to undertake after May 2012 is irrelevant for the purposes of addressing Windstream’s claim."377 The Respondent notes, however, that once the noise and decommissioning studies are completed, Ontario will analyze the findings to determine whether any further study is required.378
212.
The Respondent also takes issue with the Claimant’s suggestion that the MOE issued requests for further study proposals "to give the impression that it is proceeding with the scientific research"379 [REDACTED].380. The Respondent explains that the internal MEI and MNR email relied upon by the Claimant should be construed as offering "a relevant consideration by MEI" rather than "MOE’s and MNR’s justification for undertaking the studies."381

(c) The Respondent’s conduct after the imposition of the moratorium

213.
The Respondent argues that, while the OPA put forward a number of reasonable solutions to accommodate the Claimant in the context of the deferral, the Claimant chose to reject those offers and make unreasonable and unrealistic demands instead.382 In particular, the Respondent points out that the Claimant not only sought an extension of its MCOD until such date as the Claimant elected to resume the project as well as the return of the full amount of the security deposit, a removal of the time limitations on force majeure, and removal of the OPA’s termination right; it also made requests unrelated to mitigating the impact of the deferral, such as the removal of its domestic content requirement.383
214.
The Respondent states that OPA was willing to allow flexibility regarding the security provided, the specific force majeure status, and the termination rights of both Parties, and that the Claimant was offered a five-year extension of the MCOD.384 However, the Claimant failed to accept the OPA’s offer and made demands that could not have been entertained by OPA.385 In this regard, Mr Perry Cecchini testified that the Claimant’s demand was equivalent to asking for perpetual force majeure, which would have been "irresponsible" for the OPA to allow when there needed tobe an end date.386 The Respondent also alleges that none of the Claimant’s proposed alternative projects were acceptable since they were inconsistent with the FIT Rules and would result in major implications to ratepayers and other renewable energy projects already under development.387
215.
The Respondent states that the negotiations show that the Claimant wanted to dump the existing deal under the FIT Contract and execute a new, better deal on its own terms and timeline.388 The Respondent therefore concludes that "the fact that the Claimant’s project will not be able to proceed to permitting is because the Claimant declined the opportunity to have its contract frozen."389

(d) The current status of the Project

216.
The Respondent states that the current legal status of the contract is that it is in force majeure.390
217.
The Respondent points out that when it decided to defer all offshore wind proj ects, it canceled all Crown land applications for offshore wind sites, with the exception of the Claimant’s. Given the Claimant’s unique position as the only FIT Contract holder for offshore wind, its Contract was frozen until the regulatory framework could be finalized.391 The Respondent attributes this arrangement to the fact that the "OPA was willing to preserve [the Claimant’s] opportunity to pursue a contract" and "didn’t want the Claimant’s [P]roject to fail because... of government’s lack of readiness to approve it."392 According to the Respondent, the deferral is intended to last only as long as necessary to conduct scientific research and develop and implement an adequately informed framework for offshore wind projects in Ontario.393 When the decision to implement the deferral was made, this task was expected to take approximately 3-5 years.394
218.
The Respondent further contends that the Claimant has been repeatedly informed that its Project is only put on hold until the regulatory rules and requirements for offshore wind projects are developed.395 According to the Respondent, the Project is therefore merely "frozen" and still "kept alive."396 That is, it has not been terminated by the OPA.397 In addition, the Respondent points out that "the legal status of other assets of the project... remain unaffected."398

IV. THE JURISDICTION OF THE TRIBUNAL

219.
There is no dispute between the Parties as to the Tribunal ’ s jurisdiction to hear a claim on whether the acts of an organ of the Government of Ontario such as the MNR, the MOE, the MEI and the Premier’s Office are in breach of Chapter 11 of NAFTA.399 However, there is disagreement as to whether the Tribunal has jurisdiction to hear claims based on the attribution of conduct of the OPA to the Respondent.400 The Parties also disagree on whether this question is relevant at all.
220.
The Respondent submits that the measures challenged by the Claimant are attributable to the Government of Ontario, not the OPA.401 According to the Respondent, the Claimant’s challenges are directed to the Government of Ontario, and the MEI in particular, for allegedly failing to cause the OPA to take certain measures402 Therefore, the question whether acts of the OPA can be attributed to the Respondent for the purpose of Chapter 11 should be irrelevant403 However, if the Claimant were challenging measures of the OPA, the Respondent contends that the Claimant has failed to establish that the Tribunal has jurisdiction to consider whether such measures breached the Respondent’s obligation under the NAFTA.404
221.
The Claimant states that its primary case is indeed that the MEI’s failure to act should be attributed to the Respondent405 Given that the MEI exercised both de jure and de facto control over the OPA,406 the Respondent could have caused the OPA to comply with its commitment to "freeze" the Claimant’s FIT Contract407 However, if the Tribunal were to find that this omission is not attributable to the MEI, the Claimant suggests that the omission would necessarily have to be attributable to the OPA.408 In that case, the question of whether measures of the OPA can in turn be attributed to the Respondent would not be "wholly irrelevant in this arbitration."409

A. The Respondent’s Position

222.
According to the Respondent, to the extent that the Claimant is challenging measures adopted or maintained by the OPA, it has the burden of establishing the jurisdiction of this Tribunal to consider the measures.410 The Respondent relies on Apotex v. United States, in which the tribunal held that "Apotex (as claimant) bears the burden of proof with respect to the factual elements necessary to establish the Tribunal’s jurisdiction."411
223.
The Respondent submits that the OPA does not qualify either as a de jure or a de facto State organ under international law.412 In order to qualify as a de jure State organ, the OPA would need to have the status of a State organ under domestic law, as required by Article 4 of the International Law Commission’s Articles on State Responsibility (the "ILC Articles").413 However, in the Respondent’s view, the OPA acts independently and is not an agent of the Crown, even if it was created by a statute.414 Moreover, in order to be considered a de facto State organ, the OPA would have to act "in ‘complete dependence’ on the State, of which [it is] ultimately merely the instrument."415 However, the OPA does not act in such a manner, nor does the Respondent exercise complete control over it.416
224.
According to the Respondent, under Article 1503(2) of NAFTA, the Tribunal has jurisdiction to consider measures of a State enterprise only insofar as those "measures were adopted or maintained in the exercise of delegated governmental authority."417 The Respondent alleges that the Claimant has failed to point to an act or omission of the OPA that was carried out in the exercise of delegated governmental authority.418 In particular, the Respondent points out that the fact that the OPA was established by statute does not automatically render all of its acts "an exercise of delegated governmental authority."419 Rather, according to the Respondent’s interpretation of Article 1503(2), "only a limited set of acts of State enterprises are subject to Chapter 11 "420
225.
The Respondent takes the view that the OPA was not exercising any delegated governmental authority in its negotiations with the Claimant.421 First, while the OPA designed the FIT Program pursuant to the Minister of Energy’s letter dated 24 September 2009, it was not delegated any governmental authority to make decisions on regulatory instruments;422 the governmental authority was exercised by the relevant Ministries.423 Second, in the Respondent’s view, commercial negotiations and contracts entered into in that context do not qualify as "an exercise of governmental authority" even if they were made in furtherance of a public policy objective424
226.
The Respondent also notes that the Claimant has not introduced any evidence that the Minister of Energy delegated to the OPA the implementation of the alleged commitment to the Claimant that it would not be negatively affected by the deferral425 Moreover, even if there had been evidence, such a delegation by the MEI would not amount to an exercise of governmental authority, as there would be "nothing inherently governmental about the conduct of negotiations to settle a dispute pertaining to a contract between a state enterprise and an investor."426
227.
In the same fashion, the Respondent maintains that the Claimant has failed to prove that the decision to award Samsung - rather than the Claimant - the solar project, constituted an exercise of governmental authority427 According to the Respondent, "the consideration of how to resolve a contractual dispute within [the FIT Program] is not an issue of exercising ‘governmental authority.’"428

B. The Claimant’s Position

228.
While the Claimant agrees that the OPA qualifies as a State enterprise for the purpose of NAFTA,429 it takes issue with the Respondent’s assertion that the OPA is an "independent"430 entity.431 According to the Claimant, the Respondent has failed to counter the Claimant’s evidence which demonstrates that the MEI had both formal and informal control of the OPA.432 More specifically, the Respondent has not replied to Mr Smitherman’s explanation that he exercised a high degree of control over the OPA during his tenure.433
229.
In addition, according to the Claimant, the MEI "was heavily engaged with the OPA with respect to post-moratorium negotiations with [the Claimant]."434 The Claimant relies in particular on the fact that the OPA’s first proposal to the Claimant was made at the direction of the MEI,435 while its second proposal was included in the MEI agenda for its weekly meetings436 The MEI had also discussed with the OPA the possibility of allowing the Contract to "lapse" prior to the imposition of the moratorium.437 Moreover, according to the Claimant, "the OPA had earlier felt compelled to fulfil the promise of the Premier’s Office and MEI to TransCanada to keep TransCanada ‘whole.’"438 The MEI had also intervened with the OPA to obtain a one-year extension for the FIT Contract, over the OPA’s protests, and with the support of the [REDACTED].439
230.
The Claimant disagrees for two reasons with the Respondent’s position that the OPA was not exercising delegated authority "in failing to implement MEI’s commitment to ‘freeze’ the FIT Contract or its decision to keep [the Claimant] ‘whole.’"440 First, according to the Claimant, the Chief of Staff of the MEI advised the Claimant that the OPA would ensure that the commitment would be met441 Second, in assessing whether a State enterprise is operating in the exercise of governmental authority, one needs to consider the purposes for which the relevant powers are to be exercised and the extent to which the State enterprise is accountable to the Government442 Accordingly, if the Tribunal were to find that the MEI did not retain for itself the responsibility of keeping the FIT Contract "frozen," then that responsibility would be "squarely directed to the fulfillment of a governmental objective delegated to the OPA."443
231.
Finally, the Claimant argues that the OPA’s administration of the FIT Program constitutes "sovereign acts to carry out [the Respondent’s] objective of increasing procurement of electricity from renewable energy sources,"444 and that the FIT Contract which "[the Respondent] tasked the OPA with administering, was the key component of [the Respondent’s] signature policy objective of procuring more electricity from renewable energy sources."445 According to the Claimant, the Respondent’s argument "ignores the public purpose behind the OPA’s involvement in the FIT Program, which simply cannot be characterized as merely commercial in nature."446

C. The Tribunal’s Analysis

232.
The disagreement between the Parties concerns the interpretation and application of Article 1503(2) of NAFTA. ("State Enterprises"), which provides:

"2. Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any state enterprise that it maintains or establishes acts in a manner that is not inconsistent with the Party’s obligations under Chapters Eleven (Investment) and Fourteen (Financial Services) wherever such enterprise exercises any regulatory, administrative or other governmental authority that the Party has delegated to it, such as the power to expropriate, grant licenses, approve commercial transactions or impose quotas, fees or other charges."

233.

Article 1503(2) of NAFTA, makes it clear that the State parties to NAFTA are responsible for the conduct of State enterprises, but only to the extent that such enterprises are empowered to exercise governmental authority. This is consistent with Article 5 of the ILC Articles, which further specifies that "[t]he conduct of a person or entity which is not an organ of the State... 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." In other words, the conduct of persons or entities such as State enterprises which are not formal organs of the State can only be attributable to the State if the person or entity in question is exercising governmental authority in the particular instance.

234.
The Tribunal notes that under the Electricity Act of 1998, while the OPA was "not an agent of the Crown," the Government of Ontario (the MEI) had the authority to issue directions to OPA447 Consequently, to the extent that OPA acted on the basis of such directions, its conduct could be considered attributable to Canada, depending on whether the direction in question involved a delegation of exercise of governmental authority to the OPA. Thus, the determination of whether any of the specific acts or omissions of the OPA at issue in this case are indeed attributable to Canada requires an assessment of the relevant directions and therefore cannot be made in abstracto, but only in concreto, in the context of an assessment of the relevant direction. Any such determination is necessarily closely intertwined with the merits and therefore cannot be decided independently of the merits. Consequently, the Tribunal considers it appropriate to defer the consideration of this issue to the merits.

V. THE MERITS OF THE CLAIMANT’S CLAIMS

A. NAFTA Article 1110 - Expropriation

1. The Claimant’s Position

(a) The Respondent has indirectly expropriated the Claimant’s investment

235.
The Claimant submits that WWIS, the Project and the FIT Contract are each investments in Canada448 and that the Respondent has indirectly expropriated these investments through the imposition of the moratorium and its "failure to fulfill its promise [made during the conference call of 11 February 2011] to take positive steps to ensure that Windstream was not penalized as a result of [the moratorium]."449 The Claimant contends that these two measures "have rendered WWIS, the Project and the FIT Contract substantially worthless."450 In particular, the Claimant characterizes the FIT Contract as "a valuable asset" and "personal property under Ontario Faw"451 and asserts that the FIT Contract meets the ratione materiae requirement under expropriation provisions.452
236.
The Claimant notes that Article 1110 of NAFTA prohibits NAFTA parties from expropriating investments without compensation,453 whether directly or indirectly454 An indirect expropriation under Article 1110 of NAFTA occurs when the investor is substantially deprived of the value of its investment by measures attributable to the relevant NAFTA Party455 In the Claimant’s view, the test that has been most widely applied by arbitral tribunals to determine whether measures amount to an indirect expropriation is the "sole effects" test456 According to the Claimant, "the test... is to look solely at the effects of the deprivation, not at the purpose."457 The Claimant explains that "[u]nder that test, expropriation occurs where the investor has been substantially deprived of the value or economic viability of its investment."458
237.

Citing Burlington Resources Inc. v. Ecuador,459 Metalclad v. Mexico,460 Vivendi II461 and Tecmed v. Mexico,462 the Claimant submits that a substantial deprivation of the value of an investment amounting to an expropriation occurs when:

"a) the investment is no longer capable of generating a commercial return;

b) the investor has lost, in whole or in significant part, the use or reasonably-to-be expected economic benefit of the investment;

c) the most economically optimal use of the investment has been rendered useless; or

d) the investment’s economic value has been neutralized or destroyed, as if the rights related thereto had ceased to exist."463

238.
The Claimant explains that WWIS has the obligation to bring the Project into commercial operation by 4 May 2015 pursuant to the FIT Contract. This deadline can only be extended by up to two years (i.e., to 4 May 2017) by reason of force majeure. Thereafter, either party will be entitled to terminate the FIT Contract.464 While the Claimant’s Project currently has force majeure status, the Claimant argues that there is no longer any realistic prospect that the Project will reach commercial operation by 4 May 2017. The Claimant notes that this was admitted by Mr Cecchini of the OPA during his testimony465 According to the Claimant, the deadline became unachievable as of 4 May 2012,466 "[i]n light of the period that would be required to re-start the Project, confirm regulatory requirements, obtain the required approvals, complete development work and build the Project."467 The Claimant argues that, consequently, the Project is no longer "financeable."468 The Claimant adds that, even if the OPA were to waive its right to terminate the FIT Contract, the Government’s actions have created such a level of uncertainty around the offshore wind industry that none of the potential partners with whom Windstream was negotiating would now invest in the Project.469
239.
The Claimant contends that, as a direct consequence of the moratorium and the Respondent’s failure to effectively "freeze" the Project as promised,470 its investments in the Project and the FIT Contract are now substantially worthless,471 and this amounts to an indirect expropriation.472 The Claimant disagrees with the Respondent’s assertion that "the fact that Windstream’s investments are now worthless is somehow Windstream’s fault."473 The OPA rejected Windstream’s request that the FIT Contract remain under force majeure for the duration of the moratorium and instead proposed to limit any extension to five years, while retaining the security, regardless of the fact that the Ontario Government had not specified the duration of the moratorium.474 The Claimant did not accept the OPA’s offer because it was "unreasonable."475
240.
The Claimant submits that the situation in the present arbitration is "analogous" to that underlying the Khan Resources v. Mongolia decision.476 The Claimant points out that the tribunal in that case found that the invalidation and failure to re-register a mining license made the execution of contractual obligations impossible and thus "deprived the claimant of the benefits of the relevant agreements, even though the agreements had never been formally terminated."477
241.

The Claimant further contends that "[i]t is the nature of the deprivation that is relevant, not the duration of the measure," arguing that, as a consequence, the Respondent’s argument about "the alleged temporariness of the moratorium is misplaced."478 The Claimant refers to the decision in Belokon v. The Kyrgyz Republic, in which the tribunal concluded that a "temporary" measure suspending the powers of the board and managing bodies of five Kyrgyz banks was expropriatory479 and emphasizes that the decision in Tecmed, on which the Respondent relies, "confirms that a temporary measure may lead to a permanent deprivation."480 The Claimant points out that "[t]here is no indication on the record that the Ontario Government truly intends to lift the moratorium in the near future, or at all."481

(b) The expropriation of the Claimant’s investment was unlawful

242.
The Claimant further submits that the Respondent’s alleged expropriation of its investment was unlawful.482 According to the Claimant, an expropriation is an unlawful breach of Article 1110 of NAFTA unless it meets the following criteria: (i) it is made for a public purpose; (ii) it is conducted on a non-discriminatory basis; (iii) it is conducted in accordance with due process of law and Article 1105(1); and (iv) compensation is paid in accordance with Article 1110(2)-(6)483
243.
The Claimant alleges that the expropriation of its investment was not done for a public purpose and that, in particular, the moratorium was not adopted for a legitimate public purpose.484 As a consequence, according to the Claimant, it falls below the standard set by the International Law Commission, according to which:

"[t]he power to expropriate should be exercised only when expropriation is necessary and is justified by a genuinely public purpose or reason. If this raison d’être is plainly absent, the measure of expropriation is ‘arbitrary’ and therefore involves the international responsibility of the state."485

244.
The Claimant further contends that "Ontario has realized an economic benefit of between [CAD] 1.3 billion to [CAD] 2.5 billion by imposing the moratorium and indirectly cancelling the Project."486 According to the Claimant, Ontario wanted to prevent the Project from proceeding "so that the OPA would not be required to procure power from WWIS at the higher offshore energy prices."487 The Claimant refers to a statement by the Minister of Energy and Infrastructure, Mr Brad Duguid, made shortly after the imposition of the moratorium, asking " [i] f we’re reaching our clean energy objectives with onshore projects in solar, wind, bioenergy, why would we then want to expand into offshore which is going to be more costly?"488
245.
According to the Claimant, the expropriation was also discriminatory. The moratorium discriminated against Windstream, as a FIT Contract holder, by preventing it from proceeding through the REA process in order to bring its Project into operation by the deadline in its FIT Contract. According to the Claimant, such a constraint was not imposed on other FIT Contract holders.489
246.
The Claimant further contends that the expropriation was not carried out in accordance with due process requirements. In the Claimant’s view, the imposition of the moratorium "overrides the provisions of the REA Regulation and of Wind Policy 4.10.04" that have been adopted "to encourage Windstream and other developers to invest in renewable energy projects in Ontario."490 The Claimant contends that "[t]his regulatory framework applies equally to offshore wind projects as it does to onshore ones, yet has been eviscerated with respect to offshore wind projects."491
247.
Finally, the Claimant claims that the Respondent failed to pay any compensation for its expropriatory measures, which also renders it unlawful492

(c) The rationale for the moratorium is not relevant for the expropriation analysis

248.
The Claimant submits that the rationale for the moratorium is not relevant for the expropriation analysis.
249.
The Claimant refers to the Amended Response to the Notice of Arbitration, in which the Respondent argues that the moratorium cannot have the effect of substantially depriving Windstream of the value of its investment because "it was a bona fide, non-discriminatory governmental decision implemented in the public interest" and that "Article 1110 does not prohibit such legitimate governmental decision making."493 The Claimant submits that this argument should be rejected for several reasons494
250.
First, the Claimant argues that there is no public policy exception to expropriation and that the Respondent’s argument that regulatory measures having a legitimate public purpose cannot be expropriatory should be rejected.495 The Claimant avers that "recognition of a broad ‘public purpose’ exception to expropriation would be inconsistent with the plain wording of Article 1110," as "Article 1110(1)(a) provides that a public purpose is a prerequisite to a finding of expropriation, including indirect expropriation."496
251.

The Claimant also argues that the Respondent’s position is based on an incorrect interpretation of the Methanex decision, pointing out that, while the Methanex tribunal broadened the scope of the "police powers" doctrine, thus making certain types of general regulatory measures non-compensable, the tribunal in that case found that the challenged measures did not substantially deprive the investor of the value of its investment.497 The Claimant further asserts that many tribunals have rejected the application of a broad "public purpose" exception, including the NAFTA tribunals in Pope & Talbot, Metalclad and Feldman,498 as well as the tribunals in Santa Elena v. Costa Rica,499 Azurix500 and Vivendi II.501 In particular, the Claimant states that the tribunal in Vivendi II observed that "the application of a public policy exception to expropriation is inconsistent with the plain language of Article 1110 (and many expropriation provisions in BITs)" and held that "Article 1110 provides that a failure to compensate an investor for the expropriation of its investment is a breach, even if the expropriation is for a public purpose."502

252.

The Claimant further points out that the decisions in Chemtura, Suez, Saluka and Methanex, on which the Respondent relies, involve the application of the police powers doctrine, rather than a broad public purpose exception to expropriation.503 According to the Claimant, the police powers doctrine is not applicable in the present arbitration because it has to be construed narrowly and cannot apply when the measure complained of was not adopted in good faith or for a legitimate public purpose; when its effects are disproportionate to its stated public policy rationale; or when the measure is contrary to specific commitments made to the investor and to the investor’s legitimate expectations.504 In this context, the Claimant asserts that, in this case, "the moratorium and the failure to freeze... are not proportionate or necessary for legitimate public purpose."505

253.
Second, the Claimant alleges that the moratorium was not adopted in good faith or for a legitimate public purpose.506 In particular, in the Claimant’s view, the moratorium was politically motivated and was not based on a rationale that would justify the application of the police powers doctrine. The Claimant alleges that the moratorium was motivated by concerns about the cost of offshore power and public opposition to wind turbine projects, particularly in certain key electoral ridings for the governing Liberal Party, rather than "scientific uncertainty" concerning offshore wind development.507
254.
The Claimant submits that the "scientific uncertainty" rationale put forward by the Respondent is undermined by many elements, including that: (i) it was a rationale arrived at by politicians (rather than scientific personnel) only after a number of other rationales for constraining offshore wind were considered and rejected; (ii) several key government officials expressed skepticism about the legitimacy of scientific uncertainty as a rationale for imposing a moratorium on offshore wind; (iii) it was inconsistent with Minister Cansfield’s statement of 21 October 2009 that the government’s "research made it clear that developing offshore wind potential would be practical and environmentally sound once the appropriate infrastructure is in place;" and (iv) Ontario has made no serious efforts to advance scientific research following the moratorium.508 The Claimant emphasizes that the Respondent "has not provided any credible evidence of harm to the environment."509 As to the alleged concern about drinking water, the Claimant asserts that it has been accepted that there is no problem with drinking water, not to mention there is no credible evidence of a significant threat to drinking water.510
255.
Third, the Claimant contends that the effects of the Respondent’s measures have been disproportionate to their stated public policy rationale.511 According to the Claimant, the Respondent could have resorted to less intrusive measures to achieve its stated public policy objective.512
256.
Fourth, the Claimant submits that the Respondent’s measures were contrary to Ontario’s specific commitments and Windstream’s legitimate expectations, noting that "tribunals that accept a public policy exception to expropriation do not apply it where the measure is contrary to the state’s specific commitments to the investor or to the investor’s legitimate expectations."513 According to the Claimant, the moratorium was a reversal of Ontario’s self-promotion as "open for business" for offshore wind and its repeated assurances that it supported the Project.514

2. The Respondent’s Position

(a) The FIT Contract is not an interest capable of being expropriated

257.
The Respondent submits that there is no expropriation in this case. According to the Respondent, the Claimant’s argument that the FIT Contract has been rendered "substantially worthless" must fail as the FIT Contract does not create an investment capable of being expropriated.515 Since NAFTA contains a closed definition of investment, the Claimant must demonstrate that the FIT Contract is among the exhaustive list of investments found in Article 113 9,516
258.
Moreover, relying on Emmis v. Hungary, the Respondent contends that the existence of a valid FIT Contract does not excuse the Claimant from proving that "specific rights... under the Contract have vested such that they are capable of being expropriated, and that there was an expropriation."517 While the Respondent does not dispute the fact that the FIT Contract "imposes some vested rights and obligations,"518 it contends that the Claimant has failed to show that such rights have been expropriated.519
259.
According to the Respondent, the right that the Claimant alleges has been expropriated is the supposed right to a revenue stream under the FIT Contract.520 In the Respondent’s words, what the Claimant had was nothing more than "an opportunity."521 This, however, was not a "vested right" since "the FIT Contract provided only a potential, speculative interest in a future revenue stream, contingent upon, among other things, obtaining the required permits and reaching Commercial Operation by the deadlines required."522 As such, the alleged right was not "certain and demonstrable" and not capable of being expropriated.523 The Respondent notes that "only once the project enters into commercial operation is a supplier entitled to the revenue stream under the FIT contract." The Respondent stresses that in this case the Claimant had not even begun the process of obtaining the relevant permits such as a NTP which are preconditions for the project to enter into commercial operation.524 From the perspective of the Respondent therefore, unless the Claimant met the preconditions required by its FIT Contract, "the fact that the FIT contract offered a fixed price is completely irrelevant as to whether the right to claim payment has vested under the FIT contract."525

(b) The economic impact of the moratorium does not amount to an expropriation

260.
The Respondent submits that an expropriation requires a "taking" of fundamental ownership rights that causes a substantial deprivation of the economic value of an investment.526 In this case, the Respondent argues, the moratorium could not have constituted an expropriation because (i) the Project had no value at the time of the measures the Claimant complains of; and (ii) the deferral resulting from the moratorium is temporary in nature.527
261.
The Respondent argues that when Ontario decided to defer offshore wind development the Project had not reached a stage at which it could realistically be completed within the deadlines imposed by the FIT Contract and, as a consequence, the Project had no value.528 In the words of the Respondent:

"[g]iven where the Claimant was in the development process when it signed its FIT Contract, and given the first-of-a-kind nature of its proposal, the Windstream Wolfe Island Shoals offshore wind facility was doomed to fail from the moment that the Claimant signed on the dotted line."529

262.

In addition, the Respondent submits that the current case law of NAFTA tribunals requires showing that the expropriation is "permanent, and not ephemeral or temporary."530 The Respondent points out that since the moratorium it has conducted several studies relating to offshore wind and continues to complete the work required to develop regulatory rules and requirements for offshore wind facilities, thus demonstrating that the deferral is only a temporary measure.531

263.
The Respondent argues that the temporary nature of the measure is reflected in the fact that the Claimant’s assets remain intact;532 the FIT Contract is still in place and under force majeure.533 Accordingly, the Respondent takes the position that "the Claimant could obtain its security deposit sooner if it entered into a mutual termination agreement with the OPA."534

(c) The moratorium has not interfered with the Claimant’s reasonable expectations

264.

The Respondent further claims that the moratorium has not interfered with the Claimant’s reasonable expectations. The Respondent observes that "it is not the function of Article 1110 to eliminate the normal commercial risks of a foreign investor" orto compensate investors for their imprudent business decisions.535 The Respondent contends that the Claimant knew that its Project "required regulatory change to proceed" and "accepted these risks when it invested in Ontario."536 The Respondent further notes that "by the time the first FIT contracts were offered, the regulatory framework for offshore wind projects had not been any further developed."537

265.
According to the Respondent, this uncertainty was "clearly communicated to the public in the MOE’s policy proposal notice of June 25th, 2010."538 Moreover, in accordance with the FIT Contract that the Claimant signed, "the Claimant assumed the obligation of bringing the project into commercial operation, including obtaining all the necessary permits and approvals such as the REA, access to Crown land, and completing applicable federal permits."539 The Respondent, therefore, takes the position that "the Claimant was solely responsible for ensuring the technical, regulatory and financial viability of its project."540

(d) The measure was not of an expropriatory character

266.

The Respondent states that many types of government regulation can have significant effects on investments, yet this does not mean that all such measures would constitute indirect expropriations. Referring to the decision in Feldman v. Mexico, the Respondent points out that:

"a non-discriminatory measure, designed to protect legitimate public welfare objectives such as health, safety and the environment, is not an indirect expropriation except in the rare circumstance where its impacts are so severe in the light of its purpose that it cannot be reasonably viewed as having been adopted and applied in good faith."541

267.
According to the Respondent, the Claimant has failed to meet the following criteria established by NAFTA tribunals for the indirect expropriation of an enterprise:

"(i) whether the investor remained in control of its investment, (ii) whether it directed its day-to-day operations, (iii) whether its officers and employees were detained by the State,

(iv) whether the State supervised the work of the investor’s officers and employees or not,

(v) whether the State had taken the proceeds of sales other than through taxation, (vi) whether the State interfered with management or shareholders’ activities, (vii) whether the State prevented the distribution of dividends to shareholders, (viii) whether the State interfered with the appointment of directors or management, and (ix) whether the State had taken any other actions ousting the investor from full ownership and control of the investment."542

268.
The Respondent points out that the "Claimant has not even attempted to argue that any of these criteria are met in this case."543 The Respondent distinguishes the decisions in Santa Elena v. Costa Rica and Vivendi II quoted by the Claimant on the basis that "they involved measures targeted at a particular investment as opposed to regulatory measures of general application."544
269.
The Respondent further refers to the precautionary principle, noting that "there were legitimate concerns that the science was not sufficient to support the development of a regulatory framework that would be capable of assessing the effects of the first large scale freshwater offshore wind farm in the world."545 The Respondent also refers to the public consultation process on offshore projects, where it received an unprecedented number of responses from the public and points out that, because of this, it "anticipated that REAs for offshore wind projects would be appealed to administrative tribunals and the courts."546
270.
The Respondent further submits that the moratorium was of general application and non-discriminatory.547 Finally, according to the Respondent, "impacts of the deferral on the Claimant are not so severe in the light of its purpose that the deferral cannot be reasonably viewed as having been adopted and applied in good faith."548

3. Submissions pursuant to Article 1128 of NAFTA

(a) Submission of the United States

271.
According to the United States, determining indirect expropriation is a "fact based inquiry"549 which, once the scope of the property interest has been established,550 considers several factors including: "(i) the economic impact of the government action; (ii) the extent to which that action interferes with distinct, reasonable investment-backed expectations; and (iii) the character of the government action."551
272.
As to the first factor, the United States submits that a claimant must show that "the government measure at issue destroyed all, or virtually all, of the economic value of its investment, or interfered with it to such a similar extent and so restrictively as ‘to support a conclusion that the property has been ‘taken’ from the owner.’"552
273.
According to the United States, the second factor requires "an objective inquiry of the reasonableness of the claimant’s expectations, which ‘depend in part on the nature and extent of governmental regulation in the relevant sector.’"553
274.
As to the third factor, the United States explains that it requires a determination of the nature and character of the government action; in particular, whether "such action involves physical invasion by the government or whether it is more regulatory in nature."554

(b) Submission of Mexico

275.
Mexico takes the position that a breach of Article 1110 based on indirect expropriation requires at a minimum a "finding that a measure or series of measures attributable to the host State resulted in the effectively permanent, substantially complete deprivation of the economic benefit of an ‘investment,’ as defined in Article 1139, that is (or was) owned or controlled by an investor of another party."555 Mexico further states that an "investment" cannot exist in the absence of vested (and not contingent) legal rights comprising an asset described in Article 1139.556
276.
Mexico submits that "the existence (or non-existence) of investor’s ‘distinct, reasonable, investment-backed expectations’ is at most a factor to consider in determining whether a measure or series of measures have risen to the level of an indirect expropriation."557 According to Mexico, "a host state’s failure to satisfy such expectations does not amount to an indirect expropriation."558 Mexico adds that a bona fide regulatory action taken in the public interest that adversely affects the value or viability of an investment will not ordinarily amount to an indirect expropriation.559

(c) The Claimant’s reply to the submissions of the United States and Mexico

277.

Contrary to the positions of the United States and Mexico,560 the Claimant submits that "there is no broad public purpose or public interest exception to expropriation under Article 1110."561 According to the Claimant, even tribunals that have found an exception under the police powers doctrine have recognized that the doctrine has traditionally been narrowly construed.562

278.

The Claimant relies on the Methanex and Chemtura decisions, asserting that "proven harm" (and not public interest) is necessary to justify an otherwise expropriatory measure.563 Even in cases in which harm is proven, the Claimant contends that the measure will not "fall within the narrow boundaries of the police powers doctrine if it is not truly necessary and proportionate to the measure’s stated rationale, or if it is contrary to the investor’s legitimate expectations."564

(d) The Respondent’s reply to the submissions of the United States and Mexico

279.

The Respondent submits that, pursuant to Article 31(3) of the 1969 Vienna Convention on the Law of Treaties (the "Vienna Convention"),565 "the clear and long-standing agreement of the NAFTA Parties regarding the interpretation" should be taken into account in interpreting Article 1110 of NAFTA.566

280.
According to the Respondent, "[w]ithout substantial deprivation of a property right there can be no expropriation."567 The Respondent agrees with Mexico’s statement that expropriation requires vested legal rights to exist and not contingent contractual rights,568 and reiterates its position that "the Claimant’s contractual rights were contingent on obtaining regulatory approvals and permits and therefore did not constitute vested rights that can be expropriated."569
281.
The Respondent emphasizes that "the character of a measure is relevant to the indirect expropriation analysis and that bona fide regulatory action taken in the public interest is not ordinarily expropriatory or compensable."570 The Respondent notes that all three NAFTA parties share this view.571
282.
The Respondent argues that "interference with an investor’s expectation is only one factor in an indirect expropriation analysis, and is not conclusive on its own," and notes that all three NAFTA Parties also agree with the position.572

4. The Tribunal’s Analysis

283.
The Parties disagree not only on whether an expropriation has taken place, but also on the criteria for such determination. The relevant provision of NAFTA., Article 1110, sets out the criteria for legality of expropriation and defines the modalities of compensation, but does not provide any criteria for determining whether or when an expropriation has taken place. However, the provision does distinguish between direct and indirect expropriation, and as summarized above, it is the Claimant’s case that the Respondent has indirectly expropriated its investment.
284.
NAFTA tribunals have generally taken the view that under Article 1110 of NAFTA the determination of whether an indirect expropriation has taken place is in the first place a matter of evidence, that is, a factual determination of whether an effective or de facto taking of property that is attributable to the State has taken place, even if there has been no formal transfer of title, and even if the host State has not obtained any economic benefit. If it is determined that such a de facto taking has indeed taken place, the issue arises as to whether the taking is lawful, and what the appropriate form and level of relief should be. In certain circumstances, the question may also arise as to whether the alleged taking is excused by a justification provided under international law, such as the police powers doctrine.
285.
The Tribunal agrees that the first step in the process of determining whether an effective taking has taken place is to determine whether the investor has been substantially deprived of the value of its investment.573 This is a test that has been applied by numerous investment treaty tribunals, including NAFTA tribunals. Thus, in ADMv Mexico, the tribunal held:

"The test on which other Tribunals and doctrine have agreed - and on which the Claimants’ [sic] rely - is the ‘effects test.’ Judicial practice indicates that the severity of the economic impact is the decisive criterion in deciding whether an indirect expropriation or a measure tantamount to expropriation has taken place. An expropriation occurs if the interference is substantial and deprives the investor of all or most of the benefits of the investment. There is a broad consensus in academic writings that the intensity and duration of the economic deprivation is the crucial factor in identifying an indirect expropriation or equivalent measure."574

286.
The Cargill v Mexico tribunal similarly stressed that a finding of expropriation requires "radical deprivation of the Claimant’s economic use and enjoyment of its investment:"

"It is widely accepted that a finding of expropriation of property under customary international law requires a radical deprivation of a claimant’s economic use and enjoyment of its investment. This is the consistent view of previous NAFTA tribunals.

‘[T]he affected property must be impaired to such an extent that it must be seen as ‘taken." ‘The taking must be a substantially complete deprivation of the economic use and enjoyment of the rights to the property, or of identifiable distinct parts thereof (i.e., it approaches total impairment).’ It is a view also stated in numerous BIT arbitrations. Therefore, putting to the side the question of sufficiency of the duration of the interference, the Tribunal must find a radical deprivation of the Claimant’s economic use and enjoyment of its investment for the period of the interference."575

287.

In Metalclad v Mexico the tribunal analyzed the distinction made in Article 1110 of NAFTA. between direct and indirect expropriation, noting that both require "the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property:"

"Thus, expropriation under NAFTA includes not only open, deliberate and acknowledged takings of property, such as outright seizure or formal or obligatory transfer of title in favour of the host State, but also covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property even if not necessarily to the obvious benefit of the host State."576

288.
The Claimant claims that such a de facto taking of its investment has occurred in the present case. According to the Claimant, under the FIT Contract, WWIS had the obligation to bring the Project into commercial operation by 4 May 2015. This deadline could be extended, but only up to two years, i.e., until 4 May 2017, for reason of force majeure, whereafter either party will be entitled to terminate the Contract. The Claimant contends that, while the Project is currently under force majeure, there is no longer any realistic prospect that the Project can reach commercial operation by 4 May 2017. Consequently, the Project is no longer financeable and has effectively lost all of its value. This is the case even if the OPA were to waive its right to terminate the FIT Contract as the conduct of the Ontario Government has created such uncertainty around the offshore wind industry in Ontario that no potential investor would be prepared to invest in the Project.
289.
As summarized above, the Respondent argues that, on the facts, there has been no expropriation in this case because the Project had no value at the time of its alleged taking. At most, the Claimant was deprived of an "opportunity" to develop the Project. Moreover, the moratorium is only a temporary measure and therefore could not have resulted in a permanent deprivation of the Claimant’s investment. The Claimant’s assets, including the security deposit, remain intact and could be returned if the Claimant entered into a mutual termination agreement with the OPA.
290.
The Tribunal has carefully reviewed the relevant evidence and finds that, on the facts, no expropriation has taken place in this case. First, the Claimant’s FIT Contract is still formally in force and has not been unilaterally terminated by the Government of Ontario; consequently, while the Tribunal agrees with the Claimant that the Project can no longer be completed by the MCOD, 4 May 2017, it continues to remain open for the Parties to re-activate and, as appropriate, renegotiate the FIT Contract to adjust its terms to the moratorium. Second, and more importantly in the context of the Claimant’s expropriation claim, the Claimant’s CAD 6 million security deposit is still in place and has not been taken or rendered otherwise worthless as a result of any action taken by the Government of Ontario. Under Article 10.1(g) of the FIT Contract, if by reason of force majeure the MCOD is delayed for an aggregate of more than 24 months (which is the case here), completion and performance security will be returned at the time of the termination of the agreement by either party. Consequently, the Respondent cannot terminate, and indeed confirmed at the hearing that it would not be able to terminate, the FIT Contract pursuant to Article 10.1(g) without returning the security. It therefore cannot be said that the Claimant has been substantially deprived of its investment.
291.
In reaching the conclusion that, on the facts, the Claimant has not been substantially deprived of its investment, the Tribunal has taken into account its determination of the overall value of the Claimants’ investment, as set out in Section B below. As determined in Section B, the amount of money invested by the Claimant in the Project - its sunk costs - do not substantially exceed, if at all, the value of the security deposit. Consequently, although the Tribunal accepts (as determined in Section B below) that the Claimant’s investment consists not only of the sunk investment costs and the security deposit, but also of the value created by the Claimant in developing the Project, the value of the asset that is still available to the Claimant as it has not been taken (i.e., the security deposit) is substantial, in particular when compared to the overall value of the investment. In the circumstances, the Tribunal is unable to conclude that the Claimant has been substantially deprived of the value of its investment.

B. NAFTA Article 1105 - Fair and Equitable Treatment

1. The Claimant’s Position

292.
The Claimant contends that the Respondent has failed to grant Windstream’s investments fair and equitable treatment in breach of its obligations under Article 1105(1) of NAFTA. According to the Claimant, fair and equitable treatment is one of the elements included in the umbrella concept of minimum standard of treatment.577 The Claimant submits that the minimum standard of treatment is a rule of customary international law and as such constitutes the "floor" of treatment protected under Article 1105,578
293.

Citing various arbitral awards, the Claimant explains that examples of treatment that have been deemed to fall below the fair and equitable treatment standard include the breach of commitments or of the investor’s legitimate expectations;579 failure to observe the required regulatory fairness and predictability;580 arbitrariness;581 and discrimination.582 The Claimant notes that, while bad faith is a persuasive indicator of unfair treatment, it is not a necessary element for finding a breach of Article 1105(1).583

294.
The Claimant accepts that it has the burden of proving that the legal standard has been breached.584 However, as to proving what the relevant legal standard is, the Claimant submits that there is an equal burden on either side to provide evidence of customary law, i.e., state practice and opinio juris.585 The Claimant emphasizes that its main position is not that "there is a customary international law principle under [the fair and equitable treatment standard] of legitimate expectations that is... independent and standalone."586 According to the Claimant, legitimate expectations is one of the elements or factors examined by tribunals when determining whether a breach of the fair and equitable treatment standard has occurred.587
295.
The Claimant submits that the Respondent’s position that the threshold for proving a breach of Article 1105(1) is "extremely high" is incorrect.588 In Bilcon v. Canada, the tribunal rejected Canada’s arguments that the challenged conduct needs to rise to the level of shocking or outrageous behavior.589 The Claimant also cites the tribunal in Mondev v. United States, which confirmed that "[t]o the modem eye, what is unfair or inequitable need not equate with the outrageous or the egregious."590
296.
The Claimant submits that the only NAFTA tribunal to have accepted the "egregious conduct" standard - based on the 1926 Neer decision - is the one in Glamis Gold, but that its reasoning "has consistently been rejected by NAFTA tribunals, other tribunals applying the minimum standard of treatment and commentators."591 What is more, according to the Claimant, the Respondent "has failed to show any evidence of state practice and opinio juris that [the fair and equitable treatment standard, under minimum standard of treatment,] requires conduct that is outrageous or egregious."592 In any event, in the Claimant’s view, there is no substantial difference between the Claimant’s and the Respondent’s standard; the same factors are relevant.593
297.
According to the Claimant, there is a consistent practice of arbitral tribunals when applying the standard under Article 1105(1) to consider "whether a state has breached an investor’s legitimate expectations arising from specific commitments made to the investor to induce the investment."594

(a) The moratorium was arbitrary, grossly unfair and contrary to the Respondent’s commitments and representations and the Claimant’s legitimate expectations

298.
Applying the standard under Article 1105(1) to the facts, the Claimant submits that the moratorium breached commitments and representations made by the Respondent to encourage the Claimant to enter into the FIT Contract and breached the Claimant’s resulting legitimate expectations.595 The Claimant contends that the moratorium has prevented Windstream from obtaining access to Crown land to develop the Project in accordance with the timelines set out in the FIT Contract.596
299.
The Respondent’s commitments, representations and assurances included that: (i) Ontario was "open for business" for offshore wind; (ii) timely approval of applications to use Crown land for offshore wind energy development could be expected by those submitting applications; (iii) the streamlined regulatory approvals process created by the GEGEA applied equally to all renewable energy projects, including offshore wind projects; (iv) the GEGEA, and the FIT Program and REA process it created, would make Ontario the "destination of choice for green power developers... including wind, both onshore and offshore" by providing "certainty that government would issue permits in a timely way" and a fair price guaranteed "for decades," and that the Act would "coordinate approvals from the [MOE and MNR] into a streamlined process with a service guarantee;" (v) Ontario was satisfied that its research "made clear" that developing offshore wind was environmentally sound, and as a result lifted the earlier deferral on accepting applications for offshore wind project development; (vi) the Project had the "highest priority" for receiving AOR status and would receive "priority attention from MNR;" (vii) the Ontario Government, including the Premier’s Office, supported the Project; (viii) the Government was working "feverishly" to develop offshore REA guidelines and that, as of May 2010, the guidelines would be available "very soon;" (ix) the MNR "appreciate[d] Windstream’s need for certainty" before it signed a FIT Contract, and would "move as quickly as possible through the remainder of the application review process in order that [WWIS] may obtain Applicant of Record status in atimely manner;" (x)the approval process forthe Projectwould be expedited; and (xi)the Project could proceed as an offshore wind pilot project.597 The Claimant emphasizes that "[w]ithout this repeated and continuous confirmation of the government’s support for the Project, Windstream would not have invested time and capital in the Project."598
300.
The Claimant points out that Minister Smitherman stated in his witness statement that remarks he had made on the occasion of the introduction of the GEGEA "were designed to attract investors to Ontario."599 Windstream relied on these commitments when it decided to invest in WWIS and the Project.600 In the view of the Claimant, "[t]hese representations are akin to the representations given to the claimant in Bilcon, on which the tribunal in that case relied in finding that Canada had breached Article 1105(1)."601
301.
The Claimant disagrees with the Respondent’s assertion that in light of the allegedly underdeveloped regulatory framework for offshore wind, Windstream’s reliance on these representations was not reasonable.602 According to the Claimant, Windstream’s reliance on the Ontario Government’s commitment to issue regulatory approvals for offshore wind projects in a timely way "would only be unreasonable if the Government had made public statements reneging those commitments;"603 the 2008 decision of Minister Cansfield to lift the deferral was based on research that "made clear" that the environmental approvals process in place was sufficient to ensure compliance of offshore wind projects with environmental standards;604 and Ontario never publicly communicated that it was "not ready" to receive investment in offshore wind projects.605
302.
In the Claimant’s view, in terms of the REA Regulations, all the main rules were in place for the project to move forward.606 The Claimant maintains that the REA Regulations specifically applied to offshore wind including classified facilities and offshore wind facilities.607 Furthermore, there existed a regulatory framework that included not only the REA Regulations, but also the FIT Contract, renewable energy procurement initiatives from the Ministry of Energy, the Environmental Protection Act, and the site release process.608 The Claimant further notes that the Offshore Wind Facility Report served as a "specific piece of guidance documentation" published in relation to REA Regulation 359, and included environmental assessment components.609 In addition, as to the setback issue, the Claimant disagrees with the Respondent that there was regulatory uncertainty, arguing that each setback would be determined on a specific basis based upon each individual project.610 The Claimant’s witness, Mr Uwe Roeper, explains that there have been many projects in which there have been no specific setback guidelines and, in those instances, the standard approach is followed that uses science and the specific requirements.611 In sum, the Claimant maintains that "there were sufficient rules in place... for the project to have proceeded through the REA application and through the application provisions in the MNR."612
303.
According to the Claimant, the "moratorium was an abrupt withdrawal of Ontario’s support for the Project," with "devastating consequences" that rendered the Project "substantially worthless."613 In particular, the Claimant sees the moratorium as contrary to ministerial commitments that the GEGEA would provide offshore wind developers with "certainty," that the MNR and the MOE "would issue permits in a timely way,"614 and to the MNR’s commitment to "move as quickly as possible" with respect to Windstream’s application for the AOR status.615
304.
Further, the Claimant contends that, "[r]ather than amending the regulatory framework in place for offshore wind projects at the time Windstream invested in the Project, in adopting the moratorium Ontario decided to override that framework by fiat, with complete disregard for the regulatory process."616 The Claimant points out that the moratorium lacked formal legal authority because it was based on "nothing more than policies announced via [online] postings... and via press releases."617 This notwithstanding, the practical effect of the moratorium was to "override" the REA Regulation, which promised to proponents of offshore wind projects that they "could apply for, and obtain, a Renewable Energy Approval."618 The Claimant characterizes the moratorium as a "shocking and unexpected repudiation of a policy’s very purpose and goals" and a "willful disregard of the law," which the Claimant says has consistently been found by arbitral tribunals "to be arbitrary and grossly unfair."619
305.
The Claimant also alleges that the moratorium was "politically motivated" by the "desire to indefinitely stall offshore wind development" out of considerations including "cost savings" and "countering public opposition to offshore wind development," rather than any "scientific uncertainty."620
306.
Finally, the Claimant submits that the Respondent failed to fulfill its promises to ensure that the moratorium would not penalize Windstream.621 The Claimant contends that the Respondent could have treated Windstream "fairly" by ensuring the Project was "frozen" and not "cancelled" or by giving it an alternative project, like it did for TransCanada.622

(b) The Respondent discriminated against the Claimant

307.
The Claimant submits that the Respondent also breached Article 1105(1) of NAFTA by treating other investors more favorably.623 The Claimant points out that several NAFTA awards have found that discriminatory treatment can amount to a breach of Article 1105.624 In addition, the Claimant submits that discriminatory intent is not necessary to qualify a given measure as discriminatory under international law; what counts is the discriminatory effect.625
308.
According to the Claimant, the Respondent discriminated against it when compared to the treatment of TransCanada, Samsung, other applicants for Crown land and the other developers of large-scale projects who were awarded FIT Contracts at the same time as Windstream.626 In particular, the Claimant submits that the Respondent kept TransCanada "whole" after cancelling its project, but refused to do the same for Windstream.627 The Claimant also complains that the Respondent gave a solar project that the Claimant had proposed as an alternative to the Project to Samsung, thus "prevent[ing] Windstream from salvaging the value of its FIT Contract and Project, and instead favour[ing] the interests of Samsung."628
309.
The Claimant further submits that within the period of over six years since Windstream applied for AOR status to develop the Project, the Respondent granted that status to "at least 19 other wind energy developers," but not to Windstream, despite the "MNR’s commitment to Windstream... that [it] would receive Applicant of Record status in a ‘timely manner.’"629 According to the Claimant, "Ontario has allowed every other developer of a large wind project... to receive the benefits of its FIT contract," while "Windstream has been singled out and prevented from receiving the benefit of its FIT Contract."630

2. The Respondent’s Position

310.
The Respondent submits that the Claimant’s allegations "that Ontario’s adoption and implementation of the deferral violated Canada’s obligation to provide the Claimant with the customary international law minimum standard of treatment because it (1) was arbitrary and grossly unfair; (2) constituted a repudiation of the regulatory framework; (3) violated the commitments and representations made by Ontario contrary to the Claimant’s legitimate expectations; and (4) was discriminatory" are without any merit.631 The Respondent argues that Article 1105(1) of NAFTA. only requires Canada to accord the customary international minimum standard of treatment of aliens, referring to NAFTA’s Free Trade Commission’s ("FTC") Notes of Interpretation of 31 July 2001,632
311.
According to the Respondent, the Tribunal must "consider the applicable customary rules, which requires proof of extensive uniform, consistent, and general practice by States, together with the States’ belief that such practice is required by law."633 The Respondent notes that "the practice of states does not support the proposition that standalone FET clauses have become part of the customary international law minimum standard of treatment" and "there is no uniform consistent practice."634 According to the Respondent, "to prove a breach of Article 1105 requires proving a breach of a customary international law standard, such as denial of justice or a breach of an investor’s full protection and security."635 The Respondent submits that "the Claimant has not met its burden in identifying a standard of customary international law and has not alleged a denial of justice or a breach of full protection and security."636
312.
According to the Respondent, the threshold to establish a breach of Article 1105(1) of NAFTA is very high.637 In particular, following the FTC Note of Interpretation, NAFTA tribunals "have consistently affirmed that a violation of the minimum standard of treatment under customary international law will not be found unless there is evidence of egregious conduct, such as serious malfeasance, manifestly arbitrary behaviour or denial of justice."638
313.
The Respondent argues that the tribunal in S.D. Myers v. Canada held that, to establish a breach of Article 1105 of NAFTA, it must be "shown that an investor has been treated in such an unjust or arbitrary manner that the treatment rises to the level that is unacceptable from the international perspective."639 The S.D. Myers tribunal elaborated that "determination must be made in the light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their own borders."640 The Respondent further refers to summaries of the minimum standard of treatment under customary international law provided by the tribunals in Thunderbird, Waste Management, Glamis, Cargill and Mobil,641
314.
The Respondent concludes that "it is clear from the consistent post-FTC Note of Interpretation NAFTA jurisprudence... that the measure in question must hit a high level of severity and gravity in order to breach the exacting threshold set by Article 1105."642

(a) The moratorium was neither manifestly arbitrary nor grossly unfair

315.
The Respondent disputes the Claimant’s allegation that Ontario’s decision to defer the development of offshore wind was made because of "economic benefit, along with electoral politics," stating that such an allegation is "unsubstantiated by the evidentiary record" of this arbitration.643 The Claimant’s allegation that the decision to defer offshore wind development was made "because of electoral politics" is not supported by the evidence.644 According to the Respondent, the record is "replete with evidence concerning the reason for the deferral,"645 i.e. the need to ground the offshore wind policy framework on solid scientific foundation.
316.
While the Respondent does not deny that it was aware of public opposition to offshore wind, it argues that such opposition required that the regulatory framework be backed by scientific research.646 The Respondent considers it "absurd for the Claimant to suggest that the consideration of public concerns by elected officials is somehow a breach of Article 1105."647 Similarly, while conceding that the impact on ratepayers was a consideration in deciding to impose the deferral, the Respondent argues that "Article 1105 does not prevent elected officials charged with managing public finances from considering the full context of their decisions when making policy choices."648
317.
The Respondent explains that because the REA process was intended to be standardized and prescriptive in nature to ensure that the development of renewable energy projects does not adversely affect human health and the environment, the determination of requirements for project proponents "was a necessary prerequisite for the issuance of REAs for offshore wind projects."649 As the REA Process also provides third-parties with a right of appeal,650 the Respondent had to adopt a "cautious approach, especially in light of the public opposition to offshore wind."651 Accordingly, Ontario’s decision to institute a temporary deferral on offshore wind development "was neither manifestly arbitrary nor grossly unfair."652

(b) The moratorium did not amount to a repudiation of the regulatory framework for offshore wind

318.
The Respondent disagrees with the Claimant’s characterization of the REA Regulation.653 Contrary to the Claimant’s assertion that the deferral amounts to a repudiation of the existing regulatory framework for offshore wind, the Respondent contends that the moratorium is "fully in support of the development of offshore wind policies in the REA Regulation."654 Indeed, the moratorium was necessary to allow the regulator sufficient time to determine appropriate rules, requirements and standards.655 According to the Respondent, it could not repudiate a regulatory framework "that did not yet exist."656
319.
The Respondent acknowledges that "the REA Regulation applies equally to offshore wind projects as it does to onshore wind and other renewable energy projects,"657 but contends that the Claimant ignores the technology-specific requirements in the REA Regulation which are reflected in different classifications of renewable energy generation facilities.658 The decision to defer offshore wind development was necessary "to allow the regulator sufficient time to determine the rules, requirements and standards that the proponent of an offshore wind facility would have to satisfy prior to the issuance of a REA."659 According to the Respondent, the Claimant’s contention that the deferral was "unnecessary to achieve its stated environmental objective" is therefore unfounded.660 Without "scientifically sound rules" the MOE could not be in a position to assess a project and issue a REA accordingly.661

(c) Neither the moratorium nor Ontario’s subsequent conduct vis-à-vis the Claimant breached any specific commitments to the Claimant

320.
The Respondent argues that, even assuming a mere breach of a commitment or representation was sufficient to demonstrate a breach of Article 1105 of NAFTA, the Claimant has not provided any evidence "that Ontario made any specific assurances, which could reasonably have been relied upon by the Claimant to induce it to invest in Ontario."662 In particular, the customary international law minimum standard of treatment does not require a State to respect an investor’s legitimate expectations, as explained by the arbitral tribunals in Waste Management II, Glamis and Mobil.663 According to the Respondent, the mere failure to meet a commitment does not fall below the customary international law standard of treatment required by Article 1105 of NAFTA.664
321.
The Respondent disagrees with the Claimant’s argument that a breach of legitimate expectations in and of itself could amount to a breach of Article 1105.665 Specifically, the NAFTA decisions that the Claimant relies on provide no assistance because the tribunals in those cases failed to apply the customary international law standard.666 The Respondent suggests that, at most, the standard can be used as a "relevant factor" in assessing the egregious behavior under customary international law, referring to the decisions in Thunderbird, Glamis Gold and Mobil667
322.
The Respondent also argues that the only relevant expectations for the Article 1105 NAFTA analysis are those that are objective and reasonable, based on specific assurances made to induce the investment, and existing at the time of the investment.668 However, the Claimant has failed to prove that it had any expectations that would be relevant to an Article 1105 analysis.669 In particular, the Claimant had no objective and legitimate expectation that (i) its application for Crown land would be approved;670 (ii) it would be permitted to proceed through the REA process before the establishment of the requirements for offshore winds facilities;671 (iii) its Project would be permitted to proceed merely because the OPA (an independent State enterprise) offered it a FIT Contract;672 and (iv) its Project would be permitted to proceed as a pilot project proposal.673
323.
Finally, the Respondent’s expert, Mr Gareth Clarke, notes that the Project had a "significant risk profile"674 as it would have been "the first offshore wind project permitted in North America and particularly under the REA process" and subject to more scrutiny from the various agencies involved,675 and because it was in an early stage of development as there were still a number of technical, and environmental studies and other work to do to develop the project.676

(d) The moratorium and Ontario’s subsequent conduct did not discriminate against the Claimant

324.
The Respondent submits that the Claimant has failed to make any distinction between its Article 1105 NAFTA claims with respect to TransCanada and Samsung and its Articles 1102 and 1103 NAFTA claims, whereas the FTC Note of Interpretation clearly states that "[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)."677 According to the Respondent, the Claimant therefore inappropriately relies on its allegations of discriminatory treatment under NAFTA Articles 1102 and 1103 to establish a breach of Article 1105.678
325.
The Respondent submits that the Claimant has also failed to prove, on the facts, that it was subject to any discriminatory treatment. According to the Respondent, the Claimant was treated in its capacity as a FIT project proponent, whereas neither TransCanada nor Samsung participated in the FIT Program.679
326.
The Respondent notes that none of the comparators that the Claimant has identified are offshore wind developers.680 The Respondent points out that "there are currently no offshore wind proponents in Ontario with AOR status" and that "no other offshore wind projects have been developed or proceeded through the REA process in Ontario."681 According to the Respondent, the Claimant actually received more favorable treatment because its Project was "merely frozen," whereas all other offshore wind applications were cancelled.682

(e) Ontario took reasonable efforts to ensure that the Claimant was not adversely affected by the moratorium

327.
The Respondent submits that it "took all reasonable measures to accommodate the Claimant."683 In particular, during the telephone conference on 11 February 2011 the Government of Ontario (through officials from the MEI, MOE, MNR and the OPA) explained to the Claimant the effects of the decision on its Project and presented various options as to how to move forward.684 In other words, "Ontario confirmed that whereas all other offshore FIT and Crown land applications were cancelled, the Claimant’s Project and its Crown land applications were not terminated."685 The Claimant "was invited to engage the OPA in ‘without prejudice’ negotiations specifically in respect of the Force Majeure, two-year Force Majeure termination clause and security deposit provisions in the FIT Contract."686
328.
The Respondent submits that the Claimant "did not pursue the available options... and instead chose to make unreasonable and unrealistic demands of Ontario and the OPA," seeking "an extension of its MCOD until such date as the Claimant elected to resume the project."687 The Claimant also requested "the return of the full amount of the security deposit, a removal of the time limitations on Force Majeure, and removal of the OPA’s termination right," as well as making "requests unrelated to mitigating the impact of the deferral, such as the removal of its domestic content requirement."688 According to the Respondent, "[i]f the Claimant had accepted the OPA’s proposal, then the harm that it claims occurred on May 4, 2012, when its financing backed out because of the OPA’s termination rights, never would have happened."689 The Respondent also contends that the Claimant’s "alternative proposals" were "unreasonable," as they were "inconsistent with the FIT Rules and would result in major implications to ratepayers and other renewable energy projects that were already under development."690

3. Submissions pursuant to Article 1128 of NAFTA

(a) Submission of the United States

329.
The United States submits that the FTC’s interpretation of Article 1105 is binding on all NAFTA tribunals constituted under Chapter 11.691 As confirmed by the FTC, the term fair and equitable treatment does "not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens."692
330.
According to the United States, customary international law has two components, State practice and opinio juris.693 Both requirements "must... be identified to support a finding that a relevant rule of customary international law has emerged."694 The United States points out that ‘"legitimate expectations’ is not a component element of ‘fair and equitable treatment’ under customary international law that gives rise to an independent host State obligation,"695 and an investor’s expectation with respect to "a particular legal regime do[es] not preclude a State from taking future regulatory action."696 Consequently, "something more" than mere interference with the investor’s expectations is required under the minimum standard of treatment.697
331.
According to the United States, States may extend protections by treaty beyond what is required under customary international law through "autonomous" standards.698 However, such protections are not relevant for the purpose of interpreting "fair and equitable treatment" and "full protection and security" under Article 1105.699
332.

As to the burden of proof, the United States asserts that the claimant needs to establish "the existence and applicability of a relevant obligation under customary international law that meets the requirements of State practice and opinio juris ‘"700 Once such a burden is discharged, the claimant must show that the State breached the customary international law rule and the minimum standard of treatment.701 Such a determination "must be made in the light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their borders."702 Furthermore, as confirmed by the FTC, "establishing that Article 1102 or 1103 has been breached does not establish a breach of Article 1105(1)."703

(b) Submission of Mexico

333.
Mexico reiterates the position on Article 1105(1) of NAFTA which it presented in Mercer International Inc. v. Government of Canada', "(i) the threshold for a violation of the minimum standard of treatment is high; (ii) the burden is on the claimant to establish the existence of an obligation under customary international law that meets the requirements of State practice and opinio juris', and (iii) decisions of international courts and arbitral tribunals interpreting ‘fair and equitable treatment’ as a concept of customary international law are not themselves instances of ‘State practice’ for purposes of proving customary international law, although such decisions can be relevant for determining State practice when they include an examination of such practice."704
334.

Mexico also reiterates its position that "Article 1105(1) does not provide a blanket prohibition on discrimination against foreign investors or their investments," stressing that "[n]ationality-based discrimination falls under the purview of NAFTA Articles 1102 and 1103, and not Article 1105."705

335.
Mexico also refers to the United States’ submission in the Mesa case, in which the United States argued as follows:

"Article 1105 thus reflects a standard that develops from State practice and opinio juris, rather than an autonomous, treaty-based standard.... Arbitral decisions interpreting ‘autonomous’ fair and equitable treatment and full protection and security provisions in other treaties... do not constitute evidence of the content of the customary international law standard required by Article 1105....

States may modify or amend their regulation to achieve legitimate public welfare objectives and will not incur liability under customary international law merely because such changes interfere with an investor’s ‘expectations’ about the state of regulation in a particular sector.

The burden is on a claimant to establish the existence and applicability of a relevant obligation under customary international law that meets the requirements of State practice and opinio juris. ‘The party which relies on a custom,’ therefore, ‘must prove that this custom is established in such a manner that it has become binding on the other Party. ’ Once a rule of customary international law has been established, the claimant must show that the State has engaged in conduct that violates that rule. Determining a breach of the minimum standard of treatment ‘must be made in the light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their borders.’"706

336.

Mexico endorses the following positions adopted by the Respondent in its Rejoinder: (i) "[o]nly States can engage in relevant actions which, if followed out of opinio juris and in concert with enough other States, coalesce into binding custom;" (ii) "none of the awards cited by the Claimant, NAFTA or otherwise, undertakes the requisite examination of State practice and opinio juris necessary to prove that the customary international law minimum standard of treatment of aliens has the same substantive content as the autonomous fair and equitable treatment standard