- arbitration costs (consisting mostly of fees and disbursements charged by the arbitrators), in the amount of about $700,000;
- legal representation and assistance costs (consisting mostly of the cost of legal counsel, disbursements of legal counsel and accounting experts), in the amount of about $3.7 million.
(All figures throughout will be in Canadian dollars, unless otherwise indicated.)
"Ensure a predictable commercial framework for business planning and investment."
Article 201 of NAFTA states that:
"The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency, are to:
...c) increase substantially investment opportunities in the territories of the Parties."
Article 201(2) states that:
"The Parties shall interpret and apply the provisions of this Agreement in light of its objectives set out in paragraph 1 and in accordance with applicable rules of International law."
"The essential principle contained in the actual notion of an illegal act is that reparation must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all probability, have existed if that act had not been committed. Restitution in kind or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would not be covered by restitution in kind or payment in place of it; such are the principles which would serve to determine the amount of compensation for an act contrary to international law." [emphasis added],
- during the initial events;
- in their aftermath, when arbitral proceedings must be pursued in order to achieve redress.
In both situations, at least a reasonable measure of compensation should ordinarily be available.6
- the government of Canada has argued that decisions made by NAFTA tribunals are not worthy of a high standard of judicial deference. The UPS tribunal has stated that it is troubled by these statements and cited it as one reason for sitting the arbitration in the United States, rather than Canada8;
- the Pope & Talbot tribunal severely admonished Canada for not making full disclosure of the negotiating record with respect to Chapter 11. The tribunal stated that:
"...it is almost certain that the documents provided, which included nothing in explication of the various drafts, are not all that exist, yet no effort was made by Canada to let the Tribunal know what, if anything, has been withheld."
"The incident’s injury to the Tribunal’s work can now be remedied. But the injury to the Chapter 11 process will surely linger."9
- in this case, the government of Canada adopted protectionist measures aimed at SDMI even though its own lawyers advised it that a NAFTA panel would likely find such a measure to be a "restriction on trade".10
- the principle that full Indemnification for even a fully successful party may not be appropriate, inasmuch as arbitral practices with respect to costs should promote settlements;
- the principle that tribunals should avoid visiting unduly harsh consequences for parties who are eventually held to be unsuccessful, but could not know for sure how a tribunal would rule on contested legal arguments and evidence;
- the principle that legal representation and assistance costs should be geared to the standard of what reasonably competent-and-serviceable, rather than premium, advocacy would cost. The 50% discount is intended to give the benefit of the doubt to the respondent, CANADA, and should fully encompass any possibility that the investor could have submitted a reasonable case using fewer resources;
- some limited adjustments should be made to take into account the fact that SDMI was responsible for several avoidable complications and delays, including that connected with the late production of the electronic data base on customers;
- in the absence of a clear and consistent body of precedent in the area of costs connected with arbitral proceeding, this tribunal can reasonably be conservative in fixing the amount of the investor’s cost that CANADA must reimburse.