TransCanada NAFTA challenge could break U.S. winning streak, experts say

CALGARY -- As TransCanada prepares to launch a trade challenge over the rejection of the Keystone XL pipeline, the U.S.

See Full Article

track record in similar disputes may not appear very encouraging for the Calgary-based company.

TransCanada itself acknowledges that the U.S. has never lost a claim under the North American Free Trade Agreement, but has decided it's the right move after a "careful evaluation."

Experts say the U.S. winning streak is no reason to discount TransCanada's chances.

TransCanada (TSX:TRP) has given notice that it intends to seek US$15 billion in damages over President Barack Obama's rejection of the pipeline in November. Separately, it has filed a federal lawsuit in Houston that seeks a declaration that Obama overstepped his constitutional power when he denied the permit.

Jim Rubin, a partner at law firm Dorsey & Whitney based in Washington, D.C., said he wouldn't read to much into past U.S. wins when predicting how a TransCanada case may play out.

One reason is that, unlike a typical court case, NAFTA arbitration tribunals are not bound to follow precedents set in past cases.

"It's a really different creature," said Rubin. "If they have a strong case, they have a strong case."

Although there's no formal requirement to follow precedents, past cases will likely be highlighted as a means to persuade a tribunal.

A recent case involving a U.S. company's attempt to expand a quarry in Nova Scotia may work in TransCanada's favour, said Nicolas Lamp, an assistant professor with Queen's University's faculty of law.

Bilcon filed -- and won -- a NAFTA challenge after the provincial and federal governments rejected its project. Bilcon is now seeking at least US$300 million in damages.

The tribunal concluded that the joint review panel considered factors outside Canada's environmental legislation that were not disclosed to Bilcon during the review process.

TransCanada has a "good shot" if the Bilcon case is taken into account," said Lamp.

"If the arbitration tribunal were to follow that precedent of the Bilcon case, I think it's quite likely that they will find against the U.S."

Lamp said there are stark similarities between the Bilcon case and the Keystone XL saga -- namely, that each company expected the regulatory process to unfold in one way, only to encounter "moving goalposts" partway through.

In the case of Keystone XL, the goalposts had to do with Obama making the pipeline's broader implications for climate change a key test for whether to approve it.

Guy Holburn, who directs the Ivey Energy Policy and Management Centre at Western University, said TransCanada has a strong case based on how differently it was treated when it built the first phase of its Keystone system. The XL segment would have provided a more direct route for more oilsands crude to reach Gulf Coast refineries.

The "base Keystone" system, which started up in 2010, made its way through the regulatory process relatively smoothly within a couple of years. The XL expansion was in limbo for seven years before it was nixed.

"This has been a very exceptional project that's been put through the political wringer," said Holburn.

TransCanada wouldn't have made its decision to file a NAFTA claim lightly, said Elizabeth Whitsitt, an assistant professor at the University of Calgary's law faculty.

"International arbitration is very expensive -- tens of millions of dollars at least -- it poses reputational risk to a company and it takes years upon years before they're concluded."



Advertisements

Latest Economic News

  • What happens if you don’t file your income taxes on time?

    Economic CTV News
    Fear of the Canada Revenue Agency (CRA) has caused grown men to burst into tears while clutching thick stacks of unopened mail. Outbursts provoked by mounting fees, compounding interest, and threats of criminal prosecution, according to a prominent Toronto tax lawyer. Source
  • Trump's trade actions bring uncertainty to Canadian lumber country

    Economic CTV News
    MADAWASKA, Ont. -- It didn't take long for Donald Trump's new tariffs on softwood lumber to echo in Ontario's Madawaska Valley -- a forestry-dependent area almost exactly 1,000 kilometres due north of the U.S. capital. Source
  • Asian stocks climb on hopes for U.S. tax cuts, budget deal

    Economic CTV News
    SEOUL, Korea, Republic Of -- Shares rose in Asia on Wednesday after hopes for tax cuts by U.S. President Donald Trump drove record-breaking gains overnight on Wall Street. KEEPING SCORE: Japan's Nikkei 225 jumped 1.1 per cent to 19,289.43 and South Korea's Kospi rose 0.5 per cent to 2,207.84. Source
  • LCBO workers delivering overwhelming strike vote

    Economic CTV News
    TORONTO - Liquor Control Board of Ontario staff have voted 93 per cent in favour of a strike as their union continues to bargain for a new collective agreement. Voting by members of the Ontario Public Service Employees Union was held Monday and Tuesday. Source
  • Swedish museum celebrates corporate failure

    Economic CTV News
    From Harley Davidson-branded perfume to a lasagna produced by toothpaste maker Colgate, the corporate world is awash with ideas that fail to connect with consumers, and one museum curator hopes to inspire people with them. Source
  • Metro profit beats estimates despite lower produce, meat, dairy prices

    Economic CBC News
    The chief executive of Metro Inc. says prices for produce, meat and dairy were lower in its most recent quarter, but the grocer still increased its profits and beat analyst estimates. Food prices were about two per cent lower than a year ago during the 12-week period ended March 11, CEO Eric La Fleche told a conference call with financial analysts Tuesday. Source
  • Uber looks towards electric aircraft for next ride-hailing project

    Economic CTV News
    NEW YORK - Uber is taking to the skies with its next project - "flying cars" - even as all eyes are on its problems on the ground. On Tuesday, the embattled ride-hailing company announced plans for an on-demand network of electric aircraft that can take off and land vertically, like a helicopter. Source
  • Billy Bee and Doyon honey sold in Canada to be made in Canada, too

    Economic CBC News
    The company that owns the Billy Bee and Doyon honey brands says it will start using only Canadian honey for both products in Canada this year. McCormick & Co. says Billy Bee and Doyon products containing all-Canadian honey will start appearing on store shelves in June, while the Billy Bee organic variety will arrive before the end of the year. Source
  • Trump plans to slash U.S. corporate tax rate to 15%

    Economic CBC News
    President Donald Trump plans to stick with his campaign pledge to slash the corporate tax rate from 35 per cent to 15 per cent, but the dramatic cut raises a problematic question for the White House: How can the president deliver the "massive" tax cut he promised without also blowing a massive hole in the budget? Source
  • Reducing debt among Barrick Gold's priorities: president

    Economic CTV News
    TORONTO -- Barrick Gold says it will focus on maximizing its free cash flow, reducing debt and maintaining investment discipline in the year ahead. Company president Kelvin Dushnisky told Barrick's annual meeting Tuesday that the gold mining giant will also work on transforming its business to better use technology. Source