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

  • From panhandlers to street musicians, not everyone is ready for cashless society

    Economic CTV News
    MONTREAL -- The sound of Anthony Lovison's singing echoes through the corridors of the Montreal subway, reaching commuters' ears long before they see the young brown-haired man and his guitar. Barely a minute into "Heaven's Door," a man walks up with a smile and throws 50 cents into Lovison's open guitar case -- the first customer of the day. Source
  • Eclipse eye safety and airline phone scams: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Here's the consumer news you need to know from CBC's Marketplace. Get this in your inbox every Friday. Sign up here. Protect your eyes during the eclipse Planning on watching the eclipse Monday? Regular sunglasses won't be enough to protect your eyes. Source
  • Canadian re-commerce company LXRandCo taking luxury vintage shopping into the future

    Economic CBC News
    You've probably heard of e-commerce. But what about re-commerce? It's the business of buying and selling used items. There's a Canadian company, LXRandCo, that's carving out a niche for itself in this category. It deals in the vintage luxury market, which is growing 14 per cent every year, according to the experts at Canaccord Genuity, a financial services company. Source
  • Canada open to completing NAFTA talks in short order

    Economic CBC News
    Canadian negotiators are open to working on a timeline proposed by the U.S. to complete NAFTA renegotiations before the end of the year, CBC News has learned. A government source, speaking on background, tells CBC News that Canada is willing to work quickly, but will not agree to a bad deal for the sake of meeting a deadline. Source
  • U.S. wants NAFTA talks to wrap up before year's end, but is it possible?

    Economic CBC News
    Canadian negotiators are open to working on a timeline proposed by the U.S. to complete NAFTA renegotiations before the end of the year, CBC News has learned. A government source, speaking on background, tells CBC News that Canada is willing to work quickly, but will not agree to a bad deal for the sake of meeting a deadline. Source
  • B.C. premier and jobs minister sued by fired LNG advocate claiming $5M

    Economic CTV News
    VANCOUVER -- British Columbia's fired liquefied natural gas advocate is suing Premier John Horgan, the province's jobs minister and a New Democrat MP in a lawsuit claiming $5 million in damages. Gordon Wilson alleges in a statement of claim filed in B.C. Source
  • Millennials in Atlantic Canada most optimistic about owning homes

    Economic CTV News
    Do millennials think they can afford to buy a home? If they live in Atlantic Canada, the answer is a lot more likely to be yes. That’s according to a new online survey of 1,000 Canadians aged 25 to 30, conducted by Leger Marketing from real estate firm Royal LePage. Source
  • Can millennials afford to buy a home? It depends where they live

    Economic CTV News
    Do millennials think they can afford to buy a home? If they live in Atlantic Canada, the answer is a lot more likely to be yes. That’s according to a new online survey of 1,000 Canadians aged 25 to 30, conducted by Leger Marketing from real estate firm Royal LePage. Source
  • $500K hardship fund for former Sears Canada employees approved by judge

    Economic CBC News
    A judge has approved a hardship fund for former Sears Canada employees that will come from a pool of money set aside to pay bonuses for key employees. The $500,000 fund will help former employees facing difficulty who would have otherwise been eligible for severance payments when they lost their jobs at the retailer. Source
  • Elevated testosterone linked to 'reckless' financial trading, study finds

    Economic CBC News
    It's no secret financial traders have always been predominately male. So, when a group of researchers with the Ivey Business School at Western University in London, Ont., set out to at look at the role of testosterone on the markets, it wasn't a far-flung idea. Source