Reproduced from www.worldbank.org/icsid with permission of ICSID.
NAFTA Chapter 11 Arbitration (ICSID Case No. UNCT/20/3)
Westmoreland Mining Holdings LLC v. Government of Canada
Legal Opinion of Jan Paulsson Relating to the Issue of Jurisidiction Ratione Temporis
1. I have been asked by the Claimant, through its counsel, to give this opinion with regard to the question of NAFTA jurisdiction ratione temporis as it arises in this case. I understand that the Claimant asserts breaches of NAFTA having resulted in large financial losses, and that its substantive claim is to be deemed valid pro tem.
2. My curriculum vitae is attached hereto. I have no expertise in the US law of bankruptcy and do not take issue with the Expert Report of Ms Kathryn A. Coleman submitted by the Claimant. I take however good note of her statement near the end of her Report to the effect that the US Bankruptcy Code:
"defers to applicable non-bankruptcy law--whether it be state, federal, or international law--as to two important aspects of transferred claims. First, the Bankruptcy Code is silent on the issue of transferability itself. [Footnote omitted.] In other words, if applicable non-bankruptcy law limits the transferability of a particular claim, the fact that the claim is sold as part of an asset sale in chapter 11 does not change that result. Second, the Bankruptcy Code also defers to applicable non-bankruptcy law as to the merits of a claim and who may assert it. Accordingly, the Bankruptcy Code does not alter the applicable non-bankruptcy limitations on who may assert 'NAFTA Claim,' and whether the 'NAFTA Claim' is transferable."
3. Whether national law defers to international law is not decisive for a tribunal applying the latter, since national law neither establishes nor neutralizes international obligations. It is nevertheless satisfying to note the absence of conflict in this respect.
4. On the other hand, the effects of national law may have a bearing on international obligations as a factual matter, including threshold issues. Before addressing the merits of a case, an international tribunal may thus be faced with the need to determine what is now commonly referred to as "jurisdictional facts" (an expression often credited to Judge Rosalyn Higgins). In the present case, the issue is whether the Claimant holds entitlements in which a NAFTA-qualifying investment is manifest and exclusively represented by that Claimant.
5. Echoing parts of Paragraph 7 of Ms Coleman's Report which also apply to me, I state as follows: I have no personal relationship to, or interest in, either Canada or the Claimant (or its affiliates and lenders). I have never personally been retained to represent either party as a lawyer. I do not believe that my role as an expert witness here gives rise to a conflict of interest. I have been compensated on an hourly basis for my work on this case. My compensation is in no way contingent on the opinions that I express here, or on the outcome of this arbitration. These opinions reflect my independent views and genuine beliefs based on the materials I have reviewed to date. I am prepared to reconsider my analysis in light of further materials.
Corporate restructuring is not in and of itself fatal to jurisdiction ratione temporis (para. 6). The outcome notably depends on the following considerations:
(a) jurisdiction will not be found where the restructuring is a sham: a disguise designed to give the appearance of protected status (e.g., paras. 12, 68);
(b) provided that the true investor's qualifying nationality is preserved, restructuring with an ordinary business purpose (para. 9) should not divest a tribunal of jurisdiction over a claim;
(c) continuity in the beneficial ownership or controlling interest in the investment prevails over formalism; the tribunal should retain jurisdiction over the claim (paras. 8, 46-48, 51-57)
(d) the right to assert the claim is derived from the claimant's having invested in the investment (para. 17); a bona fide investment supports jurisdiction.
Underpinning these and other factors (the absence of windfall or double recovery) is the international legal principle of good faith.
The texts of NAFTA Articles 1116/1117 do not contain the temporal restriction that Canada has argued (paras. 39-40).
Canada's ratione temporis objection is not founded on the ratio decendi of any of the 15 cases that it cites.
My opinion proceeds as follows:
Paragraphs 6-19 explain how the issue of temporal jurisdiction raised here may be unprecedented.
Paragraphs 20-30 sets out my understanding of Canada's objection.
Paragraphs 31-50 contain my analysis.
Paragraphs 51-61 review arbitral pronouncements on the assignment of claims that I believe are consistent my analysis.
Paragraphs 62-71 contain my comments on 15 cases cited by Canada.
In my opinion the circumstances of this case does not merit dismissal for a failure of temporal juridisction.
February 26, 2021