U.S. company Windstream Energy sues Canada for $28-million in NAFTA case

The Globe and Mail | 21 February 2017

U.S. company Windstream Energy sues Canada for $28-million in NAFTA case

by Shawn McCarthy

A New York-based energy company is asking the Ontario Superior Court to enforce a $28-million award against the Canadian and Ontario governments that it received under a NAFTA arbitration after the province imposed a moratorium on offshore wind-power projects in the Great Lakes.

In an application submitted Tuesday, Windstream Energy LLC requested an order recognizing and enforcing the award rendered Nov. 30, 2016, by an arbitration tribunal under Chapter 11 of the North American free-trade agreement.

The arbitration tribunal concluded the government of former Liberal premier Dalton McGuinty broke the rules of the trade agreement when, in the face of local opposition, it placed a moratorium on offshore wind developments in February, 2011. That decision effectively scuttled the Windstream project, despite the fact the company had a contract with the province to supply electricity from the turbines to be located in Lake Ontario off Wolfe Island near Kingston.

Under the NAFTA rules, the federal government is held responsible for violations by provincial governments and must pay whatever awards are ordered by the arbitrators within 30 days.

Windstream director David Mars said the company has had no explanation as to why government has not paid. He said Windstream is still eager to complete the 100-turbine, 300-megawatt project. “We brought a NAFTA litigation with the hope of just pushing forward and not actually litigating,” he said. “And now we’re saying: Does NAFTA actually protect American investors in Canada because they won’t pay it? So we’re just scratching our heads.”

A spokesman for Global Affairs Canada said Ottawa is in discussions with the province over the payment. “Canada stands by its international commitments and fully intends to honour the tribunal’s award in the case. Steps are currently being taken to process the payment,” John Babcock said in an e-mail. The Ontario government said two months ago that it was working with Ottawa “with respect to processing payment.” A spokesman for Energy Minister Glenn Thibeault said Tuesday that the two governments are still working on it.

Mr. Mars noted the controversy comes at an inconvenient time for Canada, when U.S. President Donald Trump has complained about the fairness of NAFTA, and said he wants a “tweaking” of bilateral elements of the three-way deal that includes Mexico. “It’s not a good time to provide evidence the NAFTA deal is not working as it should,” he said.

The moratorium on offshore wind projects was announced prior to the 2011 election, around the same time that the McGuinty government cancelled two gas-fired power plants in Oakville and Mississauga that had encountered fierce opposition from residents. The cancellation of those two gas plants cost taxpayers more than $1-billion. When it imposed the moratorium on offshore wind, the province said it needed more scientific research.

The tribunal found the government’s decision was at least in part prompted by a lack of scientific data, but was also influenced by political considerations arising from public opposition and a looming election. “The government on the whole did relatively little to address the scientific uncertainty surrounding offshore wind that it had relied upon as the main publicly cited reason for the moratorium,” the panel said.