Resource World Magazine

refusal to refund $75 million in VAT payments made by the company in connection with its exploration activities. The carve out precluded EnCana from asserting any claims other than expropriation, which was exempt from the taxation carve-out. While the arbitral tribunal held that the claim to the VAT refunds constituted an "investment" capable of being expropriated, it found that Ecuador's refusal to pay the refunds did not constitute an expropriation. Canadian Developments In recent years Canada has aggressively pursued the negotiation of FIPAs. There are 24 treaties currently in force, eight awaiting ratification, and another 12 under negotiation. Apart from several ongoing claims by gold mining companies against Venezuela, Canadian-based resource companies have made infrequent use of FIPAs. The investor-state arbitral provisions within NAFTA have had more use, though most of the claims have been against Canada. In 2012, three new NAFTA claims were brought against Canada by resource-based companies: Lone Pine Resources Inc. (relating to a Québec law that suspended oil and gas exploration), Windstream Energy LLC (regarding an environmental moratorium imposed by Ontario on offshore wind projects), and Mercer International Inc. (based on denial of access to favourable hydroelectric rates enjoyed by competing pulp mills). In a decision rendered by an ICSID tribunal last Spring, Mobil Investments Inc. obtained a ruling that 2004 Guidelines promulgated by Newfoundland that required the investor to contribute millions annually to research and development in the province constituted an impermissible performance requirement and therefore violated Canada's investment obligations under NAFTA Chapter 11. Among the most significant investmentrelated events in 2012 was the conclusion of the negotiations of the China-Canada FIPA, which awaits ratification. Given the number of resource-based claims under NAFTA, what may prove to be of greater significance is the conclusion of the CanadaEuropean Union free trade negotiations in 2013. Drafts of the agreement include an investment chapter, and a leaked negotiating memorandum reveals that if the EU prevails, the obligations owed to investors will be broader than those found in NAFTA. n Richard Dearden is a senior litigation partner in Gowlings' Ottawa office, practising primarily in the areas of international trade, media and defamation law, freedom of information, and administrative law. richard.dearden@gowlings.com Wendy Wagner is a partner in Gowlings' Ottawa office and leader of the Firm's Transportation and Logistics National Practice Group. Her practice focuses on international trade law and media law. wendy.wagner@gowlings.com SAFETY EXPERIENCE SUPPORT SERVICE INNOVATION EQUIPMENT PEOPLE february 2013 www.resourceworld.com 37

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