Procedural Background and Parties' Claims

This Award concludes the "Windstream II" arbitration between Windstream Energy LLC (Claimant) and the Government of Canada (Respondent), administered by the Permanent Court of Arbitration under the 2013 UNCITRAL Rules. The dispute arose from events following a prior NAFTA award (Windstream I), which found Canada had breached the Fair and Equitable Treatment (FET) standard but had not expropriated the Claimant's investment in an offshore wind project. The Windstream I tribunal held that the Claimant's investment survived in the form of a Feed-in-Tariff (FIT) Contract and a CAD 6 million security deposit.

In this subsequent arbitration, the Claimant alleged that Canada's post-Windstream I conduct—specifically, its failure to lift a moratorium on offshore wind projects and its ultimate decision to allow the Independent Electricity System Operator (IESO) to terminate the FIT Contract in 2020—constituted an unlawful expropriation under NAFTA Article 1110 and a new breach of the FET standard under Article 1105. The Claimant sought damages for the full value of its investment, which it alleged was now completely destroyed. Canada raised preliminary objections, arguing the claims were barred by res judicata and collateral estoppel, were time-barred, and failed to establish a prima facie case of loss.

Tribunal's Analysis on Preliminary Objections

The Tribunal dismissed all of the Respondent's preliminary objections. It held that the claims were not barred by res judicata because they arose from new measures—principally the actual termination of the FIT Contract—that occurred after the first award. While the Tribunal affirmed it was bound by the factual findings of the Windstream I award under the principle of collateral estoppel, it determined that the new measures gave rise to new and distinct causes of action. The Tribunal also rejected the objections regarding the three-year limitation period, finding that the claims crystallized with the FIT Contract's termination in February 2020, which was within the limitation period. Finally, it dismissed the objection on the failure to establish prima facie loss, holding that the Claimant had met the low threshold required at the jurisdictional stage.

Tribunal's Decision on the Merits

On the merits, the Tribunal rejected both of the Claimant's claims. Regarding expropriation, the Tribunal found that the Windstream I award had established that the Claimant's surviving investment consisted of a terminable FIT Contract (which the first tribunal found had no value at that time) and a refundable security deposit. The first award had already compensated the Claimant for the damage caused by the Respondent's FET breach, which created the contractual right for IESO to terminate. The subsequent termination of the contract in accordance with its terms, and the return of the security deposit, was a lawful exercise of a pre-existing contractual right and did not constitute a new taking or expropriation. The Tribunal noted that the "option" to renegotiate the FIT Contract, mentioned in the first award, did not create a legal obligation for Canada.

Similarly, the Tribunal found no new breach of the FET standard. It reasoned that the Respondent was under no legal obligation following the first award to take steps to revive the project or prevent the FIT Contract's termination. The harm flowing from the "contractual limbo" created by the moratorium had been fully compensated in the Windstream I Award. The Respondent's subsequent conduct, and IESO's exercise of its contractual rights, did not constitute arbitrary, unfair, or inequitable treatment.

Costs and Dispositive

Having dismissed all of the Claimant's claims on the merits, the Tribunal declared that no additional damages were payable. In a departure from the "costs follow the event" principle, the Tribunal ordered each party to bear its own legal fees and costs, citing the "unusual" nature of the case and the "reasonable uncertainty" created by the language of the Windstream I Award, which necessitated the second arbitration.