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Westmoreland Coal Company v.
Government of Canada

ICSID Case No. UNCT/23/2

Canada’s Opening Statement
May 2, 2024

[Page 1]

The Claimant Has Not Established The Tribunal's Jurisdiction

1 Does the Claimant hold a “legacy investment” under CUSMA Annex 14-C?

YES

2 Has the Claimant submitted valid waivers consistent with NAFTA Article 1121?

YES

3 Is the Claim timely pursuant to NAFTA Articles 1116(2) and 1117(2)?

If YES to ALL

Proceed to Next Three Jurisdictional Issues

DISMISS ENTIRE CLAIM

[Page 2]

The Claimant Has Not Established The Tribunal's Jurisdiction

4 Has the Claimant made a prima facie damages claim under NAFTA Article 1116?

DISMISS ART. 1116 CLAIM

5 Has Prairie acted consistently with its waiver in WMH?

DISMISS ART. 1117 CLAIM

6 Did the Claimant own or control Prairie when it submitted its claim to arbitration?

DISMISS ENTIRE CLAIM

[Page 3]

Overview of Canada’s Opening Statement

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant’s Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie’s WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 4]

Overview of Canada’s Opening Statement

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant’s Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie’s WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 5]

Chapter 1: The Claimant Purchases and Sells Interests in Canada

2014
WCC Purchases
Interests in
Prairie

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶¶ 45-47

[Page 6]

Chapter 1: The Claimant Indirectly Held Its Interests in Prairie

Westmoreland Coal Company
[Delaware] (“WCC”) (99.9% LP)

Westmoreland Canada, LLC
[Delaware] (0.1% GP)

Westmoreland Canadian Investments
[Quebec]

WCC Holdings B.V.
[Netherlands] (“DutchCo”)

Westmoreland Canada Holdings Inc.
[Alberta] (“WCHI”)

Prairie Mines & Royalty ULC
[Alberta] (“Prairie”)

Canada’s Memorial on Jurisdiction, ¶ 46; R-060, WMH – Coleman Report, ¶ 77 (RER.031); R-059, Westmoreland Coal Company, Current Report (Form 8-K)

[Page 7]

Chapter 1: The Claimant Purchases and Sells Interests in Canada

2014
WCC Purchases
Interests in
Prairie

OCT 2018
WCC Files for Bankruptcy in U.S.

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶ 48

[Page 8]

Chapter 1: The Claimant Planned to Sell Substantially All of its Assets and Wind Down

the WLB Debtors’ assets. The Court also authorized the First Lien Lenders (through their as yet unformed acquisition vehicle) to serve as the stalking horse bidder.⁷⁵

E. The WCC Plan, Disclosure Statement, and Stalking Horse Purchase Agreement

61. On October 25, 2018, the WLB Debtors filed their initial joint chapter 11 plan (as amended, the “WCC Plan” or the “Plan”) and accompanying disclosure statement (as amended, the “Disclosure Statement”).⁷⁶

62. On November 2, 2018, the WLB Debtors filed a motion with the Court seeking approval of their Disclosure Statement.⁷⁷ In the motion, the WLB Debtors explained that “[t]he WLB Debtors’ goal during the chapter 11 cases is to drive a value-maximizing Sale Transaction that will provide enhanced stakeholder recoveries.”⁷⁸ They further confirmed that:

The Plan and Disclosure Statement contemplate (a) the sale and transfer of substantially all of the WLB Debtors’ assets and equity interests, (b) efficient distributions to their creditors,

⁷⁵ R-054, United States Bankruptcy Court, Order (I) Authorizing Westmoreland Coal Company and Certain Debtor Affiliates to Enter into and Perform Under the Stalking Horse Purchase Agreement, (II) Approving Bidding Procedures with Respect to Substantially all Assets, (III) Approving Contract Assumption and Assignment Procedures, (IV) Scheduling Bid Deadlines and an Auction, (V) Scheduling Hearings and Objection Deadlines with Respect to the Disclosure Statement and Plan Confirmation, and (VI) Approving the Form and Manner of Notice Thereof, [Court Docket, Doc. 519], 15 November 2018 (“Order Approving Bidding Procedures”), at c. ↩

⁷⁶ R-054, Order Approving Bidding Procedures at C-D, 5-6. ↩

⁷⁷ R-055, Westmoreland Coal Company, et al., Joint Chapter 11 Plan of Westmoreland Coal Company and Certain of Its Debtor Affiliates [Court Docket, Doc. 294], 25 October 2018 [Excerpt]; R-056, Westmoreland Coal Company, et al., Disclosure Statement for Joint Chapter 11 Plan of Westmoreland Coal Company and Certain of Its Debtor Affiliates [Court Docket, Doc. 293], 25 October 2018 [Excerpt]. ↩

⁷⁸ R-057, Westmoreland Coal Company, et al., Motion of Westmoreland Coal Company and Certain of Its Subsidiaries for Entry of an Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures with Respect to Confirmation of the Joint Chapter 11 Plan of Westmoreland Coal Company and Certain of Its Debtor Affiliates, (III) Approving the Forms of Ballots and Notices in Connection Therewith, and (IV) Scheduling Certain Dates with Respect Thereto [Court Docket, Doc. 354], 2 November 2018 [Excerpt] (“Motion to Approve the DS”). ↩

⁷⁹ R-057, Motion to Approve the DS at 6. ↩

21

WCC Motion to Approve the Disclosure Statement

The Plan and Disclosure Statement contemplate (a) the sale and transfer of substantially all of the WLB Debtors’ assets and equity interests, (b) efficient distributions to their creditors, and (c) a subsequent wind-down of the WLB Debtors’ businesses and affairs upon distribution of the sale proceeds pursuant to the Plan.

R-060, WMH – Coleman Report, ¶ 62

[Page 9]

Chapter 1: The Claimant Purchases and Sells Interests in Canada

2014
WCC Purchases
Interests in
Prairie

MAR 15, 2019
WCC Sells Interests in Prairie

OCT 2018
WCC Files for Bankruptcy in U.S.

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶¶ 48-55

[Page 10]

Chapter 1: WCC Sold Its Canadian Interests in an Arm’s-Length Sale

Case 18-35672 Document 1561 Filed in TXSB on 03/02/19 Page 28 of 165

assigned or sold to the Purchaser, including the Buyer and Designated Buyers (as defined in the Stalking Horse Purchase Agreement), free and clear of all Liens, Claims, encumbrances, and interests pursuant to sections 363(f), 1123(a)(5), and 1141(c) of the Bankruptcy Code.

XIV. Good Faith Purchaser.

46. The Purchaser is a good faith purchaser within the meaning of section 363(m) of the Bankruptcy Code and is therefore entitled to all of the protections afforded by section 363(m) of the Bankruptcy Code. The Purchaser has proceeded in good faith in all respects in connection with this proceeding.

XV. Arm’s-Length Sale.

47. The Stalking Horse Purchase Agreement and other Sale Transaction Documentation was negotiated, proposed and entered into by the WLB Debtors and the Purchaser without collusion, in good faith and from arm’s-length bargaining positions. The Purchaser is not an “insider” of the WLB Debtors, as that term is defined in section 101(31) of the Bankruptcy Code. Neither the WLB Debtors nor the Purchaser have engaged in any conduct that would cause or permit the Stalking Horse Purchase Agreement to be avoided under section 363(n) of the Bankruptcy Code. Specifically, the Purchaser has not acted in a collusive manner with any person and the purchase price was not controlled by any agreement among bidders.

XVI. No Fraudulent Transfer; Consideration.

48. The Sale Transaction Documentation was not entered into for the purpose of hindering, delaying or defrauding creditors under the Bankruptcy Code and under the laws of the United States, any state, territory, possession, or the District of Columbia, or any foreign jurisdiction. Neither the WLB Debtors nor the Purchaser is entering into the transactions contemplated by the Plan or Sale Transaction Documentation fraudulently. The consideration provided by the Purchaser pursuant to the Stalking Horse Purchase Agreement (i) is fair and

28

U.S. Bankruptcy Court, Confirmation Order

47. The Stalking Horse Purchase Agreement and other Sale Transaction Documentation was negotiated, proposed and entered into by the WLB Debtors and the Purchaser without collusion, in good faith and from arm’s-length bargaining positions.

R-073, WCC Plan Confirmation Order, ¶ 47

[Page 11]

Chapter 1: WCC Sold Its Canadian Interests in an Arm’s-Length Sale

PUBLIC DOCUMENT

in buying certain assets from Westmoreland in a Type G reorganization, it was or was not affiliated with WCC.

228. Fourthly, Westmoreland impressed upon the Tribunal the US Bankruptcy Court’s holding in its Final Order that the NAFTA claim was not extinguished by virtue of the bankruptcy process, asserting that this somehow proves that it is a valid owner of the NAFTA claim. However, this is not binding on the Tribunal and, in any event, our task is not to determine whether WCC’s claim has been extinguished but whether Westmoreland meets the NAFTA jurisdictional requirements.

229. Fifthly, the difficulties in Westmoreland’s argument that its standing is premised on assignment of the claim were made clear in the answer given to the Tribunal’s question as to whether, had a bidder emerged which had exceeded the stalking horse bid and successfully purchased WCC’s assets, such bidder would have been assigned the NAFTA claim.¹¹⁹ Westmoreland conceded that such a purchaser would not have jurisdiction to bring a claim as it would not have had any interest in the prior iteration of WCC. Given this, it is clear that Westmoreland’s argument relies upon it being able to show that Westmoreland had an interest in the prior iteration of WCC. However, the only difference in that scenario is that Westmoreland’s interest is created by its shareholders, the first-tier lien holders. Whilst Canada placed significant reliance upon the fact the identity of all of the first-tier lien holders has not been disclosed, the Tribunal does not find this argument to be of relevance. The issue for consideration is whether Westmoreland has shown, on a balance of probabilities, that any WCC entity is a shareholder of Westmoreland. Whilst Westmoreland relies upon the fact that the first-tier lien holders are shareholders, this does not assist Westmoreland as the first-tier lien holders are shareholders of Westmoreland not WCC.¹²⁰

230. Having carefully considered the Parties’ respective arguments, the Tribunal finds that Westmoreland is not the legal successor of WCC but is a separate company to which the NAFTA claim was purportedly transferred after the alleged Treaty breaches. In reaching this decision, the Tribunal emphasises that its analysis is founded on the specific process by which Westmoreland came into being. This was not a corporate restructuring pursuant to which Westmoreland emerged from WCC’s ashes. Westmoreland was not spun out of WCC nor was there any internal reorganisation or change in form. The first-tier lien holders put into motion a process by which they were able to purchase certain of WCC’s assets, including the Canadian Enterprises, in an arm’s-length transaction, with no successor liability such that it cannot be said that Westmoreland is WCC’s successor.

¹¹⁹ Tr. Day 1, p. 158:6-17. ↩

¹²⁰ The Tribunal notes the Claimant’s confirmation at the hearing that the Secured Creditors were not the investors seeking compensation in this case, Tr. Day 2, p.291:6-13. ↩

50

Westmoreland Mining Holdings v. Canada

The first-tier lien holders put into motion a process by which they were able to purchase certain of WCC’s assets, including the Canadian Enterprises, in an arm’s-length transaction ...

This was not a corporate restructuring pursuant to which [WMH] emerged from WCC’s ashes.

RLA-001, Westmoreland Mining Holdings LLC v. Canada – Award, ¶ 230

[Page 12]

Chapter 2: Measures the Claimant Challenges In This Claim

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

MAR 15, 2019
WCC Sells Interests in Prairie

OCT 2018
WCC Files for Bankruptcy in U.S.

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶¶ 21-35

[Page 13]

Chapter 2: The Claim Before This Tribunal

Measures Challenged	2022 NOA 2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy Federal Fuel Charge (withdrawn)
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie’s assets “NAFTA claim” as a “claim to money”
Alleged Damages (Heads)	Lost revenues from Prairie’s coal sales Prairie’s accelerated reclamation costs
Alleged Damages (Quantum)	Damages not yet quantified

[Page 14]

Tribunal Question 3

Please specify the scope and impact of the Claimant’s withdrawal of the federal fuel charge claim, in particular in respect of the expropriation claim under NAFTA Article 1110.

[Page 15]

Tribunal Question 4

If there is a residual expropriation claim, for instance in relation to measures adopted in 2015 and 2016, what are the Parties’ positions in relation to that claim in terms of limitation periods and the scope of WCC’s waivers?

[Page 16]

Chapter 3: History of Prior Claims

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

MAR 15, 2019
WCC Sells Interests in Prairie

OCT 2018
WCC Files for Bankruptcy in U.S.

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶ 57

[Page 17]

Tribunal Question 2

Please elaborate on the identity of the claims advanced in 2018, 2019 and 2022, respectively. In particular, are the claims identical, as the Claimant argues, or are they separate and distinct, as the Respondent contends, and what is the effect of such a determination?

[Page 18]

Canada Consents to Arbitrate Certain Claims Submitted to Arbitration

CUSMA Annex 14-C, Paragraph 1

1. Each Party consents, with respect to a legacy investment, to the submission of a claim to arbitration in accordance with Section B of Chapter 11 (Investment) of NAFTA 1994 and this Annex ...

NAFTA Article 1122(1)

1. Each Party consents to the submission of a claim to arbitration in accordance with the procedures set out in this Agreement.

CUSMA Annex 14-C, ¶ 1; NAFTA Article 1122(1)

[Page 19]

The Investor Perfects Consent By Submitting a Claim to Arbitration in Accordance with the Treaty Conditions

CUSMA Annex 14-C, Paragraph 2

2. The consent under paragraph 1 and the submission of a claim to arbitration in accordance with Section B of Chapter 11 (Investment) of NAFTA 1994 and this Annex shall satisfy the requirements of:

(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the ICSID Additional Facility Rules for written consent of the parties to the dispute;

(b) Article II of the New York Convention for an “agreement in writing”; and

(c) Article I of the Inter-American Convention for an “agreement”.

NAFTA Article 1122(2)

2. The consent given by paragraph 1 and the submission by a disputing investor of a claim to arbitration shall satisfy the requirement of:

(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the Additional Facility Rules for written consent of the parties;

(b) Article II of the New York Convention for an agreement in writing; and

(c) Article I of the InterAmerican Convention for an agreement.

CUSMA Annex 14-C, ¶ 2; NAFTA Article 1122(2)

[Page 20]

A Claim Is Submitted to Arbitration through a Notice of Arbitration

NAFTA Article 1137(1)

1. A claim is submitted to arbitration under this Section when:

...

(c) the notice of arbitration given under the UNCITRAL Arbitration Rules is received by the disputing Party.

CUSMA Annex 14-C, ¶ 2; NAFTA Article 1122(2)

[Page 21]

The Framework for an Agreement to Arbitrate

A Treaty Mechanism

An Investor

An Investment

Allegations of Loss

Satisfies the treaty’s jurisdictional requirements

Allegations of Breach

IN THE MATTER OF AN ARBITRATION PURSUANT TO THE RULES OF ARBITRATION OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW

WESTMORELAND COAL COMPANY,

Claimant,

vs.

GOVERNMENT OF CANADA,

Respondent.

CLAIMANT’S NOTICE OF ARBITRATION

Javier H. Rubinstein
Kevin D. Mohr
Lauren F. Friedman
Cedric Soule
Rikki Stern
Tamsin Parzen
KING & SPALDING LLP
110 N Wacker Drive
Suite 3800
Chicago, IL 60606

Counsel for Claimant

October 11, 2022

[Page 22]

Chapter 3: History of Prior Claims

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

NOV 2018
WCC Files NAFTA Chapter 11 Claim

OCT 2018
WCC Files for Bankruptcy in U.S.

MAR 15, 2019
WCC Sells Interests in Prairie

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶ 57

[Page 23]

Chapter 3: WCC’s 2018 NOA

	2018 NOA	2022 NOA
Measures Challenged	2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments	2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy *Federal Fuel Charge (withdrawn)*
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie’s assets	Prairie, interests in Prairie Certain of Prairie’s assets “NAFTA claim” as a “claim to money”
Alleged Damages (Heads)	Lost revenues from Prairie’s coal sales Prairie’s accelerated reclamation costs	Lost revenues from Prairie’s coal sales Prairie’s accelerated reclamation costs
Alleged Damages (Quantum)	“Damages exceeding $470 million”	Damages not yet quantified

R-079; WCC – 2018 NOA

[Page 24]

Chapter 3: History of Prior Claims

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

NOV 2018
WCC Files NAFTA Chapter 11 Claim

OCT 2018
WCC Files for Bankruptcy in U.S.

MAR 15, 2019
WCC Sells Interests in Prairie
and 2018 NAFTA Claim

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶¶ 153-55

[Page 25]

Chapter 3: WCC Chose to Sell the 2018 NOA

appointment of the chair of the tribunal, before interrupting them for a short period of time to address WCC’s request to amend its Notice of Arbitration. We set out below the relevant facts pertaining to WCC’s request.

B. WCC Amends Its November 2018 Notice of Arbitration in May 2019

27. On October 9, 2018, after the filing of its 2018 Notice of Intent, but before filing its 2018 Notice of Arbitration, WCC and some of its affiliates were forced to file for bankruptcy, partly as a result of Canada’s measures.⁶ As Jeffrey Stein, WCC’s Plan Administrator and former Chief Restructuring Officer and Board member, explains, WCC arranged to sell substantially all of its assets through the bankruptcy process to maximize recovery for WCC’s creditors, as WCC had become a shell and lacked the infrastructure necessary to extract value from its remaining assets, including its legal claims.⁷ As the Westmoreland I tribunal confirmed, the bankruptcy restructuring was carried out for legitimate reasons, and not to manufacture a NAFTA claim. In the tribunal’s words, “[i]t is clear that at all times WCC and Westmoreland and the first-tier lien holders acted in good faith,” in the restructuring.⁸ Moreover, WCC handled its NAFTA Claim with comprehensive deliberation involving input from outside consultants, external bankruptcy counsel, external NAFTA counsel, and WCC’s Board of Directors.

28. On October 18, 2018, WCC and its affiliates filed a motion with the U.S. bankruptcy court in the Southern District of Texas, Houston Division (“Bankruptcy Court”) seeking authorization to, among other things, (i) conduct a marketing process for the sale of its assets; and (ii) enter into a stalking horse purchase agreement (the “Stalking Horse Purchase Agreement”) with an acquisition entity formed by lenders (i.e., Westmoreland Mining LLC or “New Westmoreland”).⁹ The intention was to sell substantially all of

⁶ See Second Notice of Arbitration, Oct. 11, 2022, ¶ 64; In re: Westmoreland Coal Company, et al., Case No. 18-35672, Docket No. 54, Oct. 9, 2018, C-031. ↩

⁷ Witness Statement of Jeffrey S. Stein, Sept. 20, 2023 (“Stein WS”), ¶¶ 2, 7-8, CWS-1. ↩

⁸ Westmoreland Mining Holdings, LLC v. Government of Canada, ICSID Case No. UNCT/20/3, Final Award, Jan. 31, 2022, ¶ 92 (Westmoreland I Award), CLA-001. ↩

⁹ The First Lien Lenders also formed a second acquisition entity to effectuate the Sale Transaction, Westmoreland and Mining Holdings LLC (WMH), which wholly owns New Westmoreland. See Notice of Sixth Amendment to the Plan Supplement §§ II, III, Case No. 18-35672 (DRJ) (Bankr. S.D. Tex. 2018), ECF No. 1621, Exh. G, R-075. ↩

8

Claimant’s Response on Jurisdiction

WCC handled its NAFTA Claim with comprehensive deliberation involving input from outside consultants, external bankruptcy counsel, external NAFTA counsel, and WCC’s Board of Directors.

Claimant’s Response on Jurisdiction, ¶ 27

[Page 26]

The Sold “NAFTA Claim” Referred Expressly to the 2018 NOA

Case 18-35672 Document 1621 Filed in TXSB on 03/18/19 Page 139 of 661

United States, Canada or any other country, (C) changes (including changes of Applicable Law after the date hereof) in general conditions in the coal mining industry, (D) acts of war, sabotage or terrorism or natural disasters, (E) the announcement of the transactions contemplated by this Agreement or the Transaction Documents (provided that this clause (E) shall not apply to any representation or warranty that, by its terms, speaks specifically of the consequences arising out of the execution or performance of this Agreement or any of the Transaction Documents or the consummation of any of the transactions contemplated hereby or thereby), (F) any reasonably anticipated effects of any specific action taken (or omitted to be taken) at the written request of Buyer, (G) any failure by the Sellers or the Aggregate Purchased Business to meet any projections or forecasts for any period occurring on or after the date hereof (provided that this clause (G) shall not prevent a determination that any event, circumstance, effect or change underlying such failure to meet projections or forecasts has resulted in a Material Adverse Effect), (H) any reasonably anticipated effects of the filing of the Bankruptcy Case or (I) any specific action taken by Westmoreland or any of its Subsidiaries that is expressly required to be taken pursuant to this Agreement, in each case of clauses (A), (B), (C) and (D) to the extent the Aggregate Purchased Business is not materially disproportionately affected thereby as compared with other participants in the coal mining industry.

“Minimum Accounts Receivable” means, with respect to a Mining Complex other than the Non-Core Mine Complexes, the amount of Accounts Receivable set forth on Schedule 1.01(c).

“Minimum Closing Cash” means an amount of Closing Available Cash to be agreed by Buyer and Westmoreland in accordance with Section 2.18.

“Minimum Coal Inventory” means with respect to a Mining Complex other than the Non-Core Mine Complexes, the amount of coal inventory set forth on Schedule 1.01(d).

“Mining Complexes” means, collectively, the Canadian Complexes and the US Mining Complexes.

“MSHA” means the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §§ 801, et seq.

“NAFTA Claim” means that certain claim filed with the Office of the Deputy Attorney General of Canada on November 19, 2018 by Westmoreland on its own behalf and on behalf of its Canadian Subsidiary Prairie Mines & Royalty ULC against the Government of Canada pursuant to chapter 11 of the North American Free Trade Agreement (as such claim may be amended).

“New Working Capital Facility” means an asset-based or cash flow revolving credit facility, to be entered into by the lenders thereunder and Buyer or its Affiliate on terms satisfactory to Buyer on or about the Closing Date.

“Non-Acquired Entities” means Westmoreland, together with its direct and indirect Subsidiaries and Affiliates, other than the Acquired Entities.

11

Stalking Horse Purchase Agreement, s. 1

“NAFTA Claim” means that certain claim filed with the Office of the Deputy Attorney General of Canada on November 19, 2018 by Westmoreland on its own behalf and on behalf of its Canadian Subsidiary Prairie Mines & Royalty ULC against the Government of Canada pursuant to chapter 11 of the North American Free Trade Agreement (as such claim may be amended).

R-076, Stalking Horse Purchase Agreement, p. 11

[Page 27]

Chapter 3: History of Prior Claims

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

NOV 2018
WCC Files NAFTA Chapter 11 Claim

OCT 2018
WCC Files for Bankruptcy in U.S.

MAR 15, 2019
WCC Sells Interests in Prairie
and 2018 NAFTA Claim

MAY 13, 2019
Canada Receives the Attempted
Amendment

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶ 58

[Page 28]

The Attempted Amendment Sought Substitution

C-55

AMENDED NOTICE OF ARBITRATION AND STATEMENT OF CLAIM

UNDER THE RULES OF ARBITRATION OF THE
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW
AND
CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT

WESTMORELAND MINING HOLDINGS LLC,

Claimant/Investor,

GOVERNMENT OF CANADA,

Respondent/Party

May 13, 2019

Elliot J. Feldman
Michael S. Snarr
Paul M. Levine
BAKER HOSTETLER LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Tel: 202-861-1500
Fax: 202-861-1783

Alexander K. Obrecht
BAKER HOSTETLER LLP
1801 California Street, Suite 4400
Denver, CO 80202
Telephone: (303) 861-0600
Fax: (303) 861-7805

WESTMORELAND MINING HOLDINGS LLC,

Claimant/Investor,

v.

GOVERNMENT OF CANADA,

Respondent/Party

May 13, 2019

C-055, Amended Notice of Arbitration and Statement of Claim and Exhibits, 13 May 2019

[Page 29]

The Attempted Amendment Sought Substitution

C-55

AMENDED NOTICE OF ARBITRATION AND STATEMENT OF CLAIM

UNDER THE RULES OF ARBITRATION OF THE
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW
AND
CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT

WESTMORELAND MINING HOLDINGS LLC,

Claimant/Investor,

GOVERNMENT OF CANADA,

Respondent/Party

May 13, 2019

Elliot J. Feldman
Michael S. Snarr
Paul M. Levine
BAKER HOSTETLER LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Tel: 202-861-1500
Fax: 202-861-1783

Alexander K. Obrecht
BAKER HOSTETLER LLP
1801 California Street, Suite 4400
Denver, CO 80202
Telephone: (303) 861-0600
Fax: (303) 861-7805

This Amended Notice of Arbitration and Statement of Claim are submitted on behalf of Westmoreland Coal Company, Westmoreland Mining Holdings LLC, a U.S. limited liability company (“Westmoreland”), Westmoreland Canada Holdings Inc. and Prairie Mines & Royalty ULC (“Prairie”), ...

Westmoreland elects to proceed with this arbitration pursuant to Article 3 of the United Nations Commission on International Trade Law (“UNCITRAL”) Rules, as provided under Article 1120(1)(c) of NAFTA.

C-055, Amended Notice of Arbitration and Statement of Claim and Exhibits, 13 May 2019, ¶¶ 1-2

[Page 30]

The Attempted Amendment Sought Substitution

C-55

AMENDED NOTICE OF ARBITRATION AND STATEMENT OF CLAIM

UNDER THE RULES OF ARBITRATION OF THE
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW
AND
CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT

WESTMORELAND MINING HOLDINGS LLC,

Claimant/Investor,

GOVERNMENT OF CANADA,

Respondent/Party

May 13, 2019

Elliot J. Feldman
Michael S. Snarr
Paul M. Levine

out, including stranded capital, loss of revenues, and accelerated costs of reclamation, the process of rehabilitating the land after coalmining operations have ceased.

12. Westmoreland recognizes and does not dispute that Canada and Alberta are entitled to enact regulations for the public good. However, when they do, they must be fair to foreign investors consistent with NAFTA Articles 1102 and 1105.

13. Alberta’s scheme to compensate Albertan coalmine operators for the loss of their investments, to the exclusion of the only American coalmine operator, denied Westmoreland national treatment under Article 1102 and treated the company unfairly and inequitably, in violation of NAFTA Article 1105. The exclusion of the only American company was wrong, and Westmoreland is entitled to compensation for Alberta’s violations of these NAFTA provisions.

14. Westmoreland respectfully serves this Amended Notice of Arbitration and Statement of Claim for breach by the Government of Canada (“Canada”), through the actions of the provincial Government of Alberta, of its obligations under NAFTA, Chapter Eleven.

III. PROCEDURAL REQUIREMENTS

15. The initial disputing investor in this matter, Westmoreland Coal Company, is incorporated in Delaware, United States of America. Its address is:

Westmoreland Coal Company
9450 S Maroon Circle, Suite 300
Englewood, CO 80112
United States of America
Telephone: (303) 922-6463
Fax: (302) 636-5454

III. PROCEDURAL REQUIREMENTS

15. The initial disputing investor in this matter, Westmoreland Coal Company, is incorporated in Delaware, United States of America.

20. Westmoreland Mining Holdings LLC, a Delaware company, is the owner of the assets, interest [sic], rights and claims of the initial disputing investor, Westmoreland Coal Company.

21. The disputing investor, Westmoreland Mining Holdings LLC, is located at the following address: ...

C-055, Amended Notice of Arbitration and Statement of Claim and Exhibits, 13 May 2019, ¶ 15, 20, 21

[Page 31]

Canada Viewed the Attempted Amendment as an Impermissible Substitution

Global Affairs Canada

Department of Justice

Affaires mondiales Canada

Ministère de la Justice

CANADA

125 Sussex Drive
Ottawa, Ontario
K1A 0G2

July 2, 2019

VIA EMAIL

Elliot J. Feldman
Baker Hostetler
Washington Square
1050 Connecticut Ave, N.W.
Suite 1100
Washington, DC 20036-5403
[email protected]

Dear Mr. Feldman,

Re: Westmoreland Coal Company v. Government of Canada

Canada writes regarding the Amended Notice of Arbitration and Statement of Claim (“Amended NOA”) submitted on behalf of Westmoreland Mining Holdings LLC, Westmoreland Canada Holdings Inc., and Prairie Mines & Royalty ULC on May 13, 2019. We are of the view that the Amended NOA is not a permissible amendment of Westmoreland Coal Company’s Notice of Arbitration under Article 20 of the 1976 UNCITRAL Arbitration Rules.

Article 20 provides in part that “a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitration clause or separate arbitration agreement.”¹ That is, a claim cannot be amended if it would cause the amended claim to fall outside the jurisdiction of the arbitral tribunal – rather, it is a new claim. As the tribunal in Merrill & Ring observed, Article 20 “contains an overall and absolute prohibition against introducing amendments which go beyond the scope of the arbitration clause.”²

¹ David D. Caron and Lee M. Caplan, THE UNCITRAL ARBITRATION RULES: A COMMENTARY, Second Edition (Oxford University Press, 2012), pp. 468 and 460. ↩

² Merrill & Ring Forestry L.P. v. Government of Canada, Decision on a Motion to Add a New Party, 31 January 2008, ¶ 18, citing: David D. Caron, Matti Pellonpää and Lee M. Caplan, THE UNCITRAL ARBITRATION RULES: A COMMENTARY (Oxford University Press, 2006), p. 468. ↩

[... text continues ...]

The substitution of a new claimant is an amendment that causes a claim to fall outside of the tribunal’s jurisdiction.

Article 20 provides in part that “a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitration clause or separate arbitration agreement.” That is, a claim cannot be amended if it would cause the amended claim to fall outside the jurisdiction of the arbitral tribunal – rather, it is a new claim.

The substitution of a new claimant is an amendment that causes a claim to fall outside of the tribunal’s jurisdiction.

R-081, Letter from Scott Little to Elliot Feldman, “Re: Westmoreland Coal Company v. Government of Canada”, 2 July 2019

[Page 32]

Canada Viewed the Attempted Amendment as an Impermissible Substitution

The substitution of a new claimant is an amendment that causes a claim to fall outside of the tribunal’s jurisdiction. As the tribunal in Refusal to Accept the Claim of Raymond Int’l (UK) Ltd held: “to substitute a new Claimant for the original one is tantamount to the filing of a new claim and cannot be regarded simply as an amendment to the existing claim.”³ Authorities commenting on the UNCITRAL Arbitration Rules have similarly concluded that: “the substitution of a new claimant (not party to the arbitration agreement or clause) would normally mean a new claim falling outside the arbitral tribunal’s jurisdiction.”⁴

Accordingly, Westmoreland Mining Holdings LLC cannot become the disputing investor in a claim that was submitted to arbitration by Westmoreland Coal Company. Rather, Westmoreland Mining Holdings LLC must submit its own claim and meet the requirements of Canada’s offer to arbitrate, as set out in NAFTA Chapter 11. These include the Article 1119 requirement that a disputing investor must deliver a notice of its intention to submit a claim to arbitration (“NOI”) at least 90 days before the claim is submitted. These pre-conditions are not requirements that Canada can agree to waive.

[... text continues ...]

³ Refusal to Accept the Claim of Raymond Int’l (UK) Ltd, Decision No. DEC18-REF21-FT (December 8, 1982), reprinted in 1 Iran-U.S. C.T.R. 394, 395 (1981-1982). (Emphasis added) See also: Firouz Mal Tavakoli et al. v. Government of the Islamic Republic of Iran, Award No 580-832-3 (April 23, 1997), reprinted in 33 Iran-U.S. C.T.R. 206, 210 (1997). ↩

⁴ David D. Caron and Lee M. Caplan, THE UNCITRAL ARBITRATION RULES: A COMMENTARY, Second Edition (Oxford University Press, 2012), p. 470, footnote 14. ↩

Accordingly, Westmoreland Mining Holdings LLC cannot become the disputing investor in a claim that was submitted to arbitration by Westmoreland Coal Company. Rather, Westmoreland Mining Holdings LLC must submit its own claim and meet the requirements of Canada’s offer to arbitrate, as set out in NAFTA Chapter 11. These include the Article 1119 requirement that a disputing investor must deliver a notice of its intention to submit a claim to arbitration (“NOI”) at least 90 days before the claim is submitted.

R-081, Letter from Scott Little to Elliot Feldman, “Re: Westmoreland Coal Company v. Government of Canada”, 2 July 2019, p. 2

[Page 33]

Canada Viewed the Attempted Amendment as an Impermissible Substitution

Under the circumstances, and because the Amended NOA appears to meet the formal requirements of an NOI, Canada is prepared to accept the Amended NOA filed on May 13 as Westmoreland Mining Holdings LLC’s NOI, on the condition that Westmoreland Coal Company withdraws the claim that it submitted against Canada on November 19, 2018. Westmoreland Mining Holdings LLC would then be free to submit its own claim to arbitration 90 days after the May 13 NOI date. The disputing parties would re-appoint their party appointed arbitrators once a claim is submitted and would then continue the process, in which they are currently engaged, of appointing a tribunal chairperson.

[... text continues ...]

⁴ David D. Caron and Lee M. Caplan, THE UNCITRAL ARBITRATION RULES: A COMMENTARY, Second Edition (Oxford University Press, 2012), p. 470, footnote 14. ↩

Under the circumstances, and because the Amended NOA appears to meet the formal requirements of an NOI, Canada is prepared to accept the Amended NOA filed on May 13 as Westmoreland Mining Holdings LLC’s NOI, on the condition that Westmoreland Coal Company withdraws the claim that it submitted against Canada on November 19, 2018. Westmoreland Mining Holdings LLC would then be free to submit its own claim to arbitration 90 days after the May 13 NOI date.

R-081, Letter from Scott Little to Elliot Feldman, “Re: Westmoreland Coal Company v. Government of Canada”, 2 July 2019, p. 2

[Page 34]

Canada Reserves Its Right to Raise Jurisdictional or Admissibility Objections

In accordance with NAFTA Article 1118, Canada would of course be willing to engage in consultations with Westmoreland Mining Holdings LLC as the new claimant in follow-up to its NOI, should it so desire.

For the avoidance of doubt, Canada makes the proposal outlined herein without prejudice to its ability to raise any jurisdictional or admissibility objections with respect to the original NOA or any new claim.

⁴ David D. Caron and Lee M. Caplan, THE UNCITRAL ARBITRATION RULES: A COMMENTARY, Second Edition (Oxford University Press, 2012), p. 470, footnote 14. ↩

For the avoidance of doubt, Canada makes the proposal outlined herein without prejudice to its ability to raise any jurisdictional or admissibility objections with respect to the original NOA or any new claim.

R-081, Letter from Scott Little to Elliot Feldman, “Re: Westmoreland Coal Company v. Government of Canada”, 2 July 2019, p. 2

[Page 35]

The Requestors Accepted Canada’s Offer The Next Day

BakerHostetler

R-077

Baker & Hostetler LLP
Washington Square, Suite 1100
1050 Connecticut Ave., NW
Washington, DC 20036-5403
T 202.861.1500
F 202.861.1783
www.bakerlaw.com
Elliot J. Feldman
direct dial: 202.861.1646
[email protected]

July 3, 2019

VIA E-MAIL

Mr. Scott Little
General Counsel
Trade Law Bureau
125 Sussex Drive
Ottawa (Ontario) K1A 0G2
E-mail: [email protected]

Re: Westmoreland Mining LLC v. Government of Canada

Dear Scott:

We write in response to your July 2, 2019 letter, which states that “Canada is prepared to accept” Westmoreland Mining LLC’s May 13, 2019 Amended Notice of Arbitration and Statement of Claim (“Amended NOA”) as a Notice of Intent. Canada would then accept a new Notice of Arbitration and Statement of Claim on August 12, 2019, 90 days after Westmoreland Mining submitted the Amended NOA. The parties would re-appoint their existing wing arbitrators and we would resume the process of appointing a Tribunal President (with appointment following submission of the new Notice of Arbitration).

Canada conditions its proposal by requiring “that Westmoreland Coal Company withdraws the claim that it submitted against Canada on November 19, 2018.” According to Canada, the substitution of a new claimant—even in these circumstances—is prohibited by Article 20 of the 1976 UNCITRAL Arbitration Rules and, therefore, outside a tribunal’s jurisdiction.

[... text continues ...]

We write in response to your July 2, 2019 letter, which states that “Canada is prepared to accept” Westmoreland Mining LLC’s May 13, 2019 Amended Notice of Arbitration and Statement of Claim (“Amended NOA”) as a Notice of Intent.

According to Canada, the substitution of a new claimant—even in these circumstances—is prohibited by Article 20 of the 1976 UNCITRAL Arbitration Rules and, therefore, outside a tribunal’s jurisdiction.

R-082, Letter from Elliot Feldman to Scott Little, “Re: Westmoreland Mining LLC v. Government of Canada”, 3 July 2019, p. 1

[Page 36]

The Requestors Accepted Canada’s Offer The Next Day

BakerHostetler

R-077

July 3, 2019

VIA E-MAIL

Mr. Scott Little
General Counsel
Trade Law Bureau
125 Sussex Drive
Ottawa (Ontario) K1A 0G2
E-mail: [email protected]

Re: Westmoreland Mining LLC v. Government of Canada

Dear Scott:

[... text continues ...]

We disagree with Canada’s analysis of Article 20 and the applicability of the cited authorities. We see those authorities as distinguishable because, among other reasons, the new claimants do not change the nationality of the parties nor the issues to be resolved in the arbitration. Nonetheless, we accept Canada’s proposal as a means to expedite the arbitration process and avoid unnecessary conflict. In the same spirit,

Atlanta Chicago Cincinnati Cleveland Columbus Costa Mesa Denver Houston Los Angeles New York Orlando Philadelphia Seattle Washington DC

We disagree with Canada’s analysis of Article 20 and the applicability of the cited authorities. We see those authorities as distinguishable because, among other reasons, the new claimants do not change the nationality of the parties nor the issues to be resolved in the arbitration.

Nonetheless, we accept Canada’s proposal as a means to expedite the arbitration process and avoid unnecessary conflict.

R-082, Letter from Elliot Feldman to Scott Little, “Re: Westmoreland Mining LLC v. Government of Canada”, 3 July 2019, p. 1

[Page 37]

Chapter 3: History of Prior Claims

2014
WCC Purchases
Interests in
Prairie

2015
AB
Announces
Climate
Leadership
Plan

2016
AB Allocates
Transition
Payments

2016
AB Enacts
Climate
Leadership
Act

NOV 2018
WCC Files NAFTA Chapter 11 Claim

OCT 2018
WCC Files for Bankruptcy in U.S.

MAR 15, 2019
WCC Sells Interests in Prairie
and 2018 NAFTA Claim

MAY 13, 2019
Canada Receives the Attempted
Amendment

JUL 23, 2019
WCC Withdraws
NAFTA Chapter
11 Claim

2020
Federal Fuel Charge Applies in AB

2014

2015

2016

2017

2018

2019

2020

See Canada’s Memorial on Jurisdiction, ¶ 62

[Page 38]

Chapter 3: History of Prior Claims

JUL 23, 2019
WCC Withdraws NAFTA
Chapter 11 Claim

AUG 12, 2019
WMH Files NAFTA
Claim

JAN 31, 2022
WMH Tribunal Issues Award

OCT 14, 2022
WCC Files CUSMA Annex 14-C
Claim

2019

2020

2021

2022

2023

2024

See Canada’s Memorial on Jurisdiction, ¶¶ 63-74

[Page 39]

Tribunal Question 2: The Claimant Has Not Established Identity Between the Claims

	Date	Waivers	Treaty	Claimant	Investment	Alleged Breach	Alleged Loss	Measures	Status
2018 NOA	2018	Withdrawn	NAFTA	WCC	Interests in Prairie	1102, 1105	$470M	Emissions Phase-Out, Transition Payments	Withdrawn
2019 NOA	2019	Effective	NAFTA	WMH	Interests in Prairie	1102, 1105	$470M	Emissions Phase-Out, Transition Payments	Adjudicated – Final Award
2022 NOA	2022	None	CUSMA + NAFTA	WCC	Interests in Prairie and “NAFTA Claim”	1102, 1105, 1110	?	Emissions Phase-Out, Transition Payments, Fuel Levies	Pending – Jurisdictional Phase
Identity?	No	No	No	No	No	No	No	No	No

R-079; WCC – 2018 NOA, R-085, WMH – 2019 NOA

[Page 40]

Overview of Canada's Opening Statement

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 41]

The Claimant Does Not Have a “Legacy Investment” Under
CUSMA Annex 14-C

1 The express requirements of CUSMA Annex 14-C

Please elaborate on the definition of a legacy investment under Article 6(a) of Annex 14-C of the USMCA and, in particular, on the requirement that a legacy investment must be “in existence on the date of entry into force of this Agreement”.

2 The Claimant has failed to establish it meets the express requirements

3 The Claimant cannot establish jurisdiction based on equitable principles

[Page 42]

CUSMA Annex 14-C, Paragraph 1

1. Each Party consents, with respect to a legacy investment, to the submission of a claim to arbitration in accordance with Section B of Chapter 11 (Investment) of NAFTA 1994 and this Annex alleging breach of an obligation under:

(a) Section A of Chapter 11 (Investment) of NAFTA 1994;

...

CUSMA Annex 14-C, ¶ 1

[Page 43]

CUSMA Annex 14-C, Paragraph 6(a)

6. For the purposes of this Annex:

(a) “legacy investment” means an investment of an investor of another Party in the territory of the Party established or acquired between January 1, 1994, and the date of termination of NAFTA 1994, and in existence on the date of entry into force of this Agreement;

...

CUSMA Annex 14-C, ¶ 6(a)

[Page 44]

CUSMA Annex 14-C, Paragraph 6(b)

6. For the purposes of this Annex:

...

(b) “investment”, “investor”, and “Tribunal” have the meanings accorded in Chapter 11 (Investment) of NAFTA 1994

...

CUSMA Annex 14-C, ¶ 6(a)

[Page 45]

NAFTA Article 1139

Article 1139: Definitions

For purposes of this Chapter:

“investment means: ...”

“investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment;”

NAFTA Article 1139

[Page 46]

CUSMA Annex 14-C, Paragraph 6(a)

6. For the purposes of this Annex:

(a) “legacy investment” means an investment of an investor of another Party in the territory of the Party established or acquired between January 1, 1994, and the date of termination of NAFTA 1994, and in existence on the date of entry into force of this Agreement;

...

CUSMA Annex 14-C, ¶ 6(a)

[Page 47]

NAFTA Article 1139

Article 1139: Definitions

For purposes of this Chapter:

“investment of an investor of a Party means an investment owned or controlled directly or indirectly by an investor of such Party;”

NAFTA Article 1139

[Page 48]

The CUSMA Parties Agree that an Investor Must Hold The Relevant Investment When CUSMA Entered Into Force

In this regard, for an investor to validly pursue a claim under USMCA Annex 14-C, it has to prove that it owned or controlled the enterprise [...] as of the date of entry into force of the USMCA.

Annex 14-C limits the submission of arbitration claims to those investors with ongoing investments in the host states after the NAFTA’s termination.

Article 1128 Submission of Mexico, ¶ 34; R-156, TC Energy v. United States of America – Reply on its Prelim. Objection, ¶ 52. See also Canada’s Memorial, ¶¶ 81-90; Canada’s Reply, ¶¶ 71-72

[Page 49]

CUSMA Annex 14-C, Paragraph 6(a)

6. For the purposes of this Annex:

(a) “legacy investment” means an investment of an investor of another Party in the territory of the Party established or acquired between January 1, 1994, and the date of termination of NAFTA 1994, and in existence on the date of entry into force of this Agreement;

...

CUSMA Annex 14-C, ¶ 6(a)

[Page 50]

1 The express requirements of CUSMA Annex 14-C

2 The Claimant has failed to establish it meets the express requirements

3 The Claimant cannot establish jurisdiction based on equitable principles

[Page 51]

The Claimant's Alleged Investments Are Not Legacy Investments

Measures Challenged	2022 NOA 2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy Federal Fuel Charge (withdrawn)
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie's assets “NAFTA claim” as a “claim to money”
Alleged Damages (Heads)	Lost revenues from Prairie's coal sales Prairie's accelerated reclamation costs
Alleged Damages (Quantum)	Damages not yet quantified

[Page 52]

The Claimant Sold Its Interests in Canada Prior to July 1, 2020

2014
WCC Purchases
Interests in
Prairie

OCT 2018
WCC Files for Bankruptcy in U.S.

MAR 15, 2019
WCC Sells Interests in Prairie

JULY 1, 2020
CUSMA Enters Into Force

2014 2015 2016 2017 2018 2019 2020

See Canada’s Memorial on Jurisdiction, ¶ 53. Claimant’s Response on Jurisdiction, ¶ 30

[Page 53]

The Claimant's Alleged Investments Are Not “Legacy Investments”

Measures Challenged	2022 NOA 2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy Federal Fuel Charge (withdrawn)
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie's assets “NAFTA claim” as a “claim to money”
Alleged Damages (Heads)	Lost revenues from Prairie's coal sales Prairie's accelerated reclamation costs
Alleged Damages (Quantum)	Damages not yet quantified

[Page 54]

1 The express requirements of CUSMA Annex 14-C

2 The Claimant has failed to establish it meets the express requirements

3 The Claimant cannot establish jurisdiction based on equitable principles

[Page 55]

Estoppel Cannot Create Jurisdiction Where It Does Not Exist On the Law

Koch Industries et al. v. Canada

First and foremost, the jurisdiction of the Tribunal is a matter of law. The Tribunal must be satisfied that the jurisdictional requirements of the NAFTA are met, and if not, must decline its jurisdiction. The Tribunal therefore concurs with the tribunal in Oded Besserglik v. Mozambique that “the jurisdiction of the Tribunal cannot be created by invoking the doctrine of estoppel.”

RLA-094, Koch – Award, ¶ 397 (citing RLA-063, Oded Besserglik v. Mozambique), ¶ 422

[Page 56]

The Claimant Has Not Established The Tribunal's Jurisdiction

1 Does the Claimant hold a “legacy investment” under CUSMA Annex 14-C? → NO

↓

DISMISS ENTIRE CLAIM

[Page 57]

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 58]

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 59]

Requirements of Article 1121 is a Condition Precedent to Submission of a Claim to Arbitration

NAFTA Article 1121(3)

Article 1121: Conditions Precedent to Submission of a Claim to Arbitration

3. A consent and waiver required by this Article shall be in writing, shall be delivered to the disputing Party and shall be included in the submission of a claim to arbitration.

NAFTA Article 1121(3)

[Page 60]

Pope & Talbot v. Canada

[T]he requirement in Article 1121(3) that a waiver required by Article 1121 shall be included in the submission of a claim to arbitration does not necessarily entail that such a requirement is a necessary prerequisite before a claim can competently be made. Rather, it is a requirement that before the Tribunal entertain the claim the waiver shall have been effected.

RLA-086, Pope & Talbot - Award in Relation to Canada’s Preliminary Motion, ¶ 18

[Page 61]

Gramercy Funds v. Canada

Where an effective waiver is filed subsequent to the Notice of Arbitration but before constitution of the tribunal, the claim will be considered submitted to arbitration on the date on which the effective waiver was filed, assuming all other requirements have been satisfied, and not the date of the Notice of Arbitration.

CLA-067, Gramercy Funds – Award, ¶ 495

[Page 62]

WCC Has Failed to Meet the Requirements of Article 1121(3)

“November 12, 2018”

Claimant’s Notice of Arbitration; C-040, Prairie Mines Waiver, 12 November 2018; C-041, WCC Waiver, 12 November 2018

[Page 63]

The submission of, and compliance with, an effective waiver under Article 1121 is among the pre-requisites to establish a NAFTA Party's consent to arbitrate

Waivers filed in separate arbitration proceedings cannot constitute valid waivers for the purposes of the current claim

Canada disagrees that the waivers filed in Westmoreland Coal Company and Prairie Mines & Royalty's first claim in 2018 (the “First Claim”) are still applicable and in effect

Absent confirmation that the individuals who signed Exhibits C-040 and C-041 (Michael G. Hutchinson and Joseph Micheletti, respectively) had the capacity to sign waivers on behalf of WCC and Prairie on the date of the NOA

R-091, E-mail from Canada to Claimant, 21 February 2023

[Page 64]

Claimant has Failed to Meet the Requirements of NAFTA Article 1121(3)

Claimant's Rejoinder on Jurisdiction

Thus, to the extent it is relevant that one of the individuals signing the waiver letter left the company prior to submission to arbitration is inconsequential for purposes of Article 1121.

Joe Micheletti, who signed the waiver letter on behalf of Prairie retired from Prairie on May 15, 2023, and so still had the authority to waive Prairie's legal rights on Oct. 14, 2022 when WCC filed its Notice of Arbitration. Michael Hutchinson signed the waiver letter on behalf of WCC when WCC emerged from bankruptcy.

Claimant’s Rejoinder on Jurisdiction, ¶ 186, fn. 290

[Page 65]

Bacilio Amorrortu v. Peru

A tribunal's power to grant leave to amend or modify a notice of arbitration and/or statement of claim is part of the general power of a tribunal over arbitral proceedings. It is a matter of case management and sound administration of justice. In contrast, granting leave to cure a defective waiver, over the objection of the Respondent, would be tantamount to the Tribunal creating consent to arbitration where no such consent existed when the Tribunal was constituted.

RLA-038, Amorrortu – Partial Award on Jurisdiction, ¶ 237

[Page 66]

Tribunal Question 4

If there is a residual expropriation claim, for instance in relation to measures adopted in 2015 and 2016, what are the Parties' positions in relation to that claim in terms of limitation periods and the scope of WCC's waivers?

[Page 67]

Tribunal Question 5

How does the Respondent respond to the Claimant's request in note 234 of its Rejoinder that, if the Tribunal were to dismiss the claims, the Tribunal should issue an order confirming that WCC has not effectively waived its right to pursue relief in other venues?

[Page 68]

1 Does the Claimant hold a “legacy investment” under CUSMA Annex 14-C? → NO

2 Has the Claimant submitted valid waivers consistent with NAFTA Article 1121? → NO

↓

DISMISS ENTIRE CLAIM

[Page 69]

I Factual Background

II The Claimant Does Not Have a “Legacy Investment” Under CUSMA Annex 14-C

III The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121

IV The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)

V The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)

VI Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim

VII The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 70]

The Temporal Limitation on Consent

Article 1116: Claim by an Investor of a Party on Its Own Behalf

1. An investor of a Party may submit to arbitration under this Section a claim that another Party has breached an obligation under:

(a) Section A [...], and that the investor has incurred loss or damage by reason of, or arising out of, that breach.

2. An investor may not make a claim if more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

NAFTA Article 1116

[Page 71]

Article 1117: Claim by an Investor of a Party on Behalf of an Enterprise

1. An investor of a Party, on behalf of an enterprise of another Party that is a juridical person that the investor owns or controls directly or indirectly, may submit to arbitration under this Section a claim that another Party has breached an obligation under:

(a) Section A [...], and that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.

2. An investor may not make a claim on behalf of an enterprise described in paragraph 1 if more than three years have elapsed from the date on which the enterprise first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

NAFTA Article 1117

[Page 72]

Dates for Article 1116(2) and 1117(2) Analysis

Critical Date

Submission of Claim to Arbitration (Art. 1137(1))

3 YEARS

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

[Page 73]

OCT 14, 2019
Critical Date

OCT 14, 2022
WCC NOA

NOV 24, 2016
Claimant's first knowledge of alleged breach and loss

WCC first became aware of Canada's breaches of the NAFTA and that those breaches caused it harm on November 24, 2016

3 YEARS

2015 2016 2017 2018 2019 2020 2021 2022

Claimant’s Response to Memorial on Jurisdiction, ¶ 151 (emphasis in original)

[Page 74]

The Claimant's False Premise

Claimant's Rejoinder on Jurisdiction

WCC's claims are timely under Articles 1116(2) and 1117(2) since ... less than three years have passed for limitations purposes since that period tolled during the pendency of the arbitration that WCC originally commenced and then was pursued by WMH in Westmoreland I.

Claimant’s Rejoinder on Jurisdiction, ¶ 118

[Page 75]

Claimant's Rejoinder on Jurisdiction

In sum, it is clear that WMH and WCC have submitted the same claims since they involve the same facts, the same challenged measures, and the same requested relief, which is precisely why the Westmoreland I tribunal declined jurisdiction on the basis that WMH was seeking to bring a claim that only WCC could pursue. The parties' conduct confirms that the claims are the same, since the parties agreed to “substitute” WCC for WMH, in order to “proceed” with “the arbitration.”

Claimant’s Rejoinder on Jurisdiction, ¶ 50

[Page 76]

NAFTA: Claims Arising out of the Same Events

Article 1117

3. Where an investor makes a claim under this Article and the investor or a non-controlling investor in the enterprise makes a claim under Article 1116 arising out of the same events that gave rise to the claim under this Article, and two or more of the claims are submitted to arbitration under Article 1120, the claims should be heard together by a Tribunal established under Article 1126, unless the Tribunal finds that the interests of a disputing party would be prejudiced thereby.

NAFTA Article 1117

[Page 77]

Tribunal Question 2

Please elaborate on the identity of the claims advanced in 2018, 2019 and 2022, respectively. In particular, are the claims identical, as the Claimant argues, or are they separate and distinct, as the Respondent contends, and what is the effect of such a determination?

[Page 78]

OCT 14, 2019
Critical Date

OCT 14, 2022
WCC NOA

NOV 24, 2016
Claimant's first knowledge of alleged breach and loss

3 YEARS

2015 2016 2017 2018 2019 2020 2021 2022

Claimant’s Response to Memorial on Jurisdiction, ¶ 151 (emphasis in original)

[Page 79]

NAFTA: Limitation Period is Not Flexible

[T]he Limitations Period Doctrine in Public International Law

Gentini and Williams can be construed as standing for the proposition that international law, without specifying a particular field of international law, recognizes and encourages the application of the [limitation period doctrine] even where the treaty at issue does not prescribe a limitations period.

RLA-077, Martinez-Fraga & Reetz, p. 112

[Page 80]

NAFTA: Limitation Period is Not Flexible

Corona Materials, LLC v. Dominican Republic
(ICSID Case No. ARB(AF)/14/3)
Award on the Respondent's Expedited Preliminary Objections

public international law. As it will be seen later in this Award, whatever the importance devoted to DR municipal law by the Parties, and in particular by the Claimant, both in its written pleadings and during the Hearing as well as in its Post-Hearing Brief, the DR's Law plays nothing but a marginal or subsidiary role, including when the Tribunal addresses the issue of an alleged denial of justice committed by the Respondent against the Claimant.

C. The Basis for Consent to Arbitration

188. The DR-CAFTA's "Investor-State Dispute Settlement" section (Section B) contains the consent of each DR-CAFTA Party to this form of arbitration. Article 10.17, "Consent of Each Party to Arbitration", provides in relevant part:

"1. Each Party consents to the submission of a claim to arbitration under this Section in accordance with this Agreement [...]." [Emphasis added.]

Consent is thus expressly conditioned on the claimant's submission of the claim in accordance with the terms of the Agreement. In this respect, the invocation of the investor-State arbitration clause is governed by a lex specialis.

189. The precise contours of the State Party's consent are addressed in the next article, Article 10.18, "Conditions and Limitations on Consent of Each Party", which among other things contains a limitation period stating that:

"1. No claim may be submitted to arbitration under this Section if more than three years have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged under Article 10.16.1 and knowledge that the claimant (for claims brought under Article 10.16.1(a)) or the enterprise (for claims brought under Article 10.16.1(b)) has incurred loss or damage."

190. Article 10.18 sets out two other conditions and limitations, specifically the requirements: (i) that no claim may be submitted to arbitration unless the claimant consents in writing to arbitration in accordance with the procedures set out in the Agreement; and that (ii) the notice of arbitration must be accompanied by a written waiver from the claimant and/or its enterprise, as the case may be. The claimant must waive "the right to initiate or continue

Corona Materials, LLC v. Dominican Republic

Consent is thus expressly conditioned on the claimant's submission of the claim in accordance with the terms of the Agreement. In this respect, the invocation of the investor-State arbitration clause is governed by a lex specialis.

RLA-026, Corona Materials – Award on the Respondent's Expedited Preliminary Objections in Accordance with Article 10.20.5 of the CAFTA-DR, ¶ 188

[Page 81]

NAFTA: Limitation Period is Not Flexible

Submission of Mexico

To be clear, it is Mexico's position, as agreed by the Parties, that there is no possibility for the three-year limitation period to be suspended. That scenario is nowhere to be found in NAFTA, since it was never the intention of NAFTA Parties.

U.S. Submission in Resolute

The limitations period set out in Articles 1116(2) and 1117(2) [...] is a "clear and rigid" requirement that is not subject to any "suspension," "prolongation," or "other qualification.”

1128 Submission of Mexico, ¶ 30; R-098, Resolute – U.S. 1128 Submission, ¶ 6

[Page 82]

NAFTA: Limitation Period is Not Flexible

1117(2). Those provisions determine either the extent of the jurisdiction of the present Tribunal or, at the least, the admissibility of the claim brought before it. The brief passage in the Mobil I Decision on which Mobil now relies cannot confer upon the present Tribunal a jurisdiction which it would not otherwise possess, or render admissible a claim which, under a proper interpretation of the relevant NAFTA provisions, would not otherwise be admissible. Whether the present claim complies with the requirements of Articles 1116(2) and 1117(2) is a matter which the Tribunal must determine for itself.

(4) Is Mobil's Claim barred by Articles 1116(2) and 1117(2)?

145. The Tribunal will therefore turn to the central question before it, namely whether or not the claim brought by Mobil in the present proceedings, which relates to the losses it claims to have sustained as a result of the application of the 2004 Guidelines is barred by the application of Articles 1116(2) and 1117(2). At the outset, the Tribunal wishes to say that it has found the submissions of the Parties and the Article 1128 submissions from Mexico and the United States of great assistance. To the extent that it does not deal in detail with every point made in those various submissions, that is only because it considers that some are concerned with points which the Tribunal is not compelled to decide.

146. The Tribunal considers that the requirement, in Articles 1116(2) and 1117(2), that any claim in respect of a breach of Section A of Chapter Eleven must be brought within three years of the investor (or enterprise) first acquiring knowledge of the alleged breach and first acquiring knowledge that it has suffered loss or damage as a result of that breach plays an important role within the scheme of Chapter Eleven. By preventing claims being brought against a NAFTA Party after more than three years, it guarantees for all three States a degree of certainty and finality. Their submissions in several earlier NAFTA arbitrations make clear the importance which they attach to that guarantee while the awards themselves highlight that the limitation period is "clear and rigid".⁷³

⁷³ See RL-8, Marvin Roy Feldman Karpav. United Mexican States, ICSID Case No. ARB(AF)/99/1, Award, 16 December 2002, para. 63 and RL-3, Grand River Enterprises Six Nations, Ltd, et al. v. United States of America (UNCITRAL), Decision on Objections to Jurisdiction, para. 29, and the references at notes 34-39, above. ↩

Mobil Investments Canada Inc. v. Canada

The Tribunal considers that the requirement, in Articles 1116(2) and 1117(2), [...] plays an important role within the scheme of Chapter Eleven. By preventing claims being brought against a NAFTA Party after more than three years, it guarantees for all three States a degree of certainty and finality. Their submissions in several earlier NAFTA arbitrations make clear the importance which they attach to that guarantee while the awards themselves highlight that the limitation period is “clear and rigid".

RLA-027, Mobil – Decision on Jurisdiction, ¶ 146

[Page 83]

NAFTA: Limitation Period is Not Flexible

Marvin Roy Feldman Karpa v. United Mexican States

NAFTA Articles 1117(2) and 1116(2) introduce a clear and rigid limitation defense which, as such, is not subject to any suspension, prolongation or other qualification.

Resolute Forest Products Inc. v. Canada

There is no provision for the Tribunal to extend the limitation period [...].

RLA-023, Feldman – Award, ¶ 63; RLA-021, Resolute – Decision on Jurisdiction, ¶ 153; Canada's Memorial on Jurisdiction, fn. 173

[Page 84]

NAFTA: Limitation Period is Not Flexible

Second, as explained by the United States in its previous submissions, Methanex itself has not alleged any direct injury that is independent of any alleged loss sustained by its U.S. affiliates; to the extent that Methanex claims direct losses, that claim is inadmissible because such losses are not claimed by Methanex to have been sustained by it in its capacity as an investor. See U.S. Memorial at 65; U.S. Reply at 52-53. For the foregoing reasons and those set forth in the Memorial and the Reply, this Tribunal lacks jurisdiction to hear Methanex's claim under Article 1116.

VI. METHANEX'S CLAIM SHOULD BE DEEMED SUBMITTED AS OF MAY 25, 2001, AND ITS CLAIM CHALLENGING THE BILL SHOULD BE DISMISSED AS TIME-BARRED

Methanex and its U.S. affiliates have now filed waivers in accordance with the jurisdictional prerequisites set forth in Article 1121. See Exh. 5 to Methanex's Rejoinder. The United States therefore reiterates its offer not to seek dismissal of Methanex's claim on jurisdictional grounds so long as the Tribunal issues an order recognizing that Methanex's claim has been duly submitted as of May 25, 2001-the date Methanex filed its complying waivers. See U.S. Memorial at 74-75, 77-78; U.S. Reply at 54-55; see also Canada's Second 1128 Submission, ¶ 49 ("Canada agrees with the interpretation [of Article 1121] submitted by the United States."). The United States also consents to the reconstitution of this Tribunal as of that date. See U.S. Memorial at 77-78; U.S. Reply at 53.

As a result of deeming Methanex's claim to be submitted as of May 25, 2001, that portion of Methanex's original Statement of Claim that identified the Bill as a measure that violated NAFTA Chapter Eleven should be dismissed by this Tribunal since the Bill

Methanex Corp. v. United States

As a result of deeming Methanex's claim to be submitted as of [the date of proper waivers], that portion of Methanex's original Statement of Claim that identified the Bill as a measure that violated NAFTA Chapter Eleven should be dismissed by this Tribunal since the Bill was passed more than three years before the submission of Methanex's claim to arbitration.

R-148, Methanex – Rejoinder on Jurisdiction, p. 52

[Page 85]

NAFTA: Limitation Period is Not Flexible

proceedings. On the face of the award (as analyzed above), all the first Tribunal did was to hold the initial waiver invalid and thus ineffective to amount to the condition precedent expressly required by Article 1121 for the invocation of arbitral jurisdiction. The first Tribunal did not say in so many words whether a new claim accompanied by a valid waiver was or was not open. The Respondent however stressed Mr. Highet's statement that "the entire NAFTA claim has been undone".²⁷ In its view, this indicated much more than a procedural error immediately curable by new proceedings.

20. On a careful reading of the first Tribunal's reasons and decision, we cannot find any expression of opinion on the point which now has to be decided. The first Tribunal did not need to decide what effect its decision had for the future, and there is no indication in the Award that it did so.

21. It is true that the question whether the Claimant might validly resubmit its claim was discussed in argument before the first Tribunal. In its Memorial, the Claimant indicated its intention to resubmit the claim, if it lost on the point concerning the effect of its waiver.²⁸ The Respondent noted that any new claim would have to take into account what had happened in the domestic proceedings: "The Claimant would have to present a new claim taking into consideration what happened since [the first claim]".²⁹ It said further that "if this [sc. the first] Tribunal decides, as we believe it should, that in the particular circumstances of this case it lacks competence and the Claimant decides to present again a claim, we would have to evaluate it on its own merits".³⁰ In fact it appears that the Claimant has resubmitted the very same claim to arbitration, since it does not rely on the later domestic proceedings in any way in terms of its current claim. On the other hand, those proceedings are facts which either party may bring to the Tribunal's attention, to the extent they may be relevant.

²⁷ Award, § 27 a), 40 I.L.M. 56 (2001), at p. 67. ↩
²⁸ Dissent, para. 63, 40 I.L.M. 56 (2001), at p. 81. ↩
²⁹ Claimant's Memorial in the first proceedings, para. 4.18, as cited in Claimant's Response of 19 February 2002, p.1. ↩
³⁰ As noted in Respondent's Additional Submission of 19 February 2002. ↩

Waste Management v. Mexico

The Respondent noted that any new claim would have to take into account what had happened in the domestic proceedings: “The Claimant would have to present a new claim taking into consideration what happened since [the first claim].” It said further that “if this [sc. the first] Tribunal decides, as we believe it should, that in the particular circumstances of this case it lacks competence and the Claimant decides to present again a claim, we would have to evaluate it on its own merits”.

RLA-036, Waste Management v Mexico – Decision of the Tribunal on Mexico's Preliminary Objection concerning the Previous Proceedings, ¶ 21

[Page 86]

Limitation Period is Not Flexible

Bacilio Amorrortu v. Peru

The present, PCA Case No. 2023-22, is the second arbitration between the same Parties.

In turn, according to the Respondent, the Claimant's claim was only “submitted to arbitration” in accordance with Article 10.16.4 of the USPTPA on 21 August 2023, the date on which both the Claimant's Notice of Arbitration and his Statement of Claim were received by the Respondent – that is, more than three years after the Claimant first acquired knowledge of the alleged Treaty breaches in 2019.

RLA-097, Bacilio Amorrortu v Peru – Procedural Order No. 2: Decision on Bifurcation, ¶ 16, 22

[Page 87]

NAFTA: Limitation Period is Not Flexible

Claimant's Rejoinder on Jurisdiction

[T]he fact that WMH and WCC are different corporate entities therefore has no bearing on the applicability of tolling to this case.

This principle [...] benefit [sic] WCC as a creditor with the same interest as WMH in pursuing the NAFTA Claims against Canada.

Claimant's Rejoinder on Jurisdiction, ¶¶ 138, 140

[Page 88]

NAFTA: Limitation Period is Not Flexible

2883. Prescription may not be renounced in advance, but prescription acquired or the benefit of the time elapsed in the case of prescription that has begun to run may be re[illegible]

2893. Any demand by a creditor to share in a distribution with other creditors also

M.C.L. s. 600.5856; M.S.A. s. 27.5856. The statutes of limitations are tolled when (1) the complaint is filed and a copy of the summons and complaint are served on the defendant, or when (2) jurisdiction over the defendant is otherwise acquired, or when (3) the complaint is filed and a copy of the summons and complaint in good faith, are placed in the hands of an offer for immediate service, but in this case the statute shall not be tolled longer than 90 days thereafter.

1975. La interrupción de la prescripción contra el deudor principal por reclamación judicial de la deuda, surte efecto también contra su fiador; pero no perjudicará a éste la que se produzca por reclamaciones extrajudiciales del acreedor o reconocimientos privados del deudor.

C-110, Civil Code of Quebec; C-112, Civil Code of Argentina; C-111, Civil Code of Spain; C-109, Federal Kemper Ins. Co. v. Isaacson, 377 N.W.2d 379 (Mich. Ct. App.1985)

[Page 89]

NAFTA: Limitation Period is Not Flexible

Claimant's Rejoinder on Jurisdiction

While a true withdrawal could lead a respondent State to believe that it no longer needed to preserve its evidence, there was no such withdrawal here.

Claimant's Rejoinder on Jurisdiction, ¶ 136

[Page 90]

NAFTA: Limitation Period is Not Flexible

Claimant's Response on Jurisdiction

Even if the NAFTA limitations period was not suspended during the pendency of the earlier arbitral proceedings, Canada nonetheless should be estopped from asserting the limitations defense [...].

Claimant's Response on Jurisdiction, ¶ 190; see also, Canada's Memorial on Jurisdiction, ¶¶ 105-122; Canada's Reply Memorial, ¶¶ 159-165

[Page 91]

NAFTA: Claimant Must Establish Jurisdiction

Claimant's Rejoinder on Jurisdiction

Tolling is just as warranted here as it was in Renco II, since WCC has not had its NAFTA Claim heard on the merits before any tribunal, national or international [...].

Claimant's Rejoinder on Jurisdiction, ¶ 146

[Page 92]

NAFTA: Claimant Must Establish Jurisdiction

Article 1115: Purpose

Without prejudice to the rights and obligations of the Parties under Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures), this Section establishes a mechanism for the settlement of investment disputes that assures both equal treatment among investors of the Parties in accordance with the principle of international reciprocity and due process before an impartial tribunal.

NAFTA Article 1115

[Page 93]

Tribunal Question 4

If there is a residual expropriation claim, for instance in relation to measures adopted in 2015 and 2016, what are the Parties' positions in relation to that claim in terms of limitation periods and the scope of WCC's waivers?

[Page 94]

The Claimant Has Not Established The Tribunal's Jurisdiction

Does the Claimant hold a "legacy investment" under CUSMA Annex 14-C?

NO
Has the Claimant submitted valid waivers consistent with NAFTA Article 1121?

NO
Is the Claim timely pursuant to NAFTA Articles 1116(2) and 1117(2)?

NO

If YES to ALL

Proceed to Next Three Jurisdictional Issues

DISMISS ENTIRE CLAIM

[Page 95]

Overview of Canada's Opening Statement

Factual Background
The Claimant Does Not Have a "Legacy Investment" Under CUSMA Annex 14-C
The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121
The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)
The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)
Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim
The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 96]

Alleged Damages Claimed by WCC

	2022 NOA
Measures Challenged	2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy Federal Fuel Charge (withdrawn)
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie's assets "NAFTA claim" as a "claim to money"
Alleged Damages (Heads)	Lost revenues from Prairie's coal sales Prairie's accelerated reclamation costs
Alleged Damages (Quantum)	Damages not yet quantified

[Page 97]

Article 1116 Permits a Claim by an Investor for Loss or Damage Incurred by the Investor

NAFTA Article 1116(1)

Article 1116: Claim by an Investor of a Party on Its Own Behalf

1. An investor of a Party may submit to arbitration under this Section a claim that another Party has breached an obligation under:

(a) Section A or Article 1503(2) (State Enterprises), or

(b) Article 1502(3)(a) (Monopolies and State Enterprises) where the monopoly has acted in a manner inconsistent with the Party's obligations under Section A,

and that the investor has incurred loss or damage by reason of, or arising out of, that breach.

[Page 98]

Permissible Claims for Damage by a Shareholder Investor under Article 1116

NAFTA

Damages caused by the loss of voting rights

Damages caused by the loss of the right to receive dividends

Damages caused by the loss of an ability to transfer share ownership

Damages caused by the loss of a right to acquire further shares

Canada's Memorial on Jurisdiction, ¶ 132. RLA-040, Bilcon - Award on Damages, ¶ 330

[Page 99]

Article 1117 Permits a Claim by an Investor for Loss or Damage Incurred by the Enterprise

NAFTA Article 1117(1)

Article 1117: Claim by an Investor of a Party on Behalf of an Enterprise

1. An investor of a Party, on behalf of an enterprise of another Party that is a juridical person that the investor owns or controls directly or indirectly, may submit to arbitration under this Section a claim that the other Party has breached an obligation under:

(a) Section A or Article 1503(2) (State Enterprises), or

(b) Article 1502(3)(a) (Monopolies and State Enterprises) where the monopoly has acted in a manner inconsistent with the Party's obligations under Section A, and that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.

[Page 100]

Permissible Claims for Damage by an Investor on Behalf of an Enterprise under Article 1117

NAFTA

Damages caused by a loss in the value of an enterprise's assets

Damages caused by a reduction in the value of a corporation's shares

Damages caused by lost profits

Canada's Memorial on Jurisdiction, ¶ 132. RLA-040, Bilcon - Award on Damages, ¶ 330

[Page 101]

Damages for an Article 1117 Claim are Paid to the Enterprise not the Investor

NAFTA Article 1135(2)

2. Subject to paragraph 1, where a claim is made under Article 1117(1):

(a) an award of restitution of property shall provide that restitution be made to the enterprise;

(b) an award of monetary damages and any applicable interest shall provide that the sum be paid to the enterprise; and

(c) the award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law.

[Page 102]

The NAFTA Parties Agree that Articles 1116 and 1117 Address Discrete and Non-Overlapping Types of Injury

NAFTA Articles 1116 and 1117 serve to address discrete and non-overlapping types of injury. Where the investor seeks to recover loss or damage that it incurred directly, it may bring a claim under NAFTA Article 1116. Where the investor seeks to recover loss or damage to an enterprise that the investor owns or controls, the investor's injury is only indirect. Such a derivative claim must be brought, if at all, under NAFTA Article 1117.

While Article 1116 is the avenue that permits an investor to pursue a claim for loss or damages incurred by the investor directly, Article 1117 allows an investor to pursue a claim for loss [sic] or damages incurred indirectly, through an enterprise. This distinction is clear.

Article 1128 Submission of United States, ¶ 6; Article 1128 Submission of Mexico, ¶ 24. See also Canada's Memorial on Jurisdiction, ¶ 132; Canada's Reply on Jurisdiction, ¶ 218

[Page 103]

Alleged Damages Claimed by WCC

VII. DAMAGES

Westmoreland's mine-mouth operations depended on the adjacent power plants. Alberta's decision to phase out coal by 2030, and its subsequent decision to implement a carbon charge (later supplemented by the federal government's minimum carbon charges), led Canadian coal-fired generation utilities to accelerate the closure of coal-fired generation units and/or convert them to natural gas sooner than 2030—long before the timeline envisioned under the 2012 Federal Regulation in force when Westmoreland made its investment. Canada's actions at the provincial and federal levels eliminated the market for thermal coal, and essentially left Westmoreland with worthless interests in the Genesee, Sheerness, and Paintearth mines, while saddling Westmoreland with significant reclamation costs.

Claimant's Notice of Arbitration, 14 October 2022, ¶ 94

[Page 104]

Alleged Damages Claimed by WCC

	2022 NOA
Measures Challenged	2015 Climate Leadership Plan (Phase-Out of Coal-Fired Emissions) 2016 Allocation of Transition Payments 2016 Imposition of Consumer Fuel Levy Federal Fuel Charge (withdrawn)
Alleged Breaches	NAFTA Article 1102 NAFTA Article 1105 NAFTA Article 1110
Alleged Investments	Prairie, interests in Prairie Certain of Prairie's assets "NAFTA claim" as a "claim to money"
Alleged Damages (Heads)	Lost revenues from Prairie's coal sales Prairie's accelerated reclamation costs
Alleged Damages (Quantum)	Damages not yet quantified

[Page 105]

Alleged Damages Claimed by WCC

Claimant's Response on Jurisdiction

Respondent misconstrues the meaning of reflective loss. Claims for reflective loss arise where shareholders sue for the diminution of the value of their shares caused by acts of the host State taken against the company in which they own shares.²¹⁵ That is not at issue here, as WCC is challenging Canada's conduct that resulted in the total destruction of WCC's investment. This is not a case of reflective loss.

Claimant's Response on Jurisdiction, ¶ 144

[Page 106]

Alleged Damages Claimed by WCC

Claimant's Rejoinder on Jurisdiction

First, WCC's claims do not involve reflective loss because the challenged measures culminated in the total destruction of WCC's investment. Canada argues that WCC "fails to specify how the challenged measures 'destroyed' its shareholding in Prairie" since it continued to hold shares in Prairie after the measures.³⁰³ However, despite holding shares in Prairie following the measures, WCC had significant write-offs on its own books after emerging from the bankruptcy.

Claimant's Rejoinder on Jurisdiction, ¶ 193

[Page 107]

The Claimant Has Not Established the Tribunal's Jurisdiction

4 Has the Claimant made a prima facie damages claim under NAFTA Article 1116?

DISMISS ART. 1116 CLAIM

[Page 108]

Overview of Canada's Opening Statement

Factual Background
The Claimant Does Not Have a "Legacy Investment" Under CUSMA Annex 14-C
The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121
The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)
The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)
Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim
The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 109]

Requirements of Article 1121 is a Condition Precedent to Submission of a Claim to Arbitration

NAFTA Article 1121(2)(b)

2. A disputing investor may submit a claim under Article 1117 to arbitration only if both the investor and the enterprise:

[...]

(b) waive their right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article 1117, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party.

NAFTA Article 1121(2)(b)

[Page 110]

Article 1121: Material Requirements

Waste Management, Inc. v. Mexico

The act of waiver involves a declaration of intent by the issuing party, which logically entails a certain conduct in line with the statement issued. [...] [I]t is clear that the waiver required under NAFTA Article 1121 calls for a show of intent by the issuing party vis-à-vis its waiver of the right to initiate or continue any proceedings whatsoever before other courts or tribunals with respect to the measure allegedly in breach of the NAFTA provisions. Moreover, such an abdication of rights ought to have been made effective as from the date of submission of the waiver [...].

RLA-028, Waste Management I – Award, ¶ 24

[Page 111]

Article 1121 Provides a Limited and Narrow Exception

NAFTA Article 1121(2)

Article 1121: Conditions Precedent to Submission of a Claim to Arbitration

2. A disputing investor may submit a claim under Article 1117 to arbitration only if both the investor and the enterprise:

(a) consent to arbitration in accordance with the procedures set out in this Agreement; and

(b) waive their right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article 1117, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party.

NAFTA Article 1121(2)

[Page 112]

The Claimant's Argument is Contrary to the Text of Article 1121(2)(b)

Bacilio Amorrortu v. Peru

There is simply no textual support for the Claimant's attempt to carve out of USPTPA Article 10.18.2(b) claims that may eventually be dismissed by the treaty tribunal for lack of jurisdiction or otherwise (i.e., without deciding on the merits). Such an interpretation would in fact amount to an impermissible rewriting of the text of the USPTPA. A similar argument was heard and dismissed by the Renco I tribunal, with whose views on this point this Tribunal also aligns [...].

RLA-038, Amorrortu – Partial Award on Jurisdiction, ¶ 226

[Page 113]

The Claimant Has Not Established the Tribunal's Jurisdiction

Has the Claimant made a prima facie damages claim under NAFTA Article 1116?

NO

DISMISS ART. 1116 CLAIM
Has Prairie acted consistently with its waiver in WMH?

NO

DISMISS ART. 1117 CLAIM

[Page 114]

Overview of Canada's Opening Statement

Factual Background
The Claimant Does Not Have a "Legacy Investment" Under CUSMA Annex 14-C
The Claimant Has Not Submitted Valid Waivers Under NAFTA Article 1121
The Claimant's Claim Is Not Timely Under NAFTA Articles 1116(2) and 1117(2)
The Claimant Has Not Made a Prima Facie Damages Claim Under NAFTA Article 1116(1)
Prairie's WMH Waiver Bars the Claimant From Bringing its NAFTA Article 1117(1) Claim
The Claimant Did Not Own or Control Prairie When It Submitted its Claim to Arbitration Under NAFTA Article 1117(1)

[Page 115]

Article 1117(1) Requires Ownership or Control When Claim is Submitted

NAFTA Article 1117(1)

1. An investor of a Party, on behalf of an enterprise of another Party that is a juridical person that the investor owns or controls directly or indirectly, may submit to arbitration under this Section a claim that the other Party has breached an obligation under:

NAFTA Article 1117(1). See, Canada's Memorial on Jurisdiction, ¶ 132; Claimant's Rejoinder on Jurisdiction, ¶ 107

[Page 116]

The NAFTA Parties Use Different Temporal Tenses in Chapter 11

NAFTA Article 1139

investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment;

NAFTA Article 1139.

[Page 117]

The Clear Understanding of the NAFTA Parties

B-Mex, LLC and others v. United Mexican States

"The Respondent would add that any intended claimant [under Article 1117] would also need to prove ownership and control on the date of submission to arbitration...")

"[A]n investor of a Party other than the respondent Party must also own or control the enterprise directly or indirectly at the time of submission of the claim to arbitration."

R-155, B-Mex – Mexico's Reply on Jurisdictional Objections, ¶ 284; R-117, B-Mex - Second Submission of the United States of America, ¶ 5

[Page 118]

NAFTA Tribunals Have Confirmed This Understanding

B-Mex, LLC and others v. United Mexican States

[Article 1117(1)] uses the present tense: an investor may make a claim "on behalf of an enterprise of another Party that is a juridical person that the investor owns or controls directly or indirectly". Thus, the investor must own or control the enterprise at the time it submits a claim on the enterprise's behalf. The drafters of the Treaty could have said an enterprise "that the investor owned or controlled at the time of the alleged breach". They chose not to.

Loewen Group Inc. v. United States

...the Tribunal unanimously decides...[t]hat it lacks jurisdiction to determine Raymond L. Loewen's claims under NAFTA concerning decisions of the United States courts on the ground that it was not shown that he owned or controlled directly or indirectly TLGI when the claims were submitted to arbitration...

RLA-046, B-Mex – Partial Award, ¶¶ 148-152; RLA-045, Loewen - Award, pp. 69-70

[Page 119]

The Claimant Has Not Established the Tribunal's Jurisdiction

Has the Claimant made a prima facie damages claim under NAFTA Article 1116?

NO

DISMISS ART. 1116 CLAIM
Has Prairie acted consistently with its waiver in WMH?

NO
Did the Claimant own or control Prairie when it submitted its claim to arbitration?

NO

DISMISS ART. 1117 CLAIM

The Claimant Has Not Established The Tribunal's Jurisdiction

The Claimant Has Not Established The Tribunal's Jurisdiction

Overview of Canada’s Opening Statement

Overview of Canada’s Opening Statement

Chapter 1: The Claimant Purchases and Sells Interests in Canada

Chapter 1: The Claimant Indirectly Held Its Interests in Prairie

Chapter 1: The Claimant Purchases and Sells Interests in Canada

Chapter 1: The Claimant Planned to Sell Substantially All of its Assets and Wind Down

WCC Motion to Approve the Disclosure Statement

Chapter 1: The Claimant Purchases and Sells Interests in Canada

Chapter 1: WCC Sold Its Canadian Interests in an Arm’s-Length Sale

U.S. Bankruptcy Court, Confirmation Order

Chapter 1: WCC Sold Its Canadian Interests in an Arm’s-Length Sale

Westmoreland Mining Holdings v. Canada

Chapter 2: Measures the Claimant Challenges In This Claim

Chapter 2: The Claim Before This Tribunal

Tribunal Question 3

Tribunal Question 4

Chapter 3: History of Prior Claims

Tribunal Question 2

Canada Consents to Arbitrate Certain Claims Submitted to Arbitration

CUSMA Annex 14-C, Paragraph 1

NAFTA Article 1122(1)

The Investor Perfects Consent By Submitting a Claim to Arbitration in Accordance with the Treaty Conditions

CUSMA Annex 14-C, Paragraph 2

NAFTA Article 1122(2)

A Claim Is Submitted to Arbitration through a Notice of Arbitration

NAFTA Article 1137(1)

The Framework for an Agreement to Arbitrate

Chapter 3: History of Prior Claims

Chapter 3: WCC’s 2018 NOA

Chapter 3: History of Prior Claims

Chapter 3: WCC Chose to Sell the 2018 NOA

Claimant’s Response on Jurisdiction

The Sold “NAFTA Claim” Referred Expressly to the 2018 NOA

Stalking Horse Purchase Agreement, s. 1

Chapter 3: History of Prior Claims

The Attempted Amendment Sought Substitution

The Attempted Amendment Sought Substitution

The Attempted Amendment Sought Substitution

III. PROCEDURAL REQUIREMENTS

Canada Viewed the Attempted Amendment as an Impermissible Substitution

Canada Viewed the Attempted Amendment as an Impermissible Substitution

Canada Viewed the Attempted Amendment as an Impermissible Substitution

Canada Reserves Its Right to Raise Jurisdictional or Admissibility Objections

The Requestors Accepted Canada’s Offer The Next Day

The Requestors Accepted Canada’s Offer The Next Day

Chapter 3: History of Prior Claims

Chapter 3: History of Prior Claims

Tribunal Question 2: The Claimant Has Not Established Identity Between the Claims

Overview of Canada's Opening Statement

The Claimant Does Not Have a “Legacy Investment” UnderCUSMA Annex 14-C

CUSMA Annex 14-C, Paragraph 1

CUSMA Annex 14-C, Paragraph 6(a)

CUSMA Annex 14-C, Paragraph 6(b)

NAFTA Article 1139

CUSMA Annex 14-C, Paragraph 6(a)

NAFTA Article 1139

The CUSMA Parties Agree that an Investor Must Hold The Relevant Investment When CUSMA Entered Into Force

CUSMA Annex 14-C, Paragraph 6(a)

The Claimant's Alleged Investments Are Not Legacy Investments

The Claimant Sold Its Interests in Canada Prior to July 1, 2020

The Claimant's Alleged Investments Are Not “Legacy Investments”

Estoppel Cannot Create Jurisdiction Where It Does Not Exist On the Law

Koch Industries et al. v. Canada

The Claimant Has Not Established The Tribunal's Jurisdiction

Requirements of Article 1121 is a Condition Precedent to Submission of a Claim to Arbitration

NAFTA Article 1121(3)

Pope & Talbot v. Canada

Gramercy Funds v. Canada

WCC Has Failed to Meet the Requirements of Article 1121(3)

Claimant has Failed to Meet the Requirements of NAFTA Article 1121(3)

Claimant's Rejoinder on Jurisdiction

Bacilio Amorrortu v. Peru

Tribunal Question 4

Tribunal Question 5

The Temporal Limitation on Consent

Article 1116: Claim by an Investor of a Party on Its Own Behalf

Article 1117: Claim by an Investor of a Party on Behalf of an Enterprise

Dates for Article 1116(2) and 1117(2) Analysis

The Claimant Does Not Have a “Legacy Investment” Under
CUSMA Annex 14-C