AbitibiBowater Inc., v. Government of Canada, ICSID Case No. UNCT/10/1
ICSID · Investment (ICSID and treaty) · Canada · 15 Dec 2010
Why it matters
This case is notable as one of the first NAFTA Chapter 11 claims to be settled after the investor filed for bankruptcy. The settlement included a CAD $130 million payment, reflecting the fair market value of expropriated assets. It also demonstrated the use of a consent award to formally terminate arbitration proceedings, and the parties agreed to publication, contributing to transparency in investor-state arbitration.
Summary
AbitibiBowater Inc., a US-based forestry and paper company, and its Canadian subsidiaries filed a NAFTA Chapter 11 arbitration against the Government of Canada in February 2010. The dispute arose from a 2008 Act of the Government of Newfoundland and Labrador that expropriated certain timber and water use rights and associated assets owned by AbitibiBowater. The company sought compensation for the expropriation, claiming violations of NAFTA's investment protections, particularly Article 1110 on expropriation and compensation. At the time of filing, AbitibiBowater was undergoing restructuring under Chapter 11 bankruptcy in the US and CCAA proceedings in Canada. The arbitration was administered by ICSID under the UNCITRAL Rules. Before any hearings on the merits, the parties reached a settlement agreement on 24 August 2010. Under the settlement, Canada agreed to pay CAD $130 million to AbitibiBowater's new corporate entity, representing the fair market value of the expropriated rights and assets. In return, AbitibiBowater irrevocably withdrew its notice of arbitration, released Canada from all claims, and waived any future NAFTA claims related to the Act. The settlement was conditional on court approvals in the bankruptcy proceedings and the constitution of the new company. Once those conditions were satisfied, the parties jointly requested the arbitral tribunal to issue a consent award incorporating the settlement terms. The tribunal issued the consent award on 15 December 2010, formally terminating the arbitration. The award is public by agreement of the parties under NAFTA Annex 1137.4. The case is significant because it shows how investor-state claims can be resolved through settlement even when the investor is in bankruptcy, and it provides an example of a consent award that records the terms of settlement and ends the proceedings.
The detail
Parties: AbitibiBowater Inc., v. Government of Canada, ICSID Case No. UNCT/10/1
Case number: italaw/cases/39
Outcome: Settlement: Canada paid CAD $130 million; AbitibiBowater withdrew its NAFTA Chapter 11 claim and released Canada from all claims related to the expropriation.
Quantum: CAD $130 million
Applicable law: NAFTA Chapter 11, UNCITRAL Arbitration Rules, laws of Ontario and applicable international law
Issues in play: The case involved the expropriation of timber and water rights by Newfoundland and Labrador, and the investor's claim for compensation under NAFTA Article 1110 (expropriation). The settlement avoided a ruling on the merits.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.