Lone Pine Resources Inc. v. The Government of Canada, ICSID Case No. UNCT/15/2
ICSID · Investment (ICSID and treaty) · Canada · 21 Nov 2022
Why it matters
This case is a landmark NAFTA Chapter Eleven award addressing the tension between investor rights and environmental regulation. The tribunal upheld Canada's right to regulate for environmental protection, rejecting claims that a ban on hydraulic fracturing under the St. Lawrence River amounted to expropriation or violated fair and equitable treatment. It clarified that legitimate expectations must be based on specific, unambiguous representations, not general regulatory frameworks.
Summary
Lone Pine Resources Inc., a US company, invested in oil and gas exploration in Québec, including obtaining an exploration permit (River Permit) for the St. Lawrence River. In 2011, Québec passed the Act to limit oil and gas activities, which effectively revoked the River Permit and banned hydraulic fracturing under the river. Lone Pine claimed this violated NAFTA's expropriation (Article 1110) and fair and equitable treatment (Article 1105) provisions. The tribunal first upheld jurisdiction, finding that the River Permit rights constituted an 'investment' under NAFTA. On the merits, the tribunal rejected the expropriation claim, holding that the permit was a revocable authorization and the ban was a non-discriminatory environmental regulation. On the FET claim, a majority found no breach: Québec's conduct did not create specific legitimate expectations, and the ban was a reasonable exercise of police powers. The tribunal dismissed all claims and ordered each party to bear its own costs.
The detail
Parties: Lone Pine Resources Inc. v. The Government of Canada, ICSID Case No. UNCT/15/2
Case number: italaw/cases/1606
Outcome: Tribunal dismissed all claims; each party bears its own legal costs and half of arbitration costs.
Applicable law: NAFTA Chapter Eleven, UNCITRAL Arbitration Rules, Mining Act (Québec), Environment Quality Act (Québec)
Issues in play: NAFTA Article 1110 (expropriation) and Article 1105 (minimum standard of treatment) vs. Québec's regulatory power to ban oil and gas activities in the St. Lawrence River for environmental protection.
Read the full decision at italaw ↗
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