Melvin J. Howard, Centurion Health Corp. & Howard Family Trust v. Government of Canada
PCA · Investment (ICSID and treaty) · Canada · 2 Aug 2010
Why it matters
This case illustrates the consequences of a claimant's failure to comply with procedural obligations, such as paying required deposits, leading to termination of proceedings. It underscores that tribunals have discretion to award costs against the unsuccessful party even without a merits decision, and that legal fees may not be awarded if disproportionate to the preliminary stage of the case.
Summary
The claimants, U.S. nationals, initiated arbitration against Canada under NAFTA Chapter 11, alleging that Canadian legislative and administrative measures impeded their planned construction of a private healthcare facility in Vancouver, British Columbia. They claimed breaches of NAFTA Articles 1102 (National Treatment), 1103 (Most-Favored-Nation Treatment), 1105 (Minimum Standard of Treatment), 1110 (Expropriation), and provisions on state enterprises. The claimants sought over US$160 million in damages. After the tribunal was constituted, the claimants challenged arbitrator Henri Alvarez, but the challenge was not pursued to a decision. The claimants failed to pay their share of the required deposit for arbitration costs despite multiple requests. The tribunal postponed the first procedural meeting and eventually, at Canada's request, terminated the proceedings under Article 41(4) of the UNCITRAL Rules due to the claimants' failure to prosecute. The tribunal found the claimants to be the unsuccessful party and ordered them to bear the arbitration costs (US$37,905.45) and disbursements (CAN$4,667.99), but declined to award Canada's legal fees (over CAN$227,000) as disproportionate given the preliminary stage. The place of arbitration was The Hague, Netherlands.
The detail
Parties: Melvin J. Howard, Centurion Health Corp. & Howard Family Trust v. Government of Canada
Case number: PCA Case No. 2009-21
Outcome: Proceedings terminated due to Claimants' failure to pay deposit and prosecute claims; Claimants ordered to pay US$37,905.45 in arbitration costs and CAN$4,667.99 in disbursements to Canada.
Quantum: US$37,905.45 and CAN$4,667.99
Applicable law: NAFTA Chapter 11, UNCITRAL Arbitration Rules
Issues in play: The case involved NAFTA obligations (national treatment, minimum standard of treatment, expropriation) and procedural rules under UNCITRAL regarding deposit requirements and termination for failure to prosecute.
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