Mobil Investments Canada Inc. v. Canada
ICSID · Investment (ICSID and treaty) · Canada · 4 Feb 2020
Why it matters
This case is the sequel to Mobil I, which established that NAFTA Article 1106 prohibits performance requirements like mandatory R&D spending. The consent award shows how states can settle investment treaty claims by providing credits rather than cash payments, and it confirms the ongoing application of the Mobil I precedent to subsequent periods.
Summary
Mobil Investments Canada Inc. (a US company) invested in the Hibernia and Terra Nova offshore oil projects in Newfoundland and Labrador, Canada. In 2004, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) issued Guidelines requiring operators to spend a fixed percentage of revenues on research and development (R&D) within the province. Mobil challenged these guidelines in an earlier arbitration (Mobil I), where the tribunal found that Canada breached NAFTA Article 1106 (prohibition on performance requirements) and awarded damages for expenditures from 2009 to early 2012. In this second arbitration (Mobil II), Mobil claimed damages for continued application of the guidelines after those dates, up to 2015, and sought to add claims for later periods and future losses. The Tribunal rejected Canada's arguments on jurisdiction and admissibility in a 2018 decision, allowing the damages phase to proceed. However, before the Tribunal issued a final award on damages, the parties reached a settlement. Under the settlement, Mobil withdrew its claims and waived any future claims under NAFTA or other laws regarding the 2004 Guidelines. In exchange, Canada provided a C$35 million credit to be applied against Mobil's future R&D obligations under the guidelines. The Tribunal recorded the settlement as a consent award, which permanently discontinues the proceedings. The award does not determine liability or damages; it merely formalizes the parties' agreement.
The detail
Parties: Mobil Investments Canada Inc. v. Canada
Case number: ICSID Case No. ARB/15/6
Outcome: The parties settled; the Tribunal recorded the settlement as a consent award. Canada provided a C$35 million credit to Mobil against future R&D obligations.
Quantum: C$35 million credit
Applicable law: NAFTA Chapter Eleven, ICSID Convention
Issues in play: The dispute concerned whether Canada's application of R&D expenditure guidelines to offshore oil projects violated NAFTA Article 1106's prohibition on performance requirements. The earlier Mobil I decision found a breach; this case addressed continued application and damages.
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