Westmoreland Coal Company v. Canada (III), ICSID Case No. UNCT/23/2
ICSID · Investment (ICSID and treaty) · Canada · 17 Dec 2024
Why it matters
This award clarifies the scope of the USMCA's legacy provision for NAFTA claims, particularly the requirement that an investment be 'in existence' at the time USMCA entered into force. It also addresses the tolling of the limitation period when a claimant withdraws and refiles claims, and the application of estoppel and abuse of rights in investment arbitration. The decision provides guidance on the continuity of investor protection under successor trade agreements.
Summary
Westmoreland Coal Company (WCC), a US company, owned coal mines in Alberta, Canada through its subsidiary Prairie. After Canada and Alberta implemented measures to phase out coal-fired electricity by 2030, WCC initiated NAFTA arbitration in 2018 (Westmoreland I) claiming expropriation and unfair treatment. That case was dismissed without prejudice after WCC filed for bankruptcy. In 2023, WCC filed a new NAFTA claim under the USMCA's legacy provisions (Annex 14-C), which preserve certain NAFTA claims for investments 'in existence' when USMCA entered into force on 1 July 2020. Canada objected to jurisdiction on three grounds: (1) the claims were time-barred under NAFTA's three-year limitation period; (2) the investment was not 'in existence' under USMCA Annex 14-C because WCC had sold its coal assets in 2018 and was in bankruptcy; and (3) WCC was estopped or precluded from bringing the claims due to its conduct in prior proceedings. The Tribunal upheld Canada's objections. It found that WCC's claims were time-barred because the alleged breaches occurred by 2018, and the limitation period was not tolled by the earlier arbitration. The Tribunal also held that WCC's investment was not 'in existence' when USMCA entered into force because WCC had sold its coal assets and was in bankruptcy proceedings, thus lacking ownership or control of the investment. The Tribunal declined jurisdiction and ordered WCC to pay Canada's costs.
The detail
Parties: Westmoreland Coal Company v. Canada (III), ICSID Case No. UNCT/23/2
Case number: italaw/cases/10662
Outcome: The Tribunal declined jurisdiction over the dispute, ordered Claimant to pay Respondent USD 215,949.50 for costs of proceedings and CAD 1,461,766 for legal fees.
Applicable law: NAFTA Chapter 11, USMCA Annex 14-C, UNCITRAL Arbitration Rules 2013
Issues in play: The case involved the interpretation of the USMCA's legacy provision (Annex 14-C) which preserves NAFTA claims for investments 'in existence' when USMCA entered into force, and the application of NAFTA's three-year limitation period for bringing claims.
Read the full decision at italaw ↗
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