An investor-state dispute resolution tribunal has dismissed Canadian company TC Energy’s claim against US President Joe Biden’s cancellation of the Keystone XL oil pipeline in 2021.
On Tuesday, it was announced that the court ruled that the cancellation of the project was not appropriate, for which the company is seeking compensation of more than 15 billion dollars in damages.
In January 2021, when Biden took office, he cancelled the project due to the alleged environmental damage it would cause, an act that was a campaign promise.
TC Energy considered that the Tribunal based its decision on the transition rules described in Annex 14-C of the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) as of July 1, 2020.
The transition rules protect investments made under NAFTA through July 1, 2023.
“However, the Court ruled that these protections only cover breaches of the agreement that occurred before July 1, 2020, when NAFTA was still in force. As a result, the Court determined that it does not have the authority to decide whether the revocation of the Presidential Permit violated the obligations described in Section A of Chapter 11 of NAFTA,” TC Energy said in a statement.
In its request for arbitration, TC Energy claimed it had a “legacy investment” under USMCA Annex 14-C, which allows investors to bring investor-state dispute resolution claims against USMCA parties until July 1, 2023, three years after the NAFTA renegotiation.
The Canadian also said that the cancellation of the pipeline was a political decision.
“We are disappointed and frustrated with the Court’s decision to deny our right to bring a NAFTA legacy claim.
“TC Energy was treated unfairly and inequitably in the permit revocation, which was driven by political considerations,” said Patrick Keys, executive vice president and general counsel of TC Energy.
Óscar Ocampo, coordinator of the energy practice at the Mexican Institute for Competitiveness (Imco), considered that the court’s decision does not represent an important and serious precedent for the country because the court’s argument states that since the violation occurred after 2020, with the USMCA already in force, the protections of the original NAFTA cannot be appealed to.
He indicated that the country has this type of project covered by the provisions of the USMCA with the Mexico-United States mechanism for dispute resolution that protects certain sectors such as telecommunications, infrastructure, electricity, hydrocarbons, gas and mining.
He also said that Canada cannot invoke those protections because it is not part of that dispute settlement mechanism.
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