Wednesday, November 10, 2010

New claim under Chapter 11 of NAFTA further to the cancellation of licences for outfitting operations

(BY HUGO)

Thanks to colleague Ana-Maria Daza for the heads-up on this one: the revoking of licences to exploit salmon rivers that were granted to an American owned outfitting operation by the government of Québec seems to have recently triggered a notice of arbitration under NAFTA's Chapter 11, according to CNW:

«The $8 million-plus claim alleges unfair treatment of U.S. citizen William Greiner concerning his Canadian-formed company, a lodge and outfitting business which offered Atlantic salmon fishing and hunting in Quebec. (...) It is alleged in the Notice of Arbitration that government action was taken discriminatorily, without legal authority or due process and in violation of NAFTA. The arbitration raises issues regarding the unfair treatment of American citizens investing in businesses in Canada. The Notice of Arbitration also states that the actions taken by the Quebec Government were done in order to protect investments the Government had made in competing businesses, and that Mr. Greiner was targeted because of his nationality, as well as the nationalities of his clients.»

I would be grateful for any advice on how to get a copy of the claim.

Here's a very helpful quote from our American friend Mr. Greiner: «The Government of Canada should understand that laws are meant to be followed». Wow. Thanks.

According to Foreign Affairs and International Trade Canada, William Jay Greiner and Malbaie River Outfitters Inc. are already involved in a dispute under NAFTA Ch11. They served Canada with a Notice of Intent on September 16, 2008, claiming $5 million and alleging that the province of Quebec severely damaged the investor’s business by changing the lottery system for obtaining salmon fishing licenses in 2005 and harmfully revoking licences (see notice here). Interestingly, the letter from Québec authorities indicating the reasons for the revocation (in attachement to the notice) points to unethical behaviour from Greiner's business in addition to economic reasons.

The legal framework for the management of outfitting operations is detailed by the Act respecting the conservation and development of wildlife as well as its regulations. Among the provisions that might be somehow relevant in this context are the following:

85. The Minister may delimit areas on land in the domain of the State with a view to increased utilization of wildlife resources and the carrying on of recreational activities incidental thereto.

86. The Minister may lease exclusive hunting, fishing or trapping rights on all or part of the lands in the domain of the State contemplated in section 85. The Minister may also lease exclusive trapping rights in a controlled zone or in a wildlife sanctuary.

86.1. Notwithstanding any general law or special Act and subject to the right of first refusal of the Native people provided for in the Act respecting hunting and fishing rights in the James Bay and New Québec territories (chapter D-13.1), a lease of exclusive hunting or fishing rights shall be granted, after a call for tenders, to the tenderer whose bid is the most advantageous. However, the Minister is not required to lease exclusive rights if the Minister is of the opinion that the most advantageous bid is inadequate. A lease of exclusive rights is not subject to a call for tenders if the lease is
(1) a lease for a renewal;
(2) a lease for a transfer;
(3) a lease for an extension of rights;
(4) a lease for the expansion of territory;
(5) a lease of exclusive fishing rights that does not cover outfitting activities or that covers a body of water less than 20 hectares in area.

86.2. Where a part of the lands in the domain of the State is contemplated in an outfitter's licence although the licence holder does not hold a lease of exclusive hunting or fishing rights and where that part of the lands in the domain of the State is subsequently delimited in accordance with section 85, the Minister shall
(1) revoke the licence if a lease of exclusive rights is granted to a person other than the licence holder;
(2) amend the licence if the designation of the lands in the domain of the State affects only part of the territory contemplated in the licence.
The provisions of this division in respect of the acquisition of buildings and structures situated on the territory identified in the lease apply, adapted as required.

88. The lessee of exclusive hunting, fishing or trapping rights may, in view of the increased utilization of wildlife resources, erect buildings and structures on the land assigned to him without being required to comply with the provisions of the Act respecting the lands in the domain of the State (chapter T-8.1) concerning leases or occupation licences for land in the domain of the State. The lessee has a right of occupation on the land where the buildings and structures are erected, for the term of the lease.

89. Where the Minister repeals, amends or replaces the instrument delimiting areas of land in the domain of the State, the Minister must revoke or amend the lease of exclusive hunting, fishing or trapping rights for the territory contemplated by the repeal, amendment or replacement.

90. The Minister may amend, revoke or refuse to renew a lease of exclusive hunting, fishing or trapping rights if
(1) the lessee has failed to comply with the conditions of his lease;
(2) the lease was obtained pursuant to a fraudulent declaration.

91. Upon the revocation of a lease under section 89 or the non-renewal of a lease by the Minister for reasons other than those provided in section 93, the Minister shall
(1) compensate the lessee, if no other lease has been granted elsewhere to the satisfaction of both parties, in consideration of, in particular, his loss of revenue derived from the exercise of his rights under the lease; and
(2) acquire the buildings and structures situated in the territory identified in the lease by paying to the lessee who owns them an amount equivalent to their real value or compensate the lessee in consideration of the decrease in value of the buildings and structures.
Upon the amendment of a lease under section 89, the Minister shall acquire the buildings and structures situated in the territory identified in the lease and affected by the amendment by paying to the lessee who owns them an amount equivalent to their real value or compensate the lessee in consideration of the decrease in value of the buildings and structures.
However, if the exclusive hunting, fishing or trapping rights under the lease not being renewed by the Minister for reasons other than those provided in section 93 are granted to a new lessee, the new lessee has an obligation to acquire the buildings and structures for an amount equivalent to their real value and in no case may he exercise his rights under the lease until he becomes their owner.

92. Upon the revocation or amendment of a lease under section 89, if the Minister compensates the lessee in consideration of the decrease in value of the buildings and structures, the lessee shall, within one year of the date of compensation, remove the buildings situated in the territory identified in the lease and affected by the revocation or amendment, or obtain from the Minister, the right to continue to occupy the land concerned under the Act respecting the lands in the domain of the State (chapter T-8.1).

93. Upon the revocation or non-renewal of a lease pursuant to section 90, or where the lessee has, before the expiry of his lease, notified the Minister of his intention not to renew it, every new lessee has an obligation to acquire the buildings and structures situated in the territory described in the lease by paying to the owner of the buildings and structures an amount equivalent to their real value. The lessee whose lease is revoked or not renewed retains his right of occupation only until a new lessee is designated or until the instrument delimiting the area of land in the domain of the State is repealed, amended or replaced so as to exclude the land where the buildings owned by him are situated. No new lessee may exercise the rights conferred by his lease until he becomes the owner of the buildings and structures contemplated in the first paragraph.

94. If a difference of opinion arises between the new lessee and the former lessee or between the Minister and the former lessee on the real value of the buildings and structures contemplated in sections 91 and 93, the Minister shall appoint an assessor agreed by the parties; the assessment of the appointed assessor is without appeal. The costs incurred for the assessment are assumed equally by both parties.

96. No person may, except with the lessee's authorization, carry on an activity for which exclusive rights have been granted on any land on which exclusive hunting, fishing or trapping rights have been granted.


A recent report by Scott Sinclair from the Canadian Centre for Policy Alternatives provides food for thought on the regulatory chill effect of Ch11.

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