Non-disputing Party Submission

Non-disputing Party Submission

Non-disputing Party Submission Under Chapter 11 of the North American Free Trade Agreement in 2013

United States views on international law [1] in relation to Non-disputing Party Submission Under Chapter 11 of the North American Free Trade Agreement: On April 19, 2013, the United States made a submission pursuant to Article 1128 of the NAFTA as a non-disputing party in a case brought against the government of Canada, Clayton/Bilcon v. Canada. U.S. investors, members of the Clayton family and a corporation they control called Bilcon, filed a claim against Canada alleging that the type of environmental assessment undertaken with respect to the White Point Quarry and/or Marine Terminal Project, as well as the administration and conduct of the environmental assessment, violate NAFTA Article 1102 (national treatment), Article 1103 (most favored nation treatment), and Article 1105 (minimum standard of treatment).The U.S. submission is excerpted below (with most footnotes omitted) and is available in full at (Secretary of State website) state.gov/documents/organization/208140.pdf.

Some Aspects of Non-disputing Party Submission Under Chapter 11 of the North American Free Trade Agreement

Article 1105 (Minimum Standard of Treatment) 2. On July 31, 2001, the Free Trade Commission (“Commission”), comprising the NAFTA Parties' cabinet-level representatives, issued an interpretation confirming that “Article 1105(1) prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of another Party.” The Commission clarified that “[t]he concepts of 'fair and equitable treatment' and 'full protection and security' do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.” The Commission also stated that “a breach of another provision of the NAFTA, or of a separate international agreement, does not establish that there has been a breach of Article 1105(1).”

Developments

3. NAFTA Article 1131, entitled “Governing Law,” states in part that “[a]n interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section.” The power to issue an authentic interpretation of a treaty remains with the States Parties themselves.

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4. The Commission's interpretation confirms the NAFTA Parties' express intent to establish the customary international law minimum standard of treatment as the applicable standard in NAFTA Article 1105. As the United States has observed in previous submissions in NAFTA Chapter Eleven cases, the minimum standard of treatment is an umbrella concept reflecting a set of rules that, over time, has crystallized into customary international law in specific contexts.6 Article 1105 thus reflects a standard that develops from State practice and opinio juris, rather than an autonomous, treaty-based standard. Although States may decide, expressly by treaty, to extend protections under the rubric of “fair and equitable treatment” and “full protection and security” beyond that required by customary international law, that practice is not relevant to ascertaining the content of the customary international law minimum standard of treatment.7 Arbitral decisions interpreting “autonomous” fair and equitable treatment and full protection and security provisions in other treaties, outside the context of customary international law, do not constitute evidence of the content of the customary international law standard required by Article 1105. While there may be overlap in the substantive protections both types of treaty provisions ensure, a claimant submitting a claim under an agreement such as NAFTA, in which fair and equitable treatment is expressly a part of the customary international minimum standard of treatment, still must demonstrate that the rights claimed are in fact a part of customary international law.

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5. The burden is on a claimant to establish the existence and applicability of a relevant obligation under customary international law that meets the requirements of State practice and opinio juris. “The party which relies on a custom,” therefore, “must prove that this custom is established in such a manner that it has become binding on the other Party.” Once a rule of customary international law has been established, the claimant must show that the State has engaged in conduct that violated that rule.10 Determining a breach of the minimum standard of treatment “must be made in the light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their borders.”11

6. Finally, the principle of “good faith” is not a separate element of the minimum standard of treatment embodied in the Agreement. It is well established in international law that good faith is “one of the basic principles governing the creation and performance of legal obligations,” but “it is not in itself a source of obligation where none would otherwise exist.” Article 1102 (National Treatment)

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7. NAFTA's national treatment provision, Article 1102, is designed to prohibit discrimination on the basis of nationality. Article 1102 paragraphs (1) and (2) are not intended to prohibit all differential treatment among investors or investments. Rather, they are intended only to ensure that Parties do not treat entities that are “in like circumstances” differently based on their domestic nationality. If the challenged measure, whether in law or in fact, does not treat foreign investors or investments less favorably than domestic investors or investments on the basis of nationality, then there can be no violation of Article 1102.

Resources

Notes

  1. Non-disputing Party Submission Under Chapter 11 of the North American Free Trade Agreement in the Digest of United States Practice in International Law

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