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S.D. Myers v. Canada

Type of decisionPartial Award
Date of decision13 November 2000
Tribunal
J. Martin Hunter (President)
Bryan P. Schwartz
Edward C. Chiasson
Legal instrumentNorth American Free Trade Agreement
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Statements from this decision

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Even if the shares of a local subsidiary are not owned by the foreign claimant (a judicial person), the claimant can be deemed an investor inasmuch as the same natural persons control both companies
Usually, expropriation requires a lasting interference with property rights
An expropriation requires a degree of interference with property rights that is usually not met by regulatory actions
The “minimum standard” is a floor below which treatment of foreign investors must not fall
A breach of Article 1105 NAFTA occurs only when it is shown that an investor has been treated in such an unjust or arbitrary manner that the treatment rises to the level that is unacceptable from the international perspective
When interpreting and applying the “minimum standard”, a Chapter 11 NAFTA tribunal does not have an open-ended mandate to second-guess government decision-making; the ordinary remedy for errors in modern governments is through internal political and legal processes, including elections
Interpretation of the FET standard must be made in light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their own borders
The interpretation of “like circumstances” must take the legal context of the NAFTA into account; the interpretation invites an examination of whether the claimant is in the same “sector” as a national investor, where “sector” has a wide connotation that includes the concepts of “economic” and “business” sectors
In assessing whether a measure is contrary to the standard of national treatment, intent is relevant; bad intent alone, however, does not constitute a breach, as long as no adverse effect on the non-national takes place
The test for whether a measure is contrary to the standard of national treatment includes whether the measure favours nationals openly over non-nationals and whether the practical effect of the measure creates a disproportionate benefit for nationals over non-nationals
A measure not attaching express conditions to a regulatory approval may still constitute a performance requirement within the meaning of Article 1106 NAFTA as the substance of the measure is decisive
A tribunal has to determine the measure of compensation appropriate to the specific circumstances of the case, taking into account the principles of both international law and the provisions of NAFTA; according to those principles, the compensation has to be assessed on the basis of the economic harm linked causally to the breach and as proven by the investor
The standard of compensation according to the fair market value of the asset on expropriation does not apply to breaches of other standards of protection
Even if the shares of a local subsidiary are not owned by the foreign claimant (a judicial person), the claimant can be deemed an investor inasmuch as the same natural persons control both companies
The interpretation of “like circumstances” must take the legal context of the NAFTA into account; the interpretation invites an examination of whether the claimant is in the same “sector” as a national investor, where “sector” has a wide connotation that includes the concepts of “economic” and “business” sector
In assessing whether a measure is contrary to the standard of national treatment, intent must be considered, but it does not constitute a breach on its own as long as no adverse effect on the non-national takes place
The test of whether a measure is contrary to the standard of national treatment includes assessing whether the measure openly favours nationals over non-nationals and whether the practical effect creates a disproportionate benefit for nationals over non-nationals
The “minimum standard” is a floor below which treatment of foreign investors must not fall
A breach of Article 1105 occurs only when it is shown that an investor has been treated in such an unjust or arbitrary manner that the treatment rises to the level that is unacceptable from the international perspective.
Interpretation of Article 1105 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 own borders
When interpreting and applying the “minimum standard”, a Chapter 11 tribunal does not have an open-ended mandate to second-guess government decision-making; the ordinary remedy for errors in modern governments is through internal political and legal processes, including elections
A measure not attaching express conditions to a regulatory approval may still constitute a performance requirement within the meaning of Article 1106 NAFTA as the substance of the measure is decisive
Usually, expropriation requires a lasting interference with property rights
An expropriation requires a degree of interference with property rights that is usually not met by regulatory actions
A measure concerning goods within the meaning of Chapter 3 can be related to an investor or an investment within the meaning of Chapter 11 at the same time

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