UPS investment claims against Canada rejected by NAFTA tribunal

As recently reported by PLC Dispute Resolution (see NAFTA tribunal rejects UPS investment claims against Canada) a NAFTA tribunal has issued its majority award in the arbitration proceedings between United Parcel Service of America (UPS) and the Government of Canada, dismissing UPS' claim for damages of US$160m.

UPS made various investment claims under Chapter 11, in particular that Canada had breached it obligation under article 1102 to accord UPS national treatment no less favourable than it accorded to its own investors through its unfair enforcement of customs laws, the unfair access it gave to Purolator (Canada Post's subsidiary and a competitor of UPS) to Canada Post's infrastructure, and Canada's unfair use of a system giving publishers a subsidy in return for using Canada Post.

UPS' appointed arbitrator, Ronald Cass issued a partial dissenting opinion. In his view, Canada had violated its national treatment obligation through the system of subsidies to publishers (which he considered did not fall within the "cultural industries exception"), and through the access Purolator was given to Canada Post's infrastructure. Cass strongly disagreed with the tribunal's view on whether UPS and Canada Post were "in like circumstances" and considered that the tribunal's conclusions on this issue would dramatically circumscribe the national treatment obligation in article 1102, which is a cornerstone of NAFTA parties' obligations to investors.

Opinion is divided as to whether the dismissal of UPS' claims is essentially based on the particular way in which Canada post operates, or whether the tribunal's conclusions on a number of issues will have wider implications for investment treaty claims.

See Global Arbitration Review