Texas wind-power company loses trade challenge against Ontario

A company owned by Texas tycoon T. Boone Pickens has lost a NAFTA claim against Canada over Ontario’s wind-energy procurement process.

Mr. Pickens’s Mesa Power Group LLC filed a claim in 2011 alleging that the Ontario government discriminated against the privately owned wind-energy firm, which had planned to build wind farms in the province.

Mr. Pickens founded Mesa in 2007 to build projects across North America, and was pursuing four in Southwestern Ontario with total capacity of 465 megawatts.

After it failed to get contracts from the Ontario government, Mesa filed the claim for more than $600-million under NAFTA, saying political interference doomed its plans. It said preferential treatment was given to other companies after private meetings with Ontario government officials. Under NAFTA rules, the federal government had to defend the case, even though the complaint was against Ontario.

The case was heard by a NAFTA arbitration tribunal, organized by the Netherlands-based Permanent Court of Arbitration, in October, 2014. It took the panel more than a year and a half to reach its decision.

While the details of its ruling have not yet been released, the federal government put out a release Friday confirming the decision in its favour. It said the tribunal decided Mesa will have to pay all the costs of the arbitration, which amounted to $2,948,701.

Toronto trade lawyer Lawrence Herman, of Herman & Associates, called the decision “an important victory” which “may dampen the enthusiasm of American claimants, and their financial underwriters, to bring cases that aren’t based on clear and compelling arguments that the NAFTA was really breached.” But he said it will be necessary to see the detailed reasoning of the panel to understand the broader significance of the decision.

The full decision will not likely be released for at least a week, as the parties are allowed to remove any confidential business information before it is made public.

Mr. Herman said it is unusual for a panel to make a claimant pay all the costs of an arbitration hearing. Normally costs are shared and each side pays its own lawyers, he said. “This may indicate that the panel felt that Mesa’s arguments were not well-founded.”

In a statement, Mesa said it was disappointed by the ruling. Chief executive officer Cole Robertson said “we do think they got this one wrong,” adding that Mesa is reviewing the decision and the dissenting opinion written by one of the three tribunal members. Mesa “will be evaluating our options,” he said.

The company said industry depends on government having transparent selection criteria when selecting investing partners, and “that did not happen in Ontario, where the provincial government failed to conduct an open and fair bidding process.”