Testimony and Analysis by Brattle Economists Secures Favorable Outcome for the Government of Canada in NAFTA Tribunal Decision on Bilcon Damages Claim

Expert testimony and analysis by Brattle Principal Darrell Chodorow, working with Senior Associate Sujay Dave and Research Analyst Kaitlyn Brady, was relied upon to set damages in a recently published NAFTA award by a Permanent Court of Arbitration Tribunal.

A group of US investors had sought to build an aggregates quarry and marine terminal in Nova Scotia. After some initial site development, the project was denied federal and provincial permits after the issuance of a report by an environmental review panel. In a NAFTA dispute brought by the claimants, Bilcon of Delaware et al v. Government of Canada, the Tribunal found that the permit review process was in breach of NAFTA’s national treatment standards. The claimants sought an award of US$443 million arising from the breach, based on a projection of lost profits that would have been generated by the project.

Retained by Canada to evaluate the reasonableness of this claim, Mr. Chodorow explained that, given the particular circumstances of this project, the claimants’ damages request was excessive and inconsistent with evidence from past transactions of ownership interests and the limited investment by claimants in the project. The Tribunal found the claimants’ damages estimate to be unsupported, and concluded that the value of the claimants’ lost opportunity to develop the project was $7 million, based on evidence from past transactions of the project’s ownership interests and investment made in the project.

The Tribunal’s decision, issued on January 10, 2019 and published in redacted form on February 25, can be found on the Permanent Court of Arbitration’s website.