Investment Arbitration Reporter

By Luke Eric Peterson

Newly-released documents show that a US investor suing the Government of Canada over an alleged expropriation has asked arbitrators to close the hearings to the public, and to reject applications from outside groups seeking to intervene in the NAFTA Chapter 11 arbitration.

In the event that the tribunal accepts amicus curiae submissions, the claimant, Vito G. Gallo, has asked the tribunal to impose a $25,000 fee on prospective interveners so as to defray some of the additional time and procedural costs arising out of such submissions.

These disclosures come to light following a request by IAReporter for copies of recent documents in the Vito Gallo v. Canada arbitration. This request was met with the public release by Canada of a number of documents in early November.

Mr. Gallo initiated arbitration in March of 2007, alleging that actions taken by the Ontario provincial government amount to an expropriation of his investments in a scheme to use a former open-pit mine as a disposal site for non-hazardous household and commercial waste from the City of Toronto.

In a series of documents exchanged earlier this year, the two parties debated a series of procedural issues.

Ultimately, the tribunal (consisting of Prof. Juan Fernandez-Armesto (Chair), J. Christopher Thomas Q.C. (Canada’s appointee), and Prof. Jean-Gabriel Castel O.C. Q.C. (investor’s nominee)) issued a pair of orders on June 4, 2008 resolving a number of these procedural issues.

Documents can be disclosed, but open hearings are opposed by investor

Among the key rulings made by the tribunal is one which orders that all documents submitted to or issued by the tribunal may be released by either party.

Canada had sought disclosure of all such documents, and has pushed for the oral hearings in the case to be open to the public.

In contrast with most governments involved in investment treaty arbitration, Canada, the US and Mexico generally push for release of arbitration documents and pleadings in NAFTA Chapter 11 arbitrations. Such a policy was adopted following widespread public and media criticism of the confidential nature of legal proceedings which may have serious policy and financial consequences.

While Canada has pushed in the Gallo arbitration for the release of most documents, and for open arbitration hearings, the investor has countered that the UNCITRAL rules of arbitration governing the dispute provide for an unconditional right of in-camera hearings. For his part, Mr. Gallo has insisted upon his “right to privacy” in the proceedings, and has called for the oral hearings (and associated written hearing transcripts) to be confidential.

In arguments submitted to the tribunal, Mr. Gallo’s legal representatives stressed that the NAFTA parties (Canada, US, and Mexico) had failed to stipulate in the 1994 trade agreement that hearings should be open to the public. As such, nothing in the NAFTA should over-ride the express stipulation in Article 25(4) of the UNCITRAL rules that hearings be held in-camera.

However, Mr. Gallo’s legal representatives did express a willingness to see various documents and pleadings disclosed to the public. According to claimant, the release of such documents should satisfy any “public interest that may lie in knowing of the basic elements of the dispute.”

The proposal to use the former mine site for waste-disposal has indeed attracted widespread public interest, with some 23,000 public submissions made when Ontario’s Ministry of Environment solicited public comments on the project in 2003.

Outsiders can apply to intervene; tribunal silent on $25,000 fee proposal

In anticipation of potential intervention by non-parties wishing to present legal arguments (as so-called amicus curiae) the two sides also debated the procedures for any such submissions.

While the claimant acknowledged that tribunals in NAFTA Chapter 11 arbitrations have the authority to permit such submissions, Mr. Gallo’s counsel argued that there is no public interest in the present case which would justify amicus curiae interventions. In the claimant’s view, the case does not involve a dispute over regulations of general application; rather in the claimant’s view the case pertains to a specific statute, the Adams Mine Lake Act, “targeting a particular project”.

However, in the event that the tribunal permits amicus curiae interventions, the claimant called for the imposition of a $25,000 fee so as to defray some of the expenses which arise when outside legal briefs must be reviewed and discussed by the parties and the tribunal.

(The Editor of IAReporter is not familiar with any other investor-state arbitrations where such a proposal has been made – although it is commonplace for one or both parties to an arbitration to cite concerns about the additional time and cost burdens that may be imposed by amicus curiae interventions)

Ultimately, the tribunal did not address the proposal for an amicus curiae fee in its Orders issued on June 4, 2008. However, a procedural timetable included in the Procedural Order No.1 does contemplate potential amicus curiae submissions.

According to the current timetable, would-be interveners have until Nov.16, 2009 to seek leave to file an amicus curiae submission in the case.

Indeed, the Gallo case appears set to play out over the next several years. The parties will exchange documents over the coming months, followed by an exchange of written briefs in the second half of 2009. A second exchange of written briefs is slated for the first half of 2010, with oral hearings to be scheduled sometime thereafter.

Investment Arbitration Reporter is a specialized news publication tracking developments in the area of international investment law and policy.

The publication does not offer legal or financial advice or recommendations of any kind.
 
To offer news-tips or comments, email the Editor, Luke Eric Peterson, at: editor@iareporter.com