A company that planned a huge offshore wind farm in Lake Ontario says it has been awarded more than $25-million in damages, because the Ontario government cancelled its project.
Windstream Energy LLC made the claim under NAFTA rules, saying that its proposed 100-turbine wind farm five kilometres offshore near Kingston had the legs knocked out from under it when the Ontario government suddenly announced a moratorium on offshore wind developments in February, 2011.
The case pitted U.S.-based Windstream against the Government of Canada, rather than Ontario, because under the North American free-trade agreement, Ottawa is considered to be responsible for the actions of the provinces. The claim was filed under the “Chapter 11” investor protection sections of NAFTA.
A hearing was held in front of a three-member panel convened by the Netherlands-based Permanent Court of Arbitration in February. Windstream said Thursday that the panel has now ruled in its favour.
The PCA has not publicly released its decision, and won’t do so until it and the company agree to any revisions made to the final version.
According to Windstream, the tribunal said Ontario “on the whole did relatively little to address the scientific uncertainty surrounding offshore wind that it relied upon as the main publicly cited reason for the moratorium.” Further, the province “did little to address the legal and contractual limbo in which Windstream found itself after the imposition of the moratorium.”
The tribunal awarded the company damages of about $25.2-million and about $2.9-million in legal costs, Windstream said. In its claim, Windstream had asked for damages of up to $568-million.
The tribunal also ruled that the company’s contract with Ontario is formally in force and has not been unilaterally terminated, Windstream said.
In its claim, Windstream said it had signed a power contract with Ontario’s power authority and had posted $6-million as security before the moratorium was announced. Under NAFTA, investments by U.S. companies in Canada cannot be expropriated without compensation, Windstream said in its claim, and the moratorium amounted to an expropriation that made its investment in the wind project worthless.
In its filings with the tribunal, the federal government said Ontario had the “right to proceed with caution” on offshore wind developments, and NAFTA doesn’t prohibit “reasonable regulatory delays.” The Windstream project was high risk in any event, the government submission said, and it had no investment value because it could never have been built within the deadlines of the contract.Report Typo/Error
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