TransCanada Takes Next Step in NAFTA Case on Keystone Pipeline

Canadian energy giant TransCanada has now filed a request for investor-state arbitration in connection with the US government’s rejection last year of its application to build the cross-border Keystone XL oil pipeline. The Canadian company has claimed that the decision violates provisions of the North American Free Trade Agreement (NAFTA), which includes the US, Canada, and Mexico as members. TransCanada also refers to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), along with related legal instruments to support this move. The request follows a notice of intent that TransCanada filed in January 2016. The parties to the dispute also held consultations in which they failed to reach an amicable settlement. (See Bridges Weekly, 14 January 2016 ) Long-running saga Last November, US Secretary of State John Kerry confirmed that Washington was denying a Presidential Permit for building the pipeline, citing, among other findings, that the project would have negligible domestic economy and energy security benefits; would not lead to lower domestic gas prices; and would facilitate the transportation of a “dirty” source of fuel. The critical component, he noted at the time, was that “moving forward with this project would significantly...