1 Canada pointed out that, in this case, the Investor had withdrawn its claim under Article 1103, but that fact is not material to a proper interpretation of Article 1105.

2 At: <http://www.icj-cij.org/icjwww/ibasicdocuments/ibasictext/ibasicstatute/htm>.

3 Letter submission by the claimant in Methanex Corporation v. United States of America, September 18, 2001 at 6.

4 Id., at 20.

5 See, Nov. 2001 Tr. at 655:17-656:8.

6 Id. at 649:18-655:16.

7 See, Award on the Merits of Phase 2, April 10, 2001 at ¶¶ 105-185.

8 See, e.g.,Metalclad Corp. and Mexico, Award, August 25, 2000 at¶¶lI76, 99-101 (failure to provide transparent system of regulation of investment denied investor fair and equitable treatment under international law as required by Article 1105); reversed in part, United Mexican States v. Metalclad Corp, 2001 BCSC 664 at ¶¶ 62, 72 (“international law” under Article 1105 means “customary” international law; Chapter II contains no obligations to provide transparency). See also, S.D. Myers, Inc. and Canada, Partial Award, November 13, 2000 at ¶¶ 258-266 (fair and equitable treatment subsumed in international law standard, but international law includes rules designed to protect investors; denial of national treatment under Article 1102 can be a violation of Article 1105).

9 That Interpretation, at the very least, was intended to clarify what the NAFTA Parties must have seen as an ambiguity in the words “international law” in Article 1105; the clarification consisted of adding the word “customary” as a modifier. Had the NAFTA Parties not perceived an ambiguity, no interpretation would have been necessary. The Tribunal must note, however, that, of all the problems of interpretation of Article 1105, the scope of the term “international law” should be the least troubling, since that term is plain on its face and is defined in the Statute of the ICJ.

10 SeeArticle 32, Vienna Convention on the Law of Treaties: Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order … to determine the meaning when the interpretation according to Article 31:

• (a) Leaves the meaning ambiguous or obscure;

• (b) Leaves to a result which is manifestly absurd or unreasonable.

11 See Nov. 2000 Tr. Vol. 2 at 41:15-42:10.

12 See id. Vol. 3 at 3:24-4:14

13 Blacks Law Dictionary (7^th Ed.) defines that term as: (French “preparatory works“) Materials used in preparing the ultimate form of an agreement of statue, and esp. of an, international treaty; materials constituting a legislative history.

14 See, Nov. 2000 Tr., Vol. 5 at 2:2-2:18.

15 See id., at 3:20-3:25, Canadian counsel subsequently advised the Tribunal that his comments were restricted to the existence of travaux related to Article 1105. See Letter to Tribunal Feb. 22, 2002.

16 See id. at 4:15-4:20

17 The Tribunal's request was made in a faxed letter to the disputing parties dated Sept. 17, 2001, after the Interpretation of the Free Trade Commission in which it asked Canada to advise, inter alia, whether the Commission had been presented with any material related to the interpretation, including “negotiating history.” None of the NAFTA Parties responded to this question and none provided any negotiating history.

18 See Nov., 2000 Tr. Vol. 5 at 2:20-3:5.

19 Letter from Howard Strauss, Coordinator, Access to Information and Privacy, DFAIT to Patrick Westaway, one of the associates of counsel for the Investor.

20 Indeed, the DFAIT letter concluded: “Our understanding, therefore, is that you would not want to pursue the Access request in your letter of February 7.” It is unlikely that a requester would abandon seeking documents that he believed might exist without knowing why they were being withheld.

21 Nov. 2001 Tr. at 759:4-760:4.

22 Sept. 18, 2001 letter from Claimant's counsel to Methanex tribunal at 6. The matter in issue related to the meaning of “international law” in Article 1105. The recollection of the Mexican negotiator was that a draft of the article using “customary” as a modifier had been considered and rejected by the negotiators. The United States denied the assertion that there was a negotiating draft containing the word “customary” but said nothing about the existence of negotiating history. See submission of the United States to the Methanex tribunal dated July 31, 2001 at fn. 1, attached to its Submission to this Tribunal dated Dec. 3, 2001.

23 Attachment to the claimant's Reply Submission dated Nov. 9, 2001, to the Methanex tribunal at ¶ 15, submitted by Canada to this Tribunal on March 2002. That claimant's submission also contained the following statement:” [T]he United States steadfastly refuses to produce any negotiating history, including previous drafts of NAFTA, although it acknowledges that these drafts both exist and are in the searchable (but unilateral) possession of the United States.” Id. Reply Submission at 10.

24 Rejoinder dated Dec. 17, 2001 to Methanex's Reply Submission at 4, submitted to this Tribunal by Canada on March 25, 2002.

25 Letter to the Methanex tribunal dated Feb. 11, 2002 at 4, submitted to this Tribunal by Canada on March 25, 2002.

26 Feb. 20, 2002 letter at 3.

27 In the Matter of Tariffs Applied by Canada to Certain U.S.Origin Agricultural Products, Final Report of Chapter 20 pane!, Dec. 2, 1996 at ¶71.

28 In the Matter of Cross-Border Trucking Services, Final Report of Chapter 20 panel Feb. 6, 2001 ¶ 121.

29 Letter to the disputing parties dated March 21, 2002.

30 The documents consisted solely of the various drafts of what came to be Chapter 11. There is almost certainly additional material that was available to the Parties during the negotiations, reflecting various views on these drafts, as well as other documents that bear on those views.

31 Nov. 2000 Tr. Vol. 5 at 3:21-25. As noted above, the assertion was later limited to material on Article 1105. On February 22, 2002 Canadian counsel advised the Tribunal: “I provided the foregoing answers [i.e., those in the November, 2000 hearing] to this Tribunal after making inquiries of appropriate and knowledgeable officials and investigating such other avenues as I considered necessary and appropriate to satisfy myself that Canada possessed no such documents.“

32 See paragraph 31 above.

33 That text reads: Investments shall at all times be accorded fair and equitable treatment, shall enjoy full protection and security and shall in no case be accorded treatment less than that required by international law.

34 SeeAward on Merits of Phase 2 at ¶¶111-113

35 See fn. 2 above.

36 Canada has also implicitly made this argument in its proposals on the Free Trade Area of the Americas agreement, where it refers to a failure by states “to meet the minimum standard of treatment if their acts amounted to an outrage, bad faith, willful neglect of duty or an insufficiency of governmental action so far short of international standards that every reasonable and impartial person would readily recognize its insufficiency.” See, Canada's Proposal to the FTAA Negotiating Group on Investment, August 2001. The Quoted language is from Neer.

37 The Tribunal is not unaware that, in the Eighth Submission of the United States, it argued that the term “international law” in Article 1105 means customary international law, basing itself on the judgment in die United Mexican States v. Metalclad Corp., 2001 BCSC 664. In that decision, Tysoe, J. reached that conclusion without providing any analysis or reasoning. See id. at 62. Of course, the failure to provide a rationale for the conclusion renders this ipse dixit holding of questionable precedental value.

38 See¶ 34 above.

39 As it did in its Award of April 10, 2001, the Tribunal will henceforth use “fairness elements” to refer to both the “fair and equitable treatment” and “full protection and security” requirements of Article 1105.

40 Canada's view was “The conduct of government toward the investment must amount to gross misconduct, manifest injustice or, in the classic words of the Neer claim, an outrage, bad faith of the will ful neglect of duty.” Counter Memorial Phase 2 \ 309.

41 See, fn. 36, above. As noted there, the language offered by Canada used the precise language of Neer to explain what it meant by the customary international law minimum standard of treatment.

42 To recall, the passage from Neer relied upon Canada states: [T]he treatment of an alien, in order to constitute an international delinquency, should amount to an outrage, to bad faith, to willful neglect of duty, or to an insufficiency of governmental action so far short international standards that every reasonable and impartial man would readily recognize its insufficiency. 1927 Am. J. Int'l L. 555, 556.

43 Canada used this term to “encapsulate” what it believed were the standards of customary international law. See, Nov. 2000 Tr., Vol. 2 at 58:8-20.

44 See Post Hearing Submission Damages Phase for Mexico at f 8: “Mexico also agrees that the standard is relative and that co duct which may not have violated international law (sic) the 1920s might very well be seen to offend internationally accepted principles oday.“

45 See Nov. 2001 Tr. at 830:8-11. “We also said that that standard, obviously, develops over time, but that does not take away from the fact that the threshold is high.“

46 Brownlie: Principles of Public International Law (5^lh Ed. 1998) p. 12.

47 OECD Publication 23081, Nov. 1967.

48 Id. Note 4(a) at 15.

49 As Professor Sir Robert Jennings cogently observed in Opinion furnished by him in another NAFTA case (Methanex v. United States) and provided to this Tribunal by the United States, the Neer case relied upon for that standard was not one concerned with fair and equitable treatment but with whether the state concerned had committed an “international delinquency.“

50 Nov. 2001. Tr. at 730-732.

51 See Canada's Post Hearing Submission Arising out of Article 1128, etc. (Damages Phase) at ¶ 14.

52 Parra, A., Applicable Substantive Law in ICSID Arbitrations Initiated Under Investment Treaties, ICSID News, Vol. 17, No. 2.Google Scholar

53 As stated by counsel for Canada, “Customary international law is based on the practice of states or diplomatic correspondence.” Nov. 2001 Tr. at 731:2-4.

54 Of course, as noted in the Tribunal's April 10, 2001 Award under Article 1105, every NAFTA investor is entitled, by virtue of Article 1103, to the treatment accorded nationals of other states under BITs containing the fairness elements unlimited by customary international law. See, ¶ 117. The Interpretation did not purport to change that fact, nor could it.

55 Case Concerning Elettronica Sicula S.P.A. (ELSI),ICJ 15 at 76.

56 Statement of Defense and Counter Memorial Phase 3 — Damages, at ¶¶56-58.

57 Id.

58 Nov. 2001 Tr. at 476.

59 Counter Memorial (Damages Phase) at H 51.

60 Id. at ¶52.

61 The link between the financial fortunes of parent and subsidiary corporations, perhaps obvious on its face, is made express by requirements in most developed countries that majority owned subsidiaries by consolidated in the financial reports of the parent. See, e.g., U.S. Securities and Exchange Commission Regulation S-X, 17 C.F.R. § 210 SA-02; (U.S.) Financial Accounting Standards Board Statement No. 94 (issued 10/87); Canadian Institute of Chartered Accountants Handbook (2002) at § 1590.16.

62 Canada argued that the Interim Hearing expenses should be considered as costs rather than damages. For the reasons stated in the Award of April 10, 2001, the Tribunal considers it more appropriate to treat those expenses as damages.

63 Counter Memorial (Damages Phase) at ¶ 145.

64 Reply Counter Memorial (Damages Phase) at ¶104.

65 See, e.g., Award in the Matter of an Arbitration between Kuwait and the American Independent Oil Co. (1981)21 ILM 976atfl 163; Asian Agricultural Products v. Republic of Sri Lanka (1991) 6 ICSID Rev. — FILJ at H 114.

66 This is the date sought by the Investor. See Statement of Claim and Memorial (Damages Phase) at ¶ 30