{"id":433,"date":"2009-12-04T04:12:00","date_gmt":"2009-12-04T09:12:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2009\/12\/04\/arbitrator-forced-to-choose-in-nafta-dispute-over-thwarted-canadian-garbage-site\/"},"modified":"2013-02-01T01:55:24","modified_gmt":"2013-02-01T07:55:24","slug":"arbitrator-forced-to-choose-in-nafta-dispute-over-thwarted-canadian-garbage-site","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2009\/12\/04\/arbitrator-forced-to-choose-in-nafta-dispute-over-thwarted-canadian-garbage-site\/","title":{"rendered":"Arbitrator forced to choose in NAFTA dispute over thwarted Canadian garbage site"},"content":{"rendered":"

By Elizabeth Whitsitt<\/span><\/p>\n

December 6, 2009<\/span><\/p>\n

Mr. J. Christopher Thomas Q.C. has resigned from his appointment as an arbitrator in a Chapter 11 NAFTA<\/span> dispute initiated by US investor Vito G. Gallo against the Canadian government.<\/span><\/p>\n

Canada\u2019s nominee to the tribunal resigned on October 21, 2009, one week after ICSID<\/span> Deputy Secretary-General, Nassib G. Ziade, determined that Mr. Thomas would have to choose between continuing to provide legal advice to Mexico or serving as an arbitrator in the case.<\/span><\/p>\n

Mr. Gallo\u2019s challenge was filed with Mr. Ziade in July of 2009 after learning that Mr. Thomas\u2019 professional situation had changed since the commencement of the arbitral proceedings.\u00a0 For fifteen years, Mr. Thomas was the managing partner of Thomas & Partners, a law firm specializing in international trade and arbitration matters.\u00a0 In this capacity he had served as a legal advisor to Mexico in various trade and investment matters (including NAFTA chapter 11 arbitrations).\u00a0 At the time of his arbitral appointment, however, Mr. Thomas was in the process of joining a larger Canadian law firm as an independent consultant so that he could focus on serving as an arbitrator.\u00a0 In this new role Mr. Thomas subsequently agreed to advise the Government of Mexico regarding \u201c\u2026specific legal matters as they arose\u2026\u201d<\/span><\/p>\n

Mr. Thomas attempted to notify the parties of the changes to his professional status and his advisory role to the Mexican government.\u00a0 A mistyped email address, however, prevented the parties from receiving that communication until early June 2009.\u00a0 Shortly thereafter, counsel for Mr. Gallo requested that Mr. Thomas withdraw from his post as arbitrator.<\/span><\/p>\n

In so doing, Mr. Gallo and his counsel stressed that they did “not allege the existence of actual bias” on the part of Mr. Thomas.\u00a0 Instead they grounded their request on Articles 9 and 10 of the UNCITRAL<\/span> arbitration rules and argued that Mr. Thomas could not act as an arbitrator in the dispute and at the same time act as advisor to another NAFTA state party.\u00a0 Doing so, in the claimant\u2019s opinion \u201c\u2026[gave] rise to justifiable doubts as to [Mr. Thomas’] impartiality and independence.\u201d<\/span><\/p>\n

In response Canada attempted to test the timeliness of the claimant\u2019s challenge.\u00a0 Canada argued that Mr. Gallo was outside the 15 day time limit to challenge Mr. Thomas\u2019 appointment.\u00a0 In addressing this issue, the parties made numerous arguments about when the Mr. Gallo became aware or should have become aware that Mr. Thomas was continuing to act as a counsel for Mexico.\u00a0 Eventually siding with Mr. Gallo, Mr. Zaide remained unconvinced by Canada\u2019s evidence on this point and determined that \u201c[t]he proper matter to be considered [in the case was] whom Mr. Thomas ha[d] counseled, and on what topics.\u201d<\/span><\/p>\n

Mr. Zaide clarified that the applicable standard under Articles 9 and 10 of the UNCITRAL arbitration rules in addressing that question is an objective one, clarifying that \u201c\u2026one may as a general matter be simultaneously an arbitrator in one case and a counsel in another.\u201d\u00a0 Moreover, he was clear that Mr. Gallo could not sustain his challenge on the basis of Mr. Thomas\u2019 expressed intention to retire as counsel and subsequent change of heart.\u00a0 In his view, the potential for conflict in this case lay in NAFTA Article 1128, which provides NAFTA state parties the right to make submissions in Chapter 11 disputes (as non-disputing parties) on questions of interpretation of NAFTA.<\/span><\/p>\n

Considering Mexico a \u201cpotential participant\u201d in the case, Mr. Zaide rejected evidence provided by Mr. Thomas which indicated that he had only provided a \u201cde minimis\u201d amount of legal advice to Mexico in his new role as an independent consultant.<\/span><\/p>\n

Mr. Zaide was careful, however, to recognize that \u201cMr. Thomas’ personal integrity [was] unquestioned\u201d and commended him for disclosing his advisory services to Mexico in a forthright manner.<\/span><\/p>\n

Nonetheless, Mr. Zaide concluded that \u201c[b]y serving on a tribunal in a NAFTA arbitration involving a NAFTA State Party, while simultaneously acting as an advisor to another NAFTA State Party which has a legal right to participate in the proceedings, [Mr. Thomas] inevitably risked creating justifiable doubts as to his impartiality and independence.\u201d\u00a0 Accordingly, Mr. Zaide asked Mr. Thomas to choose whether he would continue to advise Mexico, or continue to serve as an arbitrator in the dispute between Mr. Gallo and Canada.<\/span><\/p>\n

Sources:<\/span><\/p>\n

Decision on the Challenge to Mr. J. Christopher Thomas, QC in Vito G. Gallo v. Canada, UNCITRAL (NAFTA) is available here:<\/span><\/p>\n

http:\/\/ita.law.uvic.ca\/documents\/Gallo-Canada-Thomas_Challenge-Decision.pdf<\/span><\/a><\/p>\n

Resignation Letter of Mr. J. Christopher Thomas, QC is available here:<\/span><\/p>\n

http:\/\/www.naftaclaims.com\/disputes_canada_gallo.htm<\/span><\/a><\/p>\n

Previous ITN<\/span> Reporting:<\/span><\/p>\n

\u201cUS investor notifies Canada of potential arbitration over thwarted waste site,\u201d By Luke Eric Peterson, Investment Treaty News, 15 November 2006, available here:<\/span><\/p>\n

http:\/\/www.IISD<\/span>.org\/pdf\/2006\/itn_nov15_2006.pdf<\/span><\/a><\/p>\n

\u201cUS investor files formal arbitration against Canada over thwarted garbage disposal site,\u201d Luke Eric Peterson, Investment Treaty News, 27 May 2007, available here:<\/span><\/p>\n

http:\/\/www.IISD<\/span>.org\/pdf\/2007\/itn_may27_2007.pdf<\/span><\/a><\/p>\n

\u201cTribunal appointed to hear NAFTA claim over thwarted garbage site in Canada,\u201d
\nBy Luke Eric Peterson, Investment Treaty News, 21 February 2008, available here:<\/span><\/p>\n

http:\/\/www.IISD<\/span>.org\/pdf\/2008\/itn_feb21_2008.pdf<\/span><\/a><\/p>\n