We are pleased to share with you this article which discuses a small state’s successful defence of its Bilateral Investment Treaty with Canada against a claim brought under the treaty that it had failed to take environmental measures to protect an investment which was a 34-acre wetlands property.
An UNCITRAL tribunal seated in The Hague has dismissed a US$26 million investment treaty claim against Barbados brought by a Canadian businessman who alleged the Caribbean island state had failed to take environmental measures to protect his nature sanctuary.
In an award issued on 27 June and published today, a tribunal chaired by Australia’s Gavan Griffith QC ruled that Barbados had “prevailed on all merits issues” and ordered the claimant, Peter Allard, to pay US$3.1 million in costs. The tribunal’s award on jurisdiction from 2014 has also been published.
The dispute concerned the Graeme Hall Nature Sanctuary, a 34-acre wetlands area that forms part of a 240-acre green space on Barbados’ south coast between the state’s sole airport and the capital city of Bridgetown.
Allard acquired the wetlands for use as a mangrove forest and migratory bird sanctuary in the 1990s, along with related eco-tourist infrastructure, for a total alleged cost of nearly US$26 million. The sanctuary opened to the public in 2004 but Allard closed it down five years later, alleging that environmental degradation had left it as “little more than a mosquito-infested swamp”.
Allard filed for arbitration in 2010, alleging breaches of the 1996 Barbados-Canada bilateral investment treaty. He claimed that Barbados had failed to provide fair and equitable treatment by re-zoning the land around the sanctuary for development. He also argued that Barbados had breached the BIT’s full protection and security provision by failing to prevent the discharge of raw sewage into the wetlands and neglecting drainage systems that regulated the health of the wetlands.
The tribunal – which included academics Michael Reisman of the US and Andrew Newcombe of Canada – accepted jurisdiction over Allard’s claim in June 2014, rejecting Barbados’ objections that the sanctuary did not qualify as an “investment” for BIT purposes and that Allard did not own the sanctuary in accordance with the laws of Barbados. The state also argued that the claim fell outside a three-year limitation period under the BIT.
In its final award, the tribunal found that the state had not breached any of its obligations under the treaty. It found that Allard had decided to create a nature reserve as early as 1994 and had continued with the project “irrespective, and not in reliance upon” any representations by Barbados. While Allard had a “visionary disposition” in respect of the project, the tribunal said that “when things go wrong, good intentions do not directly translate” to establishing state responsibility under the BIT.
The tribunal also found that Barbados had taken appropriate and sufficient measures to protect the nature sanctuary, including conducting research and seeking to balance competing needs.
Considering scientific evidence, the tribunal found that Allard had failed to establish any environmental degradation at the site between his initial investment in 1996 and the closure of the sanctuary in 2009, nor any causal link between the state’s environmental management of the site and the alleged impact on the mangroves and the habitat of certain species of fish, birds and crabs.
The case was administered by the Permanent Court of Arbitration, which only disclosed details of the dispute last year.
Allard was represented by Canadian firm McMillan, with the team including Toronto-based partner Robert Wisner. He declined to comment.
Barbados retained a Volterra Fietta team headed by partner Robert Volterra in London. Volterra says this was a “significant” win for his client.
“The investor had made unwarranted and unsubstantiated accusations against Barbadian governments and government officials and presented a base claim equal to just over £20 million. By way of comparison of the impact on the state per capita, that is the equivalent of a £4.5 billion claim against the UK,” he says.
It is not the first time Barbados has turned to Volterra. While at his former firm Latham & Watkins, Volterra acted as co-agent to the state in a claim against Trinidad & Tobago – the first maritime boundary arbitration to be heard under annex VII of the United Nations Convention on the Law of the Sea. Members of Volterra Fietta have also advised Barbados in relation to a proposed gas pipeline and the drafting of a joint development zone treaty with Guyana.
The award is another good result for the firm, which last year won a US$455 million ICSID award against Venezuela on behalf of a subsidiary of US bottlemaker Owens-Illinois. Volterra Fietta has also recently been retained by Egypt to defend an ICSID claim brought by Qatar-based broadcaster Al-Jazeera.