IN THE MATTER OF AN INTERNATIONAL ARBITRATION UNDER CHAPTER 11 OF THE NORTH AMERICAN FREE TRADE AGREEMENT AND THE UNCITRAL ARBITRATION RULES
METHANEX CORPORATION Claimant/Investor and
UNITED STATES OF AMERICA Respondent/NAFTA Party
FINAL AWARD OF THE TRIBUNAL ON JURISDICTION AND MERITS
THE TRIBUNAL: J. William F. Rowley Professor W. Michael Reisman V.V. Veeder (President)
PART I - PREFACE
The Claimant, Methanex Corporation (“Methanex”), initiated this arbitration against the Respondent, the United States of America (the “USA”), on 3rd December 1999 under Chapter 11 of the North American Free Trade Agreement (“NAFTA”), as a Canadian investor. As formulated in its Original Statement of Claim of 3rd December 1999, Methanex claimed compensation from the USA in the amount of approximately US$ 970 million (together with interest and costs), resulting from losses caused by the State of California’s ban on the sale and use of the gasoline additive known as “MTBE” (methyl tertiary-butyl ether) which was then intended to become legally effective on 31st December 2002. MTBE is a synthetic, volatile, colourless and organic ether, with a turpentine-like taste and odour. Methanex was (and remains) the world’s largest producer of methanol, a feedstock for MTBE. It has never produced or sold MTBE.
Methanex’s claim was brought under Article 1116(1) NAFTA, based on the alleged breach by the USA of two provisions in Section A of Chapter 11 of NAFTA: Article 1105(1) and Article 1110(1).
The Tribunal was formed on 18th May 2000 to decide Methanex’ claim. From the outset, the USA challenged the Tribunal’s jurisdiction to decide Methanex’s claim and alternatively disputed Methanex’s claim on the merits. After several written submissions, procedural sessions and a jurisdictional hearing in July 2001 followed by further written submissions, the Tribunal decided, by its Partial Award of 7th August 2002, that there was no jurisdiction under Chapter 11 to decide Methanex’s claim as formulated in its Original Statement of Claim. By permission from the Tribunal, Methanex significantly amended its claim in November 2002 in the form of a “Second Amended Statement of Claim”. In all subsequent submissions, the
Part I - Preface - Page 1
USA maintained its challenge to the Tribunal’s jurisdiction and its denial of Methanex’s amended claim on the merits. 4.
Methanex’s amended claim had first been intimated to the Tribunal in the form of drafts prepared in January and February 2001 by its then newly instructed Counsel in these arbitration proceedings. Methanex’s claim was there advanced under both Articles 1116(1) and 1117(1) NAFTA, based also on the alleged breach by the USA of Article 1102 NAFTA, in addition to Articles 1105(1) and Article 1110(1).
In regard to its draft Amended Statement of Claim of 12th February 2001, Methanex explained the reasons for amending its claim, as follows: “Methanex’s decision to amend is the result of information it discovered in the fall of 2000 indicating that Archer-DanielsMidland (“ADM”), the principal U.S. producer of ethanol, misled and improperly influenced the State of California with respect to MTBE. Specifically, Methanex discovered that - during the middle of his 1998 California gubernatorial campaign, and during a time when the future of all oxygenates in California was under active review - now-Governor Gray Davis met secretly with top executives of ADM. On August 4, 1998, after receiving an initial $5,000 campaign contribution from ADM, he traveled to Decatur, Illinois, where ADM is headquartered, on a private plane owned by ADM, in order to confer with executives of ADM. ADM has a reputation for seeking to create and control markets by influencing the political decision-makers who affect them; to that end, ADM makes large political contributions to both political parties in