The Contribution of Canadian Law to International Mining Arbitration

In seventeen-twenty they sailed to CB,
In search for coal that outcropped by the sea;
They settled the land ’round Morien Bay,
’Twas here coal mining started, they say


Whether or not coal mining truly started at Cape Breton Island in Nova Scotia, as the song goes, Canada has by now undisputedly established itself as one of the leading mining jurisdictions.[3] This Commonwealth country produces more than 60 different minerals and metals, ranking first in the global production of potash; second in gemstones; third in diamonds, niobium and uranium; fourth in aluminium, cadmium, indium and wollastonite; and fifth in graphite, gold, mica, sulphur, tellurium and nickel.[4] Its status promises to remain current, as it is also ‘home to 14 of the 19 metals and minerals needed to make a solar PV panel’.[5] This abundance of diverse resources has led many companies to put down roots in Canada, even when their operations are scattered across the globe.[6]

The wide availability of capital to fuel exploration and exploitation of minerals also explains Canada being home to numerous mining companies.[7] More than 50 per cent of the world’s publicly listed exploration firms in 2013 had their headquarters in this country.[8] According to 2019 data, half of the world’s publicly traded mining companies were listed on the Toronto Stock Exchange (TSX) and TSX-Venture Exchange. These two exchanges accounted for 37 per cent of the equity capital raised globally for mining, more than any other exchange in the past five years.[9] This abundance of minerals and a dynamic capital market have fostered the development of a variety of mining-related expertise in Canada, such as in geology, remote sensing, mining finance and engineering services, and environmental management.[10] Finally, Canada’s stable and reliable legal system,[11] with its independent and experienced judiciary and elaborate legislative and regulatory framework, provides fertile soil for exploration projects.

Canadian mining law has been shaped by several factors, including the country’s form of government (constitutional monarchy), federal structure and Aboriginal rights.[12] The country’s colonial past also played a role in the adoption by many provinces of the free mining regime, according to which the first person to stake a claim to a resource is granted exclusive rights to its exploration and exploitation.[13]

Except for few instances of private ownership and Aboriginal title, all mines and minerals belong to the Crown (i.e., provincial governments or federal government, when they are situated on federal lands).[14] The Constitution Act of 1867 allows each province to legislate on exploration, development, conservation and management of non-renewable natural resources, as well as on export of the primary production from non-renewable natural resources from the province to another part of Canada.[15] Additionally, the provinces ‘may make laws in relation to the raising of money by any mode or system of taxation in respect of non-renewable natural resources . . . in the province and the primary production therefrom’.[16] While the federal government’s regulation of mining operations is seemingly limited, the latter must incidentally comply with dozens of federal acts,[17] and some matters, such as taxation and environment, are regulated at both the federal and provincial levels.[18] Lastly, the Constitution Act of 1982 recognises and affirms rights of Aboriginal peoples,[19] who are entitled to be consulted and accommodated by the Crown if they may be affected by a governmental decision, including with respect to mining projects.[20]

Some of these domestic characteristics are reflected in Canadian treaties with other countries. For instance, in the uranium mining sector the government requires at least 51 per cent Canadian ownership.[21] To avoid claims of violations of various treaty standards (such as national (NT) or most-favoured nation (MFN) treatments), Canadian agreements contain reservations. Thus, under the Canada–EU Comprehensive Economic and Trade Agreement, an investor in the uranium mining sector is precluded from arguing that a requirement of Canadian ownership violates NT or MFN.[22]

For all these reasons, Canadian courts have had the opportunity, over more than a century, to create and refine a vast body of mining law that international arbitration decision-makers, practitioners and users may look to for guidance. This chapter, therefore, first looks at past Canadian influences on international mining arbitrations. Then, through a review of Canadian court judgments in mining disputes, it suggests areas in which international commercial and investment arbitration could benefit from this body of law.

Canada in mining arbitration

Despite being as often confidential and infrequently publicised as other types of arbitration, the number of mining-related arbitrations is estimated to be significant.[23] For instance, the oil, gas and mining sector generates the largest number of disputes before the International Centre for Settlement of Investment Disputes (ICSID) (24 per cent of the Centre’s caseload).[24] While Canada does not often find itself on the receiving end of the claim,[25] Canadian investors actively seek protection of their rights abroad.[26]

In Crystallex v. Venezuela, the claimant – a Canadian company frustrated in its attempt to develop a gold mining project – argued that the respondent’s refusal to issue an environmental permit, allowing the extraction of gold deposits, and the government’s subsequent termination of its mine operation contract amounted to expropriation and violated various treaty standards.[27] Upon findings of expropriation and breach of the fair and equitable treatment (FET) standard,[28] the ICSID Tribunal turned to the assessment of damages. Among the various valuation methods proposed by the parties,[29] the Tribunal applied two suggested by the claimant: the stock market and the market multiples approaches.[30] In choosing to value a development property using these ‘forward-looking methodologies’,[31] which aim ‘at determining lost profits’ instead of just looking at a computation of sunk costs, the Tribunal relied on the Standards and Guidelines for Valuation of Mineral Properties of the Canadian Institute of Mining, Metallurgy and Petroleum (the CIMVAL Standards and Guidelines).[32] The Tribunal thereby reaffirmed the relevance of these Guidelines as ‘important standards in the industry’.[33]

Indeed, the Canadian expertise in the field of valuation was recognised in the CIMVAL Standards and Guidelines, serving as one of the three main sets of guidelines on which the International Mineral Property Valuation Standards template was based.[34] The Canadian guidelines were said to ‘play an increasingly dominant role in shaping’ parties’ approaches to valuations,[35] as they were more frequently relied upon in arbitration proceedings.[36] In late 2019, the CIMVAL Standards and Guidelines were replaced with the CIMVAL Code, which consists of three parts: mandatory rules called ‘Standards’, voluntary ‘Guidelines’, which elaborate on the Standards and recommend best practices, and ‘Definitions’ of the terms used in the CIMVAL Code.[37] The Standards are limited to valuations of mineral properties, which include real property, various permits and licences (prospecting, reconnaissance, exploration, development), mining licences and leases, as well as royalty interests.[38] While the valuation of metallic and non-metallic mineral properties is covered by the Standards, oil and gas properties are not.[39] Although the Standards call for valuations by qualified valuators,[40] they do not require that a certain valuation approach and method be used; rather, the responsibility to choose the appropriate ones in each case is left with the qualified valuator.[41] The Guidelines assist in this choice, as they classify mineral properties into categories, and then pair each category with the suitable valuation approach.[42] The market approach may be suitable to all four types of property: exploration property, mineral resource property, development property and production property. The income approach is suitable for development and production properties, whereas a cost approach is recommended for exploration properties.[43]

The investor–state dispute in Clayton/Bilcon v. Canada is also worth mentioning in the context of mining arbitration. The dispute was triggered by the respondent’s rejection of the investor’s project to operate a quarry and marine terminal after a negative environmental assessment. The claimant contested the appropriateness of the procedure used during this assessment, arguing that it contravened Canada’s duties to accord its investment FET, full protection and security, and national and MFN treatment. In particular, it claimed that the procedure before a joint review panel (JRP) was ‘unwarranted’,[44] since it was only appropriate for ‘projects of far greater risk or magnitude’,[45] than that of the claimant. Moreover, the claimant alleged that the ‘overriding consideration in assessing the project’ were ‘community core values’,[46] a term not mentioned in any legislation.[47] Although the tribunal acknowledged that ‘social impacts can be within the scope of a valid assessment’[48] in its award on jurisdiction and liability, it sided with the claimant.[49] The tribunal found the JRP’s approach to be ‘distinct, unprecedented and unexpected’[50] and, above all, ‘highly problematic in light of the applicable law and facts of the case’.[51]

Before the tribunal had a chance to decide on the issue of damages, an application for the set aside of its award was filed with the Federal Court of Canada.[52] Although it ultimately dismissed the application, the Court noted that:

[t]he majority’s Award raises significant policy concerns. These include its effect on the ability of NAFTA Parties to regulate environmental matters within their jurisdiction, the ability of NAFTA tribunals to properly assess whether foreign investors have been treated fairly under domestic environmental assessment processes, and the potential ‘chill’ in the environmental assessment process that could result from the majority’s decision.[53]

One cannot help but wonder whether the tribunal was somewhat influenced by this statement in its award on damages: out of more than US$400 million claimed,[54] it awarded only US$7 million.[55]

The claim made against Canada by a US company under Chapter XI of the North American Free Trade Agreement (NAFTA) in Lone Pine Resources v. Canada,[56] based on the revocation of exploration licences for petroleum, natural gas and underground reservoirs located in the St Lawrence River, is also worthy of attention. The expected award[57] may shed light, inter alia, on whether a NAFTA tribunal ought to exercise its jurisdiction regarding working interests arising out of a farmout agreement. The claimant’s allegations that Canada breached its FET obligation and proceeded to an illegal expropriation could also raise the issue of the appropriate valuation method for natural gas project at the exploration stage. Finally, extensive expert reports and testimony were adduced to inform the tribunal on the nature of the rights conferred to the investor, and the treatment of this evidence by the tribunal may be of interest to arbitral tribunals seized of mining arbitrations.

Finally, a case that ought to be kept on the radar for the foreseeable future is Einarsson v. Canada.[58] In this NAFTA dispute, investors reproach Canada for its alleged unilateral disclosure to third parties of proprietary marine seismic data. In the investor’s view, the alleged confiscation of its intellectual property rights in the seismic data constitutes indirect expropriation, as well as breaches of the FET and minimum standard of treatment and performance requirements. Although the data in question is most often used in oil and gas exploration, its similarities to sonar, drilling and other types of data used in mining projects make this case a potential point of interest for mining arbitration.

Potential areas of Canadian influence in international mining arbitrations

While this chapter does not purport to argue that Canadian law is an authoritative source of law in mining arbitration proceedings,[59] it remains that Canadian courts have exceptional expertise in the field. The depth and breadth of Canadian experiences with a variety of legal and factual issues in the area make Canadian mining law a logical source of inspiration that may inform arbitral decision-making, in the context of both commercial and investor–state arbitrations.

International commercial arbitration

Irrespective of the specific law applicable to a given arbitration, tribunals are commonly tasked with the contractual interpretation of agreements involving various actors of the mining industry and are asked to rule on the consequences of handling the confidential information that is frequently involved at different stages of exploration and production of a mining site. The sophistication of the solutions articulated by Canadian courts in such contexts makes this body of law an attractive basis for arguments.

Contractual allocation of risk

It is no secret that mining exploration entails substantial risks, be it geological, financial or other.[60] Governments accordingly grant companies and their investors tax credits to make project financing possible,[61] among other incentives. Parties, likewise, are inclined to mitigate risks, either by assigning or sub-contracting their exploration contracts, or entering into joint ventures, farming in and farming out.[62] If the issue of allocation of risks is not dealt with in advance (i.e., by way of contract), the project is unlikely to advance.[63]

Yet, inserting a clause into a contract does not guarantee its application. Before relieving any party of liability, Canadian courts will analyse an exclusion of liability clause pursuant to the three-pronged Tercon test: (1) they will consider whether the clause applies to the circumstances established in evidence; (2) in the affirmative, they will review whether it was unconscionable at the time of contract conclusion (i.e., invalid); (3) if valid, the courts will determine whether overriding public policy mandates against enforcement of the given clause.[64]

Applying the Tercon test to the standard form contract used in the Canadian oil well drilling industry, the Alberta Court of Appeal refused to shield the defendant from liability for fraudulent misrepresentation in Precision Drilling Canada Limited Partnership v. Yangarra Resources Ltd.[65] As a result of Precision employee’s mistake, which was not timely communicated to Yangarra, the latter’s drilling equipment was damaged.[66] At the very least, Precision’s actions were reckless; at most, they constituted active deception.[67] Disregarding the fact that the parties’ contract was a ‘no-fault’ agreement, under which each bore the risk of damage to its own assets,[68] the Court held that ‘public policy requirements . . . intervened to give no effect to [contractual] language’ that explicitly released the parties from a claim based in fraud.[69]

Although the decision in Plas-Tex Canada Ltd v. Dow Chemical of Canada Ltd preceded Tercon, the Alberta Court of Appeal adopted a similar approach in the context of the natural gas industry, refusing on public policy grounds to enforce an exclusion clause in favour of a supplier who knowingly omitted to disclose to the buyer the defects in its plastic resin pipeline.[70]

Force majeure clauses

Although a century old, the lessons to be drawn from the case of Samuel v. Black Lake Asbestos and Chrome are worth revisiting, especially as the coronavirus pandemic brings the spotlight back on force majeure clauses. The parties’ two, nearly identical, contracts called for delivery of a large quantity of Canadian lump chrome ore by a certain date.[71] Soon after the contracts’ conclusion, prices of chrome, as well as production costs, began to rise due to increased demand for chrome in times of war.[72] Obtaining the required quantity would, therefore, entail greater expense than the defendants had anticipated at the time of contracting. Unsurprisingly, they were delaying deliveries to the plaintiff, trying to profit from dealings with other purchasers.[73] After an unsuccessful attempt to increase the contract price,[74] the defendants stopped further deliveries to the plaintiff.[75] Refusing to apply the elaborate force majeure clauses contained in both contracts, which, inter alia, covered ‘other unforeseen circumstances beyond the reasonable control of the sellers’,[76] the trial judge held:

That increased cost of production, unless specifically provided against, is not a ground for refusal to perform, is well established, even though it be to the extent of rendering the contracts unprofitable to the vendors. Mere economic unprofitableness is not to be regarded as equivalent to impossibility of performance.[77]

Transcanada Pipelines Ltd v. Northern and Central Gas Corp Ltd concerned a force majeure clause in a contract for the supply of natural gas.[78] The contract obliged the buyer, Northern, to pay ‘demand charges’ irrespective of whether or not it took delivery of the gas that the seller, Transcanada, undertook to supply. When the buyer’s clients were hit with strikes and explosions, their demand for gas decreased, thus prompting Northern to seek relief from the demand charges. The Ontario Court of Appeal stated that, generally, force majeure clauses were limited to events besetting the parties to the contract, unless the parties had widened the clause’s scope by, for example, exempting the seller from liability arising from its supplier’s non-delivery of gas (as was the case here). The Court refused to exempt Northern on account of strikes and explosions suffered by its customers on the following grounds: (1) the parties’ specific intent to only protect the seller, which is evident from the fact that only Transcanada could be exempt for failures of its suppliers; (2) the duty to remedy any force majeure ‘with all reasonable dispatch’, which indicated that the ‘remedying’ could only be performed by the parties to the contract; and (3) the fact that upholding Northern’s interpretation would essentially grant it ‘business interruption insurance protection’.[79]

Liability for misuse of confidential information

Confidential information has always been a key asset in the mining industry, especially concerning ore location, quality and accessibility, and it promises to be an increasingly difficult asset to protect. The growing availability of data and processing capabilities means that, more than ever before, the disclosure of the slightest piece of exploration results may deprive a mining company of its edge in putting together a development project fast enough. Confidentiality agreements, which may include ‘restricted use’ or ‘permitted use’ clauses, are therefore typically signed before site visits or any discussions take place.[80] In situations where no such agreement is in place, Canadian courts have articulated legal solutions that protect the value of this information in the mining industry, drawing from various areas of contract law.

One of the bases for asserting claims against partners that prove to be untrustworthy is breach of confidence, a sui generis cause of action with equitable origins.[81] In the seminal case of Lac Minerals v. International Corona Resources, where the parties had no confidentiality agreement in place, the Supreme Court of Canada held that a senior mining company, Lac, by misusing information received from a junior mining company, Corona, had breached a duty of confidence to Corona. The latter had carried out an extensive exploration programme and arranged to acquire certain property (Williams property). During Lac’s representatives’ visit to the Corona property, Corona disclosed its confidential geological findings and theory of the site, highlighting the importance of the Williams property. At the meeting, Lac had advised Corona to aggressively pursue the Williams property. Yet, following the meeting and unbeknown to Corona, Lac itself acquired it and staked 640 favourable claims east of the property.[82] Undoubtedly, Corona’s information was ‘the springboard that led to the acquisition of the Williams property’.[83]

In finding a breach of confidence, the Court looked at whether: (1) information conveyed was confidential; (2) information was communicated in confidence; and (3) the recipient of information misused it.[84] The first element was satisfied, since the information conveyed ‘went beyond what had been imparted publicly’.[85] The fact that ‘information of commercial value was given on a business-like basis and with some avowed common object in mind’ satisfied the second element of the test. Finally, testimony of Lac’s witnesses showed that ‘Lac was aware that it owed some obligation to Corona to act in good faith, and that that obligation included the industry-recognized practice not to acquire the property which was being pursued by a party with which it was negotiating’.[86] In the Court’s view:

Lac had the option of either pursuing a relationship with Corona in which Corona would disclose confidential information to Lac so that Lac and Corona could negotiate a joint venture for the exploration and development of the area, or Lac could, on the basis of publicly available information, have pursued property in the area on its own behalf. Lac, however, is not entitled to the best of both words.[87]

On the issue of remedies, the Court’s majority held that breach of confidence cases provided for ‘considerable flexibility’.[88] While noting that the claim was of restitutionary nature,[89] monetary damages were deemed ‘unfair and unjust’ because ‘the actual damage . . . was virtually impossible to determine with any degree of accuracy’.[90] The Williams property could not be ‘given back’ since it never belonged to Corona. Consequently, the Court’s majority awarded Corona a constructive trust over the Williams property, meaning it had a lien on the property to the extent Corona was saved the necessary expenditure.[91] This remedy was deemed appropriate, considering ‘the uniqueness of the Williams property, the fact that but for Lac’s breaches of duty Corona would have acquired it, and recognizing the virtual impossibility of accurately valuing the property’.[92]

Lac Minerals is arguably the ‘most relevant authority on the misuse of confidential information and on the appropriate remedy in mining cases’.[93] Countless subsequent judgments have relied on the Supreme Court’s pronouncement. For example, in Ontex v. Metalore, Metalore had acquired confidential information thanks to Ontex having granted it access to its property. Although the parties’ agreements required Metalore to share this information with Ontex so that both companies could participate in staking additional claims, Metalore used it exclusively to advance its own interests. The Ontario Court of Appeal found Metalore in breach of its duty of confidence. However, no constructive trust was established in the plaintiff’s favour because it failed to prove any detriment or loss flowing from the breach of confidence.

The British Columbia case of Minera Aquiline Argentina SA v. IMA Exploration Inc[94] involved a Toronto-based exploration company, Minera Aquiline, as plaintiff, and IMA, a British Columbia junior mining company, together with its Argentinian wholly owned subsidiary, Inversiones Mineras Argentinas, as defendants. IMA was interested in acquiring mining property Calcatreu (Argentina) from the plaintiff’s predecessor.[95] Before the site visit IMA signed a confidentiality agreement that covered ‘certain financial, operating, technical, geological and other information concerning the [Calcatreu] Project’, as well as ‘all communications . . . between the Participants relating to the Project’.[96] During the site visit, IMA’s representative accidentally observed a satellite map concerning a different project and showing the points sampled, most of which were outside of Calcatreu (in Chubut).[97] Intrigued, the plaintiff later requested a digital copy of this data.[98] Although the Calcatreu deal ultimately fell through, IMA staked mineral claims in Chubut.[99] Minera Aquiline claimed that, by using confidential geological information obtained during the site visit, IMA breached the confidentiality agreement or, alternatively, its common law duty of confidence.[100]

IMA disputed the agreement’s scope, since it did not expressly reference regional exploration data.[101] The court held that ‘this information was covered by the words “relating to” and “concerning” the Project’,[102] and held IMA in breach of its contractual duties.[103] Central to this conclusion was the fact that the plaintiff ‘undertook the geochemical survey, which in its first phase, resulted in developing the [contested] data, for the express purpose of potentially adding to the Calcatreu gold property’.[104]Although, after this finding, a ruling on the plaintiff’s alternative claim of breach of confidence at common law was unnecessary,[105] the court nonetheless analysed the issue and found that all conditions of the Lac Minerals test were met.[106] The court’s determination of the law applicable to the dispute may also be of interest to practitioners when drafting arbitration clauses with a view to minimising uncertainty in that respect.[107]

While most issues in Barrick Gold Corporation v. Goldcorp Inc were governed by the contract, several general remarks may be distilled from the court’s decision to dismiss Barrick’s common law claim.[108] First, ‘there is no authority for imposing a duty of confidence in favour of a third party to a contract who is neither the owner of the confidential information nor a confider of the confidential information.’[109] Second, it is not ‘reasonable to provide a right in equity to prevent an otherwise permitted transaction by restricting the disclosure of confidential information’.[110] Third, a claim cannot be asserted without the claimant having a reasonable expectation of privacy.[111] Finally, even when claimant has an ownership interest in the agreement and, as such, is entitled to a duty of confidence in its favour respecting that agreement, its claim may fail due to its acquiescence to disclosure.[112] In applying the principles set out in Minera Aquiline, this decision sheds additional light on the risk of seeing a ‘foreign’ law apply to a dispute.[113]

Investor–state arbitration

Arbitral tribunals seized of investor–state disputes are frequently asked to determine whether a certain governmental action constitutes expropriation and, if so, how to value the expropriated property. Canadian case law addresses several issues associated with such matters.

The changing landscape of expropriation cases

A classic example of de facto expropriation in the mining context is R v. Tener.[114] In 1937, the province had granted respondents’ predecessors in title an interest in fee simple in the lands in dispute.[115] A few years after the grantees had received a grant of all minerals in the land, along with the right to remove them,[116] British Columbia created a park that encompassed the land subject to the respondents’ mineral claims.[117] Thirty years into the grant, the province enacted a new Park Act, requiring anybody wishing to exploit natural resources in the park to obtain a use permit.[118] A permit for this class of park was ‘restricted to situations where it was “necessary to the preservation or maintenance of the recreational value of the park involved”’.[119] Later amendments to the Mineral Act required anyone exploring for or producing minerals in a park to also have the authorisation of the Lieutenant Governor in Council.[120] As respondents not only did not receive any permit,[121] but were also informed in 1978 that ‘no new exploration or development work [could] be authorized within a Provincial Park’,[122] they claimed compensation, asserting that this denial of permit amounted to expropriation.

The Supreme Court of Canada interpreted the term ‘land’, which was not defined in statutes, as including an interest in land.[123] It also subsumed the extinction of an interest in land under the expression ‘expropriation of land’.[124] Even though the title to the minerals was intact, the Court held that the province’s actions amounted to a compensable taking (i.e., ‘recovery by the Crown of a part of the right granted to the respondents in 1937’) because the respondents could no longer access the minerals.[125] The aim of this expropriation was ‘to enhance the value of the public park, . . . to preserve the qualities perceived as being desirable for public parks’.[126] The 1978 notice ‘took value from the respondents and added value to the park’, leaving the respondents ‘with only the hope of some future reversal of park policy and the burden of paying taxes on their minerals’.[127] In short, the respondents’ claims had become ‘worthless’.[128] This case shows that ‘a de facto expropriation requires a total barrier to the exercise of a proprietary interest’, as well as that ‘the benefit acquired by the government can be different in substance than the specific property interest that is effectively confiscated’.[129]

While the said ‘benefit’ may be different from the property interest in question, it must still exist. In the absence thereof, courts will refuse to qualify a governmental action as a compensable taking, as appears from a recent judgment of the British Columbia Supreme Court[130] in Compliance Coal Corporation v. British Columbia (Environmental Assessment Office).[131] The plaintiffs in this case claimed damages from the federal and provincial governments for alleged misconduct in performing environmental assessments of a coal mine project.[132] According to the plaintiffs, after the support for the project from local governments and communities began to erode, an unidentified ‘political actor’ instructed the British Columbia Environmental Assessment Office (BCEAO) and the Canadian Environmental Assessment Agency (CEAA) to ‘engage in a process of review that would ensure the failure of Compliance’s application for an environmental assessment certificate’.[133] Despite (1) the BCEAO’s and the CEAA’s conflicting and constantly changing feedback on Compliance’s application,[134] (2) the arbitrary and ‘effectively impossible to meet’[135] requirements that the BCEAO and the CEAA imposed on the plaintiffs, (3) the fact that the ‘political actor made it clear through their actions that Compliance would be barred from undertaking the [project], regardless of whether it could practically satisfy the requirements to obtain an environmental assessment certificate’,[136] and (4) the fact that Compliance withdrew its application, believing it had been effectively rejected, after spending approximately US$42 million on the environmental assessment,[137] the Court held that plaintiffs failed to plead a reasonably arguable claim for compensation on the basis of de facto expropriation.[138] The benefit that the provincial and federal governments allegedly received (‘they no longer had to face criticism from constituents and other individuals who were opposed to the development of coal mines on Vancouver Island’)[139] was not, in the Court’s view, equivalent to ‘the acquisition of a beneficial interest in the property or flowing from it’.[140]

While R v. Tener remains good law, (political) climate change appears to have caused a shift in perspectives and priorities. Recently, when assessing mining companies’ rights in light of increasing environmental and societal concerns, courts have upheld governmental actions, refusing to conclude that they constituted de facto expropriations. In Strateco Inc v. Procureure Générale du Québec,[141] the Quebec Court of Appeal confirmed the government’s refusal to issue a certificate for a uranium mine on grounds of ‘social acceptability’ of the project. Although this concept was not defined in legislation, the Court of Appeal viewed it ‘more as being the result of a participatory process’,[142] ‘directly related to the perceived threat that a project may pose to the life or quality of life of a milieu’.[143] The government’s decision, while not falling within the category of ‘core policy’ decisions, enjoyed qualified immunity, meaning that Strateco had to prove bad faith, serious carelessness or recklessness, which it had not.[144] Distinguishing Strateco’s case from R v. Tener, the Court also found that Strateco was not dispossessed of its claims;[145] rather, nothing prevented it from submitting a new application for uranium exploration.[146] Moreover, Strateco was, at the outset, fully aware of the risks it ran in undertaking its uranium exploration project, including the possibility of not receiving the requisite certificate.[147] Hence, its expropriation claim was destined to fail.

Echoing the same sentiment, the Court of Queen’s Bench of Alberta recently refused the plaintiff’s claim of expropriation of its royalty interest in a coal mining facility following new regulations pertaining to coal-fired emissions. In the Court’s view:

[w]hen a party enters an industry knowing that emissions regulation is part of the landscape, it cannot in any way suggest that a change in emissions regulations is a surprise. . . . Surely, and without more, the law cannot be that a regulator purporting to regulate in the interests of public health and environmental preservation must pay the creditor of a health or environmental hazard to stop polluting. This is not to say that there has been a specific finding that there is or is not a health hazard at the emission levels set here. That issue is simply not before the Court from an evidentiary point of view, and the regulation has not been challenged as being arbitrary or capricious.[148]

The power of the state to regulate and the deference that ought to be given to environmental and societal interests, exhibited in recent Canadian case law, have been reoccurring themes in international investment disputes, such as Bear Creek Mining v. Peru[149] and Clayton/Bilcon v. Canada,[150] and have made their way into new investment treaties.[151] While not binding on international tribunals, Canadian case law may inform their decision-making, especially as recent trends closely track a more restrictive approach to indirect expropriation and the application of FET obligations in investment treaties.[152]


Selecting the most appropriate valuation method upon findings of expropriation remains a daunting task for any arbitral tribunal seized of an investor–state dispute. The British Columbia Superior Court decision in Shell Can v. East Kootenay provides for helpful reflexions on the matter, recognising the particularities of such an exercise in the mining industry:

Although in most cases the value of a business conducted at a premises will be different from the value of the land and improvements, there are undoubtedly cases where they are the same. Such cases may include mines, where the land and improvements are put to their highest and best use in producing an income stream from the production of coal, and where there is no residual value when the deposit is worked out.[153]

The case underlines the factual considerations in determining, for instance, whether the discounted cash flow method is to be favoured to the replacement cost or the market value, as an indicator of value,[154] and recalls that Canadian law allows the use of different methods side by side.[155]

Finally, in Bayens v. Kinross Gold Corp,[156] the Ontario Superior Court proceeded to a substantial discussion of the approaches to valuation in the mining industry, underscoring its relation to financial disclosure requirements.[157]


This chapter barely scratches the surface of the expertise developed by Canadian courts in dealing with disputes arising in the mining industry. The hundreds of decisions rendered in the field yearly, the creativity of the solutions arrived at by courts, and the intimate knowledge of the particularities of the industry that they exhibit make Canada a natural source of legal insights in the area:[158] parties to international mining disputes and the tribunals they trust to decide the matter would all benefit from the body of knowledge accumulated over the years in Canadian mining law.


1 Eric Bédard is a partner and Dina Prokić is an associate at Woods LLP. The authors wish to thank Joshua Crowe, associate at Woods LLP, for his contribution to the research that made the first edition of this chapter possible.

2 The Men of the Deeps, ‘The Coal by the Sea’ (1991).

3 The Mining Association of Canada, ‘Facts and Figures: The State of Canada’s Mining Industry 2020’, 7,

4 id., at 24.

5 Clean Energy Canada, ‘Mining for Clean Energy: Tracking the Energy Revolution 2017’, 5,; The Mining Association of Canada, ‘Facts and Figures: The State of Canada’s Mining Industry 2020’, 64,

6 Dwight Newman, Mining Law of Canada, Lexis Nexis (2018), 51.

7 While Vancouver features ‘the world’s leading cluster of exploration companies’, Edmonton is home to oil sands expertise, Saskatoon attracts companies dealing in uranium and potash, and Montreal hosts a number of aluminium and iron ore firms: The Mining Association of Canada, ‘Facts and Figures: The State of Canada’s Mining Industry 2020’, 7,

8 Global Affairs Canada, ‘Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad’, 2,

9 The Mining Association of Canada, ‘Facts and Figures: The State of Canada’s Mining Industry 2020’, 37,

10 Government of Canada, ‘Exploration and Mining in Canada: An Investor’s Brief’, February 2016, 3.

11 According to the World Justice Project report, Canada ranks ninth in the 2020 Rule of Law Index. See WJP, ‘Rule of Law Index 2020’, 6,

12 Dwight Newman, Mining Law of Canada, Lexis Nexis (2018), 60. To a lesser extent, the country’s bijuralism contributes to the richness of its mining law: the mineral titling regime of Quebec is based on the principles found in common law, but its civilian tradition does bear on the qualification of property rights, for instance.

13 This principle originally served to favour the accelerated prospect of a vast territory perceived as sparsely populated.

14 Constitution Act, 1867, Section 109.

15 Constitution Act, 1867, Section 92A. See, for example, in Quebec: Civil Code of Quebec (CCQ-1991); Mining Act (CQLR c. M-13.1); Business Corporations Act (CQLR c. S-31.1); Mining Companies Act (CQLR c. C-47); Environment Quality Act (CQLR c. Q-2), schedule A; Natural Heritage Conservation Act (CQLR c. C-61.01); Petroleum Resources Act (CQLR c. H-4.2). In Ontario: Conveyancing and Law of Property Act (R.S.O. 1990, c. C.34); Mining Act (R.S.O. 1990, c. M.14); Mining Amendment Act (S.O. 2009, c. 21 – Bill 173); Aggregate Resources and Mining Modernization Act (S.O. 2017, c. 6 – Bill 39); Land Titles Act (R.S.O. 1990, c. L.5); Public Lands Act (R.S.O. 1990, c. P.43); Environmental Assessment Act (R.S.O. 1990, c. E.18); Occupational Health and Safety Act (R.S.O. 1990, c. O.1); Oil, Gas and Salt Resources Act (R.S.O. 1990, c. P.12). In British Columbia: Land Title Act (R.S.B.C. 1996, c. 250); Mineral Tenure Act (R.S.B.C. 1996, c. 292); Mines Act (R.S.B.C. 1996, c. 293); Environmental Assessment Act (S.B.C. 2018, c. 51) and Reviewable Projects Regulation (B.C. Reg. 243/2019); Petroleum and Natural Gas Act (R.S.B.C. 1996, c. 361); Oil and Gas Activities Act (S.B.C. 2008, c. 36).

16 The Constitution Act, 1867, Section 92A. See, for example, Mining Tax Act (CQLR c. I-0.4); Mining Tax Act (R.S.O. 1990, c. M. 15); Mineral Tax Act (R.S.B.C. 1996, c. 291).

17 See, for example, Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), Sections 127, 213; Competition Act (R.S.C., 1985, c. C-34); Criminal Code (R.S.C., 1985, c. C-46), Sections 394, 396; Canada Labour Code (R.S.C., 1985, c. L-2), Sections 125.3, 137.2; Canada Business Corporations Act (R.S.C., 1985, c. C-44); Energy Monitoring Act (R.S.C., 1985, c. E-8), Section 5; Extractive Sector Transparency Measures Act (S.C. 2014, c.39, Section 376); Canada National Parks Act (S.C. 2000, c. 32), Section 41.4; National Energy Board Act (R.S.C., 1985, c. N-7); Nuclear Safety and Control Act (S.C. 1997, c. 9) and Uranium Mines and Mills Regulations (SOR/2000-206); Canadian Environmental Protection Act (S.C. 1999, c. 33); Fisheries Act (R.S.C., 1985, c. F-14); An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts (S.C. 2019, c. 28); Oceans Act (S.C. 1996, c.31), Section 20; Migratory Birds Convention Act (S.C. 1994, c. 22); Federal Real Property and Federal Immovables Act (S.C. 1991, c. 50) and Public Lands Mineral Regulations (SOR/96-13); Territorial Lands Act (R.S.C., 1985, c. T-7), Section 12; Canada Petroleum Resources Act (R.S.C., 1985, c. 36 (2nd Supp.)).

18 For a practical summary, see UNCTAD, ‘Case Studies in FDI: How to Attract and Benefit from FDI in Mining – Lessons from Canada and Chile’, 2011, 31, It is also noteworthy that the mining of uranium exceptionally falls within the purview of the federal government, for reasons of national security: the jurisdiction to regulate mining of uranium forms part of a broader power to legislate for the ‘peace, order and good government’ under Section 91 of the Constitution Act, 1867. See also Erik Richer La Flèche, David Massé and Jennifer Honeyman, ‘Canada’, in Erik Richer La Flèche (ed.), The Mining Law Review (6th ed., 2017), 45.

19 The Constitution Act, 1982, Section 35.

20 See, e.g., Taku River Tlingit First Nation v. British Columbia, [2004] 3 SCR 550, 2004 SCC 74; Quebec (Attorney General) v. Moses, [2010] 1 SCR 557, 2010 SCC 17.

21 Natural Resources Canada, ‘Non-Resident Ownership Policy in the Uranium Mining Sector’ (1987), Yet the government may also depart from this requirement in certain cases, as it did in 2015 when it allowed Australia’s Paladin Energy Ltd a majority ownership of a uranium mine in Newfoundland and Labrador. See The Globe and Mail, ‘More takeovers seen in uranium sector after Ottawa makes rare policy move’, 15 May 2018,

22 Canada–European Union Comprehensive Economic Trade Agreement (CETA), Annex I, Reservation I-C-4. See also Canada–Peru BIT (2006), Annex I, I-C-20; Canada–Jordan BIT (2009), Annex I, Section 15; Canada–Tanzania BIT (2013), Annex I, Section 14; Canada–Côte d’Ivoire BIT (2014), Annex I, Section 14; Canada–Mali BIT (2014), Annex I, Section 14; Canada–Serbia BIT (2014), Annex I, Section 14.

23 Raphael J Heffron, ‘Mining Disputes’, in Maxi Scherer (ed.), International Arbitration in the Energy Sector (OUP, 2018), 6.17.

24 As illustrated, again, by International Centre for Settlement of Investment Disputes (ICSID) Caseload Statistics, 2020–2, 12,

25 See, e.g., Mobil Investments and Murphy Oil v. Canada (I), ICSID Case No. ARB(AF)/07/4; St. Marys VCNA, LLC v. Canada (UNCITRAL 1976); Clayton/Bilcon v. Canada, PCA Case No. 2009-04; Mobil Investments Canada Inc. v. Canada (II), ICSID Case No. ARB/15/6; Westmoreland Mining Holdings LLC v. Canada (II), ICSID Case No. UNCT/20/3.

26 See, e.g., Encana v. Ecuador, LCIA Case No. UN3481, UNCITRAL; Glamis Gold v. USA, UNCITRAL; Vannessa Ventures v. Venezuela, ICSID Case No. ARB(AF)/04/6; Nova Scotia Power v. Venezuela (I), UNCITRAL; Gold Reserve v. Venezuela, ICSID Case No. ARB(AF)/09/1; Copper Mesa v. Ecuador, PCA Case No. 2012-2; Crystallex v. Venezuela, ICSID Case No. ARB(AF)/11/2; Khan Resources v. Mongolia, PCA Case No. 2011-09; Nova Scotia Power v. Venezuela (II), ICSID Case No. ARB(AF)/11/1; Rusoro Mining v. Venezuela, ICSID Case No. ARB(AF)/12/5; Stans Energy v. Kyrgyzstan (I); Bear Creek Mining v. Peru, ICSID Case No. ARB/14/21; EuroGas and Belmont v. Slovakia, ICSID Case No. ARB/14/14; World Wide Minerals v. Republic of Kazakhstan, Case 2 (UNCITRAL 1976).

27 Crystallex v. Venezuela, ICSID Case No. ARB(AF)/11/2, Award, 4 April 2016, paras. 6–8.

28 ibid., paras. 623, 673, 675.

29 ibid., paras. 764, 765, 769.

30 ibid., para. 916.

31 ibid., para. 882.

32 ibid., paras. 883, 884, 901.

33 ibid., para. 883.

34 International Mineral Valuation Committee, ‘International Mineral Property Valuation Standards Template’ (3rd ed., 2018), 1,

35 Henry G Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes: Law and Practice (OUP, 2017), 20.05.

36 See, e.g., Gold Reserve Inc. v. Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014, paras. 780, 831; Quiborax v. Bolivia, ICSID Case No. ARB/06/2, Award, 16 September 2015, paras. 393, 394.

37 Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on the Valuation of Mineral Properties (CIMVAL), ‘The CIMVAL Code for the Valuation of Mineral Properties’ (2019), Section 1.4, (the CIMVAL Code).

38 CIMVAL Code, Sections 2.3 and 4.

39 ibid., Section 2.3.

40 ibid., Section 2.9.

41 ibid., Section 2.8.

42 ibid., Section 3.3.3.

43 The CIMVAL Code is more extensively discussed in Chapter 5 of the present guide.

44 Clayton/Bilcon v. Government of Canada, UNCITRAL, Award on Jurisdiction and Liability, 17 March 2015, para. 17.

45 ibid., para. 16.

46 ibid., para. 20.

47 ibid., paras. 23, 503.

48 ibid., para. 601.

49 ibid., para. 604.

50 ibid., para. 601.

51 ibid., paras. 451, 534.

52 2018 FC 436.

53 ibid., para. 198.

54 Clayton/Bilcon v. Government of Canada, UNCITRAL, Award on Damages, 10 January 2019, para. 87.

55 ibid., para. 400. The claimant may ask Canadian courts to set aside this award.

56 ICSID Case No. UNCT/15/2. The author Eric Bédard formed part of the team at Canada’s Trade Law Bureau that defended Canada’s interests in this matter.

57 Following the passing of the tribunal’s president, the tribunal was reconstituted in accordance with the UNCITRAL Arbitration Rules (2010) and Chapter Eleven of the North American Free Trade Agreement in September 2020.

58 Theodore David Einarsson, Harold Paul Einarsson and Russell John Einarsson v. Canada,

59 The Canadian government has clearly dissociated itself with such an approach; see, e.g., Clayton/Bilcon v. Government of Canada, UNCITRAL, Award on Damages, 10 January 2019, para. 186.

60 John Southalan, Mining Law and Policy: International Perspectives (The Federation Press, 2012), 14; Henry G Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes: Law and Practice (OUP, 2017), 6.01; Dwight Newman, Mining Law of Canada, Lexis Nexis (2018), 56.

61 Ressources Strateco Inc. v. Attorney General of Quebec, 2017 QCCS 2679, para. 548. Whereas the decision was appealed (2020 QCCA 18; leave to the Supreme Court dismissed, 2020 CanLII 76222 (SCC)), that had no effect on the cited statement.

62 Silver Butte Resources Ltd. v. Esso Resources Canada Ltd., Tenajon Resources Corp. and Westmin Resources Ltd., 1994 CanLII 625 (BCSC), 10.

63 John Southalan, Mining Law and Policy: International Perspectives (The Federation Press, 2012), 14.

64 Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) [2010] 1 SCR 69, 2010 SCC 4 (CanLII), paras. 121–23.

65 2018 Dixon et al., ‘Recent Judicial Decisions of Interest to Energy Lawyers’, 56:2 Alberta Law Review (2018), 2018 CanLIIDocs 262, 503.

66 Precision Drilling Canada Limited Partnership v. Yangarra Resources Ltd., 2017 ABCA 378, paras. 3, 4.

67 ibid., para. 24.

68 ibid., para. 2.

69 ibid., paras. 41, 44.

70 Plas-Tex Canada Ltd. v. Dow Chemical of Canada Ltd., 2004 ABCA 309, referred to in Michael A Marion et al., ‘Canada’s aging oil and gas infrastructure: Who will pay? The public and private cost recovery frameworks’, 52:2 Alberta Law Review (2014), 2015 CanLIIDocs 111, 363.

71 Samuel v. Black Lake Asbestos and Chrome Co. Ltd., judgment of the Appellate Division of the Ontario Superior Court in 1920 CanLII 456 (ONCA), 271. The trial judge’s ruling was upheld by the Supreme Court of Canada. See Samuel v. Black Lake Asbestos and Chrome Co. Ltd., 62 SCR 472, 1921 CanLII 8 (SCC).

72 Samuel v. Black lake Asbestos and Chrome Co. Ltd., judgment of the Ontario Superior Court in 1920 CanLII 456 (ONCA), 274.

73 ibid., 275.

74 ibid.

75 ibid., 274.

76 ibid., 272.

77 ibid., 276.

78 Transcanada Pipelines Ltd. v. Northern and Central Gas Corp. Ltd., 1983 CanLII 1617 (ONCA).

79 Although the decision of the Nova Scotia Court of Appeal in AMCI Export Corporation v. Nova Scotia Power Incorporated, 2010 NSCA 41, does not, in the end, decisively address the legal and factual issues raised about the coal supply and purchase agreement in question, it helpfully illustrates the myriad ways in which a supplier may seek to avoid paying damages for failure to deliver.

80 Barry Barton, Canadian Law of Mining (Lexis Nexis, 2019), 920–21.

81 Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 SCR 574, 615.

82 ibid.

83 ibid., 636.

84 ibid., 608.

85 ibid., 612.

86 ibid., 641.

87 ibid., 642.

88 ibid., 671.

89 ibid., 669.

90 ibid, 675.

91 ibid., 675, 679–80.

92 ibid, 679.

93 Ontex Resources Ltd. v. Metalore Resources Ltd., 1993 CanLII 8673 (ONCA). See also Barry Barton, Canadian Law of Mining (Lexis Nexis, 2019), 917.

94 Minera Aquiline Argentina SA v. IMA Exploration Inc. and Inversiones Mineras Argentinas S.A., 2006 BCSC 1102, confirmed on appeal. See Minera Aquiline Argentina SA v. IMA Exploration Inc., 2007 BCCA 319. Leave to appeal to the Supreme Court of Canada dismissed. See 2007 CanLII 66723 (SCC).

95 ibid., para. 3.

96 ibid., para. 63.

97 ibid., para. 51.

98 ibid., paras. 55, 56.

99 ibid., paras. 20, 58.

100 ibid., para. 5.

101 ibid., para. 61.

102 ibid., para. 109.

103 ibid., paras. 109, 111.

104 ibid., para. 81.

105 ibid., para. 112.

106 ibid., paras. 148, 157.

107 ibid., paras. 158–64, 181, 200, 234, 253–69.

108 Barrick Gold Corporation v. Goldcorp Inc., 2011 ONSC 3725, paras. 4, 787. Readers nevertheless should know that the primary claim in this matter concerns ‘[B]arrick Gold Corporation alleg[ing] that Xstrata Copper Chile S.A. breached an agreement to sell Barrick a 70% interest in a Chilean mining project referred to as the El Morro Project. The 70% interest of Xstrata Copper Chile SA was instead sold to Datawave Sciences Inc, a subsidiary of New Gold Inc, pursuant to the exercise of a right of first refusal set out in a shareholders’ agreement between Datawave Sciences Inc and Xstrata Copper Chile SA.’

109 ibid., para. 788.

110 ibid., para. 790.

111 ibid., para. 791.

112 ibid. paras. 798, 803.

113 ibid. paras. 773, 778–79.

114 Shawn H T Denstedt and Ryan V Rodier, ‘What happens when developers can’t develop: Can and should resource developers be compensated when they can’t develop their assets?’, 48:2 Alberta Law Review (2010), 2010 CanLIIDocs 158, 337.

115 R v. Tener, [1985] 1 SCR 533, 1985 CanLII 76 (SCC), para. 42.

116 ibid., para. 43.

117 ibid., para. 44.

118 ibid., para. 45.

119 ibid., para. 46.

120 ibid., para. 3.

121 ibid., para. 4.

122 ibid.

123 ibid., para. 53.

124 ibid.

125 ibid., para. 59.

126 ibid., para. 60.

127 ibid.

128 ibid., para. 34.

129 Shawn H T Denstedt and Ryan V Rodier, ‘What happens when developers can’t develop: Can and should resource developers be compensated when they can’t develop their assets?’, 48:2 Alberta Law Review (2010), 2010 CanLIIDocs 158, 338.

130 The province’s trial court.

131 2020 BCSC 621.

132 ibid., para. 3.

133 ibid., para. 15.

134 ibid., para. 23.

135 ibid., para. 22.

136 ibid., para. 29.

137 ibid., para. 27.

138 ibid., para. 101.

139 ibid., para. 30.

140 ibid., para. 95.

141 2020 QCCA 18 (CanLII). Leave to appeal to the Supreme Court of Canada denied (2020 CanLII 76222 (SCC)).

142 ibid., para. 95.

143 ibid., para. 97. See also Barry Barton, Canadian Law of Mining (Lexis Nexis, 2019), 742: ‘Under the modern approach, social licence and corporate social responsibility can be seen as a matter of obtaining the conditions for project success; they are a business necessity, to avoid conflict with the broader community, will all the attendant risks of regulatory delays, interim injunctions and blockades that can wreak havoc with a project’s timetable and budget.’

144 ibid., paras. 86–87, 89.

145 2020 QCCA 18, para. 118.

146 ibid., para. 124.

147 ibid., para. 115.

148 Altius Royalty Corporation v. Alberta, 2021 ABQB 3, paras. 39, 45.

149 ICSID Case No. ARB/14/21.

150 PCA Case No. 2009-04.

151 See Nicholas J Diamond, ‘2019 in Review: International Investment Agreements and Human Rights’, Kluwer Arbitration Blog (8 February 2020).

152 See, for instance, CETA, Article 8.9(1) and Annex 8-A.

153 Shell Can. Resources Ltd. v. Easte Kootenay Assessor, Area 22, 1987 CanLII 2537 (BCSC), para. 9.

154 ibid., para. 17.

155 ibid., para. 14.

156 2013 ONSC 6864.

157 After having been denied certification (a decision confirmed on appeal in 2014 ONCA 901), a settlement was approved in 2015 ONSC 3944.

158 It remains to be seen whether this institutional insight will play any role in how Canadian courts deal with human rights arguments brought in a mining context, such as in the expected sequel to Nevsun v. Araya, 2020 SCC 5.

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