A free trade arbitration tribunal has dismissed Canadian company TC Energy‘s $15bn claim against the US government over the cancellation of its Keystone XL pipeline project.
TC Energy, the pipeline operator, had sought compensation through the mechanisms provided by the now-defunct North American Free Trade Agreement (NAFTA).
The claim was filed in 2021, following President Joe Biden’s decision to cancel the pipeline’s permit, which came into effect a year after the NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA).
The tribunal determined that it did not possess the authority to rule on whether the revocation breached NAFTA obligations.
The Keystone XL pipeline, which faced over a decade of environmental opposition and regulatory challenges, was intended to transport 830,000 barrels of oil daily from Alberta to the US Midwest.
Following the project’s cancellation, Alberta, Canada’s premier oil-producing province, also initiated a trade challenge to recuperate its nearly $950m investment in the pipeline.
TC Energy executive vice-president and general counsel Patrick Keys said: “We are both disappointed and frustrated with the Tribunal’s decision to deny our right to bring a legacy NAFTA claim.
“This ruling does not align with our expectations and views of the plain interpretation of the protections NAFTA and the USMCA were designed to offer. TC Energy was treated unfairly and inequitably in the revocation of the Permit, which was driven by political considerations.”
Last month, TC Energy’s shareholders endorsed the decision to spin off its Liquids Pipelines business into a new company, South Bow Corporation.
