Law Times

Page 4 August 20, 2018 • LAw times www.lawtimesnews.com 'Stark reminder' of sovereign risk Wind farm nixed following legal battle BY SHANNON KARI For Law Times A few days after the new Conservative govern- ment introduced legis- lation last month to kill a major wind turbine project in Prince Edward County, a lawyer for the Ministry of the Environ- ment and Climate Change was in court to defend the initial ap- proval process. The Divisional Court panel dismissed the application by a residents group for an injunction to halt construction and ruled in favour of the respondents — the province and WPD White Pines Wind Incorporated. That decision and other court rulings related to the project were rendered moot when the Urgent Priorities Act received royal assent on July 25, nine days after it was introduced. The legislation terminates the project, revokes any con- tracts between the company and related parties, extinguishes any existing proceedings and pre- vents future proceedings against the Crown. White Pines has also been ordered to decommission the project and is responsible for any liabilities that may result. In a separate move, the ministry was re-named the Ministry of the Environment, Conservation and Parks. The cancellation was part of the Conservatives' election platform and an example of the risk that private sector compa- nies face when entering into con- tracts with the public sector and there is a change in government. "It is blunt legislation," says Sean O'Neill, a partner at Mc- Carthy Tétrault LLP in Toronto and the industry group leader of the firm's power group. "It is a clear example of sov- ereign risk. It is certainly not unique, but it is a reminder of how the government can pass legislation that deprives a party of contractual rights or rem- edies," says O'Neill. "You are not dealing with a private counter- party. You are dealing with an entity that has statute-making power," he adds. WPD, a subsidiary of a Ger- man company, was originally awarded a contract in 2010 by the province. The project faced numerous court challenges in the past eight years and a smaller facility than originally planned was supposed to be operational by this fall. Eric Gillespie, who acted for the "Alliance to Protect Prince Edward County" at the Division- al Court and other proceedings, says that while the legislation was enacted quickly it should not have been a surprise to WPD. "The current government clearly stated its position on this issue during the campaign," says Gillespie, a Toronto-based liti- gator whose practice focuses on environmental issues. Gillespie says the province "took steps" because it recognized the ur- gency of the situation, since con- struction was underway. For residents' groups, it is also difficult to challenge these types of projects at tribunals and in the courts. "Judicial review is of- ten not a very useful tool. Part of the problem is that courts have interpreted legislation like the Judicial Review Procedure Act very narrowly," says Gillespie. One aspect of the litigation over the White Pines project that was successful, he notes, was that it bought some time for Prince Edward County residents until there was an election. "In the end, the legal pro- cesses did have an impact on the timing of the construction, so that when a new government came into office the project was not fully developed," he says. If the company does initiate litigation against the province over the cancellation of the proj- ect and the provisions in the leg- islation, that same judicial def- erence may be difficult to over- come, suggests Gillespie. "WPD is likely to meet the same obsta- cles our clients did," he says. Restricting its own liability is also not unusual, says Gillespie. "Governments do this on a regular basis, limiting who you can sue," he notes. Patrick Duffy, a partner at Stikeman Elliott LLP in Toronto, who acts for WPD, was unavail- able for comment about whether the company might bring any legal action against the province as a result of the cancellation of the wind project. According to O'Neill, the province appears to have crafted the statute with an eye to the possibility of litigation. "Whoever drafted it has gone through the jurisprudence and drafted it in a way to try to bul- let-proof it from any claims," he says. One example, he notes, is a section of the bill that seeks to deny any claim of expropriation. "Nothing in this Act and nothing done or not done in accordance with this Act con- stitutes an expropriation or inju- rious affection for the purposes of the Expropriations Act or otherwise at law," states s. 5(8) of the bill. There is also a precedent for voiding past contracts in the en- ergy sector. "The Electricity Act as it stands has similar provisions preventing claims," says O'Neill. A section of that legislation, enacted in 1998 when Ontario Hydro was re-structured into five separate entities, declared that any contract it had entered into with a municipality no lon- ger had any force or effect. While the province may be on solid legal ground, the new legisla- tion will be on the minds of any company seeking to make a sig- nificant investment in Ontario, O'Neill suggests. "All investors are aware of the notion of sovereign risk. This is a stark reminder of what it means," he says. LT NEWS NEWS NEWS Sean O'Neill says the recent cancellation of a wind farm project by the province is 'a reminder of how the government can pass legislation that deprives a party of contractual rights or remedies.' In-class and online programs recognized by Law Societies Executive Education to Navigate the Canadian Legal Landscape Visit Lexpert.ca to find out more In the end, the legal processes did have an impact on the timing of the construction, so that when a new government came into office the project was not fully developed. Eric Gillespie ONTARIO LAWYER'S PHONE BOOK 2018 Ontario Lawyer's Phone Book is your best connection to legal services in Ontario with more than 1,400 pages of essential legal references. You can depend on the accuracy of this trusted directory that includes the most up-to-date names, phone numbers, mailing addresses and emails so you don't have to search anywhere else. More detail and a wider scope of legal contact information for Ontario: • Over 26,800 lawyers listed • Over 8,500 law firms and corporate offices listed • Fax and telephone numbers, e-mail addresses, office locations and postal codes Includes lists of: • Federal and provincial judges • Federal courts • Ontario courts and services • Small claims courts • The Institute of Law Clerks of Ontario Order your copy today. Visit www.store.thomsonreuters.ca or call 1-800-387-5164 for a 30-day, no risk evaluation Perfectbound Published December each year On subscription $85 One time purchase $88.50 L7798-7858 Multiple copy discounts available Plus applicable taxes and shipping & handling. (prices subject to change without notice) Your instant connection to ONTARIO'S LEGAL NETWORK Untitled-3 1 2018-08-14 1:49 PM

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