NAFTA Tribunal Issues Award in Mondev Case

Mondev is a Canadian real-estate development company. In the 1970s, a Mondev subsidiary agreed with the City of Boston and the Boston Redevelopment Authority to develop a shopping mall in Boston. A bank foreclosed on the shopping mall in 1990, and Mondev’s subsidiary later brought a lawsuit against the City and the Authority for breach of contract, among other claims. The subsidiary won in the trial court, but the Massachusetts Supreme Judicial Court reversed the judgment in 1998. Mondev then submitted its claim to arbitration against the United States under the North America Free Trade Agreement’s (NAFTA) investment chapter, seeking $50 million in damages.

In yesterday’s award, the tribunal rejected each of Mondev’s claims. It found that the decision of the Massachusetts high court was consistent with international standards of justice. It held that Massachusetts did not violate international law by making the Boston Redevelopment Authority immune from suit for interference with contractual relations. It rejected Mondev’s assertions that acts by the City of Boston and the Authority in the 1980s could violate NAFTA, which did not enter into force until 1994. And it found that Massachusetts did not discriminate against Mondev’s subsidiary on the basis of its Canadian ownership.

The members of the tribunal are Sir Ninian Stephen, Professor James R. Crawford and Judge Stephen M. Schwebel. The Office of the Legal Adviser of the Department of State represents the United States in this case.

The full text of the award is available on-line at http://www.state.gov/s/l/c3758.htm.