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The U.S. has emerged victorious in the $15 billion arbitration case brought by TC Energy over the cancellation of the Keystone pipeline, with an international tribunal dismissing the claims on jurisdictional grounds.

In an award issued Friday, the tribunal, composed of presiding arbitrator Alexis Mourre and wing arbitrators Henri C. Alvarez and John R. Crook, accepted a jurisdictional objection lodged by the U.S. Alvarez, the arbitrator appointed by TC Energy, dissented.

US Wins $15B Keystone Cancellation Case : Tribunal Dismisses Claims

The tribunal concluded that it lacked jurisdiction because the underlying trade deal, the North American Free Trade Agreement (NAFTA), had terminated when the permit for the Keystone project was revoked by the Biden administration in early 2021. NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA) in mid-2020.

Although the award had not been made public by Monday morning, a TC Energy spokesperson confirmed the news in an email to Law360.

"TC Energy is disappointed that the tribunal hearing the company's claim to recover more than $15 billion in damages resulting from the revocation on Jan. 20, 2021, of the presidential permit for the Keystone XL Project has determined in a jurisdictional ruling that the claim cannot proceed," the company wrote in an email.

TC Energy's Reaction

"We are both disappointed and frustrated with the tribunal's decision to deny our right to bring a legacy NAFTA claim," added Patrick Keys, TC Energy's executive vice president and general counsel. "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."

TC Energy filed the case in late 2021 after Biden, on his first day as president, canceled the presidential permit that Donald Trump's administration had granted the company to construct the controversial Keystone XL pipeline.

Background of the Keystone XL Pipeline

The pipeline, designed to run from Alberta, Canada, to Nebraska, had faced opposition from environmental groups, land use groups, and Native American tribal entities for years.

But the case against the United States was hardly a surprise. After the administration of former President Barack Obama nixed the project in 2015, TransCanada, as TC Energy was then known, filed a claim under NAFTA seeking more than $15 billion in damages. The claim was dropped once Trump revived the project.

TC Energy is represented by Sidley Austin LLP. The federal government is represented by the U.S. Department of State's Office of International Claims and Investment Disputes.

US Wins $15B Keystone Cancellation Case : Legal Representation

Sidley Austin LLP represented TC Energy in the arbitration case. The federal government's defense was managed by the U.S. Department of State's Office of International Claims and Investment Disputes.