OTTAWA -- Two U.S. oil companies have won their complaint against the province of Newfoundland and Labrador, which they challenged under a provision of the North American Free Trade Agreement.

Unofficial reports from a U.S. website broke the news Friday, saying a NAFTA panel ruled 2-1 on May 22 in favour of Exxon Mobil Oil and Murphy Oil, which complained about Newfoundland's requirement for offshore research spending.

The panel found that the obligations imposed on the oil firms by the province breached Article 1106 of NAFTA prohibiting governments from applying performance requirements as conditions of investment.

A Canadian trade official confirmed that Canada had lost the case, which dates back to 2007.

``Our government is disappointed by the tribunal's ruling,'' said Me'shel Gulliver Belanger, a spokesperson for the department of international trade in Ottawa.

``The ruling is extremely technical and requires careful review. We are currently assessing the final decision to determine the best way forward.''

The panel is seeking additional information before assessing a penalty, but the parties originally sought $50 million in compensation.

Lawrence Herman, a trade lawyer with Cassels Brock, said the ruling was not an ``unqualified victory'' for the oil companies since the tribunal apparently rejected a second claim that the firms were denied fair and equal treatment.

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