By: Les Whittington Ottawa Bureau reporter, Published on Tue Jan 13 2015
Study charts foreign corporations’ growing use of NAFTA’s investor protections to sue governments over environmental and economic regulations.
OTTAWA—The private owner of the Detroit-Windsor bridge is suing Canada for billions under NAFTA, one of many legal cases cited in a new study on corporations’ growing use of investor protection measures to challenge the Canadian, U.S. and Mexican governments.
Michigan billionaire Matty Moroun, owner of the existing bridge connecting Windsor to Detroit, is claiming damages from Ottawa in connection with Canada’s plan to help build a second bridge linking Ontario to Michigan at Detroit.
Moroun, whose bridge company opposes the Canadian project, claims Canada’s handling of the pre-construction phase of the proposed new bridge has violated his firm’s right under NAFTA provisions to be treated no differently than a Canadian company. In an initial filing, Moroun’s company asked a NAFTA arbitration tribunal for $3.5 billion in damages from Ottawa.
In the ensuing proceedings, Canada has argued the case should be thrown out because Moroun’s company did not file a complaint within the time deadline for Chapter 11 suits, which is three years after a complainant becomes aware of an alleged rights violation. The case is still before the NAFTA dispute settlement tribunal.
It’s only one example of claims against Canada by U.S. or Mexican companies or private investors who say they have been treated unfairly by environmental, health, trade and economic regulations by governments in Canada. The claims against Ottawa for damages under the Chapter 11 investor-state dispute settlement (ISDS) mechanism in NAFTA total billions of dollars, according to the summary of cases by the Canadian Centre for Policy Alternatives (CCPA), an Ottawa think tank that has often criticized federal policies.
Canada’s experience with NAFTA investor protections has taken on a higher profile in the controversy over inclusion of a similar mechanism in the free-trade pact being finalized by Canada and the European Union. The Canada-EU deal has sparked concerns in Europe among political groups who see ISDS measures as a danger to governments’ ability to regulate on behalf of public safety, the environment, health and other priorities.
“NAFTA’s investor-state mechanism and similar investment rules in other international treaties have been rightly criticized for giving multinational corporations too much power while constraining the fundamental role of democratic governments,” says Scott Sinclair, the CCPA senior researcher who authored the study being released Wednesday.
Canadians and their elected officials should be paying more attention to the impact of investor protection measures, Sinclair says in Democracy Under Challenge: Canada and Two Decades of NAFTA’s Investor-State Dispute Settlement Mechanism.
Currently, Canada faces nine active ISDS claims challenging government measures that allegedly interfere with the expected profitability of foreign investments, the report says.
These include challenges to a ban on fracking by the Quebec government; a decision by a Canadian federal court to invalidate a pharmaceutical patent on the basis that it was not sufficiently innovative or useful; provisions to promote the rapid adoption of renewable energies; a moratorium on offshore wind projects in Lake Ontario and the decision to block a controversial mega-quarry in Nova Scotia.
The report notes Canada has already lost or settled six claims and paid out damages totaling more than $170 million.
The federal Conservative government has said critics are overstating problems associated with ISDS measures in free-trade pacts. “Investment protections have long been a core element of trade policy in Canada and Europe, and will encourage job-creating investment and economic growth on both sides of the Atlantic,” a spokesperson for International Trade Minister Ed Fast said during the debate over the Canada-EU deal.
Legal challenges by investors against national governments filed under NAFTA Chapter 11 over two decades:
Against Canada: 35
Against Mexico: 22
Against U.S.: 20