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Canada the biggest loser under NAFTA Chapter 11: report

A report released today by the Canadian Centre for Policy Alternatives shows that Canada has attracted 43 per cent of the 66 investor-state disputes under NAFTA’s Chapter 11. In the past five years alone, 15 new cases have been brought against Canada, which is more than half the total number of Canadian cases since NAFTA came into force 15 years ago. The report lists in detail the 66 cases, including the complaining investor, issue, NAFTA articles cited, amount claimed and status. It then makes recommendations based on these findings.

The upward trend in challenges against Canadian government policies over the past five years “reflects a growing awareness among foreign investors and corporate trade lawyers of NAFTA investment rights, and an increasing willingness to invoke them to contest public policy measures,” writes Scott Sinclair, senior researcher with the CCPA, and author of today’s report. In Canada, settlements with corporations challenging provincial and federal public policy have cost the country $157 million, not counting legal costs.

Incredibly, $130 million of that figure went to one company — AbitibiBowater, which settled with the federal government recently in a highly controversial case.

“Ottawa’s decision to settle with the investor raises serious constitutional issues,” writes Sinclair. “Although the exact terms of the settlement have not been disclosed, the large sum of money involved undoubtedly means that AbitibiBowater was compensated, to some degree, for the loss of water and timber rights on public lands. Such rights, however, are not considered compensable under Canadian law.”

Investment arbitration is increasingly controversial and contested globally. The process is so undemocratic and flawed that Chapter 11 should be removed from NAFTA outright, claims the CCPA report, which concludes:

The NAFTA investment regime was originally characterized as an exceptional remedy to be used only under extreme circumstances. It was supposedly aimed at situations where the domestic courts, specifically in the Mexican regime of that era, could not be trusted to redress valid investor concerns. Fifteen years of experience has clearly shown that the sweeping powers and protections afforded to investors by NAFTA have repeatedly been invoked in order to frustrate the legitimate exercise of governmental authority. In too many cases, those efforts have succeeded. It is now time for renewed public pressure on North American governments to address the serious threat to the rule of law and democratic governance posed by NAFTA’s Chapter 11.

To read the report, click here.