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NAFTA investor-state challenge by Chemtura

Embassy Magazine has recently reported on three NAFTA challenges – the Chemtura challenge that is currently underway, and possible challenges by Dow Chemical and the makers of Bisphenol A.

“(US chemical company) Chemtura is trying to recoup more than $100 million in future lost profits following Canada’s move to restrict the use of Lindane as a pesticide seed treatment.”

“Ottawa has responded fiercely to Chemtura’s claim. In legal papers filed last autumn, the feds grouse that the U.S. company is trying to hold Canadian taxpayers responsible for the fact ‘that it can no longer profit from the sale of a toxic chemical that has been internationally banned based on demonstrated health and environmental concerns.’ Canada is asking arbitrators to dismiss the case, and to hold Chemtura liable for the millions of dollars that the government will spend to defend the arbitration claim.”

“Ultimately, it falls to three arbitrators to decide whether Canada denied Chemtura certain legal and due-process protections promised in the NAFTA. The arbitration tribunal will hear oral arguments in the dispute later this year. However, at the insistence of Chemtura, these hearings will be closed to the public and the media.”

Orlando Silva, a partner at McCarthy Tetrault says that “a successful Chemtura result could open the floodgatesto more of these NAFTA arbitrations.”

“A few months ago, Embassy revealed details of a legal threat made by Dow chemical company. The U.S. firm warned that a Quebec ban on the use of lawn-care pesticides could breach protections contained in the North American Free Trade Agreement.”

“A multi-million dollar lawsuit against the federal government appeared to be in the offing—with Dow prepared to accuse Canada of ‘unfair’ and ‘expropriative’ treatment of its long-standing investments in the pesticides market.”

“Under NAFTA rules, Dow had to notify Canada of its intent to launch a claim under Chapter 11 of NAFTA, and then wait 90 days before moving forward with that lawsuit. The 90-day window has long since elapsed, but there have been no further movements by Dow. When last contacted, the company said it had taken no formal decision to move forward.”

“Some observers suspect that the threats targeted at Quebec’s more stringent pesticides regulation are merely a stalking horse. In this theory, the real battle is in Ontario, where a similar tightening of regulations is underway—threatening a much larger chunk of Dow’s Canadian business.”

“When Dow’s threatened NAFTA suit became public last autumn, speculation mounted as to whether the makers of Bisphenol A (BPA), a controversial substance used widely in food and drink packaging, might pursue its own NAFTA compensation claim if health regulators introduce new restrictions on BPA use.”

The Council of Canadians is tracking these and other NAFTA cases (notably by AbitibiBowater, Bilcon, Exxon-Murphy Oil, and Centurion), looking for opportunities to intervene both politically and legally, and using these cases as arguments as to why NAFTA – particularly the Chapter 11 investor-state clause – should be renegotiated.

Thank you to Bruce Campbell of the Canadian Centre for Policy Alternatives for sharing this article with us.

The full article can be read at