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NEWS: Panel dismisses Chemtura’s NAFTA challenge

Embassy Magazine reports today that, “Earlier this month, a panel of three arbitrators dismissed claims filed by the US chemical company Chemtura under Chapter 11 of the North American Free Trade Agreement. Chemtura had sought to hold Canada liable for financial losses related to the government’s phase-out of lindane, a hazardous agricultural chemical. However, the company failed to persuade arbitrators that government regulators acted without regard for scientific evidence or due process. In addition to kicking Chemtura’s claim to the curb, arbitrators also ordered the company to reimburse Canada for $3 million in legal costs and expenses. While the feds will still be out of pocket for time devoted to defending the NAFTA lawsuit, the outcome is about as good as a government could hope for.”

As background, Embassy had reported in February that, “(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.”

Luke Eric Petersen concludes in today’s article, “In early 2009, a subsidiary of the Dow Chemical Company set in motion a similar NAFTA Chapter 11 claim. As was first revealed in these pages, Dow wants Canadian taxpayers to compensate them for losses arising out of provincial bans on cosmetic lawn pesticides. After filing its papers in 2009, Dow ostentatiously sat on its hands—perhaps to see how arbitrators chose to resolve the earlier-launched Chemtura case. …Slowly, but surely, international arbitrators are offering reassurances that NAFTA governments need not take out their chequebooks every time they introduce a new health or environmental regulation.”

Chapter 11 gives corporations the right to sue the federal government if any public policy or government action denies them investment or profit opportunities. While Petersen concludes on an optimistic note, the dismissal of this case does not mean that the NAFTA process is working. The investor-state dispute process puts public policies aimed at protecting people and the environment at risk. In fact, about 40 per cent of legal challenges to government policy under Chapter 11 have been against environmental policies. Chapter 11 also puts a chill on legitimate public policy. It makes it almost impossible to strengthen public services after they have become partially privatized. And just the threat of an expensive Chapter 11 challenge is enough to discourage federal and provincial governments from pursuing environmental or health policies that might run counter to business interests.

Today’s article is at http://www.embassymag.ca/page/view/nafta-08-25-2010.

For a listing of the NAFTA Chapter 11 cases that the Council of Canadians is tracking, please go to http://canadians.org/campaignblog/?p=3233.