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NEWS: Panel rules against Adams mine NAFTA challenge

The Globe and Mail reports, “A U.S. businessman (Vito Gallo) involved in an abandoned project to throw Toronto’s garbage into a disused Northern Ontario mine (the Adams mine) has lost a bid to extract more than $350-million in compensation out of the Canadian government under a controversial clause of the North American free-trade agreement.”

“Mr. Gallo challenged the Ontario government’s ban on using the former iron mine as a landfill (which had cited the danger of pollutants leaking into the water supply), launching a case under NAFTA’s Chapter 11, a clause that allows foreign investors to sue governments before a special panel of arbitrators.”

“The government argued that Mr. Gallo’s NAFTA claim should be thrown out because he was not really an investor, having paid nothing for his (single) share of what was otherwise a Canadian company.”

“Now, a three-member panel of arbitrators has tossed out Mr. Gallo’s case, siding with Canadian government lawyers who argued that he could not prove he was an investor in the controversial Adams Mine project at the time the Ontario government passed a law to scrap it.”

“Some lawyers who follow NAFTA cases say this and other wins for Ottawa show that warnings from anti-free-trade activists that the controversial Chapter 11 provisions would be open to abuse have not come true.”

“Toronto lawyer Lawrence Herman, a partner with Cassels Brock & Blackwell LLP and an expert in international arbitration, said the decision shows that arbitration panels will not put up with attempts by domestic investors to manufacture a NAFTA challenge. …(Herman added) most of the claims made against Canada since NAFTA’s inception, and all of those made against the United States, have either been thrown out or abandoned. …Mr. Herman said that in cases that didn’t settle before a ruling, Canada has only actually been ordered by NAFTA tribunals to pay investors a total of about $7-million, out of hundreds of millions of dollars in total prospective claims.”

But, “(Osgoode Hall law school professor Gus Van Harten) noted that Canadian governments are still vulnerable to pressure from U.S. investors who threaten to use NAFTA to demand compensation for environmental or other legislation that conflicts with their interests. …I think to suggest that this case alleviates wider concerns about the structure of NAFTA and how NAFTA can be used in more serious cases is totally far-fetched.”