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NEWS: St. Mary’s Cement launches $275 million NAFTA challenge due to cancelled quarry

The Toronto Star reports that, “A Brazilian corporation is alleging its bid to build a massive quarry (for aggregate to make concrete) outside Hamilton was scuttled by the (provincial) Liberal government for political reasons. In a $275 million lawsuit against the federal government — filed under the North American Free Trade Agreement — St. Marys Cement (SMC) charges the province intervened last year to help Grits living nearby (in the former town of Flamborough).”

St.Mary’s Cement can launch this NAFTA challenge against Canada because it is “owned and controlled” by St. Mary’s VCNA, a Delaware-based company.

“In April 2010, then minister of municipal affairs and housing Jim Bradley invoked a rare minister’s zoning order to prevent the planned excavation of amabel dolostone, a durable aggregate material used to make concrete, at the 158-hectare site. Bradley said…he acted…due to the potential harm from the quarry to groundwater that feeds wells, wetlands and streams. ‘Water supply was a very, very important component of this. The local municipalities were opposed to it. Local citizens were opposed to it and it was done on that basis. It was extremely unpopular locally,’ he said.”

In a 15-page claim, the company claims it is the “victim of…unfair behaviour.”

Osgoode Hall Law School professor Gus Van Harten recently wrote in the Hamilton Spectator, “The controversy over the Carlisle quarry has gone global, illustrating how Ontario and Ontarians can be the victims of flaws in a trade deal. St. Mary’s Cement is threatening Canada under NAFTA Chapter 11 because Ontario took steps to reconsider the aggregate quarry it wanted to excavate on about 67 hectares at the 11th Concession and Milburough Line.” Van Harten says that groups must “now blow the whistle on how investor-arbitration can put unfair constraints on democracy.”

In his critique of Chapter 11, Van Harten writes, “Foreign investors, like Canadian investors and the rest of us, were bound by the decisions of Ontario courts, subject to Ontario legislature. The decisions were final, as they should be in a constitutional democracy based on the rule of law and the principle of independent courts. But the arbitration process under NAFTA Chapter 11, and many other trade deals, gives foreign investors a trump card. If a government rethinks a project for environmental or health reasons, foreign investors can sue for very generous compensation. This includes rights to compensation that do not exist in Canadian law out of respect for democratic choice and responsive regulation. Worse, the lawsuits are not resolved in an international court. They are resolved by private arbitrators who do not have the safeguards of independence that judges enjoy.”

He adds, “More importantly, Canada must stop signing trade deals that allow for investor-state arbitration. If Canadian companies need these protections abroad, they can negotiate them directly in their contracts with foreign governments. No major deal in a developing country would go through today without an elaborate contract that includes its own dispute settlement provisions. For Canadians, the biggest worry right now is the Canada-Europe trade deal under negotiation by the Harper government. If signed, the deal will extend these NAFTA privileges to European companies with major interests in the water sector, for example. The deal would also likely allow U.S. investors to sue for provincial decisions that are now somewhat protected under NAFTA.”

The Toronto Star article is at http://www.thestar.com/news/canada/politics/article/1037616–cement-company-seeks-275m-in-compensation-over-scuttled-quarry. Van Harten’s full op-ed can be read at http://www.thespec.com/opinion/columns/article/577718–the-carlisle-quarry-and-nafta.
The claim from the company can be read on the Department of Foreign Affairs and International Trade website at http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/St_Marys_VCNA_LLC_vs_Govt_of_Canada-Notice_of_Intent.pdf.

For Council of Canadians commentary on Chapter 11, please see http://canadians.org/NAFTA, and specifically http://canadians.org/action/2011/AbitibiBowater.html, http://canadians.org/trade/documents/NAFTA-chapter11.pdf and http://canadians.org/blog/?p=2848.

In Ontario, the Council of Canadians is opposing the gravel quarry proposed in Melancthon (about 100 kilometres north of Toronto), http://canadians.org/campaignblog/?p=7944. We have also expressed concern about the Wawa gravel quarry on Lake Superior, http://canadians.org/campaignblog/?p=1544 and the proposed Nelson Aggregates gravel quarry at Mount Nemo near Burlington, http://canadians.org/campaignblog/?p=5903. In October 2008, the Environmental Commissioner of Ontario highlighted in his annual report the damage done by gravel extraction to aquifers, http://canadians.org/campaignblog/?p=1933. In Alberta, our Red Deer chapter was part of a successful campaign to stop the approval of a gravel quarry on an alluvial aquifer, http://canadians.org/campaignblog/?p=4680.