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OTTAWA—All levels of government in Canada are increasingly being targeted by investors for alleged breaches of Chapter 11, NAFTA’s investment chapter, says an analysis released today by the Canadian Centre for Policy Alternatives (CCPA).
According to the analysis, by CCPA Senior Trade Researcher Scott Sinclair, as of October 2010, 43% of the known 66 claims under Chapter 11 were made by foreign investors against Canada.
“The trend over the last five years is alarming. More than half the claims (54%) against Canada since NAFTA came into force over 15 years ago, were initiated during this time period,” Sinclair says. “This trend 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.”
The analysis notes that even though NAFTA was signed by the federal government, many of the Chapter 11 challenges involve provincial government resource management and environmental protection measures.
“Ottawa’s decision this summer to pay Abitibi Bowater’s $130 million to settle its NAFTA chapter 11 claim is a particular concern,” says Sinclair. “The federal government compensated the investor for the loss of its water and timber rights in Newfoundland and Labrador, but such rights have never been considered compensable under Canadian law.”
The known investor-state claims as of October 1, 2010 include 28 against Canada, 19 against the U.S., and 19 against Mexico.
Canada has already paid out NAFTA damages totaling $CAD157 million and incurred tens of millions more in legal costs.
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