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Judge Rebuffs Challenge to NAFTA'S Chapter 11 Investor Claims Process PDF Print E-mail
Justice News
Friday, 05 August 2005 03:39
Judge Rebuffs Challenge to NAFTA'S Chapter 11 Investor Claims Process

On July 8, Ontario Superior Court Judge Sarah Pepall rejected a legal challenge to the North American Free Trade Agreement (NAFTA). According to the applicants, the case is "the first to question the lawfulness of NAFTA and takes aim at the trade deal's investment rules that empower foreign corporations to sue governments for damages for taking actions which interfere with the profitability of their investments, even where such government measures are taken entirely in the public interest." Although Judge Pepall acknowledged that Chapter 11 "lacks total transparency," "decisions lack predictability," and "[t]here is no consistent mechanism for review of the decisions of [NAFTA] tribunals," she dismissed these concerns, saying that "a treaty is a bargain," and that her role is "not to remedy unpopular provisions," but to determine whether Chapter 11 is in violation of Canada's Constitution. She held that it is not. The groups which brought the challenge (the Council of Canadians, the Canadian Union of Postal Workers, and the Charter Committee on Poverty Issues) have announced that they will ask the Ontario Court of Appeal to review Judge Pepall's ruling.
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In announcing that they intend to appeal, the groups challenging Chapter 11 have stated that they "will attempt to persuade the Appeal Court that the coercive authority of NAFTA arbitral tribunals, the secrecy that envelops their proceedings, and the very limited scope for judicial review of arbitral awards should be seen as representing a direct assault on the bedrock principles concerning the administration of justice under Canada's Constitution."

Read a news release on the Council of Canadians website, and a report from the CUPW website.

Subject: FW: NAFTA Chapter 11 ruling
Date: Fri, 5 Aug 2005 11:18:41 -0700
From: "Bob Wilson" < This e-mail address is being protected from spambots. You need JavaScript enabled to view it >

JUDGE REBUFFS CHALLENGE TO NAFTA'S CHAPTER 11 INVESTOR CLAIMS PROCESS

Triggering the court case is a claim for $195 million CAD by giant U.S.-based courier company UPS that Canada has breached Article 11 of the NAFTA by allowing Canada Post, an unfair advantage over private sector courier companies, through its denial to UPS and other foreign competitors of access to the same public infrastructure, government policies and programs that are available to Canada Post. The groups challenging Chapter 11 argue that UPS' claim could damage Canada Post's ability to deliver cost-effective services across the country, and that other Canadian laws, such as health care and environmental protection measures, could be jeopardized by allowing private corporations to bring claims for damages directly against governments before special NAFTA tribunals. Indeed, the Canadian government has already had to pay $20 million to settle a claim by U.S.-based Ethyl Corporation resulting from restrictions on the company's distribution of manganese-based fuel additives in Canada. Specifically, the groups contend that the investor claims process in Chapter 11 of the NAFTA

(1) transfers the work of Canadian courts to NAFTA arbitration tribunals, and diminishes the core powers of Canadian courts, contrary to s.96 of Canada's Constitution Act;

(2) violates the principles of Canadian constitutionalism and the rule of law by authorizing NAFTA tribunals to adjudicate Canadian constitutional principles and the Charter of Rights;

(3) infringes on the guarantees in sections 7 and 15 of the Charter of Rights relating to equality and to life, liberty, and security by adversely affecting the protection of essential public services, environmental regulations and special measures to boost employment; and

(4) breaches the right to a fair hearing under s.2(e) of the Canadian Bill of Rights.

 

Judge Pepall did not accept these arguments. She held that Chapter 11 does not transfer the work of Canadian courts to NAFTA arbitration tribunals since the NAFTA does not deal with domestic Canadian law and Canadian courts "do not adjudicate on treaty rights and attendant obligations of nations." Moreover, in Pepall's view, Chapter 11 does not violate Canadian constitutionalism and the rule of law since, while NAFTA tribunals can award damages for breach of international treaty obligations, they have "no jurisdiction to invalidate domestic laws or government practices."

With respect to Charter rights to equality and to life, liberty and security, Pepall characterized the challenge as "premature," but held that in any event, the Charter was not engaged since NAFTA arbitral tribunals had no authority to change Canada's domestic law or practices. As for the Canadian Bill of Rights, the absence of third parties such as citizen advocacy groups at NAFTA arbitration tribunal hearings was, in Pepall's view, "irrelevant" since their rights and obligations were not being determined.

In announcing that they intend to appeal, the groups challenging Chapter 11 have stated that they "will attempt to persuade the Appeal Court that the coercive authority of NAFTA arbitral tribunals, the secrecy that envelops their proceedings, and the very limited scope for judicial review of arbitral awards should be seen as representing a direct assault on the bedrock principles concerning the administration of justice under Canada's Constitution."

The more our knowledge increases, the more our ignorance unfolds. John Fitzgerald Kennedy

Last Updated on Friday, 05 August 2005 03:39
 

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