NAFTA

The North American Free Trade Agreement (NAFTA) was comprised of Canada, Mexico and the United States. It came into effect in 1994 and was the first trade agreement among developed countries to include investor-state dispute settlement (ISDS) provisions.

Over 20 years later, Canada became the third most sued developed country in the world. Of the 77 known NAFTA investor-state disputes, 35 have been filed against Canada, 22 against Mexico and 20 against the US. American investors have won 11 of their cases and the US never lost a NAFTA investor dispute or paid any compensation to Canadian or Mexican companies.

Canada has paid American corporations more than US$200 million in the nine cases it has lost or settled. Besides, Canada has spent over US$65 million in legal fees, regardless of the cases’ outcome.

Most NAFTA arbitration disputes involved challenges to environmental protection or resources management that were claimed to have interfered with the profit of US corporations.

NAFTA was recently renegotiated and replaced by the US-Mexico-Canada Agreement (USMCA), which was signed on 30 November 2018. The ISDS mechanism between the US and Canada, and between Mexico and Canada has been removed – even though it is included in the TPP, to which both countries belong. New procedures replace the ISDS between the US and Mexico. Expansive rights for investors are mostly terminated. Only limited claims are allowed after exhaustion of local remedies. But the ISDS mechanism has been maintained between the two countries for claims pertaining to Mexico’s oil and gas sector.

The most well-known cases include:

Ethyl (US) vs. Canada: case settled in 1998 for US$13 million paid to the US chemical company, in compensation for the ban of the toxic gasoline additive MMT. The ban was also lifted.

Metalclad (US) vs. Mexico: US$16.2 million awarded in 2000 to the investor, a waste management corporation, for not having been granted a construction permit for a toxic waste facility.

Loewen (Canada) vs. United States: the dispute over a funeral home contract was dismissed on far-fetched procedural grounds in 2003.

Photo: Obert Madondo / CC BY-NC-SA 2.0

(March 2020)

El Economista | 20-Apr-2022
México no estableció reservas para minerales estratégicos en los tratados comerciales, afirman.
Inequality.org | 15-Apr-2022
Mexico and many other countries are facing anti-democratic corporate lawsuits like the case that pushed Khan to withdraw from international investment agreements.
La Jornada | 29-Mar-2022
Pakistán ha sido forzado por el Banco Mundial y Barrick Gold a otorgar un permiso minero en contra de su voluntad soberana. México debe poner especial atención a este caso por la demanda en su contra de la minera estadunidense Odyssey Marine Exploration.
Inequality.org | 2-Mar-2022
In the Gulf of Ulloa, a US treasure-hunting company turned seabed mining outfit poses a dire risk to the environment.
CIEL | 25-Feb-2022
The ICSID announced their rationale for a decision to reject a non-disputing party submission (amicus curiae) filed by the Center for International Environmental Law (CIEL).
Reuters | 23-Feb-2022
Monterra Energy plans to pursue legal action against Mexico and seek damages of about $667 million for the "unlawful" closure of its Tuxpan fuel imports terminal in the Mexican state of Veracruz for five months.
CCPA | 22-Feb-2022
Koch claims that Ontario’s abrupt cancellation of its cap-and-trade system in 2018 violated the NAFTA Chapter 11 minimum standard of treatment and expropriation clauses.
Radio-Canada | 11-Feb-2022
Après l’entreprise TC Énergie, c’est maintenant le gouvernement albertain qui soumet une demande d’arbitrage en vertu de l’Accord de libre-échange nord-américain (ALENA).
Alberta Politics | 10-Feb-2022
Alberta bid to recover $1.3-billion loss from KXL shutdown is politically motivated and unlikely to succeed
Reuters | 10-Feb-2022
The Canadian province of Alberta formally initiated a trade challenge to recover its investment in the Keystone XL oil pipeline, which was scrapped in 2021 after the United States cancelled a key permit.