NAFTA

The North American Free Trade Agreement (NAFTA) is 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 has become 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 seven cases it has lost and foreign investors are currently seeking over US$6 billion from the Canadian government in new disputes. 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.

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.

(March 2016)

Le Figaro | 15-Nov-2017
La société ferroviaire américaine Omnitrax a menacé de saisir le tribunal d’arbitrage prévu par l’Accord de libre-échange nord-américain (Aléna) pour régler le désaccord qui l’oppose au gouvernement canadien sur la réparation d’une voie de chemin de fer.
L’Orient le Jour | 15-Nov-2017
Une grande partie du problème tient aux traités bilatéraux et aux dispositions sur l’investissement inscrites dans les accords commerciaux plus généraux.
National Post | 15-Nov-2017
Ottawa filed a lawsuit against the owners of a broken rail line in northern Manitoba hours after the company said it would file a complaint against the federal government under the North American Free Trade Agreement.
Project Syndicate | 9-Nov-2017
Much of the problem can be traced to bilateral investment treaties and investment rules embedded within broader trade pacts.
Reuters | 4-Nov-2017
Energy firms worry the end of NAFTA could eliminate the so-called Investor State Dispute Settlement.
AFTINET | 30-Oct-2017
US Trade Representative Robert Lighthizer said that the US wants to opt out of ISDS in NAFTA, because of the risk and costs of US governments being sued by foreign corporations, and despite corporate lobby groups pushing to retain ISDS.
Expansión | 27-Oct-2017
Reconocidos expertos en economía dicen que permite a empresas extranjeras evadir los tribunales de Estados Unidos, vulnerando la soberanía del país.
Public Citizen | 27-Oct-2017
As corporate lobby rages against proposed ISDS rollback, law professors and economists say ISDS undermines rule of law and subsidizes offshoring
Public Citizen | 27-Oct-2017
Corporate lobby isolated in its strident defense of the controversial regime that was first inserted into US trade deals with NAFTA and that elevates individual corporations to equal status with nations.
NY Times | 18-Oct-2017
This far-flung peninsula in the North Atlantic seems an unlikely place for an international trade dispute. But an American company’s scuttled plans to build a quarry here have turned these quiet fishing grounds into a case study.

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