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)

iPolitics | 16-Apr-2021
NAFTA-investor lawsuits have cost Canadian taxpayers more than $376 million over the last 25 years, and could cost even more in the years ahead.
CCPA | 15-Apr-2021
The removal of investor–state dispute settlement (ISDS) from the renegotiated NAFTA was a critical victory but Canada, the US and Mexico continue to be enmeshed in an extensive web of bilateral and regional accords containing ISDS.
El Sol de México | 9-Apr-2021
Doups Holdings y Sepadeve International dicen que el gobierno capitalino violó las reglas del tratado y afectó sus inversiones.
La Jornada | 8-Apr-2021
Las obligaciones de los Estados en los TBI. ¿Qué implica «compensar» a las empresas cuando las regulaciones o políticas en favor del interés público y nacional afectan sus ganancias esperadas?
El Economista | 6-Apr-2021
Las denuncias no solo involucran al sector energético sino también al sector de telecomunicaciones, farmacéutica, alimentos y electrónica; critican que cada vez haya más obstáculos de acceso al mercado que son contrarios a los compromisos asumidos en el acuerdo.
El Economista | 5-Mar-2021
El caso se da en el marco del Capítulo 11 de este acuerdo pues involucra inversiones establecidas o adquiridas mientras aún estaba en vigencia.
Jacobin | 5-Mar-2021
Free-trade agreements enable companies to sue governments if they interfere with profit-making activities, no matter how destructive. These trade deals put us in an antidemocratic straitjacket — it’s time we got rid of them.
NTR | 3-Mar-2021
La minera canadiense First Majestic Silver inició una solicitud de arbitraje internacional bajo el Tratado de Libre Comercio de América del Norte (TLCAN) contra el Gobierno de México, informó la compañía, que mantiene una disputa fiscal con las autoridades del País.
MRT | 3-Mar-2021
Canadian mining company First Majestic Silver Corp submitted a request for arbitration based on NAFTA, due to the tax debt and its differences with the Mexican government.
West Law | 8-Feb-2021
Alberta’s Premier said that the Canadian province, which has an equity in the now-canceled Keystone XL pipeline, may seek compensation under investor-protection provisions still in effect under NAFTA

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