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)

The Guardian | 1-Feb-2024
Local fishers helped halt underwater mining off Baja California’s coast in 2018. But then an obscure international legal process was put into motion.
Argentina Mejor sin TLC | 12-Jan-2024
El 2023 fue el año más virulento en cuanto a demandas inversor-Estado (ISDS) contra países de América Latina y el Caribe, con más de 30 demandas en total. A su vez, la región fue la más demandada a nivel global y el país que más litigios enfrentó fue México.
IRIS | 18-Dec-2023
En février 2023, l’entreprise responsable du défunt projet d’exportation de gaz naturel liquéfié à Saguenay a déposé une poursuite en arbitrage international contre le Canada afin de réclamer des dommages et intérêts de 20 milliards de dollars.
Canada’s National Observer | 15-Dec-2023
A company launched a record-breaking NAFTA lawsuit against Canada — confirming the dire threat that investor-state dispute settlement (ISDS) poses to bold climate action.
Inter Press Service | 2-Nov-2023
Governments the world over are worried about investor-state dispute settlement (ISDS) rules. These allow foreign investors to sue them for billions over new laws or policies reducing their profits.
Milenio | 7-Sep-2023
Buscarán recuperar 178 mdd en daños que sufridos debido al incumplimiento por parte de México de sus obligaciones bajo el TLCAN.
GlobalNewswire | 7-Sep-2023
Silver Bull Resources Inc. has secured funding for its international arbitration proceedings against Mexico under the USMCA and NAFTA.
La Jornada | 31-Aug-2023
Cuando funcionarios del gobierno de Peña Nieto negociaron el T-MEC con Canadá y Estados Unidos, dejaron a la 4T una bomba de tiempo que ya ha estallado.
Mexico Daily Post | 21-Aug-2023
According to the Ministry of Economy, from 1997 to 2022, 23 lawsuits were concluded against Mexico, where more than 3.362 million dollars were claimed as compensation, within the framework of NAFTA and various investment agreements.
Aporrea | 10-Aug-2023
18 nuevas demandas contra Estados latinoamericanos en 2023. A paso redoblado, grandes grupos empresariales internacionales continúan su ofensiva contra los Estados latinoamericanos y caribeños exigiendo pagos multimillonarios en concepto de indemnizaciones.