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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 Bilcon NAFTA tribunal: a clash of investor protection and sustainability-based environmental assessments
SSRN | 4-Aug-2017
The Bilcon tribunal ruling raises a number of concerns about the ability of investor protection tribunals to properly assess whether a foreign investor has been treated fairly under a domestic environmental assessment process.
Canada , environment , investor-state disputes | ISDS , NAFTA | USMCA
Oscuro capítulo del TLCAN podría ser factor decisivo para Canadá
Gestión | 25-Jul-2017
EE.UU. confirmó la semana pasada que entre sus principales objetivos en el TLCAN está la eliminación del mecanismo de resolución de controversias del capítulo 19 que Mulroney hizo tanto para preservar.
investor-state disputes | ISDS , NAFTA | USMCA
Canada blinks in face of US/Pharma pressure
Info Justice | 14-Jul-2017
The cool reasoning of the Canadian Supreme Court does not acknowledge or reference “external” pressures or the Eli Lilly v. Canada ISDS case. However, courts do not decide cases in a vacuum. This case seems to have been decided in a pressure cooker.
Canada , intellectual property , investor-state disputes | ISDS , medicines , NAFTA | USMCA , US
Small business leaders to Trump: in renegotiating NAFTA, end unfair competitive edge for multinational companies over US small businesses
Green America | 12-Jul-2017
100 small businesses: NAFTA currently privileges multinational corporations over U.S. small business unfairly under “Investor-State Dispute Settlement” preferential treatment.
investor-state disputes | ISDS , NAFTA | USMCA , US
Can NAFTA be improved? Some activists are hopeful about renegotiation
The Progressive | 4-Jul-2017
Regardless of the short-term outcome, the movement for a progressive new NAFTA will hand progressives a dynamic issue—and a mobilized base—in the 2018 and 2020 elections. The current renegotiation could set the stage for future battles, perhaps for deeper change.
investor-state disputes | ISDS , NAFTA | USMCA , US
NAFTA’s Chapter 11: Sure to be a sticking point in upcoming trade negotiations
Global Trade Mag | 30-May-2017
One of the most overlooked aspects of NAFTA is the Investor-State Dispute Settlement.
Canada , EU , investor-state disputes | ISDS , NAFTA | USMCA
Ontario coughs up $28M to wind power company
The Whig | 14-Apr-2017
The Ontario government says it has paid a $28-million award that a NAFTA tribunal ruled was owed to a wind power company over a provincial offshore wind moratorium.
Canada , energy , investor-state disputes | ISDS , NAFTA | USMCA , US
El TLCAN 2.0 es acerca del control, no del libre comercio
El Financiero | 14-Apr-2017
Un tema que no ha sido analizado a profundidad son las nuevas disposiciones que serán agregadas al texto del tratado en materia de medio ambiente, laboral, sindical, propiedad intelectual, entre otros.
CPTPP , intellectual property , investor-state disputes | ISDS , NAFTA | USMCA
Tribunal dismisses Eli Lilly’s NAFTA challenge on promise utility doctrine
Lexology | 27-Mar-2017
The Tribunal found that Eli Lilly had failed to demonstrate that the promise doctrine constitutes a fundamental or dramatic change in the utility requirement under Canadian patent law or that the promise doctrine is arbitrary and/or discriminatory.
Canada , intellectual property , investor-state disputes | ISDS , medicines , NAFTA | USMCA , US
TransCanada Keystone XL rejection lawsuit dropped - arbitrator
Reuters | 24-Mar-2017
Transcanada Corp’s legal challenge against the United States over its past rejection of Keystone XL pipeline has been dropped.
Canada , climate , energy , investor-state disputes | ISDS , NAFTA | USMCA , US