Canada

A Nafta Battleground on the Shores of Canada

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Nafta marked the first time such a provision was used between developed countries like the United States and Canada, which have robust legal systems. Supporters argued that it was important in case companies had problems in Mexico and to create a precedent for future pacts.

The scope of investor-state arbitration cases has expanded in recent years to provide broader protection for investors, including against “indirect expropriation” — when new regulations are passed that damage a company’s business — and unfair or discriminatory treatment based on nationality.

It was the fair treatment provision that Bilcon accused Canada of violating. The company said that it had been subjected it to a stricter review than Canadian-owned projects and that the review had focused on considerations not mandated by Canadian law. In its complaint, Bilcon claimed that Nova Scotia had wooed its business, even flying a company representative around to see potential sites in a government helicopter.

Gregory Nash, a lawyer for the family who owns Bilcon, said the case was about Canada’s treatment of good faith investors who had been invited to Nova Scotia.

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“Nafta allows decisions to be made by people we’ve never seen in places we’ve never heard of that directly affect us,” said Mr. Stanton. “We have no say in it.” Credit Stephanie Foden for The New York Times

“They have been treated shamefully,” he said, “in a manner that is unbecoming of Canada’s reputation as a reliable jurisdiction in which to do business.”

Some in the community agreed. David and Linda Graham, who live 10 miles north of Mr. Stanton, on the other side of the proposed quarry, said they looked favorably on the roughly 30 jobs the project would have created in an area that is losing population.

The conflict divided the community. Supporters and opponents erected signs and circulated dueling petitions, and one man spit in Ms. Graham’s face.

“A lot of people were mad at us for a very long time,” Mr. Graham said. “But I didn’t care. I had to leave here when I was young to get a job, and I would have loved to have been able to stay.”

In March 2015, the tribunal handed down its decision in favor of Bilcon. Two of the tribunal’s three members agreed that the Canadian government had been unfair, encouraging Bilcon to engage in an approval process that cost millions of dollars but was “unwinnable from the outset.”

The third arbiter, Donald McRae, said Canada had the right to reject such a potentially damaging project and called the ruling “a remarkable step backwards in environmental protection.”

For critics, the Bilcon case is a symbol of how Nafta gives the private sector discretion over government decisions. While Nafta tribunals cannot alter a country’s laws, they can force a government to pay significant sums of money in compensation. The tribunals are made up of three lawyers — one chosen by the country being sued, another by the company, and those two together choose a third.

Robert Stumberg, a professor at Georgetown Law, said the rulings in the cases can be arbitrary. “Every case,” he said, “is like rolling the dice.”

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Wendy Pettit

Wendy Pettit is a writer for NYT and writes for other publications on her spare time. She lives in Chicago with her husband and her dog Zuko.

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