Canadian-Based Company Sues Canada Under NAFTA, Saying That Fracking Ban Takes Away Its Expected Profits
from the it's-not-meant-to-work-like-that dept
We’ve written several posts about a growing awareness of the dangers of investor-state dispute settlement (ISDS), which lets foreign companies sue entire countries for the alleged loss of future profits. One of the most egregious examples of ISDS concerns Canada, which is being sued by Eli Lilly & Co for $500 million after refusing to grant it a couple of pharma patents. Now The Huffington Post has details about another ISDS case involving Canada:
Free trade critics say a $250-million damage suit being pursued as a result of Quebec’s moratorium on fracking is proof Canada needs to be careful in negotiating trade pacts around the world.
That’s because TPP and TAFTA/TTIP, as well as Canada’s bilateral treaty with Europe, CETA, all have ISDS clauses in them — at least as far we know, given the obsessive secrecy that surrounds their negotiation. Here’s the key issue in this latest case involving Canada:
Quebec has yet to decide whether fracking — a process to inject fluid into the ground at a high pressure in order to fracture shale rocks to release natural gas inside — can be conducted safely under the St. Lawrence.
“If a government is not even allowed to take a time out to study the impact without having to compensate a corporation, it puts a tremendous chill on a governments’ ability to regulate in the public interest,” said Ilana Solomon, director of the Sierra Club’s trade program in Washington, D.C.
That is, the company concerned is trying to pressure Quebec to lift its moratorium before the latter has had a chance to evaluate all the scientific evidence on fracking, and come to a reasoned decision. That seems to be a typical effect where ISDS clauses are in operation: with the threat of huge claims hanging over them, governments often choose to capitulate and give companies what they want, rather than risk losing before the secretive tribunals that are used to adjudicate such ISDS cases.
The fear is that both TPP and TAFTA/TTIP will cast a chill over policy making around the Pacific and across the Atlantic, as businesses take advantage of the punitive damages available to bully governments into scrapping existing or proposed regulations in key consumer areas like food, health, safety and the environment.
The present case is noteworthy for the following fact:
Lone Pine is a Calgary-based firm and would not have standing as a foreign entity to sue Canada under NAFTA [North American Free Trade Agreement], but [Lone Pine company president] Granger said it can do so because it is registered in Delaware.
The justification for ISDS is that it is designed to protect companies when they make investments in a country that is not their own, and which therefore may not offer all the protections they enjoy at home — although that’s plainly absurd when trade agreements are between nations like Canada, the US and the EU. But here we see ISDS being turned into yet another way for a local company to overturn decisions it doesn’t like — a clear perversion of the original intent of such measures.