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.

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Comments on “Canadian-Based Company Sues Canada Under NAFTA, Saying That Fracking Ban Takes Away Its Expected Profits”

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22 Comments
Ninja (profile) says:

When it’s about civil liberties the Govt can just say stfu and move on but when it’s about companies and international treaties they can’t. Except maybe for motherfucking Eagles.

I say Canada should just send a big STFU and move on with the studies and evaluations.

I know first hand how corporations can simply stomp on due process and get stuff approved with high level orders instead of due process and full technical evaluation. It happens. All the time. And the only thing left for the public servant is to keep his/her hands clean by alleging “technical incompetence” (dunno if the term exists but it’s basically refusing to analyze the case due to lack of technical knowledge) even though you are fully capable of doing so but you’d eventually need to block the project due to security issues, environmental issues and others which would lead to you losing your job.

In the end we all pay the price for the corporate greed.

Anonymous Coward says:

Great idea, lets just drill, drill, drill for more natural gas without studying the very possible risk that the local water supply could be poisoned by Natural Gas as a result of fracking.

Sure, it would suck for locals to have to take baths with bottled water, but what REALLY matters is corporate profits!

And if there’s a drought in the area, nevermind that, we can still frack for natural gas even though it requires pumping thousands of gallons of water into the ground that will stay there. It’s not like areas that frack heavily despite severe droughts have already run out of water to come out of the faucets! Oh wait, I guess they have in some parts of Texas and Arizona where politicians insisted they could have both water and economic growth promised by fracking.

And nevermind that using a process that requires one to be a foreign company to sue your own government will strongly encourage the outsourcing of Canadian jobs and money to foreign businesses. After all, why start a company to frack for natural gas in Canada when you can start a company in some foreign nation and frack in Canada anyway, but with the option of suing the Canadian government when necessary?

Anonymous Coward says:

Re: Fracking - water- corporate profits

Great idea, lets just drill, drill, drill for more natural gas without studying the very possible risk that the local water supply could be poisoned by Natural Gas as a result of fracking.

This is not a problem.

The CEO of Nestle believes water is not a human right and should be privatized.

http://www.trueactivist.com/nestle-ceo-water-is-not-a-human-right-should-be-privatized/

See? No problem. Let the corporations pollute/steal/destroy the water table so they can turn around and sell you water you had no right to in the first place.

PaulT (profile) says:

Re: Re:

It’s a very real fact that the rights and welfare of ordinary citizens do damage the profits of corporations. Minimum wages, working hours restrictions, child labour laws… imagine how much more money could be made if only they were removed!

This kind of story is useful for two things – weeding out the sociopaths who truly worship money above life itself, and providing a very good example of why government is necessary to those morons who think it’s not needed.

That One Guy (profile) says:

Re: Re: Sovereignty

I disagree, it has everything to do with sovereignty, as it’s yet another instance of a private company attempting to order around the government of a country, all in the name of profits.

A loss here would mean that the government can only make laws as long as they don’t negatively affect companies within their borders, firmly placing the power of a company higher than the power of a country.

hopesnopes (profile) says:

Re: Sovereignty

All that “sovereign country stuff” is such a quaint myth they trot out for us when it suits their interests. Corporations know no borders or allegiances beyond the immediate interests of those at the top of that particular corporation. The rest of us, many of whom are forced migrants (it’s cheaper than invading and colonizing- let the desperate migrant work force come to you)adhere to some national “team” that is every bit as symbolic and mythological as the sports teams we defend & identify with with such vengeance. As if it represented US. PS, I appreciate your comments.

Anon says:

Why?

What is the basis of this suit? As I understood NAFTA, they simply could not treat foreign and local suppliers differently. If a law applied to a US company, the same had to apply to a Canadian company – no preferential treatment.

There’s no obvious comparison between banning fracking and a milk or cheese marketing board. We’re not subsidizing one local supplier at the expense of otehrs with fracking.

out_of_the_blue says:

Torporate coup was getting those "trade agreements" passed.

No matter how often “conservatives” and “libertarians” say that “free trade” is making us all prosperous, in fact it’s just enriching the 1% at expense of 99%. UK/US industry has been hollowed out, some factories literally shipped to China for slave labor. That’s as The Rich want, just increases their take, they’ve no loyalty to any country, don’t even have an interest in gadgetry except as means of control.

This is just one of the more blatant thefts enabled by ongoing corporatism / fascism. They’ve stolen national sovreignty and made this deliberate provision to enable getting unearned money.

Oh, and fracking is poisoning groundwater everywhere it’s used, which is desired by the corporations that are soon going to monopolize water. Just EVIL all around.

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