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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Filed Under: canada, fracking, investor-state dispute resolution, investor-state dispute settlement, investor-state disputes, isds, nafta, tafta, tpp, ttip
Companies: lone pine


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  1. identicon
    Anonymous Coward, 4 Oct 2013 @ 1:21pm

    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?

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