Ecojustice Blog – Healthy communities Posted on January 24, 2018 (updated: January 26, 2018)

FAQ: Why we’re helping Canada fight a NAFTA tribunal decision

Amir AttaranLawyer
Aaron WardLawyer
Sandy cove_Digby Neck_Paul Hamilton
Photo by Paul Hamilton

Ecojustice has been working with Sierra Club Canada Foundation and East Coast Environmental Law (ECELAW) to help Canada challenge a North American Free Trade Agreement (NAFTA) ruling that could force Canada to pay upwards of $500 million in damages for enforcing its own environmental laws.

And next week, we’ll finally be in court.

Below we answer some of the top questions about this case.

How did we get here?

In 2002, an American company called Bilcon applied to operate a quarry and marine terminal at Whites Point in Digby Neck, Nova Scotia. According to the project proposal, approximately 40,000 tons of basalt would be blasted, quarried, crushed, screened, washed and stockpiled for loading each week on vessels for shipment to foreign ports through the ecologically sensitive area of the Bay of Fundy — home to many species, including the endangered right whale.

Needless to say, local residents and environmental groups (like our clients) have stood in opposition to this project since it was first proposed, arguing the project’s impact to the surrounding coastal communities and environment would be too great.

An independent Joint Review Panel appointed to review the project agreed and recommended that government reject Bilcon’s project proposal. Both provincial and federal governments accepted that recommendation. But that was not the end of the saga.

After the provincial and federal governments axed Bilcon’s project, the company filed a claim under NAFTA’s chapter 11 provision — and won. The tribunal has yet to decide the exact dollar amount Canada is liable, but Bilcon claims it is north of $500 million.

You might be surprised to know that this is not the first instance Canada (and its taxpayers) have been on the hook for a NAFTA chapter 11 arbitral award. Which brings is to our next problem.

What is NAFTA’s chapter 11 provision, and why is it not good for the environment?

NAFTA’s Chapter 11 provision gives corporations the right to sue the government if any public policy or government action denies them investment or profit opportunities. This means that if a company feels like they are being treated unfairly, they can file a claim and have a NAFTA tribunal weigh in.

As you can probably tell, this is not ideal.

By allowing a foreign company the opportunity to claim injustice for being subject to our environmental laws (the same laws Canadian companies are required to follow) and demand compensation through NAFTA without first challenging that decision through Canada’s courts, we run the risk of weakening our laws’ ability to protect Canadians and the environment — and leaving taxpayers to foot the bill.

Bilcon’s claim is not the first instance where the federal government has been on the hook for international trade-related payments. Canada has been particularly vulnerable to NAFTA arbitration suits.

Since the treaty came into force, Canada has paid out nearly $220 million in NAFTA losses and settlements to U.S. investors — the federal government is responsible for paying claims, even when the company was challenging a provincial action.

Why are we intervening in this case?

To put it simply, the tribunal overstepped in a major way.

Bilcon had the opportunity to ask a Canadian court to rule on Canada’s alleged breach of federal law, but instead it went through NAFTA. The problem with this is that NAFTA tribunals are only supposed to decide questions of NAFTA law. So when the tribunal made a ruling on whether Canada was in breach of Canadian law, it stepped outside its legal expertise and its mandate.

If this decision stands, it will send a chilling message that even when the Canadian government makes good decisions to protect our environment, there’s a chance a NAFTA tribunal could swoop in, decide our environmental laws are “unfair”, and force Canada to cough up hundreds of millions of dollars — leaving Canadian taxpayers on the hook. We can’t let that happen.

This is why we are helping our clients ECELAW and Sierra Club Canada Foundation intervene in this case, and making arguments in support of Canada’s efforts to aside the tribunal’s decision as invalid.

Our clients have been fighting this project since the beginning. What started as an attempt to protect one community and its surrounding environment from harm has turned into a broader fight to ensure international trade agreements do not supersede Canada’s environmental laws.

What do we hope this case will accomplish?

We need the court to send a strong message to foreign companies: They must go through Canada’s courts if they take issue with a decision made by a Canadian environmental assessment panel.

Foreign companies should not be allowed to sidestep Canada’s courts in favour of making a claim that might result in a big payday.

How can I support this case?

Each legal fight we take on requires us to put in hundreds of hours of work and organizational resources to secure the best possible outcome for the environment and our communities. The support of people like you ensures that we have the resources we need to sustain our efforts for as long as it takes to see things through.

You can support Ecojustice and our work in this case by giving a gift today or sharing information about this critical legal fight with your family and friends.

Build the case for a better earth

Thanks to the support of people like you, Ecojustice goes to court to protect what we value most — the air, land and water that sustains all life. Make your gift today and support bold litigation for a brighter environmental future.

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