Wednesday, August 25, 2010

NAFTA Chemical Case Goes Canada’s Way

(Embassy – Luke Eric Peterson)

Victory for Foreign Affairs over Chemtura may scare Dow off

The lawyers at the Department of Foreign Affairs and International Trade are not bragging about it – at least not to date – but they’ve just won an impressive victory in an $80 million-plus NAFTA lawsuit. Earlier this month, a panel of three arbitrators dismissed claims filed by the U.S. chemical company Chemtura under Chapter 11 of the North American Free Trade Agreement.

Chemtura had sought to hold Canada liable for financial losses related to the government’s phase-out of lindane, a hazardous agricultural chemical. However, the company failed to persuade arbitrators that government regulators acted without regard for scientific evidence or due process. In addition to kicking Chemtura’s claim to the curb, arbitrators also ordered the company to reimburse Canada for $3 million in legal costs and expenses.

While the feds will still be out of pocket for time devoted to defending the NAFTA lawsuit, the outcome is about as good as a government could hope for.

In fact, the victory could signal a set-back for another NAFTA claim which has been looming in the shadows. In early 2009, a subsidiary of the Dow Chemical Company set in motion a similar NAFTA Chapter 11 claim. As was first revealed in these pages, Dow wants Canadian taxpayers to compensate them for losses arising out of provincial bans on cosmetic lawn pesticides. Read more