NAFTA Tribunal: Canada, U.S. give formal support to IISD bid for unprecedented intervener status

Canadian NGO would be first to intervene in secretive Chapter 11 hearings; major environmental consequences at stake

WINNIPEG — IISD President David Runnalls and trade and environment law expert Howard Mann are available for interviews. Please call 416-538-8712 to schedule a time.

For the first time, the governments of Canada and the United States have formally supported the right of an environmental non-governmental organization-the International Institute for Sustainable Development-to intervene in a major trade law case. If successful, the Canadian-based Institute will be the first NGO ever to intervene in the so far secretive but environmentally critical NAFTA Chapter 11 proceedings.

In documents submitted on November 10 to the NAFTA Tribunal hearing the case of Methanex vs. the United States, Canada supported IISD's August 26 petition to present an amicus curiae (friend of the court) brief. The U.S. government also formally supported IISD's petition, and that of a U.S.-based NGO, EarthJustice.

The arbitration Tribunal, convened under the rules of NAFTA and the United Nations Centre for International Trade Law, is expected to render a final decision later this month.

IISD wants to intervene for two reasons:

• The Methanex dispute has huge environmental implications. The Canadian company is suing the U.S. over a Californian ban on the gasoline additive MTBE , a suspected human carcinogen. Methanex argues that since the ban would hurt its business (it produces methane which is then turned into MTBE) it amounts to expropriation, and the company should be compensated roughly CDN $1.6 billion. If successful, Methanex will set a precedent that will plague North American environmental regulators for years to come, potentially forcing them to pay polluters to stop polluting. IISD intends to put forward interpretations of NAFTA's Chapter 11 that will not lead to such results.
• The process for tribunals held under Chapter 11 provisions has been highly secretive up to now. "Friend of the court" status for IISD would start to open that process to public input and scrutiny.

Due to the Tribunal's confidentiality provisions, the Canadian government documents supporting IISD, submitted November 10, are still not available to the public.

NAFTA's Chapter 11, designed to protect foreign investors from expropriation and other unfair treatment, has been invoked against environmental regulations in several recent cases:

• On November 13, a tribunal decided that Canada's export ban on carcinogenic PCB wastes unfairly hurt an American investor. The investor was seeking damages of CDN $31 million. The amount of the award has not yet been decided.
• In September of this year, another tribunal found the Mexican government had unfairly treated a U.S. company by not allowing it to set up a hazardous waste treatment plant in an area of ecological significance, and awarded the company CDN $29 million.
• In 1998, Canada withdrew a ban on MMT , another controversial gasoline additive suspected of having neurotoxic properties, and paid CDN $20 million in damages to Ethyl Corporation after it initiated a Chapter 11 case.

Said IISD President David Runnalls: "We are delighted that the government of Canada has taken this unprecedented stand to support our petition for a voice at the Tribunal. It shows that they appreciate both the critical environmental importance of this case, and the urgent need to pry open the closed doors of NAFTA's Chapter 11."