NAFTA lawsuit against Quebec fracking moratorium proves environmental threat of China, EU investment deals

Council of Canadians news release November 16, 2012 

Ottawa – The Council of Canadians is renewing calls that the Harper government tear up its recently concluded investment treaty with China, and that it cease negotiating excessive corporate rights into the Canada-EU free trade deal, in light of a new NAFTA investor lawsuit against a moratorium on hydraulic fracturing (fracking) in the province of Quebec.

“It is obscene that NAFTA and other investor rights pacts give companies like Lone Pine the ability to claim lost future profits from completely legitimate environmental policies that treat all companies the same, no matter where they are based,” says Emma Lui, water campaigner with the Council of Canadians. “This isn’t expropriation – it’s corporate extortion. Why are we, the public, paying the price for sober second thoughts about fracking? Communities have a right to say ‘no’ to fracking projects that could contaminate their drinking water.”

The Council says the dispute proves the Harper government is misleading Canadians when it claims there is no environmental threat from the Canada-China Foreign Investment Protection and Promotion Agreement (FIPA) because it shows how vulnerable cancellations or delays to controversial oil and gas projects are to unnecessary corporate lawsuits outside of Canadian courts. Under the investor-state dispute settlement regime, foreign companies can take disputes with government policy outside the national court system to private tribunals where paid arbitrators have the authority to hand out multi-million or even multi-billion dollar fines against governments.

Lone Pine has filed a Notice of Intent to Submit a Claim to Arbitration under the North American Free Trade Agreement (NAFTA), the first step in the investor-state dispute settlement process under most bilateral investment treaties, including the one Harper has signed but has not yet ratified with China and that his government wants to conclude this year with the European Union. The company claims that the moratorium against all oil and gas exploration activities under the Saint Lawrence River, which was adopted by the National Assembly of Quebec on June 13, 2011, is a form of indirect expropriation without compensation of the company’s potential future profits.

Even though Quebec did not breach any Canadian laws with its moratorium, and the environmental measure treats all companies equally, Lone Pine has retained Canadian law firm Bennett Jones to help convince a private arbitration panel that it is owed $250 million by the Canadian government. Bennett Jones, like other law firms specializing in investor-state arbitration, profits from both helping companies sue governments and helping governments defend against corporate lawsuits. These suits have exploded in number over the past decade, with about a third of investor-state cases relating to natural resources disputes.

“As the Harper government looks to increase global investment in tar sands, fracking and disputed mining projects, these investment deals essentially shield those projects from new environmental measures or any change of heart down the road,” says Stuart Trew, trade campaigner with the Council of Canadians. “I don’t remember there being a right to profit in Canadian law or the Constitution. The China FIPA should be torn up. And Harper should learn from Canada’s sad record under NAFTA that we don’t need to extend these investor guarantees to European Union companies in the CETA negotiations.”