Cross-border Investment Disputes on the Rise; Thorny Issues for Ottawa,
Provinces: C.D. Howe Institute

TORONTO, July 22 /CNW/ - Cross-border Investment disputes have supplanted trade disputes as the main focus of legal actions under the North American Free Trade Agreement (NAFTA), according to a study released today by the C.D. Howe Institute. In "Trend Spotting: NAFTA Disputes After Fifteen Years," author Lawrence Herman finds a growing number of these investment disputes entail challenges by American investors against Canada's provincial, as opposed to federal, laws and regulations. So important constitutional issues need clarifying between Ottawa and the provinces. "As party to the treaty, Ottawa must carry the ball in court," notes author Lawrence L. Herman , "but who is really responsible?" Who pays when the provinces -- or municipalities - run afoul of Ottawa's multilateral commitments?

Mr. Herman, a respected trade lawyer, notes there has been a significant cooling down of so-called NAFTA "trade remedy" disputes involving anti-dumping and countervailing duties, and the emergence of NAFTA investment claims as the focus of the action.

While the Canadian federal government, as the official signatory of the NAFTA, is the respondent in these cases, he notes, it is the provinces whose actions are being challenged for allegedly offending NAFTA guarantees. A good example is AbitibiBowater Inc.'s $500 million claim in the wake of Newfoundland and Labrador's expropriation of the company's timber and water rights: the province called the tune, but the federal government may have to pay the piper. And there is no statutory provision or other law that provides authority for Ottawa to recover from a provincial government any amounts paid out to a successful complainant.

Given these unresolved questions, writes Mr. Herman, a federal-provincial understanding settling responsibility for paying NAFTA awards seems the best solution. A pragmatic arrangement could help resolve what appears to be an increasing number of potentially costly challenges to provincial and municipal actions.

For the study click here.

SOURCE C.D. Howe Institute

For further information: For further information: Lawrence L. Herman, Counsel, Cassels Brock & Blackwell LLP., 416-865-1904, email:

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