Free-trade case targets 2008 move by Newfoundland and Labrador
By NICOLAS VAN PRAET, Canwest News ServiceFebruary 26, 2010
Insolvent pulp-and-paper giant AbitibiBowater Inc. has launched a $500-million free-trade challenge to fight what it contends is the illegal expropriation of its assets in Newfoundland and Labrador. It would be one of the largest such claims brought against the federal government.
“The company contends that the provincial government’s enactment in December 2008 of Bill 75, which expropriates an extensive array of the company’s rights and assets, was arbitrary, discriminatory and illegal under international law,” the company said Thursday.
The challenge is being made under Chapter 11 of the North American Free Trade Agreement.
AbitibiBowater said it is seeking direct compensation for damages of about $500 million, plus additional costs and any relief awarded by the arbitration tribunal.
“The expropriation was detrimental to the financial position of our company,” David Paterson, president and chief executive, said in the statement.
“After operating in Newfoundland and Labrador for more than a century and contributing significantly to the region’s economic, social and sustainable development, the nationalization of AbitibiBowater’s assets was unexpected and unnecessary,” Paterson said.
“AbitibiBowater has been engaged with the government of Canada and the government of Newfoundland and Labrador in an effort to achieve a fair and equitable settlement and avoid a protracted NAFTA case. Unfortunately, despite those extensive discussions, we are unable to resolve the matter at this time and the company has no choice but to file a formal claim under NAFTA.”
Although its headquarters are in Montreal, Abitibi is incorporated in Delaware and operates in the U.S. It contends the confiscation of its assets and rights in Newfoundland and Labrador in 2008 represents a breach of Canada’s obligations to a U.S. investor under free-trade rules.
“It will be a humongous issue for the federal government,” said a source, who asked not to be named because of the sensitivity of the matter.
Some legal observers said Wednesday they believed an amicable, non-legal solution was impossible.
“(Newfoundland Premier) Danny Williams is causing trouble here. He knows that constitutionally, there’s probably no way that the federal government can make him pay for this, even though he did it,” said Todd Weiler, an attorney who was involved in many of the earliest NAFTA claims.
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