Danny Chavez vs. NAFTA
I have generally been underwhelmed by media coverage of AbitibiBowaterâ€™s prospective NAFTA challenge of Newfoundland and Labradorâ€™s decision to reclaim natural resources that the company previously used to operate paper mills in the province.
I watched a panel discussion on Mike Duffy Live (before his Senate appointment) that focussed entirely on NAFTAâ€™s nondiscrimination provisions. But there is no suggestion that the provincial government discriminated against Abitibi because it is an “American” company (headquartered in Montreal, but incorporated in Delaware) or that it treated Canadian companies in similar circumstances differently.
Subsequent reporting and commentary has more accurately emphasized NAFTAâ€™s expropriation provisions. But if the timber and water rights ultimately belong to the Crown anyway, it is not clear why the Newfoundland and Labrador government would be expected to pay compensation for them. Its legislation does appropriately envision compensation for expropriating hydroelectric facilities that Abitibiâ€™s predecessor built.
As far as I know, the provincial government has made no decision about the amount of such compensation and the company is not saying how much it wants. Recourse to NAFTA seems very premature. Abitibi is clearly using the treatyÂ to put pressure on Newfoundland and Labrador, rather than as a last resort to resolve an irreconcilable dispute.
Anyway, in contrast to my general disappointment with coverage of this episode, I was particularly happy to read Gus Van Harten’sÂ fantastic op-edÂ in todayâ€™s Financial Post. He makes several excellent points about the Abitibi situation in particular and NAFTAâ€™s Chapter 11 in general.