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U.S. Interpretation of Core NAFTA Investment Standards
Published online by Cambridge University Press: 10 March 2017
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- Contemporary Practice of the United States Relating to International Law
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- Copyright © American Society of International Law 2001
References
1 North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., 32 ILM 289 & 605 (1993) (entered into force Jan. 1, 1994) [hereinafter NAFTA]. Many of the pleadings and decisions in NAFTA cases may be found at <http://www.state.gov/s/1/index.cfm?id=3439> and at <http://www.naftaclaims.com>. Canada maintains an Internet site, <http://www.dfait-maeci.gc.ca/tna-nac/NAFTA-e.asp>, on NAFTA Chapter 11 cases to which it is a party. The International Centre for Settlement of Investment Disputes also maintains documentation on the cases arbitrated under its auspices, at <http://www.worldbank.org/icsid/>. All of the parties’ submissions discussed in this section are on file at GWU.
2 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Mar. 18, 1965, 17 UST 1270, 575 UNTS 159.
3 The rules are available on the Internet at <http://www.worldbank.org/icsid/facility/facility.htm>.
4 15 ILM 701 (1976), available at <http://www.uncitral.org>.
5 NAFTA, supra note 1, Art. 1120.
6 Submissions by the United States are made either as a party in the Chapter 11 proceeding or pursuant to NAFTA Article 1128, which allows NAFTA states parties to make submissions to NAFTA tribunals even without being parties to the disputes.
7 NAFTA, supra note l, Art. 1102(1), (2).
8 Pope & Talbot, Inc. v. Canada, Merits, Phase 2 (NAFTA Ch. 11 Arb. Trib. Apr. 10, 2001) [hereinafter Pope & Talbot arbitration]. Pope & Talbot is an Oregon-based timber company that operates three sawmills in British Columbia, Canada. Pursuant to a May 29, 1996, U.S.-Canada softwood lumber agreement, Canada was required to allocate quotas to Canadian companies for the export from certain Canadian provinces to the United States of lumber. Pope & Talbot was unsatisfied with the quotas allocated to its Canadian sawmills. Although Canada conducted a verification review to determine whether its allocations of quotas were correct, that review took place in Canada and required Pope & Talbot to produce in Canada its sales and production records for review. Pope & Talbot’s quotas were not changed. On March 25, 1999, the company initiated NAFTA arbitration, charging that Canada’s action violated Canada’s obligations under NAFTA relating to national treatment, minimum standard of treatment, performance requirements, and expropriation.
9 Second Submission of the United States of America at 1–2 (May 25, 2000), Pope & Talbot arbitration, supra note 8; see Submission of the United States of America (Apr. 7, 2000), Pope & Talbot arbitration, supra note 8 (setting forth further views on the national treatment standard).
10 NAFTA, supra note 1, Art. 1105(1).
11 S.D. Myers, Inc. v. Canada, Partial Award (NAFTA Ch. 11 Arb. Trib. Nov. 13, 2000). S.D. Meyers (SDMI) was a U.S. corporation that was active during the 1980s and 1990s in polychlorinated biphenyl (PCB) remediation activities. Those activities principally involved the identification and extraction of PCBs from contaminated equipment and oil, followed by destruction of the PCBs and PCB waste material at SDMI’s facility in Ohio. As the U.S. market for this service declined in the early 1990s, SDMI became interested in providing its services to Canadian entities. In 1995, however, Canada banned the export of PCBs from Canada. On October 30, 1998, SDMI filed a notice of arbitration under NAFTA Chapter 11. SDMI claimed that Canada’s action violated its NAFTA obligations with respect to expropriation, national treatment, minimum standard of treatment, and performance requirements. Canada denied the allegations.
12 Id., paras. 264–69.
13 [Editor’s Note: Mann, F. A., British Treaties for the Promotion and Protection of Investments, 52 Brit. Y.B. Int’l L. 241, 243 (1981)Google Scholar.]
14 Fifth Submission of the United States of America at 2–3 (Dec. 1, 2000), Pope & Talbot arbitration, supra note 8 (citations omitted).
15 Pope & Talbot arbitration, supra note 8, paras. 110–13.
16 Id., para. 114 (footnotes omitted).
17 Methanex Corp. v. United States (NAFTA Ch. 11 Arb. Trib.). Methanex is a Canadian producer and marketer of methanol, which is used to create a fuel additive known as methyl tertiary butyl ether (MTBE). Methanex supplies methanol to Californian and other MTBE producers. On March 25, 1999, the governor of California signed an executive order that found, on balance, that there was significant risk to the environment from using MTBE in gasoline in California. Consequently, the executive order required the phasing out of MTBE as a fuel additive. In October 1999, this phaseout was codified in California law. Methanex initiated arbitration under NAFTA Chapter 11, claiming that California’s actions constituted violations by the United States of its NAFTA obligations regarding both minimum standards of treatment and expropriation.
18 For further discussion of this point, see infra pp. 887–89.
19 Reply Memorial of Respondent United States of America on Jurisdiction, Admissibility and the Proposed Amendment at 22–23 (Apr. 12, 2001), Methanex Corp. v. United States.
20 NAFTA, supra note 1, Art. 1110(1).
21 Metalclad Corp. v. Mexico, Award (NAFTA Ch. 11 Arb. Trib. Aug. 30, 2000), 40 ILM 36 (2001); see William, S. Dodge, Case Report: Metalclad Corporation v. Mexico, 95 AJIL 910 (2001)Google Scholar. In this case, the Mexican federal government in 1990 authorized a Mexican company, Confinamiento Tenico de Residuos Industriales, S.A. (COTERIN), to construct and operate a transfer station for hazardous–waste landfill in the Mexican state of San Luis Potosi (SLP). In 1993, COTERIN received a federal permit to construct a hazardous-waste landfill. Shortly thereafter, a U.S. corporation, Metalclad, purchased COTERIN, the landfill site, and associated permits. Although there was some local opposition to construction of the landfill, Metalclad believed that COTERIN had secured all the necessary approvals from federal and SLP authorities, and it therefore began construction of the landfill in May 1994.
In October 1994, the local municipality of Guadalcazar ordered that the construction cease due to the absence of a municipal construction permit. Metalclad applied for the municipal permit but continued with construction of the site, which was completed March 1995. In November 1995, the company concluded an agreement with subagencies of the federal government allowing for operation of the landfill. In December, Metalclad’s application for the municipal permit was denied. In January 1996, the municipality obtained an judicial injunction barring Metalclad from conducting hazardous–waste landfill operations. In September 1997, SLP’s governor issued an “ecological decree” declaring the area with the landfill to be a natural area for the protection of rare cactus. In anticipation of such an outcome, Metalclad had initiated NAFTA arbitration proceedings against the government of Mexico in January 1997.
22 Submission of the Government of the United States at para. 10 (Nov. 9, 1999), Metalclad Corp. v. Mexico.
23 Metalclad Corp. v. Mexico, para. 103.
24 Id., paras. 104–12.
25 Pope & Talbot, Inc. v. Canada, Interim Award, para. 104 (NAFTA Ch. 11 Arb. Trib. June 26, 2000). The tribunal found that no expropriation had occurred.
26 S.D. Myers, Partial Award, paras. 279–88 (NAFTA Ch. 11 Trib. Nov. 13, 2000). The tribunal found that no expropriation had occurred.