US-incorporated energy firm Lone Pine Resources is challenging Quebec’s moratorium on fracking under terms of the North American Free Trade Agreement, and demanding more than $250 million in compensation. The company—headquartered in Calgary but incorporated in Delaware—officially notified the US Securities and Exchange Commission that on Nov. 8 it filed a notice of intent to sue the Canadian government under NAFTA’s controversial Chapter 11. Quebec lawmakers in June approved legislation, Bill l8, that imposed a moratorium on hydraulic fracturing pending further study on its environmental impacts. Lone Pine cites Chapter 11’s Article 117, on investor damages, in its claim for the loss of what it calls a “valuable right…without due process, without compensation and with no cognizable public purpose.”
Milos Barutciski, a Toronto lawyer with the firm Bennett Jones who is representing Lone Pine, acknowledged the provincial government has the right to impose a moratorium, but not to suspend existing concessions. “It just can’t, for political reasons, expropriate our property,” Barutciski said. “And that’s exactly what NAFTA’s investor-rights provision is intended to protect.” Following the filing, there is a a 90-day period in which the parties can negotiate a settlement. If no pact is reached, then the case goes to arbitration.
The NAFTA challenge is fuel for activists now opposing Canada’s proposed “investor protection agreement” with China, which would include similar provisions. “It contradicts everything the government has said about the China investment treaty, about it having no impact on the environment and there being no threats to non-discriminatory environmental measures,” said Stuart Trew, trade campaigner with the Council of Canadians. (Montreal Gazette, Nov. 23; WSJ’s Canada Real Time blog, Nov. 16; Toronto Globe & Mail, Nov. 15)
China has meanwhile launched its own case before the World Trade Organization against Canada challenging public prorgams to support solar power, and more recently brought a similar WTO case against the European Union. The cases concern “feed-in tariffs” that pay independent solar generators for power they feed back into the grid. The tariffs have been adopted by several European countries as well as Canada; China’s case against the EU concerns programs in Italy and Greece. The Chinese Ministry of Commerce (MOFCOM) stated: “China considers that the measures are inconsistent with the WTO rules on national treatment…and constitute import substitution subsidies that are banned by the WTO.” (Bloomberg, Nov. 6; FT, Nov. 5)