Last week, Lone Pine’s decade-long quest to carry out shale gas fracking along the St. Lawrence River culminated at a NAFTA Tribunal hearing in Toronto.
This story began in 2006 with granting of exploration permits, which lead to a public outcry that resulted in Quebec’s call for a moratorium on fracking in 2010. Employing the investor-state dispute settlement (ISDS) system, Lone Pine proceeded to serve the Government of Canada with an Arbitration Notice under Chapter Eleven of the NAFTA on November 8, 2012. It is interesting to note that Lone Pine submitted this arbitration against Canada, on behalf of their partner, a Canadian corporation called Enterprise, based in Alberta.
Since the introduction of new technology able to extract shale gas out of previously inaccessible deposits, ‘fracking’ has been a hotly contentious issue with financial interests pitted against ecological and health risks. The most prominent danger is to water; firstly the large quantities of freshwater required for the process and secondly the leaking of fracturing fluids into groundwater and the surrounding arteries. Although gas deposits are theoretically found far enough below groundwater to not risk contamination, in reality geological deposits are very variable with no guarantees. Even in ideal conditions, gas and processing fluids can leak from new or existing fractures in the rocks and under adequate pressure.
Citizens of Quebec understandably did not want to subject their ground water or biologically unique and sensitive habits found along Utica Shale Gas Basin (south of the St. Lawrence) to this risk and thus, called for a Moratorium.
This brings us to the current hearings. According to the notice of arbitration issued by Lone Pine in 2013 “The dispute is in relation to the Government of Quebec’s arbitrary, capricious, and illegal revocation of the Enterprise’s valuable right to mine for oil and gas under the St. Lawrence River in violation of Chapter Eleven of the NAFTA. As a Party to the NAFTA, the Government of Canada is responsible for any violations of Chapter Eleven of the NAFTA undertaken by the Government of Quebec.” The expropriation (of permits) is proposed to be unlawful, as it does not meet at least three of the criteria so required under Article 1110 in NAFTA:
- valid public purpose for the expropriation
- international standards of due process
- appropriate compensation
Lone Pine and Enterprise are seeking in excess of CDN$250 million + legal costs of entire proceedings + taxes incurred on award + interest in damages.
The verdict depends on a panel of three private lawyers who specialize in ISDS cases that sidestep national courts and have no accountability to our democratically elected leaders.
This is unfortunately far from the only instance of conflict that arises when company profits conflict with the health and well-being of citizens and their environment.
While it is true that NAFTA is about trade in goods and services, it is also all about deregulation and forcing governments to pay corporations and wealthy investors for that same government complying with their own environmental and other public interest safeguards.
The ISDS mechanism contained in NAFTA’s chapter 11 was meant to protect companies from potentially corrupt legal systems - it is completely unnecessary in developed countries with robust legal systems.
Nevertheless, a Canadian Centre for Policy Alternatives study estimates that US investors have used this mechanism to cost Canada a total of $170 million in damages, in six lost or settled claims. Even winning such a claim comes with legal costs; estimates stake Canada has spent $65 million defending such claims over the past two decades. US companies currently claim eight cases against the Canadian government asking for a total of $6 billion in damages, many of them involving domestic environmental protections such as the promotion of renewable energies and – in a case we are intervening in ourselves - Nova Scotia’s decision to block a contentious mega-quarry.
In fact, about 63 per cent of the claims against Canada involved challenges to environmental protection or resource management programs that allegedly interfere with the profits of foreign investors. In cases where the government has lost some these environmental challenges, it has been forced to overturn legislation protecting the environment. As demonstrated in the current case, this mechanism can even help Canadian companies sue their own governments for regulating in citizens’ interest.
Currently, NAFTA is undergoing renegotiation through a series of seven rounds of meetings – the next round starts tomorrow, October 11, in Washington, DC. This presents a very valuable opportunity to remove or majorly overhaul the ISDS mechanism included in this and so many other International Trade Accords.
The Lone Pine case and others like it are one of the reasons why Sierra Club undertook a Trade Summit last spring, bringing experts and community leaders together to talk about how we can fix trade agreements. But the commitments on behalf of the Canadian government to fix NAFTA have been lacking in detail and forcefulness.
We need to do more if we are going to see real change in these negotiations. Which is why I’m asking you to act now.
If you are able to, you can attend the public hearings regarding Lone Pine in Toronto
Time: October 9 – 13, 2017 from 9:30-17:00
Location: Arbitration Place located at Bay Adelaide Centre - 333 Bay Street, Suite 900, M5H 2R2, Toronto, Canada
RSVP: Members of the public who wish to attend are requested to contact Ms. Lamiss Al-Tashi of ICSID at firstname.lastname@example.org
· If you can’t be there in person, please consider tweeting your thoughts. Here are some sample tweets:
#Canada needs to #EndISDS and protect #environment , #citizens , #climate. @JustinTrudeau step up at #NAFTA and protect our envl laws.
@JustinTrudeau Lone Pine and Bilcon cases show #NAFTA rules leave #Canada at risk of big payouts. Commit to #EndISDS Now
Sierra Club will be having its day in court regarding the Bilcon case on November 20th. Our lawyers with EcoJustice are working hard to prepare our arguments, and we need to be there with them.
In the meantime, we’re pushing for changes in NAFTA so that any new trade deal eliminates ISDS mechanisms and prioritizes our climate responsibility. Visit our website for more details.
If you wish to become more involved in volunteering on this issue, please contact email@example.com.
Bana Hamze - Trade Campaigner