Thank you.
My name is Will Amos. I'm the staff lawyer and a part-time professor at the University of Ottawa Ecojustice Environmental Law Clinic. Ecojustice is Canada's foremost non-profit environmental law organization. We're best known for our litigation work and our law reform work to help protect Canadians' right to a healthy environment. In this context, I am serving as counsel to Équiterre and to the David Suzuki Foundation.
First, I'd like to congratulate the committee for taking this step of holding this hearing. It is really important that NAFTA chapter 11 disputes the concerned matters of public importance, concerned matters of public regulation, that they're discussed in the light of day before our elected representatives. You certainly have a legitimate role to play in the context of this dispute.
I'd like to quickly give an overview of where this dispute is coming from and a very basic outline of the steps that have been taken and where it's going or where it may go.
On August 25, 2008, a notice of intent to arbitrate was filed. This is the first step Dow AgroSciences could have taken. They indicated they would be seeking $2 million in compensation from Canada in addition to further relief, including additional damages for lost profits resulting from Quebec's ban on the cosmetic pesticide 2,4-D. The claim was brought under NAFTA's chapter 11, article 1105 and article 1110. Article 1105 deals with the minimum standard of treatment owed to investors, including fair and equitable treatment in accordance with international law, and article 1110 deals with expropriation or measures tantamount to expropriation.
Dow asserts the ban was imposed without scientific justification. It disputes the cancer risk associated with the chemical 2,4-D. It asserts the ban ought to have been lifted, that it's arbitrary, irrelevant, and unfair. At first glance, since Dow is not alleging any trade protectionism issues, this matter is purely about process. It's about Quebec's ban and the process they undertook to enact it, so this is unlike other disputes we have seen in the past under chapter 11, in particular S.D. Myers and Ethyl Corp., where allegations of trade protectionism were involved, alternative motives the Canadian government may have had. In this case there were no alternative motives. It would appear Dow assumed the motives were to protect public health and the environment. They just don't appreciate the way Quebec has gone about doing it.
After this notice of intent was filed, there was a 90-day cooling-off period, and any time after that 90-day cooling-off period Dow was at liberty to file its notice of arbitration, which would kick off the entire process, including the choosing of arbitrators. They have not filed a notice of arbitration, so in a sense, we're playing a waiting game right now. At least according to the document filed by the Department of Foreign Affairs and International Trade for the purposes of this hearing, there were consultations in January. We're not certain where those have led, if settlement negotiations are ongoing. Civil society is sitting and waiting for the notice of arbitration to be filed and waiting for the process to kick off.
I'd like to outline a couple of very simple concerns and then try to hit what I think is the key issue in this discussion.
In terms of our main concerns, even where public interest regulation is challenged by eligible investors, civil society participation in these processes can be severely constrained. We're dealing with a matter of public health and environmental protection, so this is something where civil society's voice should be heard loud and clear. However, even if an arbitration were to go forward, my client's ability to participate would be limited at best to a 20-page written memorandum to an arbitration panel that may not even be in Canada. There is no guarantee the investors won't request confidential proceedings, which would further limit our ability to understand what case they're bringing, and there will be no opportunity for us to make oral representations before the tribunal. This is totally unlike the Supreme Court of Canada, where public interest intervenors, with the leave of the court where they have a distinct and unique perspective that the Supreme Court feels is usefully brought.... We will not have that opportunity because the arbitration panel will not have that jurisdiction to ask for it.
Second, as I believe my colleague Steven Shrybman mentioned, NAFTA chapter 11 establishes an imbalance between investor protection rights and the parties' sovereign duty to protect the environment and public health. Over the past several years a series of investor claims in each of the NAFTA parties have claimed that certain domestic measures, whether they were health or environmental, conflicted with the terms of chapter 11. Although recent decisions, notably the Methanex decision, have been better than earlier decisions, some of the earlier decisions, like Metalclad, have been pretty harsh. The uncertainty generated by these claims--the mere filing of a notice of intent--really has an effect on other jurisdictions, both provincial and municipal.
I don't want to be too negative about it, but the reality is that provinces and municipalities are nervous when they think about enacting regulatory measures like pesticide bans, because they don't want to face the consequences of a NAFTA chapter 11 tribunal. Certainly the Canadian government faces those same restrictions. Despite the underlying legal risk, we're very pleased to see Ontario enact the ban following Quebec, and we're hopeful that further provinces will join the parade.
I want to go to our two key recommendations now. The first is that the federal government should vigorously defend Quebec's ban on 2,4-D lawn pesticides if Dow proceeds to arbitration. The federal Minister of International Trade should immediately and publicly announce Canada's intentions in this regard and acknowledge the appropriate precautionary basis for Quebec's action. We also want the federal government to assert the position that non-discriminatory regulatory measures enacted for a public purpose in accordance with due process under international law are not expropriations or violations of the minimum standard of treatment. As such, they should not be subject to compensation.
One of the most controversial issues in investment law raised in this claim is how to distinguish between a valid regulation that is not compensable, and direct or indirect expropriations that would be compensable. Dow argues that the ban is compensable expropriation. If this goes forward, we will argue--and we believe Canada ought to argue and will argue--that the Quebec ban is a non-compensable public interest regulation. We believe we're supported by the most recent NAFTA chapter 11 decision in Methanex. I'll quote from that decision:
But as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.
Obviously we don't feel that Quebec made such representations. However, international law has yet to identify, in a comprehensive and definitive fashion, precisely what regulations are permissible and commonly accepted as falling within the police or regulatory powers of the state, and thus non-compensable. So there's no bright yellow line--that's the issue here. I think it's a critical issue of public importance, and we're very pleased that this committee has invited us here to speak on this issue.
If and when this arbitration proceeds, I would request that this committee hold a similar hearing to follow up on the arguments that are being made, formally hear the position of the Government of Canada and Dow AgroSciences, and give the Canadian public's elected representatives the opportunity to ask the questions of the government and the investor. This is not just about Dow's investment; this is about our children's best interests.
Thank you.