Because they share a conviction that NAFTA investor-State procedures represent a profound assault on the most basic building blocks of a sovereign and democratic society, the Council of Canadians (the Council), the Canadian Union of Postal Workers (CUPW), and the Charter Committee on Poverty Issues (CCPI) have joined forces to challenge the constitutional validity of NAFTA investment rules.

The case is the first to question the lawfulness of NAFTA, and takes aim at the trade deal’s investment rules that empower foreign corporations to sue governments for taking actions which interfere with the profitability of their investments, even where such government measures are non-discriminatory and taken entirely in the public interest.

These extraordinary investor rights have now been invoked by foreign investors and corporations to challenge environmental laws, municipal land-use controls, water protection measures, the activities of Canada Post, and even the decisions of juries and appellate courts. Once initiated, NAFTA investor-State claims are decided by private international tribunals which operate entirely outside the framework of Canadian law and constitutional safeguards, including those of the Charter of Rights and Freedoms. Yet the $multi-million damage awards against governments made by such tribunals are binding and may be enforced as judgments of domestic courts.

The groups are seeking declarations that NAFTA investor-State procedures, and the Canadian laws that implement them, are void and of no force and effect. They will argue that the federal government acted beyond its lawful authority by establishing NAFTA investor-State procedures which:

(i) deprive Canadian courts of the authority to adjudicate matters reserved to them by the Constitution, including claims against the State by private and corporate entities arising from alleged government wrongdoing;

(ii) infringe and deny the rights and freedoms guaranteed by the Charter of Rights and Freedoms and the Canadian Bill of Rights, including those concerning fundamental justice, fairness and equality;

(iii) exceed the treaty making powers of government by negotiating a treaty that is incompatible with Canada’s most basic norms and values, including those of democracy, constitutionalism and the rule of law.

How NAFTA Rules are Being Used

Several investor-State claims have been made against Canada. Two have settled in favour of the foreign investors; two have been decided, also in favour of the foreign investors; others are still outstanding. Often, simply the threat of an investor-State claim is sufficient to discourage government action, as was most recently the case when New Brunswick backed down from plans to establish a public auto insurance system.

In the S.D. Myers case, Canada was found to have been in breach of its obligations under NAFTA by refusing to allow PCB exports to the U.S. for a brief period in the mid-1990s, even though it was obliged under an international environmental treaty, the Basel Convention, to minimize the export of such wastes. More astonishing is the fact that Canada was held liable for interfering with PCB exports, when importing such hazardous wastes was actually illegal under U.S. environmental law. Nevertheless, and on these grounds, the Tribunal awarded this U.S.- based hazardous waste company $10 million in damages, even though it had never operated in Canada.

In the UPS v. Canada case, a claim for $250 million against Canada by United Parcel Service of America Inc. (UPS) has far-reaching and potentially disastrous implications. UPS argues that Canada Post has somehow taken advantage of its letter-mail monopoly to support its parcel and courier delivery services. But in an era when many Crown Corporations and public agencies deliver at least some services in competition with the private sector, that argument could apply to virtually all public sector services - from water supply to health care. If UPS wins, the result would likely create serious pressure to privatize postal and other public services.

UPS also complains about the Canada Post Pension Plan, and an important cultural program that subsidizes the delivery of Canadian publications by Canada Post. UPS says both are unfair and demands damages on these grounds as well.

Because the case not only affects a vital public service, but also the direct interests of postal workers, both the Council and CUPW petitioned the arbitral Tribunal that will determine the UPS claim for standing as a party to the dispute. Their petition was rejected by the Tribunal on the grounds that it had no authority to admit third parties to NAFTA investor-State disputes. While the Tribunal left the door open to receiving a brief written submission by the Council and CUPW, it offered no assurance that either would see all, or even any, of the evidence upon which its decision will be based.

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The Council, CUPW and CCPI are firmly committed to ensuring that if large foreign corporations want to challenge Canadian public policy and law, they must do so in our courts, before our judges and in accordance with Canadian law, including the Constitution.