In the Matter of NAFTA Investment Rules
UPS vs. Canada
Jurisdictional Hearing to be Open to the Public
July 29-31, 2002.
United Parcel Service of America Inc. (UPS), the world's largest express carrier and package delivery company, has invoked investor state procedures to challenge public sector postal services. UPS is claiming $US 160 million in damages.
The gist of the claim is that Canada Post has taken advantage of its monopoly position to underwrite the costs of its competitive parcel and courier delivery services. But in an era when many 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. In fact, if anything, Canada Post's courier and parcel delivery businesses actually subsidize its mail delivery service, not the other way around.
For over two years now, UPS has refused to make its statement of claim public, still refuses to make much of its evidence available, and has vigorously resisted the efforts of those affected to intervene in the arbitral proceedings.
The Council of Canadians, which represents more than 100,000 Canadians, and the Canadian Union of Postal Workers (CUPW), which represents over 40,000 Canada Post employees, specifically requested and were denied the right make submissions to the Tribunal at the jurisdictional hearings that are taking place in Washington DC, beginning on July 29, 2002.
Neither group believes that the defects of this NAFTA mechanism can be cured by simply allowing third parties to submit briefs to the commercial arbitral tribunals that will determine these claims. Nevertheless both organizations sought standing because of the potentially disastrous consequences of the UPS claim for all public services. In October 2001, the Tribunal rejected the applications for party standing but reserved judgement on the question of whether Amicus intervention would be allowed at a later stage.
What is at Stake in this Jurisdictional Hearing
The UPS claim seeks damages arising from the breach of NAFTA provisions that are not included among the investment rights that are amenable to private enforcement. By seeking redress for the alleged breach of these rules, UPS is asserting the right to unilaterally enforce any provision of NAFTA, and by implication any international trade agreement to which Canada, the US or Mexico is a Party.
By asserting the right to enforce provisions of NAFTA that are not incorporated to the investment Chapter of the trade agreement, UPS is attempting to dramatically expand the scope of foreign investor claims under the trade agreement. If it succeeds, the logic of its argument would mean that foreign corporations would have the unilateral right to enforce any international treaty obligation or other commitment made by a nation state. A similar argument is being made by the Methanex Corporation in an investor-state claim against the United States concerning groundwater protection laws established by California and several other states.
The consequence of establishing such global corporate entitlements would, for the purposes of enforcing international law, elevate transnational corporations to the same status of nation states - but with one fundamental difference: unlike nation states under international law, transnational corporations would have rights but no obligations or responsibilities.
While Canada has refused to indicate what is jurisdictional objections are, it is believed that among them, would be opposition to UPS efforts to expand the ambit of investor-state claims.
Is Investor-State Litigation Constitutional
The Council of Canadians and CUPW have also initiated a constitutional challenge to the investor-state suit procedures that UPS has invoked. Their application seeks a declaration that NAFTA investor-state procedures are void and of no force and effect.
They argue that by establishing these extra-ordinary private and international enforcement procedures - Canada has acted in a manner that undermines the independence of its courts by improperly delegating judicial authority to unaccountable international tribunals; and by doing so, has also violated the fundamental constitutional principle of the rule of law.
The Canadian groups believe that these arguments, with appropriate references to the US Constitution and the Bill of Rights, apply with equal force in the United States.
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The Canadian Union of Postal Workers (CUPW) represents approximately 46,000 operational employees of Canada Post who provide postal services to Canadians throughout the country.
The Council of Canadians is a non-governmental organization with more than a 100,000 members, many of whom participate in the activities of more than 70 chapters across the country.
The Council of Canadians and CUPW are represented by Steven Shrybman, partner in the law firm Sack Goldblatt Mitchell. He can be reached at the Ottawa Office of the firm at (613) 233-4897 or at stevenshrybman@sgmlaw.com.
