US embassy cable - 05OTTAWA2430

UNCLAS OTTAWA 002430 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR LCID, WHA/EPSC, AND WHA/CAN 
 
E.O. 12958: N/A 
TAGS: ETRD, SENV, CA, NAFTA 
SUBJECT: NAFTA CHAPTER 11:  METHANEX  -- THE IMPORTANCE IS 
THE CHILL 
 
 
1.  (U) A NAFTA Chapter 11 tribunal on June 10 dismissed 
Methanex Corporation's claim against the U.S. on both 
jurisdictional grounds and on the merits, ordering Methanex 
to pay the State Department $3 million in legal fees and to 
pay the tribunal $1 million in costs.  (Note:  this is more 
than had been requested by the USG.  End note.) 
 
2.  (SBU) Canadian press cites a trade analyst saying that 
the "importance of this decision is the chill," a position 
echoed by Foreign Affairs Canada.  FAC, which had just 
received a copy of the decision, called it "great for the 
United States," noting that the case was so flimsy a loss 
would have been catastrophic. 
 
US:  One down, more to go 
------------------------- 
 
3.  (U) Methanex now joins Mondev, ADF  and Loewen  as one of 
the cases in which claims under NAFTA Chapter 1 against the 
USG were dismissed by tribunals.   However, the list of cases 
is growing, with three softwood lumber claimants and several 
cases recently filed in response to the ban on imports of 
beef from Canada. 
 
Canada:  One active case 
------------------------ 
 
4.  (SBU)  UPS is the sole U.S. firm with an active case 
pending against the GOC, and a hearing is scheduled in 
Washington, DC on December 12, 2005.  There are four 
additional cases for which notice has been received of intent 
to file but the GOC does not consider them to be active and 
agreed that the Methanex result will force claimants with 
marginal cases to think twice before pressing a frivolous 
claim that could result in hefty legal fees. 
 
5.  (SBU)  Comment:  This ruling should go far to lay to rest 
concerns that the NAFTA Chapter 11 dispute settlement process 
would cripple governments' ability to protect the 
environment.  Rather than causing a chill on environmental 
regulation, it serves notice that firms should consider 
carefully before challenging such regulations.  End Comment 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS