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The NAFTA ruling on Metalclad vs. Mexico - The Broader Context -

vieuxcmaq, Friday, December 1, 2000 - 12:00
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Gerard Greenfield (gerardg@caw.ca)

Analyis of NAFTA's chapter 11 and its implications

Two weeks ago (August 25) the NAFTA Tribunal for the case of Metalclad Corp vs. Mexico ruled in favour of Metalclad, ordering the Mexican government to pay US$16.7 million in compensation.

It is the first ruling in an investor-to-state lawsuit under NAFTA.

Metalclad vs. Mexico
In October 1996, Metalclad Corporation, a US waste-disposal company, accused the Mexican government of violating Chapter 11 of NAFTA when the state of San Luis Potosi refused it permission to re-open a waste disposal facility. The State Governor ordered the site closed down after a geological audit showed the facility would contaminate the local water supply. The Governor then declared the site part of a 600,000 acre ecological zone. Metalclad claimed that this constituted an act of expropriation and sought US$90 million in compensation.

An earlier suit against the Canadian government by US-based Ethyl Corp. was settled before a ruling was made.

Ethyl Corp vs. Canada
In 1997 the US chemicals giant, Ethyl Corp, used NAFTA Chapter 11 to sue the Canadian government for a ban imposed on MMT, a gasoline additive produced by Ethyl which is toxic and hazardous to public health. Ethyl claimed that the ban “expropriated
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