Dispute Settlement Under the NAFTA

The vast majority of trade in North America now takes place in accordance with the clear and well-established rules of the NAFTA and the World Trade Organization (WTO). Nonetheless, in such a large trading area, disputes are bound to emerge. In such cases, the NAFTA directs the governments concerned to seek to resolve their differences amicably through the NAFTA's Committees and Working Groups or other consultations. If no mutually acceptable solution is found, the NAFTA provides for expeditious and effective panel procedures.

One of the principal elements of the NAFTA is the establishment of a clear set of rules for dealing with the settlement of disputes. Dispute settlement provisions for countervailing duty and anti-dumping matters are covered under Chapter Nineteen. Chapter Twenty of the NAFTA includes provisions relating to the avoidance or settlement of all disputes regarding the interpretation or application of the NAFTA. There are also special rules for disputes under Chapter Eleven (Investment) and Chapter Fourteen (Financial Services). Administrative support to Chapter Nineteen and Chapter Twenty panels is provided by the Canadian, U.S. and Mexican National Sections of the NAFTA Secretariat.

Chapter Nineteen of the NAFTA provides for a system of binational panel review in place of final judicial review for domestic decisions regarding anti-dumping and countervailing duty matters. Prior to the entry into force of the Canada- U.S. FTA and then the NAFTA, anti-dumping, countervailing duty, and injury final determinations of a government could only be appealed: in the case of a U.S. final determination, to the Court of International Trade; in the case of a Mexican final determination, to the Tribunal Fiscal de la FederaciÓn; or in the case of certain Canadian final determinations, to the Federal Court of Appeal; or for some Revenue Canada decisions, to the Canadian International Trade Tribunal (CITT).

Canada regards Chapter Twenty as a central element of the North American Free Trade Agreement. It is invaluable in ensuring that our trade relations with the United States and Mexico are based on an established set of rules as opposed to economic or political power. As such, the objectives of the Chapter Twenty provisions are similar to those of the dispute settlement provisions of the WTO.

For investment disputes relating to obligations of NAFTA parties under Chapter Eleven, the NAFTA sets out dispute resolution procedures to resolve complaints between the investor and the host state. Complaints that are subject to NAFTA Chapter Eleven are resolved by arbitration, based on the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) and the International Centre for the Settlement of Investment Disputes (ICSID).

Chapter Fourteen of the NAFTA contains a provision for the resolution of conflicts in the area of financial services. In this case, the resolution of disputes follows the procedures set out in Chapter Twenty of the Agreement, with the caveat that panelists are to be chosen from a special roster of experts in the field of financial services. Chapter Fourteen has not been invoked to date by the NAFTA members.

If you wish to examine the disputes considered under the various provisions of Chapters Nineteen and Twenty of the NAFTA since its implementation in 1994, you can do so by linking to the NAFTA Secretariat's section on "Decisions and Reports" below. You can also link to information on the Alternative Dispute Resolution (ADR) for the settling of private commercial disputes.

Back to "Dispute Settlement menu"