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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>NAFTA TRIBUNAL AWARDS DAMAGES IN S.D. MYERS CASE</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> October 21, 2002 (4:30 p.m. EDT) No. 123 NAFTA TRIBUNAL AWARDS DAMAGES IN S.D. MYERS CASE The Government of Canada has received a tribunal decision awarding $6.05 million plus interest to an American firm that had sued Canada under NAFTA, International Trade Minister Pierre Pettigrew announced today. "This is an extremely complex case, and we must study the ruling closely," said Minister Pettigrew. "It is particularly important to do so in light of the fact that we have asked the Federal Court to review this case." In 1998, S.D. Myers Inc. of Tallmadge, Ohio, began its suit against Canada, alleging that Canada failed to respect several aspects of NAFTA's investor-state chapter (Chapter 11) because of an interim order that prevented polychlorinated biphenyl (PCB) waste, from being exported to the United States. The waste was destined for treatment or destruction at an S.D. Myers facility. On November 13, 2000, a NAFTA tribunal found that Canada breached its obligations under the following sections of Chapter 11: National Treatment (1102) and Minimum Standard of Treatment (1105). The tribunal found that Canada did not breach Chapter 11 with respect to other obligations. On February 8, 2001, Canada asked the Federal Court to set aside the tribunal's decision, on the grounds that elements of the decision exceeded the tribunal's jurisdiction and were made in conflict with Canada's public policy. Under Canada's Commercial Arbitration Act, decisions of arbitral tribunals, such as NAFTA Chapter 11 tribunals, are subject to statutory review on specific grounds, including excess of jurisdiction. To consult the Tribunal's decision and for more information visit: <a href="https://bac-lac.wayback.archive-it.org/web/20070221021219/http://www.dfait-maeci.gc.ca/tna-nac/SDM-e.asp">http://www.dfait-maeci.gc.ca/tna-nac/SDM-e.asp</a> - 30 - A backgrounder is attached. For further information, media representatives may contact: Sébastien Théberge Director of Communications Office of the Minister for International Trade (613) 992-7332 Media Relations Office Department of Foreign Affairs and International Trade (613) 995-1874 <a href="https://bac-lac.wayback.archive-it.org/web/20070221021219/http://www.dfait-maeci.gc.ca/">http://www.dfait-maeci.gc.ca</a> Backgrounder CHRONOLOGY OF NAFTA CHAPTER 11 - S.D. MYERS INC. DECISION OF THE TRIBUNAL 1. In the fall of 1995, the U.S. Environmental Protection Agency issued an enforcement discretion allowing S.D. Myers to import PCB wastes from Canada. (This was followed by enforcement discretions to other companies in the U.S.) 2. On November 20, 1995, Canada issued a PCB Waste Export Interim Order effectively banning exports of PCBs and PCB wastes. 3. On February 4, 1997, Canada rescinded the interim order. 4. In July 1997, the United States closed its border to imports of PCB wastes. 5. On July 22, 1998, S.D. Myers Inc. (headquartered in Tallmadge, Ohio) served on the government its Notice of Intent to Submit a Claim to Arbitration under the investor-state dispute settlement provisions of Chapter 11 (Investment) of NAFTA. 6. On October 30, 1998, S.D. Myers filed a Claim to Arbitration, which started the formal arbitration process. S.D. Myers alleged that Canada's PCB Waste Export Interim Order (issued November 20, 1995, rescinded February 4, 1997) breached the following NAFTA obligations: (i) Article 1102, National Treatment; (ii) Article 1105, Minimum Standard of Treatment; (iii) Article 1106, Performance Requirements; and (iv) Article 1110, Expropriation. S.D. Myers claimed that the Canadian export ban prohibited it from conducting its business in Canada. S.D. Myers claimed damages of not less than US$20 million. 7. The tribunal was established on March 4, 1999, with S.D. Myers's appointment of Dr. Bryan Schwartz, Professor of Law, University of Manitoba, and both parties agreeing to the appointment of Professor Martin Hunter (U.K.) as presiding arbitrator. Canada's appointee to the tribunal was Edward Chiasson of Vancouver, B.C. 8. In accordance with the tribunal's timetable, Canada submitted its Statement of Defence on June 18, 1999. On July 20, 1999, S.D. Myers submitted its Memorial (i.e. main argument). Canada submitted its Counter-memorial on October 5, 1999. Supplementary briefs were delivered on December 15, 1999, and pre-hearing submissions on January 14, 2000. 9. Both the United States and Mexico had representatives present throughout the proceedings, although only Mexico made any submissions to the tribunal. Mexico intervened on questions of interpretation of Chapter 11 obligations, and its interventions were largely supportive of Canada's position. 10. Hearings took place before the tribunal in Toronto from February 14 to16, 2000. 11. The tribunal decision was delivered to the parties on November 13, 2000. The decision held that Canada's temporary ban on the export of PCB waste between November 1995 and February 1997 breached two provisions of NAFTA's investment chapter. The ruling did not require Canada to change its environmental laws, including its regulations to control PCBs. The tribunal's decision was with respect to an interim order, which was no longer in effect. Nothing in the decision detracted from Canada's ability to regulate the safe movement and disposal of hazardous wastes, including PCB wastes. The tribunal directly acknowledged that NAFTA members "have a right to establish high levels of environmental protection. They are not obliged to compromise their standards merely to satisfy the political or economic interests of other states." 12. On February 8, 2001, Canada applied to the Federal Court for an application to set aside the NAFTA tribunal's November 13, 2000, partial award. 13. On March 19, 2001, the Council of Canadians, Sierra Club, and Greenpeace Canada sought leave to intervene in S.D. Myers' statutory review in the Federal Court of Canada. On April 11, 2001, the Federal Court ordered that the motion for intervener status be dismissed and that the applicants pay S.D Myers $2,000 in costs. On April 23, 2001, the NGOs appealed this order to the Federal Court of Appeal. The applicants filed their memorandum of Fact and Law on July 20, 2001. Canada as a respondent, filed its memorandum on August 17, 2001. The decision by the Federal Court of Appeal dismissing their appeal was rendered on January 28, 2002. 14. The Chapter 11 case proceeded with the damages phase. Submissions were made by Canada and S.D. Myers between March and August 2001. Hearings on damages were held in Toronto from September 21 to 26, 2001. 15. In the statutory review, memorandums were filed by parties between November 2001 and January 2002. We are currently waiting for the Federal Court to determine hearing dates. 16. On March 28, 2002, the Council of Canadians, Sierra Club of Canada, and Greenpeace Canada sought leave to appeal to the Supreme Court the Federal Court of Appeal's judgement dismissing their request for intervention. Memorandums were subsequently submitted to the Supreme Court by the Applicants and the Attorney General of Canada. 17. On October 17, 2002, the Supreme Court of Canada dismissed the leave application filed by the Council of Canadians, Sierra Club of Canada, and Greenpeace Canada. 18. On October 21, 2002, the S.D. Myers Tribunal rendered its Second Partial Award (Damages) ruling that the damages incurred by the investor amounted to $6.05 million plus interest. </body> </html>

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