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<title>CANADA TO INTERVENE IN REVIEW OF A NAFTA TRIBUNAL RULING REGARDING AN AMERICAN FIRM AND MEXICO</title>
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<p><font face="Arial"></font><font face="Arial" size="+1"></font><font face="Arial" size="+1"><strong></strong></font><font face="Arial" size="+1"><strong>February 16, 2001 <em>(3:20 p.m. EST)</em> No. 23</strong></font></p>
<p align="CENTER"><font size="+1"><strong>CANADA TO INTERVENE IN REVIEW OF A NAFTA TRIBUNAL RULING REGARDING AN
AMERICAN FIRM AND MEXICO</strong></font><font face="Arial"></font></p>
<p>Canada has intervened in a review of a NAFTA tribunal decision involving the Government of Mexico and an American
firm. The purpose of the intervention is to ensure that Canadian interests are represented and to assist the Court in the
establishment of important principles governing the interpretation of NAFTA's Chapter 11 investment provisions.</p>
<p>Canada's submission argues that the tribunal's decision contains errors that may create uncertainty about the application
and scope of NAFTA's obligations and have implications for future NAFTA Chapter 11 arbitrations.</p>
<p>"As a member of the NAFTA, Canada has a direct interest in ensuring that interpretations of the investment chapter are
consistently and appropriately applied by NAFTA tribunals," said International Trade Minister Pierre Pettigrew. </p>
<p>The review is of a decision by a NAFTA Chapter 11 tribunal in the arbitration started by Metalclad Corporation against
Mexico. On August 30, 2000, the NAFTA tribunal upheld claims by Metalclad that Mexico breached its obligations under
two sections of NAFTA's investor-state chapter. </p>
<p>The review -- scheduled to commence on February 19, 2001 -- will be held in the British Columbia Supreme Court in
Vancouver, where the NAFTA tribunal originally conducted the arbitration. Canadian law allows for the review of NAFTA
arbitral awards by Canadian courts on specified grounds. Mexico has asked the B.C. Court to set aside the NAFTA
tribunal's award and to suspend the enforcement of the award pending hearing of the review.</p>
<p>This is the first occasion that a Canadian (or any other) court has considered an application for statutory review of a
decision by a NAFTA Chapter 11 tribunal. On February 8, 2001, Canada filed an application in the Federal Court for a
review of an award on liability by a NAFTA Chapter 11 tribunal in a case involving Canada (S.D. Myers Inc.). </p>
<p>Canada's written submission is available on the Department of Foreign Affairs and International Trade's Web site at:
http://www.dfait-maeci.gc.ca/tna-nac/NAFTA-e.asp</p>
<p align="CENTER">- 30 -<font face="Arial"></font></p>
<p><font face="Arial"></font><font face="Arial">A backgrounder is attached.</font></p>
<p>For further information, media representatives may contact:</p>
<p>Media Relations Office</p>
<p>Department of Foreign Affairs and International Trade</p>
<p>(613) 995-1874</p>
<p><font face="Arial"></font><font size="+1"><strong>Backgrounder</strong></font></p>
<p align="CENTER"><font size="+1"><strong>CHRONOLOGY</strong></font><strong></strong></p>
<p align="CENTER"><strong>NAFTA CHAPTER 11 - METALCLAD</strong></p>
<p align="CENTER"><strong><font face="Times New Roman"></strong></font><font face="Arial"><strong>DECISION OF THE TRIBUNAL</strong></font></p>
<p><strong></strong>1. An arbitration was brought in October 1996 by a U.S. company, Metalclad Corporation, against Mexico under NAFTA's
Chapter 11. The dispute arose from the refusal of the Mexican Municipality of Guadalcazar<font face="Arial"> to grant Metalclad a
municipal licence to operate a hazardous waste treatment facility and landfill site.</font></p>
<p><font face="Arial">2. In August 2000, the NAFTA Chapter 11 tribunal released its decision. It held that Mexico's actions amounted
to expropriation, contrary to NAFTA Article 1110, and that the minimum standard of treatment obligations,
NAFTA Article 1105, were not met. </font></p>
<p><font face="Arial">3. Mexico was ordered to pay US$16.7 million in compensatory damages to Metalclad.</font></p>
<p><font face="Arial">4. Mexico filed a petition for statutory review in the British Columbia Supreme Court on October 27, 2000. An
amended petition was filed on November 14, 2000. The petition was brought before the British Columbia
Supreme Court, as Vancouver was the location of arbitration for this case.</font></p>
<p><font face="Arial">5. On December 22, 2000, Canada wrote to the B.C. Court seeking its right to intervene in this matter. </font></p>
<p><font face="Arial">6. On January 25, 2001, the Canadian Union of Public Employees (CUPE) filed an application to the British
Columbia Supreme Court also requesting leave to intervene in this matter. </font></p>
<p><font face="Arial">7. On January 29, 2001, the Province of Quebec filed an application to the B.C. Supreme Court, requesting
leave to intervene. </font></p>
<p><font face="Arial"> </font></p>
<p><font face="Arial">8. At a hearing before the British Columbia Supreme Court on January 31, 2001, Canada and Quebec were
granted the right to intervene. The application by CUPE was denied by the Court.</font></p>
<p><font face="Arial">9. The hearing on Mexico's Petition is scheduled to commence on February 19, 2001 in Vancouver.</font></p>
<ul>
<li><font face="Arial">Canada has filed a submission intervening on the following issues: the appropriate categorization of NAFTA
Chapter 11 arbitrations; the appropriate standard of review; errors by the tribunal, including misinterpretation
of provisions on minimum standard of treatment and expropriation; and mis-interpretation and application of
domestic law.</font></li>
<li><font face="Arial">In its submission, Canada argues that</font><font face="Arial"> any interpretation of the NAFTA must promote the NAFTA's objectives
as a whole, and ensure governments possess flexibility to safeguard public interests. Canada further argued
that the award reads into the NAFTA obligations on federal governments that would require them to remove
all doubt and uncertainty concerning relevant legal requirements applicable to NAFTA investors. These
expansive obligations are greater than those contemplated by the NAFTA drafters. In Canada's view, the
tribunal did not have the authority to expand these obligations in such a manner.</font></li>
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