Canadian Manufacturing

Canada loses 7-year NAFTA case over N.S. quarry dispute

U.S. construction materials company Bilcon is now seeking more than US$300 million in damages



TORONTO—Canada has lost a long contested trade dispute under Chapter Eleven of the North American Free Trade Agreement (NAFTA) involving the Whites Point Quarry expansion in Nova Scotia.

U.S. construction materials company Bilcon initially brought the claim in 2008 after a Nova Scotia Joint Review Panel denied an application to expand the existing Whites Point gravel quarry operations.

The NAFTA Tribunal determined there was a failure of international law because the Joint Review Panel considered factors outside Canada’s environmental law that were not disclosed to Bilcon during the review process.

In its decision, the Tribunal noted: “It was unjust for officials to encourage coastal mining projects in general and specifically encourage the pursuit of the project at the Whites Point site, and then, after a massive expenditure of effort and resources by Bilcon on that basis, have other officials effectively determine that the area was a ‘no go’ zone for this kind of development rather than carrying out the lawfully prescribed evaluation of its individual environmental merits.”

The NAFTA Tribunal determined that the Joint Review Panel ignored scientific and environmental evidence and instead imposed arbitrary requirements unrelated to the actual conditions at the quarry. This unfairness violated NAFTA’s fair and equitable treatment requirements. By comparison, the Tribunal found other environmental proponents who sought similar permissions to operate quarries were treated in a more transparent and fair manner. This violated NAFTA’s national treatment obligations.

“We had a responsible plan to expand our existing mining facility, creating new jobs and economic activity for Nova Scotia. We followed the proper regulatory process and simply expected to be treated fairly,” said William Richard Clayton, CEO of Bilcon of Delaware. “Unfortunately, that wasn’t the case, and as a result, it not only hurt our business, but it prevented the creation of 225 construction jobs and 34 full-time good jobs in the local community.”

Bilcon is seeking at least US$300 million in damages from Canada in the next phase of NAFTA proceedings.

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