Focus Online | 30 September 2015
Murray Rankin v. Canada
Rankin acted on behalf of an American mining corporation in its successful bid to sue Canada using NAFTA.
A startling ruling by a North American Free Trade Agreement tribunal last March could force the Canadian government to pay Delaware-based Bilcon more than $300 million because an environmental assessment review panel rejected a massive basalt quarry and ship-loading facility on the Bay of Fundy that scientists believed would threaten endangered right whales.
At issue for Victorians in this case is the involvement of Murray Rankin, who acted as an expert witness for Bilcon at the NAFTA hearings. Rankin, currently Member of Parliament for Victoria, is an NDP candidate in the federal election. His 2012 report and 2013 testimony in the Bilcon case helped influence the tribunal’s decision to find against Canada, in what the dissenting tribunal member called “a remarkable step backwards in environmental protection.”
Others too have expressed concern. Groups such as the Canadian Centre for Policy Alternatives, Council of Canadians, and Sierra Club Canada Foundation argue that the implications of the NAFTA ruling on Bilcon go far beyond that one case and threaten the rights of Canadians to enforce their own environmental laws, whether it’s a quarry in Nova Scotia or a pipeline in BC. All Canadians should be concerned that taxpayers will be paying Bilcon, a US company, hundreds of millions of dollars because Canadian environmental rules were enforced, they say. “These international trade agreements are designed for corporate interests, with the collusion of government, to limit the authority of the state,” said John Bennett, Sierra Club Canada Foundation national spokesman.
Investor-State Dispute Settlement (ISDS) provisions in NAFTA and other trade agreements—such as Canada-South Korea, Canada-China (Foreign Investment Promotion and Protection Agreement), Canada and European Union Comprehensive Economic and Trade Agreement (not yet ratified) and the pending Trans-Pacific Partnership—mean corporations can sue governments for compensation when they feel a policy or decision has interfered with their expected profits.
“Someone who comes along and wants to do something is suddenly entitled to compensation if people don’t want it. Investors have more rights than the state,” Bennett said.
Hadrian Mertins-Kirkwood, Canadian Centre for Policy Alternatives researcher, agreed that independent tribunals, deciding the outcome of disputes, create a parallel quasi-legal system. “It is a threat to the democratic process in Canada and elsewhere. It puts corporations on the same level as the state,” he said.
THE BILCON CASE goes back to 2004 when a Joint Review Panel (JRP) was appointed to review the company’s proposal for a 152-hectare quarry on the shores of the Bay of Fundy with a marine terminal that could host 225-metre-long ships to transport the mined rock. The JRP was to determine the potential effects on the environment and community before recommending whether the government should approve the project. After three years of extensive community consultation, hearings, and review of documentation, the JRP recommended against approval, which was followed by a similar decision by the Nova Scotia and federal governments.
Green Party leader, MP and candidate for Saanich-Gulf Islands Elizabeth May, in her former role as Sierra Club executive director (1989-2006), fought against the plan because of environmental concerns and community opposition. “It was the first environmental assessment panel ever to say ‘this project is so bad, it simply cannot be mitigated,’” said May, pointing out that scientists believed that, among other adverse environmental effects, the quarry and marine terminal would threaten the highly endangered right whale population. There are less than 400 of these whales left in the Atlantic, with the Bay of Fundy serving as an important nursery for their calves.
When both levels of government, as a result of the assessment, decided against the project in 2007, “It was a great victory for the whales and a great victory for communities and fishing organizations,” May said.
However, Bilcon, instead of asking for a federal court review of the panel’s findings, chose, in 2008, to go to a NAFTA Investor-State Dispute Settlement tribunal. After seven years of legal claims, counter claims, reports and hearings, in March 2015 that three-person tribunal ruled two-to-one that the environmental assessment panel had violated Canadian law, at least in part, by using the criterion of “community core values.” Bilcon has claimed at least $300 million in damages; the final amount for damages will be ruled on in 2016.
Rankin, an environmental lawyer and former president of West Coast Environmental Law, provided services as an administrative law expert witness on Bilcon’s behalf. The NAFTA suit was fought for Bilcon by Appleton & Associates. Appleton has served as lead counsel for investors in a large number of investor-state disputes under the NAFTA and Bilateral Investment Treaties.
As an expert witness for Bilcon, Rankin wrote a 78-page report. It concluded: “In my view, the entire environmental assessment process of the Whites Point Quarry was a violation of Canadian administrative law. The JRP’s manifest disregard for its jurisdiction led it to a spiral of errors. By not confining itself to the parameters of its enabling legislation and Terms of Reference, the JRP abused its discretion. And the manner in which it conducted its hearing was a flagrant violation of Bilcon’s rights of natural justice and procedural fairness.” This meant the federal and provincial ministers’ decisions were also in error, Rankin argued. Later, he testified at the NAFTA tribunal along such lines.
Though the NAFTA tribunal found in favour of Bilcon, a strong dissenting opinion came from one of its three members, University of Ottawa professor Donald McRae. He said the case should have gone before Canadian courts for a judicial review and that the decision was “a significant intrusion into domestic jurisdiction.”
McRae disagreed with Rankin’s criticism of the JRP for not making recommendations about how the company could mitigate adverse environmental effects of the project. McRae termed the lack of mitigation measures a “principled position” on the part of the JRP that shouldn’t be dismissed as arbitrary.
McRae wrote that the tribunal’s decision would cast a future chill on environmental review panels; members would be tempted to disregard socio-economic considerations in case there was a claim for damages.
Rankin’s report to the tribunal horrified May, who is also a lawyer and counts him as a longtime friend. “It is such a shocker, I still have trouble talking about it. It’s such a horrific decision and it’s a damaging decision against Canada’s interest,” said May.
But Rankin emphasized his report had nothing to do with the potential environmental impacts and everything to do with process. “I was called upon by a law firm in Ontario to do an expert report. I am an administrative lawyer who has done a lot of work on environmental assessment processes and I have an international reputation. I was asked to look at whether it was fair and I concluded it was not fair,” he said. “I didn’t do so as an advocate, it just happened to be part of the process,” he added. Rankin was paid by Bilcon’s law firm and charged his usual legal rates.
Rankin signed his report shortly after becoming a Member of Parliament at the end of 2012. A year later, when the Bilcon case came before the NAFTA panel, he was called to testify so he could be cross-examined on his report. “I had no choice about the matter, I had to go,” he said.
Rankin said that, since being elected, he has become concerned about Investor State Dispute Settlement tribunals, but finds it surprising that the Bilcon case has surfaced as a local election issue. “I am not going to talk about why this story has arisen,” he said.
However, for May, the big issues of trade deals and Investor-State Dispute Settlements need to be front of mind for voters, with Bilcon serving as an example of what can happen to neuter Canadian environmental rules. “It’s a corrupt mechanism and the arbitrations are neither neutral nor fair,” she said unequivocally.
Mertins-Kirkwood, CCPA’s researcher, warned there are likely to be more such cases as additional trade deals are ratified. Since NAFTA was ratified in 1993, Canada has been the target of 35 claims, mostly from US companies. So far, only three have been officially decided against Canada but another six have been settled out of court—meaning Canada effectively lost, according to CCPA research. “The state cannot win, the state can only not lose—it’s a very unbalanced system,” said Mertins-Kirkwood.
Yet, he noted that the Canadian government appears to have embraced the idea of ISDS and Canadian companies have launched 55 cases of their own, mostly against developing countries that lack the capacity to mount much of a defence. The NDP, while expressing concerns about ISDS clauses, voted in favour of one of the latest Harper government trade deals that included such a clause—with South Korea. The Liberals have also voted in favour of such agreements.
So far, taxpayers in Canada have shelled out only about $200 million to aggrieved corporations, but the possibility of billion-dollar cases is alarming, said Mertins-Kirkwood, who wonders what could happen if a company went after the federal government for compensation if First Nations blocked a project such as a pipeline.
It is certainly a scenario BC voters should consider, said May, who is hoping Nova Scotia’s Bilcon project will focus voter attention on the ramifications of trade dispute settlements. “They are very pernicious, perverse agreements that are a threat to our sovereignty,” she said.
All documents pertaining to Bilcon’s NAFTA case are at www.italaw.com/cases/1588