* Todd Weiler is an Assistant Professor and the Executive Director of the Canadian American Research Center at the University of Windsor Faculty of Law. He has been involved in four of the NAFTA cases described herein, working for the investor. He also operates the leading Internet resource for NAFTA disputes: www.naftalaw.org. The views expressed in this article are exclusively those of the author, and do not—in any way—reflect the opinions or beliefs of any of his clients, past or present. Todd Weiler can be reached at: tweiler@naftalaw.org. All of the NAFTA documents referred to in this paper can be found on: www.naftalaw.org or www.naftaclaims.com.
1 North American Free Trade Agreement, Dec. 17, 1992, U.S.-Can.-Mex., 107 Stat. 2057 (1994), 32 I.L.M. 605 (1993) [hereinafter NAFTA].
2 Agreement on the Application of Sanitary and Phytosanitary Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization [hereinafter WTO Agreement], Annex 1A, Legal Instruments—Results of the Uruguay Round vol. 1, 33 I.L.M. 1125, 1153 (1994) [hereinafter WTO SPS Agreement].
3 See, e.g., Frank E. Loy, On a Collision Course? Two Potential Environmental Conflicts Between the U.S. and Canada, 28 Can-U.S. L.J. 11, 19 (2002).
4 Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15, 1994, Legal Instruments--Results of the Uruguay Round vol. 1 (1994), 33 I.L.M. 1125, 1144 (1994).
5 NAFTA, supra note 1, art. 2102(1).
6 Pope & Talbot, Inc. v. Canada, para. 111 (NAFTA/UNCITRAL Trib., Apr. 10, 2001) (final merits award), available at http://www.naftaclaims.com [hereinafter Pope & Talbot Final Merits Award].
7 NAFTA, supra note 1, art. 103(2).
8 Id. art. 104(1).
9 Id. art. 1101(3).
10 Id. art. 1112.
11 Id. arts. 301, 309, 710, 2102(1).
12 Pope & Talbot, Inc. v. Canada, para. 33 (NAFTA/UNCITRAL Trib., Jan. 26, 2000) (award on mot. to dismiss), available at http://www.naftalaw.org.
13 S.D. Myers, Inc. v. Canada, paras. 123-38 (NAFTA/UNCITRAL Trib., Oct. 21, 2002), available at http://www.state.gov/5/l/c3754.htm. [hereinafter Myers Final Award].
14 ADF Group, Inc. v. United States, para. 155 (NAFTA/ICSID(AF) Trib., Case No. ARB(AF)/00/1, Jan. 9, 2003) (final award), available at http://www.naftalaw.org [hereinafter ADF Group Final Award].
15 Methanex Corp. v. United States, (NAFTA/UNCITRAL Trib., Aug. 7, 2002) (award on jurisdiction & admissibility), available at http://www.state.gov/documents/organiza-tion/12613.pdf [hereinafter Methanex Final Award].
16 Id. para. 147.
17 Ethyl Corp. v. Canada, 38 I.L.M. 708 (1999) (NAFTA/UNCITRAL Trib., June 24, 1998) (award on jurisdiction) [hereinafter Ethyl Award]; Kenex Ltd. v. United States (NAFTA/UNCITRAL Trib., Jan. 14, 2002) (notice of Intent to submit a Claim to Arbitration), available at http://www.naftaclaims.org; Crompton Corp. v. Canada, (NAFTA Dispute, Nov. 6, 2001), available at http://www.naftalaw.org; Methanex Corp., supra note 15.
18 NAFTA, supra note 1, art. 1131(1).
19 See, e.g., Mondev Int’l Ltd. v. United States, para. 43 (NAFTA/ICSID (AF) Trib., Case No. ARB(AF)/99/2, Oct. 11, 2002) (final award), available at http://www.naftalaw.org [hereinafter Mondev Final Award]; see also Ethyl Award, supra note 17, at paras. 50–51; WTO Appellate Body Report on United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (May 20, 1996), 35 I.L.M. 603, 624 (1996); or Japan—Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at 9–12 (Oct. 4, 1996) [hereinafter Japan Alcoholic Beverages].
20 Vienna Convention on the Law of Treaties, May 23, 1969, art. 31, 1155 U.N.T.S. 331, 8 I.L.M. 679 (1969).
21 Id. art. 31(1).
22 NAFTA, supra note 1, art. 102.
23 Canada—Tariffs Applied by Canada to Certain U.S.-Origin Agricultural Products, CDA-95–2008–01, Dec. 2, 1996, para. 122, available at http://www.worldtradelaw.net/ nafta20/agtariffs.pdf. This was an arbitration panel established pursuant to NAFTA Article 2008. Id.
24 Metalclad Corp. v. United Mexican States, 40 I.L.M. 36 (2001), para. 70 (NAFTA/ ICSID(AF) Trib., Case No. Arb(AF)/97/1, Aug. 30, 2000) (final award) [hereinafter Metalclad Final Award].
25 NAFTA, supra note 1, art. 102(1).
26 See id.
27 While covered in the Tribunal’s award, the importance of environmental provisions in the NAFTA, including its preambular language, is highlighted in the Opinion of Arbitrator Schwartz, S.D. Myers, Inc. v. Canada, paras. 107–18 (Nov. 12, 2000), available at http://www.naftalaw.org.
28 NAFTA, supra note 1, pmbl.
29 WTO Appellate Body Report on United States—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (Oct. 12, 1998), 38 I.L.M. 118, para. 129 (1999).
30 David A. Wirth, The Role of Science in the Uruguay Round and NAFTA Trade Disciplines, 27 Cornell Int’l L.J. 817, 839 (1994).
31 Id. at 818.
32 See, e.g., id. at 833; Alan O. Sykes, Domestic Regulation, Sovereignty, and Scientific Evidence Requirements: A Pessimistic View, 3 Chi. J. Int’l L. 353, 354-55 (2002); Jan Bohanes, Risk Regulation in WTO Law: A Procedure-Based Approach to the Precautionary Principle, 40 Colum. J. Transnat’l L. 323, 354–59(2002).
33 This jurisprudence is limited to three Appellate Body reports: WTO Appellate Body Report on Japan—Measures Affecting Agricultural Products, WT/DS76/R (Feb 22, 1999), 38 I.L.M. 255 (1999) [hereinafter Japanese Agricultural Products Report]; WTO Appellate Body Report on Australia—Measures Affecting Importation of Salmon, WT/DS18/AB/R (Oct. 20, 1998) [hereinafter Australian Salmon Report]; WTO Appellate Body Report on European Community Measures Concerning Meat and Meat Products, WT/DS26/AB/R, WT/DS48/AB/R (Jan. 16, 1998) [hereinafter Beef Hormones Report].
34 NAFTA, supra note 1, art. 712(1), (2); WTO SPS Agreement, supra note 2, arts 2.1, 3.3.
35 NAFTA, supra note 1, arts. 712(3), 715; WTO SPS Agreement, supra note 2, arts. 2.2, 5.1, 5.2, 5.3.
36 NAFTA, supra note 1, 712(5); WTO SPS Agreement, supra note 2, arts. 2.2, 5.6.
37 The protected economic activity in the WTO context is trade in goods. For the NAFTA, it appears to include any trade activity (whether goods or services). NAFTA, supra note 1, art. 712(4), (6); WTO SPS Agreement, supra note 2, arts. 2.3, 5.5.
38 NAFTA, supra note 1, art. 718; WTO SPS Agreement, supra note 2, art. 7, Annex B.
39 NAFTA, supra note 1, art. 1131(1).
40 See, e.g., United States—In the Matter of Cross Border Trucking Services, para. 221 (USA-MEX-98–2008–01 Feb. 6, 2001) [hereinafter United States--Trucking]; Ethyl Award, supra note 17, para. 51; Gabrielle Marceau, WTO Dispute Settlement and Human Rights, 13 Eur. J. Int’l L. 753, 782 (2002); Robert Howse, The Canadian Generic Medicines Panel: A Dangerous Precedent in Dangerous Times, 3 J. World Intel. Prop. 493, 504 (2000).
41 Statute of the Court of International Justice, Oct. 24, 1945, 832 U.S.T.D. 993.
42 It is also useful to note that NAFTA Article 709 connotes an extremely broad purview for the application of the NAFTA’s SPS obligations, indicating that they apply to “any such measure of a Party that may, directly or indirectly, affect trade between the Parties.” The implication is that the NAFTA’s drafters wanted to stress the importance of the balance they struck between legitimate protection and protectionism, using science as one of the arbitral tests.
43 S.D. Myers, Inc. v. Canada, 40 I.L.M. 1408, para. 260 (NAFTA/UNCITRAL Trib., Nov. 13, 2000) (interim merits award) [hereinafter Myers Interim Merits Award].
44 Id.; Pope & Talbot Final Merits Award, supra note 6; United States—Trucking, supra note 40; ADF Group Final Award, supra note 14; Marvin Feldman v. United Mexican States, (NAFTA/ICSID(AF) Trib., Case No. ARB(AF)/99/1, Dec. 16, 2002) (final award) [hereinafter Feldman Final Award].
45 Pope & Talbot Final Merits Award, supra note 6, paras. 31–81, particularly para. 78.
46 Id. paras. 73–80.
47 Myers Interim Merits Award, supra note 43, paras. 243–51.
48 United States—Trucking, supra note 40, paras. 253, 286.
49 Feldman Final Award, supra note 44, paras. 171–72.
50 ADF Group Final Award, supra note 14, para. 155.
51 See, e.g., United States—Section 337 of the Tariff Act of 1930, 36 (1989) B.I.S.D. 345, at paras. 5.13–5.14; Japan Alcoholic Beverages, supra note 19, at 6; WTO Appellate Body Report on Korea—Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R (Jan. 18, 1999), para. 119; WTO Panel Report on Canada—Certain Measures Affecting the Automotive Industry, WT/DS139/R. WT/DS142/R, para. 10.78 (Jan. 31, 2000), available at http://www.wto.org/english/tratop_e/dispu_e/6100d.pdf .
52 See, e.g., Myers Interim Merits Award, supra note 43, para. 254; Pope & Talbot Final Merits Award, supra note 6, paras. 41–42, 70.
53 ADF Group Final Award, supra note 14, para. 157.
54 Feldman Final Award, supra note 44, para. 181.
55 See, e.g., Pope & Talbot Final Merits Award, supra note 6, paras. 78–79; United States–Trucking, supra note 40, at 258–60.
56 United States—Trucking, supra note 40, paras. 258–60.
57 Pope & Talbot Final Merits Award, supra note 6, para. 81.
58 Beef Hormones Report, supra note 33, para. 214.
59 Australian Salmon Report, supra note 33, paras. 84–85.
60 Beef Hormones Report, supra note 33, paras. 221–23.
61 NAFTA, supra note 1, art. 1105(1).
62 North American Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions (NAFTA Free Trade Commission, July 31, 2001), at http://www.dfait-maeci.go. ca/tha-nac/NAFTA-Interpr_en.asp. (last visited Mar. 14, 2003).
63 See, e.g., Pope & Talbot, Inc. v. Canada, para. 51 (NAFTA/UNCITRAL Trib., May 31, 2002) (damages award), available at www.naftalaw.org [hereinafter Pope & Talbot Damages Awatd].
64 See, e.g., Mondev Final Award, supra note 19, para. 121.
65 ADF Group Final Award, supra note 14, para. 185.
66 United States (L.F. Neer) v. United Mexican States, 4 R.I.A.A. 60, 3 I.L.R. 213, para. 4 (1927) (US-Mexico Claims Commission 1926) [hereinafter Neer]. Neer was rejected, for example, by the Mondev Tribunal in its Final Award. Mondev Final Award, supra note 19, para. 115. The Neer claim involved an allegation of denial of justice because Mexico had allegedly failed to prosecute those who had murdered Mr. Neer.
67 Myers Final Award, supra note 13, para. 260.
68 Id. para. 263.
69 See Mondev Final Award, supra note 19, para. 118.
70 See ADF Group Final Award, supra note 14, paras. 184–85.
71 V.F. Garcia-Amador et al., Recent Codification of the Law of State Responsibility for Injuries to Aliens 196 (1974).
72 See ADF Group Final Award, supra note 14, paras. 190–91; Mondev Final Award, supra note 19, paras. 127, 156.
73 This is the formulation of a substantive denial of justice provided by Vattel, Le Droit des Gens (1758) Book II, Chapter 18, para. 350; translated by C.J. Fenwick in: J.B. Scott, ed., Classics of International Law (Washington, Carnegie Institution: 1916).
74 British Petroleum Exploration Co. Ltd. v. Libyan Arab Republic, 53 I. L. R. 297, 329 (1973) (final award of Arbitrator Lagergren).
75 Bin Cheng, General Principles of Law 132–34(1987).
76 Id. at 122.
77 Id. at 123.
78 See, e.g., Myers Interim Merits Award, supra note 43, para. 263, which provides:
The Tribunal considers that a breach of Article 1105 occurs only when it is shown that an investor has been treated in such an unjust or arbitrary manner that the treatment rises to the level that is unacceptable from the international perspective. That determination must be made in the light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their own borders. The determination must also take into account any specific rules of international law that are applicable to the case.
Id.
79 Howse, supra note 40, at 2336, although he does not explicitly recognize the role of legal certainty in combination with transparency.
80 George Schwarzenberger, International Law and Order 100 (1971).
81 Id. at 100–01.
82 See Wirth, supra note 30, at 855 (although his prescription would be even more deferential than the one provided by the Appellate Body and advocated here). See id.
83 Howse, supra note 40, at 2341.
84 Id. at 2342 (citing Beef Hormones Report, supra note 33, para. 194).
85 Australian Salmon Report, supra note 33, para. 121.
86 Beef Hormones Report, supra note 33, para. 200.
87 Japanese Agricultural Products Report, supra note 33, paras. 76–85.
88 David. G. Victor, The Sanitary and Phytosanitary Agreement of the World Trade Organization: An Assessment After Five Years, 32 N.Y.U. J. Int’l L. & Pol. 865, 872 (2000).
89 See ADF Group Final Award, supra note 14, para. 184.
90 Metalclad Final Award, supra note 24, paras. 88, 99. This aspect of the Tribunal’s award was the subject of a judicial review proceeding in which a British Columbia judge inappropriately substituted his opinion of how Article 1105 should be interpreted for that of the Tribunal. As I have explained elsewhere, it is unlikely that the judge’s opinion will sway many international lawyers in the long run. See generally Todd Weiler, Metalclad v. Mexico: A Play in Three Parts, 2 J. World Invest. 685 (2001).
91 Myers Interim Merits Award, supra note 43, para. 264.
92 Japanese Agricultural Products Report, supra note 33, para. 108.
93 See Howse, supra note 40, at 2336–37.
94 Metalclad Final Award, supra note 24, para. 112.
95 Pope & Talbot, Inc. v. Canada, paras. 101-02 (NAFTA/UNCITRAL Trib., 2000) (interim merits award), available at http://www.naftalaw.org.
96 See Feldman Final Award, supra note 44, para. 152.
97 Id. para. 110.
98 Id. para. 112.
99 Id. para. 135.
100 See Pope & Talbot Damages Award, supra note 63, para. 111.
101 See Howse, supra note 40, at 2354–56.
102 Australian Salmon Report, supra note 33, paras. 180-81.
103 For an elucidation of this condition, see Todd Weiler, A First Look at the Interim Merits Award in S.D. Myers, Inc. v. Canada, 24 Hastings Int’l Comp. L. Rev. 173, 187–88 (2001).
104 This last condition could be referred to as a legitimate expectation or an acquired right which was capable of protection under international law. For more information about these concepts, see Ignaz Seidl-hohenveldern, International Economic Law 133–39 (3rd ed. 1999).
105 Kenex Ltd. supra note 17.
106 Id. paras. 3-6. As indicated in Kenex’s Notice of Intent: hemp seeds can be used directly as a food ingredient or crushed for oil and meal. Hemp seeds and flour are being used in nutrition bars, tortilla chips, pretzels, beer, salad dressings, cheese and ice cream, and as such are directly competitive with products such as flax, walnut, sesame and poppy seeds. Poppy seeds in particular are in a very similar position to hemp seeds, insofar as poppy seeds contain trace amounts of opiates that are controlled by the Controlled Substances Act in the U.S., but are specifically exempted from control along with their trace opiates. Hemp oil is also used in body-care products such as cosmetics, lotions, moisturizers and shampoos where it competes with emollient ingredients like lanolin and jojoba oil, as well as in nutritional Essential Fatty Acid (EFA) omega-3/omega-6 dietary supplements where it competes primarily with flax, evening primrose and fish oil. Id.
107See Controlled Substances Act, 21 U.S.C. � 802, et seq. (2003).
108 Crompton Corp., supra note 17.
109 Note how, because the focus is on the businesses of competing investors, it is a legitimate inquiry to consider whether the products made by these competitors are actually “like products.” I earlier frowned upon the Appellate Body for differentiating between naturally occurring hormones and administered hormones at the justification stage, rather than at the initial stage of comparison, but in that case the goods were the focal point of the analysis, rather than the competitive position of the producers of such goods.
110 This circumstance could be contrasted with the taking of a trademark (e.g., eliminating the right of a tobacco company to market cigarettes in anything other than plain packaging), which would also qualify as an “investment” under the expansive definition contained within NAFTA Article 1139.
111 See generally Methanex Corp. v. United States (Nov. 5, 2002) (second amended statement of claim), available at www.naftalaw.org.
112 Methanex Final Award, supra note 15, para. 151.