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California Environmental Law Challenged by Foreign Investors Using NAFTA


June 7, 2004

MEDIA ADVISORY

Contact:

Martin Wagner, Attorney, Earthjustice, 510-550-6700
Marcos Orellana, Attorney, CIEL, 202-785-8700
Howard Mann, Lead Counsel, IISD, 613-286-5383



WHO: Three-Member Arbitral Panel administered by ICSID
(International Centre for the Settlement of Investment Disputes)
WHAT: Hearing in the case Methanex Corporation v. United States of America
WHERE: Ground Floor of the MC Building of the World Bank (adjacent to the Preston Auditorium)
Entrance to broadcast will be the corner of 19th and H Streets, N.W.
Washington, DC


BACKGROUND:

National and state laws protecting the environment and public health are increasingly coming under fire from foreign corporations using special provisions in the North American Free Trade Agreement.. NAFTA's investment chapter gives foreign investors unprecedented power to challenge these laws and, some companies claim, to extract compensation from governments when environmental protection measures affect the value of their investment.

In 1999, California decided to phase out MTBE, a gasoline additive suspected by the World Health Organization of being carcinogenic. MTBE had made its way into the groundwater supplies of hundreds of communities across the state, making the water undrinkable. The MTBE ban went into effect January 1, 2004.

Methanex Corporation, the Canadian parent company of a US manufacturer of methanol (one component of MTBE) has brought a $970 million suit under NAFTA against the United States, demanding compensation for profits and business opportunities it claims to have lost because of California's phase-out. This is a landmark case, raising issues that will have far-reaching implications for government's ability to regulate in the public interest in areas such as public health and the environment.

For that reason, environmental groups on both sides of the border fought successfully for the right to present arguments in the case. These groups - Earthjustice on behalf of Bluewater Network, Communities for a Better Environment, and the Center for International Environmental Law; and the International Institute for Sustainable Development (Canada) - have already scored one important victory: no other NAFTA investment tribunal has ever agreed to accept arguments from non-disputants. In their submissions they argued, among other things, that international law requires the tribunal to respect the right of governments to protect important public values like the right to clean water. (See www.earthjustice.org/news/documents/4-04/MethanexAmicusSubmission.pdf and www.iisd.org/pdf/2004/trade_methanex_submissions.pdf.)

A hearing in the case of Methanex Corporation v. United States of America is scheduled to take place before a three-member arbitral tribunal beginning on Monday, June 7, 2004. In only the second case of this type of openness in a NAFTA investment dispute, the hearing will be broadcast live in its entirety at the World Bank premises described above.



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