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Politics and Economy:
Trading Democracy
More on This Story:
The Other Chapter 11
Page 2

An excerpt from a Bill Moyers Special Report: TRADING DEMOCRACY

Soon MTBE investigations were underway. MTBE was found in water around the state — in groundwater for a trailer park 20 miles north of San Francisco, in ground wells of homes, even in famously clear South Lake Tahoe.

Martin Wagner
Martin Wagner, Attorney, Earthjustice Legal Defense Fund*

BILL MOYERS: But that order didn't sit well with Methanex — a Canadian company that is the world's largest producer of the key ingredient in MTBE. Within months, Methanex invoked Chapter Eleven and claimed that its market share, and therefore its future profits, were being taken away — expropriated — by the governor's action. Allow us to sell MTBE for gasoline in California, the company argued — or pay us $970 million dollars in compensation.

MARTIN WAGNER (ATTORNEY, EARTHJUSTICE LEGAL DEFENSE FUND): This is incredible. This is a foreign corporation coming in and saying first of all, that a regulation that the government of California, through normal democratic processes, has decided is important to protect health and the environment — they're saying that California either can't implement this protection or that they get a billion dollars. People should be outraged by that.

Transcript Read complete transcript

Official Words on Chapter 11

The Office of the United States Trade Representative has made several announcements regarding Chapter 11 in recent months:

Press Release: July 31, 2001 We reviewed the operation of Chapter 11 of the NAFTA and issued interpretations of certain Chapter 11 provisions. Furthermore, we directed experts to continue their work examining the implementation and operation of Chapter 11, including developing recommendations as appropriate. The experts are to report to Ministers on a periodic basis and, at a minimum, prior to the next meeting of the NAFTA Free Trade Commission.

We view these steps as contributing to the efficient and transparent operation of the Chapter 11 dispute settlement process and to the proper and responsible participation of the disputing parties in such proceedings. Concurrently, we agree to make accessible to the public, in a timely manner, documents submitted to, or issued by, Chapter 11 tribunals, pursuant to the interpretation.

NAFTA Secretariat: January 2002 This Chapter establishes a mechanism for the settlement of investment disputes that assures both equal treatment among investors of the Parties in accordance with the principle of international reciprocity and due process before an impartial tribunal.

A NAFTA investor who alleges that a host government has breached its investment obligations under Chapter 11 may, at its option, have recourse to one of the following arbitral mechanisms:

  • the World Bank's International Center for the Settlement of Investment Disputes (ICSID);
  • ICSID's Additional Facility Rules;
  • the rules of the United Nations Commission for International Trade Law (UNCITRAL rules).
Alternatively, the investor may choose the remedies available in the host country's domestic courts.

An important feature of the Chapter 11 arbitral provisions is the enforceability in domestic courts of final awards by arbitration tribunals.

Visit our Resources section for more information.

*Bill Moyers is president of The Schumann Foundation, which has assisted Earthjustice with a project that did not involve this broadcast.


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