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Copyright (c) 1999 NAFTA: Law and Business Review of the Americas
NAFTA: Law and Business Review of the Americas

ARTICLE: NAFTA's Article 1110 - Can Regulation be Expropriation?

Autumn, 1999

5 NAFTA L. & Bus. Rev. Am. 499


Kevin Banks *


In recent months, a number of corporate investors in Canada, the United States, and Mexico have filed claims seeking compensation for economic losses that they allegedly suffered as a result of environmental laws and other regulatory measures. These claims have sparked considerable debate and controversy. n1 Environmental and labor groups argue that such claims pose a fundamental challenge to a government's ability to regulate private economic activity in the public interest. n2 Some trade lawyers have defended the suits as simply enforcing an international obligation to compensate foreign investors for the expropriation of their property. n3 Others, however, have expressed concern that using NAFTA's chapter 11 to challenge the traditional regulatory functions of government could lead to a political backlash and that, in response, governments may adopt a restricted interpretation of the chapter or eliminate it altogether. n4 The Canadian government has proposed that NAFTA member countries adopt an interpretation of chapter 11's expropriation provisions, which would exclude "normal regulation" from their reach. n5 However, Mexico has expressed hesitancy concerning this proposal. n6

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n1 See U.S. Firm Brings NAFTA Investor Suit Against Canadian PCB Export Ban, [Vol. 5, No. 23] AM. TRADE, Nov. 12, 1998, at 1, 12 (describing filing by a coalition of environmental non-governmental organizations and the Canadian Labour Congress with the Commission for Environmental Cooperation in response to a chapter 11 investor claim); see also Newest Investor-State Case in Canada Targets Softwood Lumber Accord, [Vol. 6, No. 4] AM. TRADE, Feb. 25, 1999, at ...
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