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Backgrounder

The case

The Canadian Union of Public Employees and Democracy Watch, represented by the Sierra Legal Defence Fund, have launched a constitutional challenge of the North American Free Trade Agreement (NAFTA), arguing that the secrecy of Chapter 11 tribunal rules infringes on freedom of the press.

The coalition members, long-time observers and critics of the current free trade process, maintain that the secrecy of NAFTAs investor-state tribunal process violates the Charter of Rights and Freedoms, specifically freedom of expression and freedom of the press and other media of communication, as guaranteed by section 2 (b) of the Charter.

The coalition filed a notice of application with the Superior Court of Justice of Ontario on May 29, 2001, seeking to have Canadas agreement to NAFTA declared unconstitutional.

Chapter 11s secret process

Chapter 11 of NAFTA outlines the rights that NAFTA governments, including Canada, are obliged to extend to corporations from another NAFTA country.

The rules oblige Canada to extend to foreign corporations: national treatment and most-favoured nation treatment; minimum international standards of treatment; prohibitions on performance requirements; and prohibitions on expropriation or measures seen as tantamount to expropriation.

The rules are enforced in a secretive dispute resolution process. Corporations have the right to sue Canada, alleging violations of Canadas obligations under NAFTA that have harmed the corporations investment. The claims can cover virtually all aspects of public policy-making: laws, regulations, policies and even judicial actions.

The claims are heard before tribunals in proceedings that are closed to the public and to the press. Under the tribunal rules, members of the public and the press are not permitted to attend hearings unless all parties to a claim agree otherwise. To date, this has not happened. When claims have been finally decided, the Canadian government is under no obligation to release the tribunals rulings in any claims made against Canada.

A Chapter 11 tribunal cannot overturn a Canadian law, but it can award monetary damages so large that governments reconsider and repeal the policy or law. Canadians may be completely unaware of claims underway against Canada.

Claims that have become public involve challenges to environmental laws, delivery of public services and prohibitions on bulk water exports. The closed nature of the process means matters of public concern are being debated in private, with limited scrutiny or input from the people who will be affected.

Secrecy and freedom of the press

The challenge argues that the Canadian government is bound to respect the guarantees in the Charter when signing international agreements. This includes Canadas agreement to NAFTA.

Section 2(b) of the Charter guarantees freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication. The applicants argue that the secrecy of tribunal proceedings required by Chapter 11 infringes these guarantees.

Canadian courts, most importantly the Supreme Court of Canada, have clearly condemned restrictions on public and media access to domestic courts and tribunals in the strongest terms. The courts have criticized the negative impact of secrecy on freedom of the press and freedom of expression, recognizing that restrictions on gathering and sharing information can lead the public to question the legitimacy of courts and tribunals.

The publics ability to fully scrutinize, understand and support or criticize Chapter 11 proceedings, the decision-makers and how the parties argue and behave is vital to the democratic process. The coalition feels NAFTAs secretive tribunals fundamentally undermine the democratic process, curbing the full and fair discussion of public policy and public institutions. Not surprisingly, the closed nature of the process has drawn heavy criticism from Canadian individuals and groups.

In bringing the challenge, the coalition also wants to prevent secretive and undemocratic processes from being entrenched in future trade agreements that Canada is negotiating, such as the Free Trade Area of the Americas.

The remedy

Faced with arguments that the Charter applies to Canadas agreement to NAFTA and that the secrecy of Chapter 11 proceedings infringes on Section 2(b) of the Charter, it then falls to the federal government to establish that this violation is reasonable and demonstrably justifiable in a free and democratic society. It is hard to imagine how the government will defend the provisions of Chapter 11 in light of Charter guarantees and the clear stand courts have taken on the principle of the open court. The sweeping level of secrecy goes far beyond what is needed, for instance, to protect any business secrets of an investor.

If the courts accept the arguments of the challenge, the likely solution will be to declare invalid Canadas agreement to NAFTA to the extent that it requires a secretive process to resolve investor-state suits. The effect of this would compel Canada to renegotiate the unconstitutional aspects of NAFTA with the United States and Mexico. Presumably the judgements full effect that of invalidating Canadas agreement to NAFTA would be suspended to allow the negotiations to take place.