NAFTA - Chapter 11 - Investment

Cases Filed Against the Government of Canada

Dow AgroSciences LLC v. Government of Canada

Claimant

Dow AgroSciences LLC (“DAS”) is a corporation incorporated in the State of Delaware in the United States, with its head office located in Indianapolis, in the State of Indiana, also in the United States. It is a wholly owned subsidiary of the Dow Chemical Company (“DASCI”), also incorporated in the State of Delaware. The company operates in the pest control products, seed and agricultural biotechnology sectors. Dow AgroSciences Canada Inc. is a company established under the Canada Business Corporations Act whose head office is in Calgary, AB, Canada. DASCI is a subsidiary of DAS, which indirectly owns 100 percent of its capital stock.

Articles

  • 1105 (Minimum Standard of Treatment)
  • 1110 (Expropriation)

Damages claimed

$2 million CAD.

Arbitration Rules

UNCITRAL

Summary

Procedural history

The claimant filed a Notice of Intent to Submit a Claim to Arbitration on August 25, 2008, followed by a Notice of Arbitration on March 31, 2009, in which it alleged that the Government of Quebec breached articles 1105 (Minimum Standard of Treatment) and 1110 (Expropriation) of NAFTA. It requested an order from the tribunal requiring the Government of Quebec to repeal the ban addressed in the arbitration request. Alternatively, it sought damages and interest in the amount of at least $2 million CAD. On May 25, 2011, before the establishment of a tribunal, the parties to the dispute reached a negotiated settlement to the dispute without monetary compensation.

Factual Overview and Nature of the Claim

The Notice of Arbitration from DAS stemmed from a series of measures adopted by the Government of Quebec to ban the sale and use of pesticides containing the chemical 2,4-D on lawns other than golf courses. DAS alleged that there was no scientific basis for the ban in question and that it was arbitrary and unfair. DAS alleged that, on the contrary, several studies conducted by Canadian and international agencies showed that 2,4-D posed no health risk. Moreover, in its opinion, internal Government of Quebec documents supported this conclusion. According to the claimant, in March 2003 Quebec modified the applicable methodology for determining which products would be subject to the ban, without any consultation, thereby depriving interested parties of their right to be heard. DAS also alleged that, at the time the ban in question was announced, the Government of Quebec indicated that 2,4-D would be subject to the ban in keeping with the precautionary principle until recognized agencies had concluded their reassessments. However, the Government of Quebec apparently maintained the ban despite the conclusion of those reassessments, which allegedly proved the innocuous nature of the product. DAS alleged that those measures terminated DASCI’s commercial activities related to the sale in Quebec of 2,4-D, and products containing that ingredient, for use on lawns other than golf courses.

Settlement agreement

Under the terms of the settlement between the parties to the dispute, the claimant withdrew its arbitration request without any compensation, monetary or otherwise, and acknowledged that the disputed measures would remain in force. The settlement also contains an acknowledgement from the Government of Quebec that products containing 2,4-D do not pose an unacceptable risk to human health or the environment provided that the instructions on their label are followed, as concluded by Health Canada’s Pest Management Regulatory Agency in its May 16, 2008 reassessment decision. Finally, the settlement agreement also contains an acknowledgement from the claimant that Canada’s provinces, territories and municipalities may regulate the sale, use, transportation, and disposal of pesticides in their jurisdictions.

Status

Settled.

Legal Documents (all documents are in pdf)

This case was governed by the arbitral rules of the United Nations Commission on International Trade Law (UNCITRAL).  Additional documents related to this case can be viewed at the UNCITRAL Transparency Registry.

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