Ethyl Vs Canada Case Summary

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One of the most controversial disputes brought under Chapter 11 is the case of Ethyl v. Canada in 1997 (Sears, 476). American company Ethyl Corporation was the sole shareholder of Canadian company Ethyl Canada Inc which was located in Ontario (Staff & Lewis, 319). Ethyl was a chemical company which exported and sold Methylcyclopentadienyl Manganese Tricarbonyl or MMT (Swan, 151-152). On April 25th 1997, Canadian Parliament passed the Manganese-based fuel Additives Act which prohibited the commercial use of MM (Staff & Lewis, 319). Ethyl had previously threatened the Canadian government with a suit if the law were to be pushed through as they claimed that the law would amount to expropriation and were entitled to compensation (Swan, 151-152). …show more content…

Ethyl v. Canada remains a controversial case because it illustrates the possible dangers of the investor-state settlement disputes. Ethyl Company was able through Chapter 11 to alter a significant piece of Canadian legislation. The Manganese-based fuel Additives Act was created in order to address environmental and health concerns related to the use of MMT. In his analysis of NAFTA’s chapter 11, Scott Sinclair argued that the Ethyl case spearheaded a worrying trend amongst investors and company to rely on Chapter 11 when their environmentally-controversial projects are challenged (Sinclair, 6). The Ethyl v. Canada case shows that Chapter 11 of NAFTA can be detrimental when business interests conflict with public interests as it hinders on the state’s policy-making ability and scope. This phenomenon is labeled as the ‘chilling effect’ and scholars have warned of its dangers on governmental actions (Sinclair, 9). The threat of investor retaliation limits the actions of policy-makers and runs the risks of linking public policy, particularly concerning environmental concerns, to corporate/investor …show more content…

The agreement did not as many had feared integrate the Canadian economy into the American economy and make Canada an extended American state. Since NAFTA’s implementation, the US remains Canada’s largest export-import partner. However many of the significant benefits of NAFTA, such as the elimination of trade barriers, had already been outlined in the FTA agreement in 1989. The benefits extended by NAFTA to Canada had already been granted by the FTA. The benefits of globalization and open trade have created a trading bloc in North America that allows for an unprecedented flow of goods and capital. Whereas NAFTA’s economic policies have benefitted Canada - a significant point of contention is Chapter 11 of NAFTA. This Chapter has often been at the forefront of Canadian interests when attempting to reform certain NAFTA clause. Chapter 11 has, not only caused huge monetary losses to Canada, but posses a threat to the sovereignty of the Canadian state for the sake of foreign corporations. Environmental interests and policies have been sacrificed due to ISDS. Therefore, it can be agreed that on economic grounds, NAFTA has been relatively beneficial to Canada but Chapter 11, taking into account the rising number of ISDS, ought to be reviewed and

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