July 16, 2024

Dismissal of $15 Billion NAFTA Legacy Case on Keystone XL Pipeline Is Welcome, But Billions in Egregious Claims Still Remain

WASHINGTON, D.C. - On Friday, the World Bank indicated that a major Investor-State Dispute Settlement (ISDS) case against the United States appears to have been dismissed due to lack of jurisdiction. Canadian oil company TC Energy sought $15 billion from U.S. taxpayers over President Biden's decision to reject construction of the infamous Keystone XL Pipeline. The U.S.-Mexico Canada Agreement (USMCA) eliminated ISDS between the U.S. and Canada, but allowed a three-year window in which corporations could bring "legacy" cases under the extreme ISDS rules in the original North American Free Trade Agreement (NAFTA). The U.S. State Department argued this window was only for cases involving actions preceding the USMCA's enactment, calling for the case be thrown out due to lack of jurisdiction.

On July 12, the tribunal issued an unpublished award that concluded the case. Last year, nearly 40 senators and representatives wrote to the administration highlighting the egregious Keystone XL case and urging the elimination of ISDS through fora like the Americas Partnership for Economic Prosperity - which is meeting in Ecuador August 1-2.

In response, Global Trade Watch Director Melinda St. Louis issued the following statement:

"Due to the secretive nature of the ISDS system, we do not know the details about the conclusion of this case because the documents are not available. But from what we know, we can breathe a collective sigh of relief that U.S. taxpayers will not be on the hook for this outrageous $15 billion claim, as we recommit to end the noxious ISDS system once and for all.

"President Biden canceled the Keystone XL Pipeline on his first day in office, January 20, 2021, wisely reversing the Trump administration's anti-climate, pro-pipeline stance. The action was taken months after the USMCA was in effect, so it is only logical that this ISDS claim should not have gone forward on jurisdiction.

"The story doesn't end here. The Canadian province of Alberta still has a separate ongoing ISDS case against the U.S. over the Keystone XL Pipeline. Canada and especially Mexico are also facing costly legacy ISDS cases brought under the old NAFTA rules, with amounts sought totalling upwards of $3 billion.

"Civil society organizations from the three countries have urged their governments to issue a binding interpretation via the USMCA Free Trade Commission to clarify that actions taken after the USMCA's June 2020 entry into force should not be subject to such legacy NAFTA claims.

"Even though the case was dismissed, it still cost U.S. taxpayers hundreds of thousands of dollars (and likely much more) in tribunal costs and legal fees.

"This news is a victory for the Indigenous land defenders, scientists, and environmental activists, who first stopped the pipeline back in 2015. But we should not have to rely on the whims of an unaccountable tribunal of attorneys to protect us from corporations raiding our treasuries.

"It's high time that our three countries adopt a binding interpretation to foreclose the rest of these egregious legacy NAFTA claims and work toward eliminating ISDS from all existing trade and investment agreements to protect climate and other public interest policies."

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