Over the week-end, the State Department announced the following:
On January 12, 2011, a three-member NAFTA arbitration tribunal rejected a claim against the United States filed by Grand River Enterprises Six Nations, Ltd., a Canadian corporation, and Jerry Montour, Kenneth Hill and Arthur Montour Jr., members of Canadian First Nations, challenging certain legislative measures taken by various states related to the landmark 1998 Master Settlement Agreement (“MSA”) between multiple states and major U.S. tobacco companies. Claimants had sought as much as $664 million in damages. The Office of the Legal Adviser of the Department of State represented the United States in the case.
The Claimants submitted their claim to arbitration in 2004, alleging that certain legislative measures taken by states relating to the MSA caused them material harm and substantially impaired the value of their investment in violation of NAFTA investment protections. The Tribunal unanimously rejected the claim, and ruled in favor of the United States.
This means the U.S. is still undefeated as a respondent in NAFTA Chapter 11 cases. Why is that? Are the U.S. government lawyers simply too good? Are investors choosing weak cases to bring? Are tribunals afraid of the consequences for NAFTA Chapter 11 if the U.S. were to lose? Something else entirely?
