Case Study: NAFTA Investment Dispute

One Company’s Toxic Waste is Another Company’s Gold Mine

.Attend to the Case study – NAFTA Investment Dispute' attached with this assignment and attempt the questions stated therein. Comprehend your thoughts and referring/quoting secondary information; please cite your sources.

Case study

One Company’s Toxic Waste is Another Company’s Gold Mine Decom

Mat Inc. is a relatively new American toxic decontamination business based in the state of Michigan. Decom Mat provides toxic waste treatment for a wide array of hazardous products and by products, including chemical solvents, medical waste, asbestos and cyanide. The material is treated before it is sent to landfills or incineration sites. Incorporated in 2005, Decom Mat quickly established itself as an industry leader in the U.S. The key to its success was its invention of a ground-breaking technological decontamination process that renders waste into a form that is almost 100 percent environmentally friendly. Although the track record for the process has not been established, initial research and tests confirm Decom Mat’s innovative new process surpasses all existing regulatory requirements by rendering all forms of waste more environmentally neutral than any other commercial treatment process for hazardous decontamination currently in practice. The company is estimated to be worth USD 200 million, but with the international attention and interest in the minimal environmental impact of its decontamination process, its worth is projected to quadruple in the next five years.

Cross-Border Expansion

With the success of its new green technology gaining momentum internationally, in 2012, Decom Mat looked to Canada to invest in its next facility. After careful consideration, it chose the province of Ontario. As with the decision to open the first plant in Michigan, logistics played a crucial role in the selection of the next facility location. Like Michigan, Ontario was well positioned for short haul transport distances for trucks and trains from hospitals, chemical plants, tire manufacturing companies and other industrial plants responsible for producing tonnes of hazardous waste materials daily. In addition, the new facility was located near the Canada-U.S. border. The current logistics company contracted for transportation of the waste had a subsidiary in Canada and was well versed in hazardous material import and export regulations and procedures. As opposed to building an entirely new plant, Decom Mat purchased an existing decontamination plant in Ontario for USD 25 million and invested an additional USD 22 million upgrading the existing facility to perform the new process. © FITT

Legislative Hurdle

A month before the plant was set to officially begin processing, its operation was blocked by the province of Ontario. The reason given by the provincial government was, ironically, lack of compliance with provincial environmental regulations. Recent environmental legislation passed required all hazardous waste processing or treatment methods to have a minimum of five years of documented regulatory compliance to be legally entitled to operate in Ontario. The legislation applied to any facility not currently in operation on the day the legislation was passed. With only three years of documented regulatory compliance, while exceptional, Decom Mat was not authorized to begin operation. Having invested close to USD 50 million with the purchase and upgrade of the Canadian facility, Decom Mat Inc. turned to NAFTA to sue the Canadian government.

 1. What are the FDI risks entrepreneurs such as Decom Mat face when investing in another country? Under which NAFTA Chapter are investors protected?

2. In this case study, which of the FDI risks would Decom Mat use as grounds to sue the Canadian government, and why?

3. Dispute resolution under this chapter of NAFTA is modeled on UNCITRAL dispute proceedings. What does this dispute process entail? What are some of the criticisms for these proceedings?

4. If this scenario were brought to a NAFTA tribunal, Decom Mat would most likely win. Explain why.

2.Read the attempted question carefully and make sure you understand the facts before you begin answering. Write legibly and be descriptive with specific examples. I will be looking for well-structured and presented examples, arguments or solutions.

1.What is dumping? Is it illegal per se under the WTO? What may member countries do if products are dumped into their domestic market?