Chapter 11
Another contentious issue is the impact of the investment obligations contained in Chapter 11 of the NAFTA.
[28] Chapter 11 allows corporations or individuals to sue Mexico, Canada, or the United States for compensation when actions taken by those governments (or by those for whom they are responsible at international law, such as provincial, state, or municipal governments) have adversely affected their investments.
This chapter has been invoked in cases where governments have passed laws or regulations with intent to protect their constituents and their resident businesses' profits. Language in the chapter defining its scope states that it cannot be used to "prevent a Party from providing a service or performing a function such as law enforcement, correctional services, income security or insurance, social security or insurance, social welfare, public education, public training, health, and child care, in a manner that is not inconsistent with this Chapter.
[29]"
This also accounts for the high volume of debt which is increased in the Mexican environments throughout the country and the various manifestos that implement themselves on this particular view.
This chapter has been criticized by groups in the U.S.[30]", Mexico[31] and Canada[32] for a variety of reasons, including not taking into account important social and environmental considerations. In Canada, several groups, including the Council of Canadians, challenged the constitutionality of Chapter 11. They lost at the trial level,[33] and have subsequently appealed.
Methanex, a Canadian corporation, filed a US$970 million suit against the United States, claiming that a California ban on
MTBE, a substance that had found its way into many wells in the state, was hurtful to the corporation's sales of
methanol. However, the claim was rejected, and the company was ordered to pay US$3 million to the U.S. government in costs.
[34]
In another case
Metalclad, an American corporation, was awarded US$15.6 million from Mexico after a Mexican municipality refused a construction permit for the
hazardous waste landfill it intended to construct in
El Llano,
Aguascalientes. The construction had already been approved by the federal government with various environmental requirements imposed (see paragraph 48 of the tribunal decision). The NAFTA panel found that the municipality did not have the authority to ban construction on the basis of the alleged environmental concerns
[35]
Further, it has been argued that the chapter benefits the interests of Canadian and American corporations disproportionately more than Mexican businesses, which often lack the resources to pursue a suit against the much wealthier states.[
citation needed]
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