The Investor State Dispute Settlement Provision – Chapter Eleven of NAFTA – has long been in dispute itself. And for very good reason.
Businesses from many other countries own land in Canada for commercial purposes. NAFTA rules allow these owners to sue for compensation should regulatory changes prevent them from using their property as they intend. If government introduces legislation that interferes with or stops development, these landowners can – and do – sue Canadian tax-payers for huge amounts of money.
Yet Canadian citizens and business have no such right to compensation. If any level of government changes the rules in ways that affect value, Canadians are forced to eat the loss.
The NAFTA rules are reprocial between member NAFTA countries, but Canadian owners are routinely treated as second-class. And don’t think it’s just the “little guy” taking the beating. Canadian corporations don’t rate, either. Canadian National Railway lost their case twice when the City of Vancouver decided to turn some of CN’s land into a “public space” sans compensation.
The Environment Matters – and So Do Rights
Sometimes there are sound reasons for restrictions and changes. There should be ways to halt environmentally risky land use. But the current laws are in sorry shape – and Canadians are paying through the nose because of them.
The regulatory rules skirt the expropriation laws. If land is expropriated, owners must give up title in exchange for payment. In a regulatory taking, the owner retains title.This little detail is the deeply entrenched – and lame – excuse used for not compensating financial loss caused by the taking.
Anyone who owns real property – including our personal residences – deserves fair compensation if regulatory changes interfere with value. Canadian owners are wrongfully denied anything more than a break on their property taxes! And do the municipalities facing these tax losses get anything by way of compensation? No …
Using NAFTA Rules to Run All the Way to the Bank?
On the other hand, owners protected under the NAFTA agreement are often awarded in excess of fair value, courtesy of the tax-payer.
A recent case here in Nova Scotia: A company is suing under the agreement for $300 million plus costs for loss of potential income. Their quarry expansion plans were stopped at the environmental assessment stage.
And Ottawa has recently been ordered to hand $17.3 million over to Exxon Mobile and Murphy Oil due to Newfoundland and Labrador changing the rules in the middle of the game.
There are plenty more examples either in the midst of disputing, or already settled. Precedents are piling up. The trend is obvious and the costs are escalating.
Time to Level the Property Rights Playing Field
Many attempts have been made to straighten out Canadian property rights laws, but so far all have failed due to lack of support in Parliament. While any country has the right to stop land use that will cause serious environmental damage, the end must be accomplished by fair and reasonable means. Now’s the time to put this straight and insist that MP’s take property rights seriously. The top areas for focus:
Property owners losing out due to regulatory changes – especially ones they had no way to see coming – are owed compensation.
Preferential entitlement for NAFTA members is inequitable and prejudiced. All property owners deserve protection.
Settlement amounts need pre-set limits to avoid lengthy and costly court battles – and excessive awards and losses.
Disclosure of any proposed regulatory changes need to be made public.
Open-door policy for negotiation of proposed changes must be created both for NAFTA and Canadian legislation.
And, last-but-not-least, the free-hand needs to be removed from Canadian tax-payers’ and property owners’ pockets right now.
For a brief, comprehensive read on the regulatory taking situation in Canada, some insight into how it works in other countries for comparison – and how it could affect you as a Canadian property owner – I highly recommend:
Stealth Confiscation by Mark Milke