The Federal Government Settles AbitibiBowater’s NAFTA Claim
August 27th, 2010
This week, the federal government announced a settlement of a claim under the North American Free Trade Agreement, Can T.S. 1994 No. 2 (“NAFTA”) by AbitibiBowater Inc. (“Abitibi”) against Canada as a result of the dispute between the company and Newfoundland. In 2008, the Newfoundland government hastily expropriated nearly all of Abitibi’s Newfoundland assets after the company announced the closure of the Grand Fall’s pulp and paper mill, a key contributor to the region’s economy. The federal government has agreed to reimburse Abitibi for the expropriation in the amount of $130 million, much less than the $500 million sought.
Also, Newfoundland announced that it would seek leave to appeal from the SCC of a related decision by the Quebec Superior Court (AbitibiBowater Inc. (Arrangement relatif à), 2010 QCCS 1261), affirmed by the Quebec Court of Appeal (Newfoundland v. AbitibiBowater Inc., 2010 QCCA 965), that Newfoundland’s environmental protection orders compelling Abitibi to clean up certain expropriated sites were claims subject to bankruptcy protection claims procedures. (TheCourt.ca reviewed the Quebec decisions here.)
This article will focus on the NAFTA claim and outcome.
Background and Facts
Abitibi was a failing company as a result of the worldwide drop in demand for newsprint resulting from the proliferation of internet based news sources. A US incorporated pulp and paper manufacturer, it operated throughout the province of Newfoundland for over a century. In 2008, the company announced that its last operating mill, located in Grand Falls-Windsor, would close in 2009. This marked the end of its active operations in the province.
However, Abitibi still retained numerous property rights, assets, and undertakings within Newfoundland amounting to well over $300 million. This included interests in hydroelectric facilities, surface rights, and paper mills, many purchased either from the province or third parties for proper consideration.











