Another contentious issue is the impact of the investor state dispute settlement obligations contained in Chapter 11 of the NAFTA.[46] 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) violate the international law.[47] This chapter has been criticized by groups in the U.S.,[48] Mexico,[49] and Canada[50] for a variety of reasons, including not taking into account important social and environmental[51] considerations. In Canada, several groups, including the Council of Canadians, challenged the constitutionality of Chapter 11. They lost at the trial level[52] and have subsequently appealed. Methanex Corporation, a Canadian corporation, filed a US$970 million suit against the United States, claiming that a California ban on Methyl tert-butyl ether (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. The tribunal based its decision namely on following reasoning: But as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.[53] 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 Guadalcázar, San Luis Potosí. 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 environmental concerns.[54] Eli Lilly and Company v. Government of Canada[55] is a US$500mn claim for faulty drug patent legislation.[56] Apotex is suing the U.S. for US$520mn because of lost opportunity in a FDA generic drug decision.[56] Lone Pine Resources Inc. v. Government of Canada[57] has filed a US$250mn claim against Canada, whom it accuses of "arbitrary, capricious and illegal" behaviour,[58] because Quebec aims to prevent fracking exploration under the St. Lawrence Seaway.[56] Milos Barutciski, the lawyer who represents Lone Pine, has decried attempts to portray his client as "another rapacious multinational challenging governments’ ability to regulate for health, safety and the environment". Lone Pine Resources is incorporated in Delaware but headquartered in Calgary,[58] and had an initial public offering of stock on the NYSE on May 25, 2011, which offered 15M shares each for $13 and raised US$195mn.[59] Barutciski acknowledged "that NAFTA and other investor-protection treaties create an anomaly in that Canadian companies that have also seen their permits rescinded by the very same Quebec legislation, which expressly forbids the paying of compensation, do not have the right pursue a NAFTA claim," and that winning "compensation in Canadian courts for domestic companies in this case would be more difficult since the Constitution puts property rights in provincial hands."[58] A treaty with China would extend similar rights to Chinese investors, including SOEs.[58]
