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The 'Metalclad' Decision Under NAFTA's Chapter
11
...continued
- pg 2.
'Metalclad's'
Value
Despite these legitimate concerns,
Metalclad may prove less of an obstacle to environmental regulation and
enforcement than at first feared. For one thing, its precedential value in
arbitration awards is limited, as evidenced most dramatically by the Metalclad
panel's own failure to even mention the earlier Azinian and Pope & Talbot
awards under Chapter 11, both of which rejected expropriation claims.
Second, the "roadmap"
obligation imposed on federal officials surely cannot mean that they are
required to serve as an investor's counsel in identifying legal obligations and
charting an appropriate approval strategy, as opposed to generally identifying,
if requested, relevant levels of approval authority and avoiding the assurances
allegedly given to Metalclad that no other approvals would be required.
Third, the panel's apparent
disregard for local environmental concerns should be seen in the context both of
the environmental reviews and approvals given to this particular project by
federal agencies and the clear pattern of municipal delay evident in the
decision.
While litigation of substantive
domestic legal issues in arbitration proceedings does seem awkward and subject
to nonappealable error, it may also be implicit in the NAFTA Parties' agreement
that private investors may arbitrate directly against foreign govern- ments, if
they relinquish their right to pursue such claims in domestic courts.
Nevertheless, there is a difference between determining whether governmental
conduct constitutes a taking and delineating the boundaries among federal, state
and local environmental laws; future arbitrators, as well as the NAFTA parties,
should consider procedures to permit the latter to be determined by appropriate
domestic tribunals.
Stephen
L. Kass (kass@clm.com) is a partner and Jean M.
McCarroll (mccarroll@clm.com)
is counsel at Carter Ledyard & Milburn.
Read more American Lawyer Media news on the web on law.com.
This article is reprinted with permission from the
October 27, 2000 edition of the New York Law Journal. © 2000 NLP IP
Company.
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