May 14, 2008

Centurion to invoke extraordinary enforcement provisions of NAFTA investment rules to challenge Canadian health care policy and law

Unfair trade practice against American health care companies wanting to enter Canada.

By Melvin J. Howard

After communication with US Federal government officials and intermediaries it was decided that Centurion would file a lawsuit under NAFTA and the WTO trade agreements. This investor state litigation is to bring some uniformity and consistency with provincial health care agencies throughout Canada. With Alberta’s Bill 11 for health care and the recent Supreme Court ruling in Quebec in favor of private health care insurance for residents of that province. As well as a number of provinces contracting out their health services including Public and Private Partnerships. There are serious inconsistencies throughout Canada in terms of the Canada Health Act and Provincial health care programs. Centurion will seek to be compensated for damages for barriers to entry and expropriation. As we have experience in the past even when following provincial guidelines and rules in terms of running private surgical facilities. Municipalities or city officials can and have put up numerous roadblocks such as zoning and by law requirements that is politically motivated instead of merit base. Its like saying yes you can no you can’t in the same sentence i.e. plausible deniability as far as the government is concerned. Centurion thus pursuant will file suit under specific investment services as follows:

· National Treatment (Investment and Services)
· Most Favored-Nation Status (Investment and Services)
· Performance Requirements (Investment)
· Senior Management and Boards of Directors (Investment)
· Local Presence (Services)

Article 1102: National Treatment
1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

2. The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.

In other words, Canada must extend the very best treatment it accords its own citizens and companies to US and Mexican investors on a non-discriminatory basis. Article 1202 establishes the same rule for Foreign Service providers. Therefore unless explicitly excluded, National Treatment would require that foreign investors and service providers be given the same rights and opportunities that Canada makes available to domestic health care service providers and investors.

Article 1106: Performance Requirements
1. No Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory:
2. to achieve a given level or percentage of domestic content;
3. to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory.
Article 1106 prohibits government regulation that would condition the right to conduct business with obligations to support the local economy.

Article 1110: Expropriation and Compensation
No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
a. for a public purpose;
b. in a non-discriminatory basis;
c. in accordance with due process of law and Article 1105(1); and
d. on payment of compensation in accordance with paragraphs 2 through 6

Article 1205: Local Presence
No Party may require a service provider of another Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border provision of a service.
Article 1107 imposes similar constraints with respect to the composition and nationalities of Senior Management and the Boards of Directors.

No exception for health care is included among the general exceptions to NAFTA set out in Chapter 21. This contrasts with the approach taken for National Security, Taxation and Cultural Industries which are given broad exemption from the application of NAFTA rules. Rather, to protect health care policy and law from trade disciplines, Canada elected to list only certain health care services as reservations, and then only to some of the provisions of Chapters and 11 and 12.

Dispute Settlement
The provisions of Section B of Chapter 11 provide foreign investors with the rights to invoke international dispute resolution processes to enforce their rights under the Chapter. Accordingly, under Articles 1121 and 1122 foreign investors of a NAFTA party have a right to sue national governments for any alleged breach of investor rights they are granted by the trade agreement. The disputes will be decided, by the international arbitration panel under international law and according to procedures established for resolving international commercial disputes. This is just summary of the arguments we will be making at the tribunal.