Will courts agree to keep U.S. Steel deal with Ottawa secret?

A judge will rule in a week whether the out of court settlement should be unsealed as part of the company's bankruptcy protection hearings.

U.S. Steel bought Stelco in 2007

File photo of Stelco Steel in Hamilton, Ontario. Ontario is a key player in the U.S.-Canada steel trade. (CBC)

It will take a week to learn if the secret settlement made between the Canadian government and U.S. Steel will be unsealed, after both sides submitted arguments at Superior Court Monday.

While lawyers for U.S. Steel argue the deal is privileged and protected information, lawyers for the steelworkers union and City of Hamilton say it would be "fairness 101" to disclose the deal during bankruptcy protection and amidst the potential sale of the Hamilton steel plant.

If we're going to have a fair settlement, all that information needs to come out.'- Bill Ferguson, USW, Local 8782

"They waived any right to secrecy over this agreement," argued United Steelworkers' (USW) lawyer Ken Rosenberg. 

At issue are the details of an out-of-court settlement reached between the two sides, after the government took legal action against U.S. Steel for not fulfilling its obligations set out when Stelco was purchased in 2007. 

With the plant idled, and pensions hanging in the balance, the federal Industry Department sued in 2009.

2011 settlement 

But in 2011, a secret out-of-court settlement was reached. Details of how U.S. Steel was let off the hook for pulling steel production out of Canada have been withheld from the steelworkers union and City of Hamilton. 

One section of the Investment Canada Act could open the documents up to the public proceedings of the Canada's Companies' Creditors Arrangement Act (CCCA) court case, which is being heard in Superior Court in Toronto.

It all depends on how you read it and who is at the table, the court heard Monday. 

In the section titled "privileged information" in the Investment Canada Act, companies, Canadian or not, do not have to give up privileged information.

There are a number of exceptions, including exception "d" under Section 36, which was argued at length Monday. The exception reads, "Information the communication or disclosure of which has been authorized in writing by the Canadian or the non-Canadian to which the information relates."

Decision in a week

Union lawyers argued U.S. Steel Canada president Michael McQuade essentially shot himself in the foot by noting that a settlement did exist in a letter denying the release of the settlement, and said the terms of the agreement prevented him from disclosing the 2011 deal.

"Once you disclose, you can't then hide from partial disclosure," Rosenberg argued.

"They (U.S. Steel) have the right to disclose and they're choosing not to… Once they're in for a penny, they're in for a pound."

On the flip side, lawyers for U.S. Steel argue for a separate subsection of the exclusions to privileged information that allows any "officer or employee of Her Majesty in right of Canada or a province" to be forced into disclosing information.

Superior Court Justice Herman Wilton-Siegel will weigh the minutia of the law, he told the court, and is expected to release a written decision next week. 

What he will not have to consider is what is in fact in the settlement that would be pertinent, which was also argued Monday.

The union and city made the case they have no idea what information is in the settlement, which would largely govern how the plant is being run now, and what obligations it may have which would impact how the plant is liquidated or sold.

Closer than ever

U.S. Steel lawyers, meanwhile, called the union's request a "Catch-22" by forcing the disclosure of the settlement to prove their case that it is privileged information.

Still, after nearly three and a half years, the USW is as close as they have ever been to seeing the secret agreement, something they say they need for any upcoming negotiations, bankruptcy creditor dealings or a sale of the plants in Hamilton and Nanitocoke.

"If we're going to have a fair settlement, all that information needs to come out," said Bill Ferguson, president of USW Local 8782, which represents workers at the Nanticoke operations of U.S. Steel.

"We don't know until we get the disclosure. This whole thing is about fair play."

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