The paper company embroiled in a dispute with the Newfoundland and Labrador government over assets attached to its mill in Grand Falls-Windsor threatened Friday to take the government to court but Premier Danny Williams said his government stands by its legislation to strip those assets.

In a letter sent to Williams and obtained by CBC News, AbitibiBowater CEO and president David Paterson calls Bill 75, the bill passed by the provincial legislature on Tuesday, "an entirely unfounded and unscrupulous attack by the province of Newfoundland and Labrador on the Abitibi Canadian entities and on the parent company, AbitibiBowater Inc."

"The legislation, which is without precedent in Canada and is reminiscent of decrees emanating from jurisdictions with less democratic traditions, shocks common sensibility," the letter continued.

"We have retained prominent legal counsel, including experts in constitutional law, NAFTA and international legal principles governing expropriation, and have been advised that these actions clearly and unequivocally are illegal."

The letter spells out how AbitibiBowater believes Bill 75 violates provisions of the North American Free Trade Agreement since AbitibiBowater Inc, is a U.S. corporation, incorporated in the state of Delaware. Bill 75 strips Abitibi's rights to lucrative hydro and timber resources in central Newfoundland.

The letter said Bill 75 does not meet any requirement of NAFTA's Article 1110 which includes that parties can't expropriate the investment of another party except for: a public purpose, on a non-discriminatory basis; in accordance with due process of law, and on payment of compensation.

Although the letter says it appears the province is trying to punish AbitibiBowater for closing the mill in Grand Falls-Windsor, it still urges the government to work co-operatively with the company to avoid "protracted and unnecessary legal proceedings that can bring no benefit to the people of Newfoundland and Labrador."

"We reiterate our earlier recommendation to set up a joint working group so that together we can address all issues related to the permanent closure of the Grand Falls mill and the needs of its 750 employees," the letter said.

"In the absence of an agreed resolution or full and timely compensation in accordance with this international-law standard, AbitibiBowater expressly reserves all of its rights to the fullest extent available, both under applicable principles of Canadian constitutional, federal and provincial law, and under NAFTA Chapter 11 and applicable principles of international law."

When contacted, Williams's office said he had no statement, except to say that the letter was received, and the province stands by its legal opinions about the bill.