Notifications

​Resolute Forest Products sues for $70M over Port Hawkesbury aid

​Resolute Forest Products Inc. is seeking damages of more than $70 million under the North American Free Trade Agreement, citing losses it blames on the government-aided revival of an idled paper mill in Nova Scotia.

NAFTA action comes after closure of Laurentide mill blamed on Nova Scotian mill

Under NAFTA rules, the Government of Canada is responsible for acts taken by provincial governments. (CBC)

The federal government said Thursday it will mount a vigorous defence against a $70-million claim for compensation that Resolute Forest Products plans to file under the North American Free Trade Agreement.

The Montreal-based company said late Wednesday that it's seeking compensation for losses from the closure of its
Laurentide mill in Quebec.

Resolute says the closure of its mill in Shawinigan, Que., was a result of competition from a rival paper mill in Port Hawkesbury, N.S., that reopened in 2012 with provincial government assistance.

Under NAFTA rules, the federal government is responsible for acts taken by provincial governments.

"The government of Canada is currently assessing the information provided in the notice of arbitration under NAFTA Chapter 11 as filed by the (Resolute) on Dec 30, 2015," the Global Affairs Department said in an email Thursday.

"The government of Canada will vigorously defend this case."   

The provincial government issued a similar statement saying it will defend Nova Scotia's interests in the case.

The Port Hawkesbury mill, idled for about a year before it was purchased by Pacific West Commercial for $33 million, restarted with provincial government aid of more than $124 million over 10 years.

That was in addition to $36.8 million the Nova Scotia government spent keeping the mill in a so-called hot idle state before striking the deal with Pacific West Commercial.

Resolute contends that the government assistance to Pacific West Commercial led to the closure of its Laurentide mill in October 2014 after 126 years of operation. The company had also laid off 111 employees in late 2012 after it permanently shut down a paper machine at the plant following a drop in demand.

In addition to claiming direct losses of some $70 million, Resolute is seeking unspecified consequential damages "and
additional costs and relief deemed just and appropriate by an arbitral tribunal."

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.