AbitibiBowater is seeking damages of as much as $500 million, claiming Newfoundland and Labrador Premier Danny Williams’ government illegally seized its assets after it shuttered operations in the province because of the economic downturn.
The claim is one of the largest ever filed against Canada under the North American Free Trade Agreement (NAFTA). The filing is the latest in an ongoing spat between the company and province.
The Montreal-based company permanently closed its Grand Falls-Windsor, N.L. mill because of sagging demand.
“In retaliation, the province hastily passed Bill 75, without any attempt to consult with the Company and without holding any public hearings,” it said.
Under international law, the federal government is responsible for the actions of Newfoundland and Labrador where NAFTA provisions are concerned, the U.S.-incorporated company said.
AbitibiBowater said talks with both levels of government failed to produce an adequate settlement and that it had no choice but to file a claim under NAFTA.
"The expropriation was detrimental to the financial position of our company," said David J. Paterson, president and chief executive.
"After operating in Newfoundland and Labrador for more than a century and contributing significantly to the region's economic, social and sustainable development, the nationalization of AbitibiBowater's assets was unexpected and unnecessary."
AbitibiBowater has been operating under bankruptcy protection on both sides of the border. The company produces a wide range of newsprint, commercial printing papers, market pulp and wood products with operations in the U.S., Canada and South Korea.