Abitibi vows legal action if not compensated for assets

Everton McLean
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Forestry

AbitibiBowater's president says the province's legislation to expropriate resources and assets from the company contradicts the North America Free Trade Agreement (NAFTA), and his company will fight using every avenue possible to protect its rights.

In a letter to Premier Danny Williams, David Paterson called legislation created Tuesday to strip the company of water, land and timber rights and expropriate three hydroelectric plants "unlawful."

Grand Falls-Windsor mill

AbitibiBowater's president says the province's legislation to expropriate resources and assets from the company contradicts the North America Free Trade Agreement (NAFTA), and his company will fight using every avenue possible to protect its rights.

In a letter to Premier Danny Williams, David Paterson called legislation created Tuesday to strip the company of water, land and timber rights and expropriate three hydroelectric plants "unlawful."

The expropriation came following an announcement that the company will shut down its Grand Falls-Windsor mill in late March. "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," Paterson said in the letter.

"The legislation is 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 goes on to outline specific sections of NAFTA where, the company claims, the province's legislation is in conflict with the agreement.

Paterson notes that AbitibiBowater Inc. is a United States corporation based in Delaware. As a result, the province's legislation is subject to NAFTA, meaning the company may submit a NAFTA challenge.

The letter claims that the legislation is "a direct expropriation" and is in violation of rules in the agreement against such acts.

The letter does note, however, that those NAFTA rules don't apply where the expropriation is "(a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and Article 1105 [the minimum standard of treatment]; and (d) on payment of compensation."

But, Paterson states "none of these requirements have been met" in the legislation.

On the issue of compensation, Paterson said while the legislation allows for compensation for the hydro assets, that compensation is soley at the discretion of cabinet. What's more, he said there is no compensation for the loss of water and timber rights. Those provisions aren't in line with NAFTA rules, he said.

"The province's expropriation entitles AbitibiBowater to full reparation for its loss, including restitution of the expropriated assets or compensation at their fair market value, plus payment of any additional damages suffered as a result of the Province's actions," Paterson said.

He also writes that the expropriation also breaches NAFTA guarantees of "a minimum standard of treatment."

As well, Paterson said, a prohibition against discrimination for foreign investors is also breached because his company is the only one singled out by the legislation.

Paterson has urged the provincial government to "work co-operatively with AbitibiBowater and to avoid protracted and unnecessary legal proceedings that can bring no benefit to the people of Newfoundland and Labrador."

He is calling for a joint working group to address all issues related to the permanent closure of the Grand Falls-Windsor mill and employees.

"Failing an agreed resolution or full and timely compensation, AbitibiBowater is determined to pursue its rights against the Government of Newfoundland and Labrador to the fullest extent available in connection with the serious and unlawful infringement of its rights," Paterson's letter reads.

A spokesperson in the premier's office said Williams would not comment Friday.

However, on Tuesday, the premier said he didn't expect the company to mount a challenge to the expropriation.

"I don't think there's going to be a court battle. If they get good legal opinions, those legal opinions are going to tell them this legislature has a right to do this," said Williams.

"The law, once this bill is passed ... will, in fact, be that we in fact own these assets. So the only issue which would be in question is the question of compensation."

Williams said then that the province will meet with the company and try to work out a compensation agreement, but if one can't be reached the amount would be determined by cabinet.

Meanwhile, AbitibiBowater is also facing challenges on the New York Stock Exchange. The exchange has told the company that it has fallen below its continued listing criteria for having an average closing price less than $1 for 30 days in a row, and it may be delisted.

The company was given six months with a possible extension to bring the average share price back above $1.

The company said in a release it will try to bring its stock price up, but it could not make any guarantees.

emclean@thetelegram.com

Organizations: AbitibiBowater Inc., NAFTA, Province of Newfoundland and Labrador New York Stock Exchange

Geographic location: Abitibi, Canada, United States Newfoundland and Labrador

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Recent comments

  • GENEROUS NEWFOUNDLANDER
    July 02, 2010 - 13:35

    Mr Estep I suggest you do more research on which provincas are now considered have & have not. I am sure that it is Ontario which is now receiving transfer payments while Newfoundland is not. Please don' feel bitter toward us .We are always willing to share our goor fortune with all Canadians. Ontario included , have a happy C
    hristmas

  • Ed
    July 02, 2010 - 13:31

    How quickly abitibi execs forget,or just trying torally support,that when they last signed for the timber rights the timber was only theirs to use as long as the mill was kept running.Mr.Tobin was not willing to give away our resources without safeguards for our people and province. Stand up and shout.Go Danny.

  • Neil
    July 02, 2010 - 13:30

    The fact that Danny had to pass new legislation to do what he did seems to indicate that he had no preexisting legal right to take over the assets (despite what he says) - he had to create the legal rights with new legislation. If he did have any rights under prior legislation or agreements, why wouldn't he just contractually terminate the agreements with ABI (to take back the assets) or go to court to get an injunction blocking any sale or transfer of assets by ABI?

    I am from NF so I care about the place. While Danny and some others are enjoying their chest thumping and have a short term win, the optics on this outside NF are just bad. I think this will only discourage foreign investment. The value of these particular pulp and paper assets would also have to be discounted to get someone to take them over since the new person will know there is a risk that the rights may be appropriated again in future.

  • Howie
    July 02, 2010 - 13:28

    It's beginning to look a lot like cuba....Corporational assests are taken..
    No future development money coming in...What else can you say soo the flags will fly...Communist red and drab gray suits for every citizen...Now we just need to arm the oil rigs and take back the oil from the multi international evil doers...perhaps we can entice some other large sucker corporation in..then when they get all set up and find they cant do business here we just boot em out and keep all thier stuff too...It is a slippery slope dan the man has taken here, as democracy falls to thunderous applause and chants of danny danny...
    I guess we could seperate opt out of nafta and promote ourselves as the sunny resort of north america, then when the visitors come tell em yeah it is weird the weather is never this bad....perhaps your next vacation here will be much better....thank you come again...

  • Ev
    July 02, 2010 - 13:27

    James me boy, it's attitudes like your and companies like Abitibi that have kept Newfoundland down over the years. Mainlanders feel a need to have a poor cousin to look down on and out side companies have been allowed to pick our natural resources dry for too long. We are now starting to fight for our rights, and the likes of you can't stand it. Too bad.

  • Richard
    July 02, 2010 - 13:26

    I don't doubt that the province has every right to reclaim the timber rights and the rights of access to the rivers. But seizing other property and assets seems to have no legal basis. Another problem is that some of the hydro facility is owned by third parties. So how does the Province justify to a NAFTA tribunal that it is confiscating the assets of Abitibi, but not those of other owners of the same property? If Abitibi breached their contract, then why is the new legislation even necessary? Oh well, at least Danny gets a good publicity stunt out of it all.

  • Mike
    July 02, 2010 - 13:22

    If its one thing i learned in alberta, Don't let anyone screw you. ESPECIALLY corporations or ontario! I just moved back from Alberta... Everyone is saying go East, they are lookign for anyone with a red seal cert here!!! crazyness never thought id see the day i would make more money here than Alberta LOL but it happened :)

  • Ken
    July 02, 2010 - 13:20

    What Peter, Mike Ed and Billy seem to forget is that the water rights and timber rights are going back to the Crown in 2010 regardless. Abitibi was willing to sell their assets re/ power plants to the govt when they leave because Billy and the gang refused to help them make paper. Danny decides to ride in an do the Big thing to make it seems like he was a scaviour of some sort. Fact is he did not try and save the mill jobs for folks like Billy yet Billy and you folks want to annoit him KING forever. Abitibi will get compensated for their assets when all is said and done, Danny will get the power plants to use to make electricity to keep you all warm and Billy will be out of work.

    The days of making paper in Grand Falls without a union or govt to help retool the business are over. Seven hundred $70,000 jobs are lost and you celebrate. Before you start dumping on James Estop you should forget the emotion and look at the facts. Blaming others for your poor decision made in Grand Falls by the union, govt. and the company is a cop out. Newsprint is in the sewer and nobody bothered to help get it out.

    This move by Danny is poor business and a court will now decide what Abitibi will get for their assets... and no Billy I'm not getting paid by Abitibi just making a post about the mess you are in.

  • peter
    July 02, 2010 - 13:19

    i fail to see what the problem is here. the paper company seems to think THEY owned perpetual rights to the forests and hudro.

    i believe the deal sadi as long as they run a mill. when they dont , that means they no longer have use of the forests and tivers.

    the never did own them.

    way to go Danny

  • Billy
    July 02, 2010 - 13:16

    James Estep is obvious being paid by AbitibiBowater, Premier Williams took nothing that belonged to AB, what he did take is the resources back that AB had a lease on, until they broke that lease. As for being welfare bums again, you better look at your own province before you crap on ours. Your are a typical ignorant mainland A-hole. Thank God your a dying breed.

  • al
    July 02, 2010 - 13:15

    We will see who has the right Mr. Estep, right now I would be more worried about the Auto Industry..

  • Bill
    July 02, 2010 - 13:12

    Al, don't worry about the Auto Industry all the Governments will be there too help them not like here were they let everything close or move to the mainland. This company does have a right to ask for fair market value just like me or you if the government wanted our property.

  • James
    July 02, 2010 - 13:11

    Williams is acting like the governor of illinois

    and sgt schultz

    I know nothing and I did nothing wrong

    NFLD is entering the perfect storm

    Taking international owned assets without warrant or reasonable compensation.
    International Investment firms are now rating NFLD as a high risk Investment.
    Harpers government is saying Danny WHO!
    Jobs are leaving NFLD and most likely won't return for a generation or more.
    Canadians once thought of NFLD as the welfare province and with the price of oil below $40/barrel NFLD could very well recapture that crown, other than ADC in Ottawa could very well forget there is a NFLD.

    Oh Danny BOY!

  • Sal
    July 02, 2010 - 13:11

    I don't think the legislation contradicts NAFTA, I think NAFTA contradicts the legislation. This deal was done in 1905, a little bit before NAFTA was implemented.

    It's like AbitibiBowater getting a vehicle allowance when they use the company car. Now that they don't work for the company, and therefore don't drive the company car any longer, they still want their car allowance - LOL. Desperate measures to stay afloat.

    Funny how AbitibiBowater is stating that they are all concerned about the people of the province now. I can't believe my eyes when I read how hypocritical they are. AbitibiBowater is just doing what sinking companies do in their death throes - try to see what they can get away with. They own our resources ? You've got to be pulling my m-leg.

    Amexicans like to try to intimidate, it's in their nature. I'm so glad it won't work here in this province. NL has been getting accolades from citizens all across the country on how we stood up to this foreign national corporate giant who have deluded themselves into thinking they own this province's natural resources.

    James Estep, your city is Kitchener not kitchener, it's capitalized as a proper name. Grade 5. Please stop cross-posting your non-sense all over The Telegram. Companies doing business with NL agree upon contracts and adhere to contracts every day. Here we have one with an ill-conceived notion of self-entitlement and who've took it upon themselves to breach their own contract. What else do you need to know ? NL is set to have a 9+% growth in GDP in 2009 due to a multitide of companies who can write good contracts and can abide by their own contracts. Your opinions of NL's business reputation is baseless and falls flat on it's face as companies are not interested in heresay and columnists. They are only interested in the bottom line, and again, this is handled through the writing and adherence to good contracts. If you want to see for yourself, come over here where the action is. See for yourself. Otherwise you're just wasting everybody's time.

  • Wendy
    July 02, 2010 - 13:11

    I spent most of my life in NW Ontario, and have seen countless companies close operations while the government did nothing to reclaim the resource rights.

    What Danny Williams is doing here is what every government should have been doing from the first plant closure in this country.

    If there is anything shameful, it is that NL reclaiming the assets is a shock. Canadians are so used to being battered by by corporate rule and lack of respect for our assets that they don't even recognize what is right anymore.

  • GENEROUS NEWFOUNDLANDER
    July 01, 2010 - 20:25

    Mr Estep I suggest you do more research on which provincas are now considered have & have not. I am sure that it is Ontario which is now receiving transfer payments while Newfoundland is not. Please don' feel bitter toward us .We are always willing to share our goor fortune with all Canadians. Ontario included , have a happy C
    hristmas

  • Ed
    July 01, 2010 - 20:20

    How quickly abitibi execs forget,or just trying torally support,that when they last signed for the timber rights the timber was only theirs to use as long as the mill was kept running.Mr.Tobin was not willing to give away our resources without safeguards for our people and province. Stand up and shout.Go Danny.

  • Neil
    July 01, 2010 - 20:17

    The fact that Danny had to pass new legislation to do what he did seems to indicate that he had no preexisting legal right to take over the assets (despite what he says) - he had to create the legal rights with new legislation. If he did have any rights under prior legislation or agreements, why wouldn't he just contractually terminate the agreements with ABI (to take back the assets) or go to court to get an injunction blocking any sale or transfer of assets by ABI?

    I am from NF so I care about the place. While Danny and some others are enjoying their chest thumping and have a short term win, the optics on this outside NF are just bad. I think this will only discourage foreign investment. The value of these particular pulp and paper assets would also have to be discounted to get someone to take them over since the new person will know there is a risk that the rights may be appropriated again in future.

  • Howie
    July 01, 2010 - 20:15

    It's beginning to look a lot like cuba....Corporational assests are taken..
    No future development money coming in...What else can you say soo the flags will fly...Communist red and drab gray suits for every citizen...Now we just need to arm the oil rigs and take back the oil from the multi international evil doers...perhaps we can entice some other large sucker corporation in..then when they get all set up and find they cant do business here we just boot em out and keep all thier stuff too...It is a slippery slope dan the man has taken here, as democracy falls to thunderous applause and chants of danny danny...
    I guess we could seperate opt out of nafta and promote ourselves as the sunny resort of north america, then when the visitors come tell em yeah it is weird the weather is never this bad....perhaps your next vacation here will be much better....thank you come again...

  • Ev
    July 01, 2010 - 20:15

    James me boy, it's attitudes like your and companies like Abitibi that have kept Newfoundland down over the years. Mainlanders feel a need to have a poor cousin to look down on and out side companies have been allowed to pick our natural resources dry for too long. We are now starting to fight for our rights, and the likes of you can't stand it. Too bad.

  • Richard
    July 01, 2010 - 20:13

    I don't doubt that the province has every right to reclaim the timber rights and the rights of access to the rivers. But seizing other property and assets seems to have no legal basis. Another problem is that some of the hydro facility is owned by third parties. So how does the Province justify to a NAFTA tribunal that it is confiscating the assets of Abitibi, but not those of other owners of the same property? If Abitibi breached their contract, then why is the new legislation even necessary? Oh well, at least Danny gets a good publicity stunt out of it all.

  • Mike
    July 01, 2010 - 20:07

    If its one thing i learned in alberta, Don't let anyone screw you. ESPECIALLY corporations or ontario! I just moved back from Alberta... Everyone is saying go East, they are lookign for anyone with a red seal cert here!!! crazyness never thought id see the day i would make more money here than Alberta LOL but it happened :)

  • Ken
    July 01, 2010 - 20:02

    What Peter, Mike Ed and Billy seem to forget is that the water rights and timber rights are going back to the Crown in 2010 regardless. Abitibi was willing to sell their assets re/ power plants to the govt when they leave because Billy and the gang refused to help them make paper. Danny decides to ride in an do the Big thing to make it seems like he was a scaviour of some sort. Fact is he did not try and save the mill jobs for folks like Billy yet Billy and you folks want to annoit him KING forever. Abitibi will get compensated for their assets when all is said and done, Danny will get the power plants to use to make electricity to keep you all warm and Billy will be out of work.

    The days of making paper in Grand Falls without a union or govt to help retool the business are over. Seven hundred $70,000 jobs are lost and you celebrate. Before you start dumping on James Estop you should forget the emotion and look at the facts. Blaming others for your poor decision made in Grand Falls by the union, govt. and the company is a cop out. Newsprint is in the sewer and nobody bothered to help get it out.

    This move by Danny is poor business and a court will now decide what Abitibi will get for their assets... and no Billy I'm not getting paid by Abitibi just making a post about the mess you are in.

  • peter
    July 01, 2010 - 20:01

    i fail to see what the problem is here. the paper company seems to think THEY owned perpetual rights to the forests and hudro.

    i believe the deal sadi as long as they run a mill. when they dont , that means they no longer have use of the forests and tivers.

    the never did own them.

    way to go Danny

  • Billy
    July 01, 2010 - 19:56

    James Estep is obvious being paid by AbitibiBowater, Premier Williams took nothing that belonged to AB, what he did take is the resources back that AB had a lease on, until they broke that lease. As for being welfare bums again, you better look at your own province before you crap on ours. Your are a typical ignorant mainland A-hole. Thank God your a dying breed.

  • al
    July 01, 2010 - 19:54

    We will see who has the right Mr. Estep, right now I would be more worried about the Auto Industry..

  • Bill
    July 01, 2010 - 19:50

    Al, don't worry about the Auto Industry all the Governments will be there too help them not like here were they let everything close or move to the mainland. This company does have a right to ask for fair market value just like me or you if the government wanted our property.

  • James
    July 01, 2010 - 19:48

    Williams is acting like the governor of illinois

    and sgt schultz

    I know nothing and I did nothing wrong

    NFLD is entering the perfect storm

    Taking international owned assets without warrant or reasonable compensation.
    International Investment firms are now rating NFLD as a high risk Investment.
    Harpers government is saying Danny WHO!
    Jobs are leaving NFLD and most likely won't return for a generation or more.
    Canadians once thought of NFLD as the welfare province and with the price of oil below $40/barrel NFLD could very well recapture that crown, other than ADC in Ottawa could very well forget there is a NFLD.

    Oh Danny BOY!

  • Sal
    July 01, 2010 - 19:47

    I don't think the legislation contradicts NAFTA, I think NAFTA contradicts the legislation. This deal was done in 1905, a little bit before NAFTA was implemented.

    It's like AbitibiBowater getting a vehicle allowance when they use the company car. Now that they don't work for the company, and therefore don't drive the company car any longer, they still want their car allowance - LOL. Desperate measures to stay afloat.

    Funny how AbitibiBowater is stating that they are all concerned about the people of the province now. I can't believe my eyes when I read how hypocritical they are. AbitibiBowater is just doing what sinking companies do in their death throes - try to see what they can get away with. They own our resources ? You've got to be pulling my m-leg.

    Amexicans like to try to intimidate, it's in their nature. I'm so glad it won't work here in this province. NL has been getting accolades from citizens all across the country on how we stood up to this foreign national corporate giant who have deluded themselves into thinking they own this province's natural resources.

    James Estep, your city is Kitchener not kitchener, it's capitalized as a proper name. Grade 5. Please stop cross-posting your non-sense all over The Telegram. Companies doing business with NL agree upon contracts and adhere to contracts every day. Here we have one with an ill-conceived notion of self-entitlement and who've took it upon themselves to breach their own contract. What else do you need to know ? NL is set to have a 9+% growth in GDP in 2009 due to a multitide of companies who can write good contracts and can abide by their own contracts. Your opinions of NL's business reputation is baseless and falls flat on it's face as companies are not interested in heresay and columnists. They are only interested in the bottom line, and again, this is handled through the writing and adherence to good contracts. If you want to see for yourself, come over here where the action is. See for yourself. Otherwise you're just wasting everybody's time.

  • Wendy
    July 01, 2010 - 19:47

    I spent most of my life in NW Ontario, and have seen countless companies close operations while the government did nothing to reclaim the resource rights.

    What Danny Williams is doing here is what every government should have been doing from the first plant closure in this country.

    If there is anything shameful, it is that NL reclaiming the assets is a shock. Canadians are so used to being battered by by corporate rule and lack of respect for our assets that they don't even recognize what is right anymore.