Nov. 24, 1998

NAFTA s Birthday Bombshell

Corporate Predator Found Liable for Malicious and Fraudulent Business Practices in Mississippi Uses NAFTA to Attack Legal System

??? WASHINGTON, D.C. -- Public Citizen said today that a Canadian company s claim for damages against the U.S. government, filed under the North American Free Trade Agreement, undermines our democracy and jeopardizes the U.S. justice system.

??? The Loewen Group, which owns more than 700 funeral homes and 109 cemeteries in the United States, filed the claim under an obscure but powerful NAFTA provision allowing corporations to directly sue governments for compensation over government actions that interfere with new investor rights guaranteed under NAFTA. It is the first such claim filed against the U.S. government under NAFTA s Chapter 11 "investor-to-state" provisions.

??? "Loewen s challenge shows how global corporate predators, whether U.S., Canadian or Mexican, can use NAFTA as a giant loophole to evade the rule of law and our system of jurisprudence," said Public Citizen President Joan Claybrook. "This case is yet another reason why NAFTA should be regulated, not expanded to other countries in this hemisphere, as the administration proposes. We cannot stand by and allow NAFTA to be used as the broom for a sore loser to sweep justice aside."

??? In 1995, a Mississippi civil jury found the Loewen Group liable for committing unlawful anti-competitive and predatory acts in its quest to dominate local funeral markets. The case drew national attention to funeral industry fraud and excess. A Mississippi jury awarded $100 million in compensatory damages and $400 million in punitive damages to plaintiff Jeremiah O Keefe, a Biloxi businessman. Loewen ultimately settled the case for $150 million rather than file an appeal to a higher court.

??? "Americans have learned the hard way that NAFTA means unsafe food and job loss, but it s shocking to see the entire U.S. court system get attacked by NAFTA," said Lori Wallach, director of Public Citizen's Global Trade Watch. "This case is the most vivid example that NAFTA threatens a wide swath of our basic laws and citizen safeguards that have nothing to do with trade."

??? Loewen s claim that its investor rights under NAFTA were violated constitutes a direct assault on the very workings of the civil justice system in Mississippi. NAFTA gives the company an avenue of appeal not available to domestic corporations, which must live under the rule of law laid down by the state and federal court system. Under NAFTA s anti-democratic provisions, Loewen s claim will be heard by an international tribunal, where proceedings are conducted in secret and the records are not publicly accessible. Since the tribunal s decision will be final and binding, the U.S. government has no recourse to appeal outside of the tribunal s own limited appellate process. No one else can participate as amicus or intervenor or even hear the arguments presented.

??? "This shows how NAFTA gives privileges to corporations and not citizens, and often at the expense of citizens," Claybrook said.

??? If successful, U.S. taxpayers could be forced to shell out hundreds of millions of dollars to a Canadian company found by a judge and jury to have committed malicious and fraudulent business practices. The case also could set a precedent that would embolden any number of other North American corporations to use NAFTA to challenge laws, policies or jury verdicts they find objectionable. NAFTA has already been used by U.S.-based corporations seeking to challenge Canadian and Mexican environmental laws that cost them money.

??? "If we allow Loewen to use NAFTA to escape justice today, we surrender justice tomorrow and forever," Claybrook said.