National | Media Release

Canada at risk of huge lawsuits if U.K. accession to pacific trade deal not amended, warn civil society organizations and academics

Ottawa and London—Canada faces “huge financial risk” of lawsuits from British fossil fuel companies if the United Kingdom joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on present terms, warn civil society organizations and academics in a joint letter published today.

The letter, coordinated by Canadian and U.K. trade justice networks and signed by 57 academics and 37 organizations including the National Farmers Union, Greenpeace, the Canadian Centre for Policy Alternatives, and the Canadian Labour Congress, urges prime ministers Justin Trudeau and Rishi Sunak to “take immediate steps” to ensure the treaty does not block Canada’s ability to “enact mandated climate and environmental policies.”

The CPTPP is a regional trade agreement involving 11 Pacific Rim nations including Canada, Mexico, Vietnam, Chile, Australia, and others. The U.K. formally requested to join, or accede to, the pact in early 2021. Following negotiations with all CPTPP member countries, this request was formally accepted at a CPTPP Commission meeting in New Zealand this July.

If the U.K. accedes to the CPTPP under the present terms of the treaty, Canadian and U.K. investors and companies will have access to an investor-state dispute settlement (ISDS) system like the one Canada agreed to remove from the renegotiated NAFTA to protect environmental policy space. Based on similar concerns, Australia and New Zealand demanded side-letters with the U.K. disapplying the CPTPP’s ISDS system.

ISDS is a controversial privilege written into international trade and investment treaties that allows companies to sue governments over policy changes they allege could affect their profits. The cases are heard in private tribunals outside the national legal system. Canada is currently facing a $20-billion (USD) lawsuit under NAFTA’s expiring ISDS process for Quebec’s decision to reject a large LNG project due to its anticipated environmental impact and impact on the cultural heritage of Innu First Nations.

The U.K. is the third largest investor in Canada and U.K. firms are among the most litigious users of investment treaty protections and ISDS. U.K.-based oil and gas giant Shell, which is pushing a controversial expansion to its LNG export terminal in B.C., has been involved in four previous ISDS cases related to energy policy. As the letter explains, there is evidence that even the threat of a costly ISDS challenge can lead to countries watering down or cancelling environmental measures.

Signatories are calling on prime ministers Trudeau and Sunak to show climate leadership by signing a side-letter excluding the CPTPP’s unnecessary and harmful ISDS provisions—exactly as the U.K. did with Australia and New Zealand—“to remove the huge financial risk to both countries, as well as the infringements on our respective rights to regulate and on the pursuit of a just transition.”

Kyla Tienhaara, Canada Research Chair in Economy and Environment at Queen’s University said: 

“Canada is currently facing two ISDS claims from American fossil fuel companies that could cost taxpayers billions of dollars and threaten further action to address climate change. The federal government made a sensible decision to block any further cases from U.S.-based corporations when NAFTA was renegotiated. It is confounding that they have not taken similar steps in the CPTPP. The very simple and achievable act of signing a side-letter with the U.K. would prevent a new wave of ISDS claims that undermine our democracy and threaten progress on key issues of concern to all Canadians.”

Cleodie Rickard, trade campaign manager at Global Justice Now said: 

“Given that the U.K. has already signed side-letters to scrap dangerous investor tribunals with Australia and New Zealand, it beggars belief that they have not yet with Canada, whose companies sue foreign states the most out of all Pacific trade deal members. The U.K. government has even said it wouldn’t include ISDS in a free trade agreement with Canada, so what’s the sense in locking it in here? While Kemi Badenoch may say it’s a done deal, there’s no technical barrier to signing a side-letter—a simple and prescient way to remove the financial risk of ISDS. The only block is a lack of political will to prioritise protecting the U.K.’s public purse and policy space, instead of flashy optics in our trading relationships.”

Tom Wills, Director at the Trade Justice Movement said:

“The U.K. has shown signs that it is willing to exclude ISDS, as seen in its agreement with Australia and New Zealand, so we are baffled that we haven’t seen the same commitment for CPTPP. Signing a side-letter removing ISDS from the Pacific trade deal will show clear U.K. leadership and commitment to its climate obligations. We have enough cases on file to know that these corporate courts obstruct the urgent need to tackle climate change. Not only does this system make it harder for governments to take the sort of action they desperately need to protect the planet, it actually maintains the profits of the most reckless parts of the fossil fuel industry.”


NFU Media Contacts:

Glenn Wright, NFU 1st Vice-President (Policy),

Jenn Pfenning, National Farmers Union President,

Other Media Contacts:

Catherine Callens, senior communications adviser at the Trade Justice Movement
+44 77 26 46 45 53,

Kyla Tienhaara, associate professor, Queen’s University, +1 613-305-3104,

Stuart Trew, senior researcher, Canadian Centre for Policy Alternatives, +1 613-293-2282,