With the establishment of international investment agreements, national environmental laws are increasingly being threatened by these undemocratic procedures. The North American Free Trade Agreement contains provisions that give foreign investors unprecedented power to challenge national laws and to extract compensation from governments when environmental protection measures affect the value of a foreign investment. One of the most problematic aspects of these provisions is that they allow foreign investors to exercise their power over national governments in secret. Investors' challenges to national regulations are decided in confidential arbitration proceedings, meaning the public can have no role in deciding the fate of democratically enacted health and environmental measures.
In a precedent-setting case that has begun to define the role of these investment provisions and tribunals, a Canadian company sued the United States over California's decision to phase out the use of the toxic gasoline additive MTBE, which has been responsible for widespread contamination of groundwater. In this challenge, Methanex Corporation, the Canadian owner of a United States facility that manufactures a component of the additive, brought a one billion dollar NAFTA suit against the United States, demanding compensation for future profits that would be lost because of California's phase-out.
In October 2000, on behalf of environmental organizations that worked to establish the California phase-out of MTBE, Earthjustice sought permission to participate in Methanex's compensation claim under the North American Free Trade Agreement. Although international arbitration tribunals have never before permitted citizens to participate in these confidential processes -- a point Methanex's lawyers highlighted to the tribunal -- Earthjustice succeeded in convincing the tribunal that it had the authority to allow us to make written submissions in the case. We have thus taken a significant step in opening this highly secretive process to public scrutiny and participation.