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LGST 219 - Class 23 Notes

LGST 219 - Class 23 Notes - CLASS 23(Dec 5 Expropriation...

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CLASS 23 (Dec. 5): Expropriation Cont. 1] Loewen Case (Mississippi Canadian Investor/ Creeping expropriation/ NAFTA/ Tantamount to expropriation/ inadequate procedure: failure to exhaust local remedies) a. Loewen was a Canadian investor investing in Mississippi. He was involved in a case. b. The jury in that case decided against Loewen and forced him to pay damages that amounted to half a billion dollars! c. Loewen wanted to appeal the case because Courts of Appeal usually slice damages to a fraction. d. The problem is that Loewen cannot appeal in Mississippi. (d.i) Mississippi law says that you cannot appeal unless you post a 125% of value of damages as a precondition. (d.ii) Loewen doesn’t have that kind of money. e. Because the damages were so high, this led to the downfall of the company. f. Loewen says that this is tantamount to expropriation under NAFTA Article 1110 . So he is seeking compensation. (f.i) Under NAFTA the standards for compensation are very high (Hull Standard) . (f.ii) But the NAFTA tribunal said that Loewen had failed to pursue all local remedies before bringing this case to NAFTA. (f.iii) There was obviously no way for Loewen to do that because he’d need to put up 125% of the value of damages as a precondition for the Court of Appeals to hear his case! g. The terms “tantamount to expropriation” under NAFTA can be interpreted very widely as we see in this case. 2] Myers Case (Canada/ tantamount to expropriation/ ban on exportation/ temporary vs. permanent ban / temporary ban qualifies as regulation, not expropriation) a. A business said that an act tantamount to expropriation had taken place. b. In this case the company had to export for purposes of its business but Canada imposed an export ban that was destructive for the plaintiff's business. c. The court had to decide if Canada's act is tantamount to expropriation .
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d. Is the act something that permanently affects the property rights ? (d.i) In this case it was only temporary so we can't take a temporary regulation and convert it into expropriation because after the expiration of that ban the company will be back in the same position. (d.ii) The ban was temporary and it qualified as regulation, not expropriation e. The Court then made a distinction between expropriation and regulation. 3 Points: (e.i) Expropriation: Involves the deprivation of ownership rights With some exceptions it usually amounts to a lasting removal of the owner’s ability to utilize the owner’s economic rights. Connotes some exercise of power amounting to a “taking” by a government authority with a view to transferring ownership and should be covered by Article 1110 (e.ii) Regulation: Involves a “lesser” interference. Not necessarily a lasting Deprivation Regulatory conduct by a public authority is unlikely to be subject of complaint under Article 1110 but the possibility is not ruled out.
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