28 | LEXPERT • December 2015 | www.lexpert.ca
NAFTA
invalidated two of its drug patents.
e courts ruled Eli Lilly's applications failed to meet the
Paul Lalonde
Dentons Canada LLP
"NAFTA HAS NO ABILITY
to declare illegal or to reverse a government
measure. It only provides that where
those measures breach the very specific
commitments of Chapter 11, the government
may have to pay compensation
to foreign companies that are harmed."
standards needed to issue a new drug patent. Lilly argues
Canadian courts have been "retroactively" applying a new,
tougher standard for patents since 2005. A Canadian govern-
ment filing said that Eli Lilly "now seeks to have this Tribunal
misapply NAFTA Ch. 11 and transform itself into a suprana-
tional court of appeal."
"Eli Lilly is appealing to a NAFTA panel a decision made by
the Supreme Court of Canada," says Herman, "and that is a novel
development." He is concerned about the Chapter 11 process
being extended beyond its intended scope. "e concept was to
deal with egregious government measures that were arbitrary and
unfair. It was not thought that investment arbitration would be
used to challenge judicial decisions."
In Lone Pine Resources Inc. v. Government of Canada, the claim
arises from a moratorium on shale gas exploration (fracking) legis-
lated by the Québec government in 2012 and the nullification of
permits previously granted to Lone Pine and other oil and gas
investors. "We're not challenging the moratorium," says Pearson,
whose law firm acts for Lone Pine. "We're simply challenging the
expropriation of rights with no compensation."
e company, headquartered in Calgary but incorporated in
Delaware, is one of many major natural gas companies affected by
Québec's moratorium. Winning a NAFTA case against Québec's
fracking policy would be "an uphill battle," says Herman, since
the policy has a legitimate purpose, and does not appear to
discriminate against foreign firms.
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P OW E R I N E X P E R I E N C E .
HeneinHutchison_CL_Feb_15.indd 1 2015-01-14 1:44 PM
Sheldon Gordon is a business and legal-affairs writer based in Toronto.
