A citizens' initiative is underway in Canada which challenges the legitimacy of the Canadian government to negotiate the Multilateral Agreement on Investment, as the initiative claims the MAI is unconstitutional under the country's law. The MAI is an international treaty being secretly negotiated by the governments of the rich countries, which would give foreign investors unprecedented rights to enter countries in almost all sectors, freely bring funds in and out of the countries, and to be better treated than local companies.

By Michel Chossudovsky

February 1999

An important citizens' initiative is underway in Canada which challenges the legitimacy of the Canadian government to negotiate the Multilateral Agreement on Investment (MAI).

The initiative questions the authority of the federal government to negotiate an international treaty which derogates fundamental rights as contained in Canada's constitution.

The Defence of Canadian Liberty Committee (DCLC), based in Vancouver, BC, has taken the federal government to court. The judicial application was launched in April 1998. The DCLC has commenced proceedings in the Federal Court of Canada (trial division), No. T-790-98. Initiating documents were filed and served on 23 April 1998.

According to the DCLC: 'The MAI is unconstitutional under Canadian law because it gives entrenched rights to international banks and foreign corporations guaranteed by international law which Canadian citizens do not have... This is contrary to the principle of equality before the law which is part of the Canadian constitution enshrined in the Charter of Rights and Freedom.'

The Applicants challenge the jurisdiction of the federal government to sign a treaty, in the form of a Multilateral Agreement on Investment, on behalf of Canada which 'would be outside of the power granted by and ultra vires of the Constitution Acts of 1867 and 1982 and that, generally, such a treaty would not be in the best interests of Canadian citizens'.

The legal challenge constitutes more than an embarrassment to the government's negotiating team headed by Trade Minister Serge Marchi; it underscores the blatant violation of democratic procedures; it questions the honesty of elected politicians and bureaucrats involved in behind-the-scenes negotiations including consultations with international business groups.

'The government of Canada has no authority to sign a treaty without a mandate from Parliament. To do so is a violation of the fundamental principles of democracy and representative government. Exercise of prerogative power must be subject to the Constitution.'

Three top lawyers well versed in constitutional and human rights issues are acting on behalf of the DCLC. Government witnesses have been interrogated, the submission of confidential government documents has been demanded by the Applicants' lawyers. At the hearings in Vancouver, the federal government witness provided many new documents, most of which were heavily censored with large portions blacked out.

The government is now attempting through various means to stall the legal challenge and prevent it from going to the trial stage. Already the government has been calling for adjournments.

Assigned to the court case in the January 1998 hearings in Vancouver was Judge Dube, a former Cabinet Minister and personal friend of Prime Minister Jean Chretien, who is a Defendant in the proceedings. Judge Dube has refused to step down. The Applicants' lawyers (pointing to a blatant conflict of interest) have demanded that Judge Dube be replaced by a more qualified individual.

The proceedings are to continue. The Applicants' lawyers have demanded that the federal government produce documents and answer questions they have refused to answer on the grounds of 'Cabinet Privilege'.

The Struggle against Neoliberalism

This initiative is of crucial importance because it indicates an avenue of struggle against neoliberalism. The legal challenge constitutes a powerful instrument; it is not based on empty 'dialogue' with the government: it questions at the outset the legitimacy of politicians and bureaucrats to undertake (behind closed doors) negotiations (on behalf of national societies) which impoverish millions of people and derogate fundamental human, cultural and economic rights.

The legal challenge complements other anti-MAI initiatives. It also serves to reinforce the ability of the anti-MAI movement to pressure national governments and the relevant inter-governmental organisations.

'Internationalising' the Legal Challenge

The legal challenge in Canada is an important landmark: it identifies a framework for the launching of similar legal challenges in other countries not only against the MAI but also in relation to other international treaties which were negotiated and/or signed without legislative assent and/or in contradiction with constitutional rights.

The 'internationalisation' of this type of legal challenge against 'the MAI and its clones' (ie. legal actions launched simultaneously in several countries) is part of the worldwide movement against neoliberalism. Important lessons can be drawn from the Canadian court challenge against the MAI, particularly in countries which have a similar legal framework to that of Canada.

'MAI Clones': Challenging the Amendment of the IMF Articles

We will recall that the International Monetary Fund's resolve to deregulate capital movements was taken behind closed doors (conveniently removed from the public eye and with very little press coverage) barely two weeks before citizens' groups from around the world gathered in late April 1998 in Paris in opposition to the MAI.

The amendment of the IMF Articles seeks to derogate the powers of national societies not only to regulate foreign investment but to control the deadly movement of speculative capital. In other words, the deregulation of capital movements is to be achieved through a more 'expedient' avenue, ie. without the legal hassle of a global investment treaty entrenched in international law.

In this context, it is important to envisage legal challenges which question the authority of the IMF (through its Interim Committee) to casually proceed (in behind-the-scenes negotiations) with the amendment of its articles through a bureaucratic process. Fundamental rights of member countries are affected but the only people who are consulted are bankers, Washington officials and corporate executives.

Challenging the Legitimacy of Financial Rules and Mechanisms

Similarly, in the context of the global financial crisis (e.g. the brutal onslaught of currency speculation in Brazil), it is also important to challenge the legality of international rules, financial mechanisms and other regulations governing the movement of capital, including speculative capital. The latter are largely responsible for the collapse of national currencies in all major regions of the world with devastating economic and social consequences.

In this regard, many of the administrative rules governing stock markets, currency markets and offshore banking have never been subjected to legislative assent. In other words, many of the rules which govern international financial transactions (including the lucrative flow of dirty money) are also in blatant contradiction with fundamental economic and social rights and should therefore be questioned in the courts. - Third World Network Features

About the writer: Michel Chossudovsky is Professor of Economics, University of Ottawa, Canada.

Information concerning the DCLC legal challenge including legal documents can be found at: