The Supreme Court of Canada has cleared the way for a Federal Court hearing on claims by Ottawa that US Steel failed to live up to jobs and production promises it made in 2007 when it bought steelmaker Stelco.
OTTAWA: The Supreme Court of Canada has cleared the way for a Federal Court hearing on claims by Ottawa that US Steel failed to live up to jobs and production promises it made in 2007 when it bought steelmaker Stelco.
The top court said it will not hear a US Steel appeal seeking to overturn a lower court’s decision supporting the constitutionality of the Investment Canada Act, which governs foreign investments. The Investment Canada Act, the company claimed, created a punitive environment that infringed upon its protections under the Charter of Rights and Freedoms.
In challenging the law, US Steel argued then federal Industry Minister Tony Clement hadn’t given a reason for rejecting company claims it couldn’t meet promised Canadian levels of production and employment.
US Steel said it couldn’t live up to those promises made when it bought the Hamilton steelmaker because demand for its production had been destroyed by the recession that started in 2008.
It also argued the fact it could face contempt of court charges for not paying fines levied under the act entitled it to Charter protections not normally engaged in an administrative case such has this one.
The government’s suit against the company seeks penalties of $10,000 a day retroactive to Nov. 1, 2009.
The decision followed a failed attempt by US Steel at the Federal Court of Appeal to overturn the trial judge’s decision upholding the Investment Canada Act.
When it was given Canadian approval to buy Stelco, US Steel made a package of promises that included maintaining an average 3,105 jobs in its Canadian operations until Oct. 31, 2010.
Starting in March of 2009 it shut various parts of the Canadian plants in response to collapsing demand for steel. It later locked out its Lake Erie workers for eight months in a dispute over pensions. Hamilton workers have been locked out since November of last year in a similar dispute.
© 2011 The Canadian Press