NAFTA’S CHAPTER 11 AND THE ENVIRONMENT

The report argues that NAFTA's Chapter 11, while intended to protect foreign investors, has become an 'offensive strategic tool' used to challenge environmental laws in Canada, Mexico, and the United States. The authors highlight that broad definitions of 'measures' and 'investments,' combined with a secretive arbitration process (the 'Cone of Silence'), create a 'regulatory freeze' where governments fear adopting new environmental protections due to potential compensation claims. To mitigate this, the report recommends that NAFTA parties adopt a legally binding interpretive statement to clarify non-discrimination and expropriation disciplines, and increase transparency in the dispute process to restore democratic legitimacy.

• NAFTA's Chapter 11 provides foreign investors with an unprecedented level of rights and remedies, which have been strategically used to challenge host countries' environmental laws and administrative decisions.
• The dispute resolution process is criticized for being non-transparent and secretive, allowing corporate actors to bypass public interest safeguards and influence policy-making without accountability.
• Broad definitions of 'measures' and 'investments' in Chapter 11 create significant uncertainty for environmental regulators, as even non-binding acts or court decisions can be challenged.
• The risk of paying compensation for regulatory adjustments under the expropriation provisions (Article 1110) may lead to a 'regulatory freeze,' where governments avoid updating environmental laws.
• The report notes that Chapter 11 challenges against Canada have already targeted the only two new legally binding environmental measures with significant business impact adopted by the federal government since NAFTA began.
• The authors recommend that NAFTA parties immediately adopt a legally binding interpretive statement to clarify the meaning of national treatment and exclude non-discriminatory environmental measures from being classified as expropriations.

APA

Mann, H., & von Moltke, K. (n.d.). NAFTA’S CHAPTER 11 AND THE ENVIRONMENT. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/naftasummary.pdf

Chicago

Mann, Howard, and Konrad von Moltke. NAFTA’S CHAPTER 11 AND THE ENVIRONMENT. International Institute for Sustainable Development, n.d. https://www.iisd.org/system/files/publications/naftasummary.pdf.

Wikipedia

{{cite report |last1=Mann |first1=Howard |last2=von Moltke |first2=Konrad |title=NAFTA’S CHAPTER 11 AND THE ENVIRONMENT |publisher=International Institute for Sustainable Development |url=https://www.iisd.org/system/files/publications/naftasummary.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mannndnaftas, author = {Mann, Howard and von Moltke, Konrad}, title = {{NAFTA’S CHAPTER 11 AND THE ENVIRONMENT}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/naftasummary.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }