ABSTRACT
This chapter shows that the discretion the North American Free Trade Agreement's (NAFTA) Chapter 11 reposes in tribunals is ill defined and overly broad, and has already led to highly questionable results in several cases, including Metalclad, a decision discussed by Julie A. Soloway in some detail. Negative perceptions about Chapter 11 have also been fostered by the high level of uncertainty surrounding its legal meaning and its implications for domestic policy making and administration. The discretion conferred on NAFTA tribunals to interpret the extraordinarily broad language of Chapter 11 is breathtaking, both in its scope and the degree to which it is insulated from appellate or judicial review. The tribunal heard considerable evidence with respect to whether, under Mexican law, local governments had a constitutional right to refuse to grant construction permits based on environmental considerations. The tribunal also heard evidence that Metalclad had been informed in 1993 by its own Mexican lawyers that a municipal permit may be needed for construction.
