I really like Danny Williams, perhaps the most gutsy politician in Canada these days. This move is particularly sweet:
“We were just basically kicked out of the province by a last-minute piece of legislation,” Mr. Cote said from Montreal. “Because of what we have on the table, we will have to review our options, including of course any legal considerations. AbitibiBowater also needs to assess how this destabilizing precedent opens the door to some potential Canada-U.S. trade issues.” The legislation was introduced earlier in the day and rushed through the legislature after the opposition parties had no objections to its passage. It came days after the company announced it was closing the paper mill and laying off an estimated 800 workers in Grand Falls-Windsor, a town of 13,500. Premier Danny Williams said the firm broke a century-old “covenant” with the province when it decided to shut down the mill next March, a move that would devastate the Grand Falls-Windsor economy. He pointed to a 1905 agreement that gives AbitibiBowater access to wood and hydroelectricity as long as it runs a milling and logging operation.
The Globe and Mail has attached a pdf of what it describes as the 1905 lease agreement between the parties involved but which is really all of Chapter 10 of Newfoundland's Statutes of 1905, entitled "An Act to Encourage the Manufacture of Pulp and Paper in this Colony". Attached as a schedule of the statute is the draft agreement - at page 6 of 17 of the whole pdf - because the legislature of the colony of Newfoundland would have approved the terms of the agreement. You see this in older private legislation. Anyway, as pointed out by Mr. Williams in his statement, the lease of the property is for a purpose: "use and enjoy for its milling and logging business." The company ceases to exercise that business? Lease can be ended by another act of the legislature. Why not? What is lost to the business? If it has no intention of exercising the purpose for which the lease is intended, it doesn't get to change the terms of the lease unilaterally, does it?
Interestingly, at section 16 of the lease agreement it states "This agreement is subject to approval and confirmation by the Legislature of the Colony." Maybe that might mean continuing approval. If not, its inclusion is a little absurd given the passing of the act would inevitably precede the execution of the agreement.
Comments
seanie - December 17, 2008 10:02 AM
I guess concern was that AbitibiGrinch were able to lease out their lease to another firm or something like that. Oh well, Danny Williams Rocks!
David Janes - December 17, 2008 11:52 AM
The concern was (I think) that Abitibi would be able to enjoy all the ancillary economic benefits that were granted without having to take upon the primary responsibilty of employing people. In particular, I suspect this has a lot to do with the hydro generation capacity on the Exploits river (link):
In central Newfoundland, Fortis Generation holds a 51 per cent interest in the
Exploits River Hydro Partnership with Abitibi-Consolidated. The Exploits Partnership
was established in 2001 to develop additional capacity at Abitibi-Consolidated’s
hydroelectric generating plant at Grand Falls-Windsor and to redevelop the forestry
company’s 50-hertz hydroelectric generating plant at Bishop’s Falls to increase annual
energy production by approximately 140 GWh to 600 GWh. The Exploits Partnership
project commenced operations in November 2003. Abitibi-Consolidated continues to use
the historical annual generation while the additional energy produced as a result of the
project is sold to Newfoundland Hydro under a 30-year Power Purchase Agreement. The
Exploits Partnership achieved record annual production of 168 GWh in 2006.
Hans - December 17, 2008 11:56 AM
Let them sue the province of NF and see how far that gets them. Go Danny!
Ben (The Tiger) - December 17, 2008 12:30 PM
Property rights aren't protected in the constitution.
If the Newfoundland legislature wants to expropriate property, that's their right.
All else is moralizing.
Alan - December 17, 2008 1:09 PM
No, this arguably would not be an expropriation but a reversion. As landlord (if this be a lease) Newfoundland always owned the property. If a condition of the lease be that it be used by the tenant for "use and enjoy for its milling and logging business" and there is no right to assign the lease, then when the condition ceases to exist, so does the lease.
No moralizing at all. Just as with those who bleat along with Boing Boing and silly others advocating stripping of ownership rights in relation to digital IP, this is merely about the user coming to terms with the limitation of their rights to the use.
Ben (The Tiger) - December 17, 2008 2:13 PM
Fair 'nuff.
But even if it were a straight-out expropriation, the legislature has that right.
Alan - December 17, 2008 3:12 PM
Definitely. But they may actually have no obligation to pay out anything as compensation for an expropriation which would be a little hilarious.
NL_Expatriate - February 4, 2009 11:32 PM
Now if we could just get that CONFLICT OF INTEREST upper churchill fiasco rectified.
http://www.mun.ca/harriscentre/Memorial_Presents/Churchill_Falls/churchill_falls_video.php