OTTAWA — The Federal Court of Appeal has ruled the Canadian government’s lawsuit against U.S. Steel is to proceed without delay, after rejecting the steel giant’s request to delay the hearing.
The Pittsburgh-based steel maker had asked for a stay in the case that was filed against it, saying it would appeal an earlier ruling that found Ottawa’s arguments were valid and constitutional.
A U.S. Steel lawyer said if the case goes ahead before the appeal is heard then it could be based on arguments that might later be deemed unconstitutional, if the appeal is successful.
U.S. Steel has argued that a delay in the government’s lawsuit would not be critical since both Ontario plants are back in operation, with reduced staff.
But the court dismissed U.S. Steel’s request in a decision released Monday.
“U.S. Steel has not established that it would suffer irreparable harm,” if the case against it went forward, Justice Carolyn Layden-Stevenson wrote in her judgement.
She ruled that the case presented by U.S. Steel was based on “opinion and argument” rather than evidence that it would suffer irreparable harm if the case went ahead.
A U.S. Steel spokeswoman declined to comment Monday on the decision because the litigation is ongoing.
In its appeal, U.S. Steel argues the actions by Ottawa, including the prospect of a $10,000 a day fine against the company, violated the Charter of Rights and Freedoms, arguing it doesn’t give foreign companies the rights required under Canadian law.
U.S. Steel lawyers have filed an application to expedite the hearing of their appeal.
The federal government argues the company’s shutdown of two Ontario mills during the 2008-2009 recession breaks promises made when the U.S. steel producer acquired the former Stelco Inc. in 2007.
If the steelmaker is found to have illegally broken promises it made to Ottawa when it bought Stelco for more than $1 billion, it could face a multimillion-dollar fine or be forced to sell its Canadian assets.
The United Steelworkers Union applauded the ruling allowing the already year-long case to move forward.
“This ruling stands up for the principles for which the Investment Canada Act was created: the economic and social benefit of Canadians and Canadian communities in any foreign ownership of our natural resources and industries,” said USW Canadian director Ken Neumann.
“The federal court’s decision not to stay the proceeding of this important case underscores the law’s role in upholding important public policy, and the urgency of these matters to Canadian workers and communities.”
The steelmaker has not denied that it failed to keep its promises, but says it was justified because the global recession decimated demand for the metal used in everything from construction to cars and trucks and appliances.
However, Industry Minister Tony Clement said last year that wasn’t a good enough reason and took the company to court.
This was the first time the Investment Canada Act had been tested in court since it was implemented by the Conservatives in the mid-1980s.
U.S. Steel is an icon in the North American steel business and traces its roots to Andrew Carnegie and the robber baron age of the early 1900s. The company is a major integrated steelmaker with operations in Canada, the United States and Europe and employs more than 43,000 people.