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AbitibiBowater Seeks CDN$500 Million From NAFTA Complaint

February 26, 2010 (FinancialWire) — Bankrupt paper maker AbitibiBowater (OTC: ABWTQ) said it has filed a notice of arbitration under the North American Free Trade Agreement with regards to what the company claims is the expropriation of its assets and rights in Newfoundland and Labrador, Canada.

The claim, which seeks direct compensation for damages of around CDN$500 million, is one of the largest claims ever filed against Canada under NAFTA, according to the company.

AbitibiBowater’s action stems from actions taken in early December 2008, when the company announced capacity-reduction measures in Canada and the United States, including the permanent closure of its Grand Falls-Windsor, Newfoundland and Labrador mill, due to the economic downturn and decline in product demand. In retaliation, the province hastily passed Bill 75. The company claims that the bill was passed, “without any attempt to consult with the company and without holding any public hearings.”

In the claim, AbitibiBowater contends that the provincial government’s enactment of Bill 75, which it claims expropriates “an extensive array” of AbitibiBowater’s rights and assets, was arbitrary, discriminatory and illegal under international law.

In addition to the CDN$500 million, the claim seeks additional costs and relief “deemed just and appropriate” by the arbitral tribunal.

Under international law, the Canadian Federal government is responsible for the actions of Newfoundland and Labrador in violation of the investment protection provisions of NAFTA.

AbitibiBowater, which is headquartered in Montreal but incorporated in the United States, produces a range of newsprint, commercial printing papers, market pulp and wood products.

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