Vanderbilt Journal of Transnational Law


Steve Louthan

First Page



In the eight years since its adoption, NAFTA Chapter 11 has escaped significant scrutiny from academics and journalists alike. However, with the recent filing of several Chapter 11 expropriation claims involving U.S. states, Chapter 11 has begun to gain some notoriety in the press and sparked at least two legal symposia this past year.

This Note begins by highlighting the recent Methanex Chapter 11 claim involving the State of California. Methanex, a Canadian chemical manufacturer and importer, claimed $1.6 billion in damages over California's ban of the chemical MTBE. Despite the EPA'S classification of MTBE as a possible carcinogen and an academic study that documented its presence in over ten thousand groundwater sites, Methanex claimed that California's ban "expropriated" their investment. Methanex argued it is due just and timely compensation for this purported expropriation. Moreover, Chapter 11 disputes, by and large, remain closed to public scrutiny because of the rule of international investment arbitration.

It is not surprising that such claims sparked a modest debate over the policy implications of Chapter 11 and its dispute resolution procedures. Though several critics note that many Chapter 11 claims push the limits of credulity and that adjudication of these claims needs to occur in a forum to which the public has access, the threshold question of whether NAFTA Chapter 11 is constitutional remains ignored. This Note argues that Chapter 11 raises serious constitutional questions concerning the Eleventh Amendment and Article I. With the Supreme Court's renewed emphasis on federalism, it is far from clear whether NAFTA Chapter 11 is constitutional.