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Client Work

Federal Court of Canada grants Lakeside Steel intervener status in US Steel dispute

Fasken
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Lakeside Steel

On August 31, 2009, the Federal Court of Canada granted Lakeside Steel Inc. intervener status in a case that will address whether US Steel breached undertakings it made to the Canadian federal government when it purchased Stelco (now US Steel Canada), and if so, what remedy should be ordered by the Court. Lakeside Steel is permitted to ask the court to order divestiture in the event the undertakings were breached. In 2007, when US Steel bought Stelco for about $2 billion, the transaction was reviewed by the Minister of Industry. Pursuant to the Investment Canada Act requirement that the purchase only be permitted if it was "of net benefit to Canada", US Steel committed to a number of undertakings, including to meet specific benchmarks for steel production and employment at the Stelco facilities over a three year period. However, when world steel demand dipped in late 2008, US Steel began a series of layoffs at Stelco that culminated in the closure of both of Stelco's integrated steel mills in March 2009. In July 2009, the Federal Government applied to the Federal Court to force US Steel to live up to the employment and production undertakings that it made two years earlier. Lakeside's successful application for intervener status, virtually unprecedented for a business corporation, secures the company a seat at the table for the first proceedings ever conducted under s.40 of the Investment Canada Act (which regulates the purchase of major Canadian businesses by foreign investors). On October 14, 2009, US Steel appealed the orders allowing Lakeside Steel's intervention, and simultaneously commenced a challenge against the validity of ss. 39 and 40 of the Investment Canada Act, arguing that the scheme provided for by those sections fails to provide procedural protections guaranteed by the Charter of Rights and Freedoms, and violates US Steel's right to the enjoyment of property granted by the Canadian Bill of Rights. Fasken Martineau is counsel to Lakeside in these proceedings with a team that includes Jeffrey Kaufman, Leslie Rose, David Wilson and Murray Braithwaite, assisted by articling students Daniel Cowper and Julia Kennedy.

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