The Federal Court of Appeal ruled against US Steel (USS) in a case addressing USS's idling of its Hamilton, Ontario steelmaking operations.
Ken Neumann, Canadian Director of the United Steelworkers (USW) union said, "The Federal Court of Appeal has dismissed a challenge by US Steel and confirmed that the Investment Canada Act and its penalties can be enforced against foreign corporations."
The Investment Canada Act allows penalties including fines and forced divestment of assets for foreign corporations that break binding commitments made as part of a takeover of a Canadian company. However, such sanctions have never been imposed - given that the USS case marks the first time the government has pursued a foreign corporation for violating the Act since it was enacted 27 years ago.
In order to gain Canadian government approval to buy the former Stelco facility in 2007, USS pledged that the purchase would provide a "net benefit" to Canada, as required by the Investment Canada Act.
This week's appeal court decision upholds a Federal Court ruling last year dismissing USS's challenge to the constitutionality of the Investment Canada Act's enforcement mechanisms. The appeal court's decision clears the way for the government's case against US Steel to proceed.