May 10, 2012 / 1:50 PM / 7 years ago

NAFTA award to Cargill against Mexico stands

* Supreme Court of Canada lets $77 mln award stand

* Mexico penalized for barriers against high-fructose corn syrup

* Case heard in Canada because panel was located in Canada

* U.S., Canada backed Mexico in lower court case

By Randall Palmer

OTTAWA, May 10 (Reuters) - The Supreme Court of Canada let stand on Thursday a NAFTA panel decision that Mexico should pay Cargill Inc more than $77 million for having put up trade barriers against high-fructose corn syrup from 2002 to 2007.

The high court refused to hear a Mexican appeal of the 2009 decision under the North American Free Trade Agreement (NAFTA), which was upheld by two lower courts. The cases were heard in Canada because that is where the original NAFTA panel was held.

Mexico had argued that the dispute panel wrongfully included lost profits not only of the subsidiary Cargill de Mexico, which distributed the product, but also of the U.S.-based parent company, Cargill Inc, which produced it and exported it.

Cargill had calculated the lost profits of the parent company at $65.9 million, more than half its original claim of $123.8 million. It alleged that the Mexican tax was aimed at protecting Mexican sugar producers and excluding high-fructose syrup from the soft-drink market.

In the end, the panel awarded Cargill $77 million plus interest and legal costs.

The Cargill claim was launched under the often-criticized Chapter 11 of NAFTA, which allows companies to sue NAFTA countries for improper actions that affect their investments.

The United States said in a lower court submission in Ontario that it and Canada - Mexico’s two partners in NAFTA - actually backed Mexico in saying that Chapter 11 was not meant to compensate for lost trade opportunities.

The Supreme Court of Canada, as usual, did not issue reasons for its decision not to hear an appeal by Mexico.

The case name is United Mexican States v. Cargill, Incorporated (34559).

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