July 26, 2010 / 7:51 PM / 9 years ago

Canada's suit against U.S. Steel to proceed -court

* Ottawa says U.S. Steel broke job and production promises

* Judge says company case based on “opinion and argument”

* Canada seeking fines of up to C$10,000 a day (U.S. dollars unless noted)

TORONTO, July 26 (Reuters) - A Canadian court has rejected a bid by United States Steel Corp (X.N) to have a government lawsuit against it thrown out, saying in a ruling released on Monday that the company put forward “opinion and argument” rather than facts, and the case must proceed.

The Canadian government took U.S. Steel to court last July for allegedly breaking production and employment promises made when the company won Ottawa’s approval in 2007 for a $1.1 billion takeover of Hamilton, Ontario-based Stelco Inc.

U.S. Steel sought to have the case thrown out, arguing that the Investment Canada Act, through which the government oversees foreign takeovers, is too vague and difficult to defend against.

Federal Court of Appeal Judge Carolyn Layden-Stevenson said U.S. Steel failed to establish it would suffer “irreparable harm” if the case were to go ahead and that a delay would not provide any benefit to the public.

“These paragraphs, in my view, constitute a combination of opinion and argument,” she said regarding an affidavit from U.S. Steel’s executive vice-president and chief operating officer, John H. Goodish. “There is no factual foundation to support the bare and conclusive assertions.”

A spokeswoman for Pittsburgh-based U.S. Steel said the company does not comment on ongoing court cases.

A spokesman for Canada’s Industry Minister was not immediately available for comment.

In March 2009, U.S. Steel temporarily shut down most of its Canadian operations at two big steel plants in Hamilton and Nanticoke, Ontario, affecting some 1,500 jobs. It blamed adverse market conditions.

In approving Stelco’s takeover, the government cited job protection as one of the benefits.

Ottawa is seeking fines of up to C$10,000 ($9,700) a day until the company meets its obligations.

The United Steelworkers union lauded the court’s decision on Monday.

“This ruling stands up for the principles for which the Investment Canada Act was created: the economic and social benefit of Canadians and Canadian communities in any foreign ownership of our natural resources and industries,” Ken Neumann, the union’s national director for Canada, said in a statement.

$1=$1.03 Canadian Reporting by John McCrank; editing by Rob Wilson

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