TRAIL SMELTER ARBITRATION CASE( UNITED STATES VS CANADA)

1941, U.N. Rep. Int'L Arb. AWARDS 1905 (1949)

INTRODUCTION:-

The Trail Smelter Case1 arose in the field of late 1950's and came up with the issue of

International Environmental Law. In this case it was damage caused by one State to the environment of the other that triggered the legal claim. Legally the issue was not viewed as

different from damage caused to the public or private property, for instance by the inadvertent

penetration of a foreign State's territory by armed forces. For the first time an International

Tribunal propounded the principle that as State may not use, or allow its national's to use, its own

territory in such a manner as to cause injury to a neighboring country'2. The facts of the case are

lead below :-

The Columbia River rises in Canada and flows past a lead and zinc smelter located at Trail, in British Columbia (Canada). The smelter company was alleged to cause damage to trees, crops

and land in the American States of Washington.3 The climate from beyond Trail on the United

States boundary is dry, but not arid. The smelter was built under U.S. auspices, but had been

taken over. In 1906, the Consolidated Mining and Smelting Company of Canada, Limited

acquired the smelter plant at Trail. Since that time, the Canadian company, without interruption,

has operated the Smelter, and from time to time has greatly added to the plant until it has become

one of the best and largest equipped smelting plants on the American continent.4 In 1925 and

1927, stacks, 409 feet high, were erected and the smelter increased its output, resulting in more

sulphur dioxide fumes. The higher stacks increased the area of damage in the United States.

From 1925 to 1931, damage had been caused in the State of Washington by the sulphur dioxide

coming from the Trail Smelter, and the International Joint Commission recommended payment

of $350,000 in respect of damage to 1 January, 1932. The United States informed Canada that

the conditions were still unsatisfactory and an Arbikal Tribunal was set up to "finally decide"

whether further damage had been caused in Washington and the indemnity due, whether the

smelter should be required to

1. 1941, U.N. Rep. Int'L Arb. AWARDS 1905 (1949)

2. Cassese Antonio, International Law, Oxford University Press, 2nd edition, 2005, New York,

484

3. Ibid pg 484.

4. Noah D. Hall, FOURTH IUCN ACADEMY OF ENVIRONMENTAL LAW WORLDWIDE

COLLOQUIUM: IMPLEMENTING ENVIRONMENTAL LEGISLATION: THE CRITICAL

ROLE OF ENFORCEMENT AND COMPLIANCE, Pace Environmental Law Review, Winter,

2007, 5

cease operation; the measures to be adopted to this end; and compensation due. The Tribunal was

directed to apply the law and practice of the United States as well as international law and

oractice.'5 The United States Government, on February 17, 1933, made represents to the

Canadian Government that the existing conditions were entirely unsatisfactory and that damage

was still occurring and diplomatic negotiations were entered into, which resulted in the signing

of the present convention.'6

The Court held Canada responsible for the conduct of the Trail Smelter and enjoined it to pay compensation to United States. The court also provided for future monitoring of the effects of the

factory's activities on the environment, to prevent possible future damages to the United States

environment.'7

The subsequent diplomatic negotiations led to the United States and Canada signing and ratifying a Convention in 1935. Through the Convention, the two countries agreed to refer the

matter to a three-member arbitration tribunal composed of an American, a Canadian, and an

independent chairman (a Belgian national was ultimately appointed). The arbitration tribunal was

charged with first determining whether damages caused by Trail Smelter continued to occur after

January 1, 1932 and, if so, what indemnity should be paid. Under the Convention, Canada had

already agreed to pay the United States $ 350,000 for damages prior to 1932, based on the

findings of the IJC. The arbitration tribunal addressed this first question in this context of the

case determining that the damages caused by the Canadian smelter to properties in Washington

State from 1932 to 1937 amounted to $ 78,000 (equivalent to approximately $ 1.1 million in

2006). The arbitration tribunal's more difficult, and ultimately more significant charge, was to

decide whether the Canadian smelter should be required to refrain from causing damage in the

State of Washington in the future, and what measures or regime, if any, should be adopted or

maintained by the smelter, in addition to future "indemnity or compensation."

5. http://www.unescap.org/DRPAD/VC/document/compendium/int7.htm

6. Mark W. Jarris & John E. Noyes, Cases and Commentary on International Law, West

Publishing Company, 1997, St. Paul, 586

7. Supra note 2 pg 484

To answer these questions, the tribunal was directed to apply the law and practice followed in

dealing with cognate questions in the United States of America as well as International Law and

Practice, and give consideration to the desire of the High Contracting Parties to reach a solution

just to all parties concerned.'8

The Trail Smelter case came up with the issue of "duty" of states to "prevent transboundary

harm" and invoking the "polluter pays" principle. Firstly we move on to the Transboundary Harm' issue. Transboundary Harm proceeds in three parts. Part One examines the historical foundations of the case, its influence on international environmental law, and the smelter's

continuing yet largely unknown toxic legacy. Part Two examines the case's contemporary

significance for the law of transboundary environmental harm. Part Three looks beyond

environmental law to examine the significance of the Trail Smelter arbitration for legal responses

to other transboundary harms, from international terrorism to Internet torts.'9 Illustratively:

Part One examination begins with a detailed account of the history surrounding the dispute, describing the important roles of the private parties involved and examining the actions of the

state actors in arbitrating the dispute on behalf of the parties. Part One also examines the

"jurisprudential legacy" of the decision in an increasingly prevention-focused, regulatory world.

The usefulness of the Smelter case is limited by the fact that the dispute turned more on the

rights of states as "sovereign equals" and less on the undesirability of transboundary pollution.

Unlike the situation in Trail, in contemporary disputes the cause of damages is often unclear and

the disputing countries often lack a history of cooperation and "reciprocal" interests which

counsel them toward cooperation and moderation. The enduring significance of the "due

diligence" obligation was created by the Tribunal. The obligation "not to cause serious

environmental harm" - was originally intended to ensure the continuing compliance of the Trail

Smelter with

8. Supra note 4 pg 6

9. Stepan Wood, TRANSBOUNDARY HARM IN INTERNATIONAL LAW LESSONS FROM

THE TRAIL SMELTER ARBITRATION, EDITED BY REBECCA M. BRATSPIES &

RUSSELL A. MILLER (NEW YORK: CAMBRIDGE UNIVERSITY PRESS, 2006) 347pages,

Osgood Hall Law Journal.

pollution-prevention measures. Due diligence, is recognized by the "Draft Articles on Prevention

of Transboundary Harm from Hazardous Activities" as the requisite level of intent needed to

establish the liability of transboundary polluters. Part One closes with an account of a new

dispute over pollution by the Trail Smelter - the United States Environmental Protection Agency

(EPA) has recently issued a regulatory order under the Comprehensive Environmental Response,

Compensation and Liability Act (CERCLA) against Cominco relating to pollution of the

Columbia River "watershed." An action to enforce the order is pending in United States Courts.

The regulatory character of this action, and the attempt by the United States to directly regulate a

foreign entity under a "strict liability" theory of accountability, demonstrates a drastic break in

the character of modern transboundary pollution disputes.'10

Part Two examines the significance and potential relevance of the Trail Smelter principles to important "contemporary" issues in transboundary environmental harm. The issues surveyed

include genetically modified organisms, nuclear energy, global climate change, hazardous waste

transport, transboundary air pollution, and marine pollution, among others. The difficulty of

identifying any particular polluting entity as the single cause of global pollution problems, like

climate change cannot be identified. The requirement of "clear and convincing evidence" of

"serious" environmental harm makes liability increasingly difficult to establish, and bilateral

litigation becomes less effective in solving widespread pollution problems. States still reign

supreme even in such international regulatory regimes, as conventions generally depend upon

state cooperation and often are more concerned with preserving the sovereign equality of states

than preventing pollution. One other key theme in Part Two is a recognition of the fact that

although Canada voluntarily assumed responsibility for the actions of a private company in the

Trail Smelter arbitration, such attributions of control are more problematic.'11

10. Lisa Gouldy, Transboundary Harm in International Law: Lessons from the Trail Smelter

Arbitration. Edited by Rebecca M. Bratspies and Russell A. Miller. New York, New York:

Cambridge University Press, 2006. Pp. xxi, 347. New York University Journal of International

Law and Politics, Winter, 2006. 2.

11. Ibid pg 2.

Part Three innovatively examines the applicability of Trail Smelter to non-environmental forms of "transboundary harm" as broadly defined, including terrorism, refugee flows, Internet torts,

drug trafficking, and human rights. Generally, such analyses find that Trail's lessons are not

easily transposed to other sorts of transboundary harm. First, "liability regimes" imposing

damages for continuing harms are not always appropriate to remedy non-environmental harms.

In the cases of migration of refugees forcing the state from which the harm emanated to

compensate other states for the harm engendered will not generally resolve the problem because

the harms tend to arise from instability, poverty, or weak governments within those states. Not

only will those states generally have little money to satisfy any potential judgment, but any such

judgment could only serve to further destabilize the state and increase the harm.

In other situations, the intense focus of Trail Smelter on theories of sovereign equality makes it

less well suited to address harms caused by private actors. For example, with respect to Internet

torts or terrorism, states may not be well placed to prevent the commission of such harms by

private actors. In addition, multinational corporations often operate across many different states,

making it difficult to hold any one state responsible for their harmful actions. Rather,

multinational corporations often have better resources and scientific knowledge to regulate their

own actions in ways consistent with notions of "corporate social and environmental

responsibility" and therefore states must work together with those corporations in that regard.

Finally, the Trail Smelter remains relevant insofar as it would counsel that states be held

responsible for their own extraterritorial actions which result in human rights violations

abroad.'12

After the issue of the transboundary harm we can come up to the general principles which have

been evolved from this case and its implications.

Only two General Principles have been evolved from the case of Smelter. The first and more general one is that enjoying every State not to allow its territory to be used in such a way as to

damage the environment of other States or of areas beyond the limits of national jurisdiction.

This principle was first set out by the Arbitral Courts in the Smelter

12. Ibid pg 2.

case. This principle is substantially based on an even more general obligation, enunciated in the

Corfu Channel13 case where the principle laid down that every State is under the obligation not

to allow knowingly its territory to be used for acts contrary to the rights of the other States.'14

The second general principle attested to by the general and increasing concern of the States about the environment and born out by the great number of treaties concluded that imposing

upon States the obligation to co-operate for the protection of the environment. This principle had

already been eluded in the decision of the Smelter case. It is off course much looser than the

previous one but already reflects a new approach to environmental issues, based on the

assumption that the environment is a matter of general concern. It follows from this principle that

every State must co-operate for the protection of this precious asset, regardless of whether or not

its own environment has been or may be harmed. This principle can only be applied jointly with

the customary rule on good faith, which states every State must in good faith endeavor to co-

operate with other States with a view to protecting the environment. A blunt refusal to co-

operate, unaccompanied by a statement of he reasons for such attitude, would amount to a breach

of the principle.'15 After dealing with issues of transboundary harm and general principles

applicable in this case we have to give the answers to the questions that has come up in this case

relating to whether the Canadian smelter should be required to refrain from causing damage in

the State of Washington in the future, and what measures or regime, if any, should be adopted or

maintained by the smelter, in addition to future "indemnity or compensation."

The tribunal first concluded that there was no need to chose between the law of the United States or international law to decide the case, as the law followed in the United States in dealing

with the quasi-sovereign rights of the States of the Union, in the matter

13. ICJ Reports, 1949;16 ILR

14. Supra note 2. pg 488

15.Ibid pg.489.

of transboundary pollution, is in conformity with the general rules of international law. The

tribunal cited a leading international law authority: "As Professor Eagleton puts in ... 'A State

owes at all times a duty to protect other States against injurious acts by individuals from within

its jurisdiction.'"16The tribunal supplemented this general rule with a comprehensive summary

of the United States Supreme Court's decisions regarding interstate transboundary pollution,

including cases both between two sovereign states and between a state and local governments or

private parties (such as cities and mining companies). Taking the decisions as a whole, the

tribunal stated the following principles for transboundary pollution disputes:

No State has the right to use or permit the use of its territory in such a manner as to cause injury

by fumes in or to the territory of another or the properties or persons therein, when the cause is of

serious consequence and the injury is established by clear and convincing evidence.

The tribunal further held that the Dominion of Canada is responsible in international law for the conduct of the Trail Smelter. Therefore, it is the duty of the Government of the Dominion of

Canada to see to it that this conduct should be in conformity with the obligation of the Dominion

under international law as herein determined.17

Applying these principles to the dispute at hand, the tribunal required the Trail Smelter to

"refrain from causing any damage through fumes in the State of Washington."18 The tribunal

specifically noted that such damage would be actionable under United States law in a suit

between private individuals. Further, the tribunal ordered a detailed management regime and

regulations for the smelter to prevent sulphur dioxide emissions from reaching levels that cause

property damage in Washington State. The tribunal also indicated that it would allow future

claims for damages that occur, despite the imposed management regime.'19

16. CONVENTION FOR SETTLEMENT OF DIFFICULTIES ARISING FROM OPERATION

OF SMELTER AT TRAIL, B.C. U.S. Treaty series No. 893. Art XII

17. Ibid Art XII last Para

18. answer to the question of refraining of the Canadian smelter

19. Supra note 4 pg 6

The emergence of the Trail smelter dispute raises significant questions about the ability of Canada and the United States to resolve transboundary pollution disagreements:

* Should U.S. domestic environmental laws be applied and enforced extraterritorially against

Canadian companies that operate exclusively in Canada?

* What international legal mechanisms exist to resolve transboundary water pollution disputes

between the United States and Canada satisfactorily and effectively?

* What lessons may be drawn from the original Trail Smelter Arbitration decided over sixty

years ago?

Answers to these questions are important, for the Trail smelter dispute which does not stand

alone. The United States has numerous other environmental disputes along the Canadian border

that are either ongoing or are in the making, and the number of disputes is expected to grow.

Accordingly, the countries need an effective means to resolve their transboundary pollution

problems.

This Article discusses some of the legal mechanisms available to resolve transboundary water

pollution disputes between the United States and Canada, as viewed through the context of the

Trail smelter dispute. This Article concludes that the use of international arbitration provides an

effective, and too often overlooked, way to resolve transboundary water pollution issues.20 Part I

describes the current Trail smelter dispute, and the unique environmental problems the Trail

smelter is believed to have caused to the Upper Columbia River Basin. Part II analyzes the legal

obstacles facing the U.S. Environmental Protection Agency and others wishing to use domestic

environmental laws to hold Canadian companies liable for transboundary pollution. Although the

United States may be successful in its attempt to hold Canadian polluters liable through EPA

initiated U.S. domestic litigation, extraterritorial application of U.S. environmental law creates

significant problems, and seriously encroaches upon Canadian sovereignty. Ultimately, the

national adjudication of cross-border disputes does not provide a long-term solution to

transboundary pollution. Part III explores an available,

20. Shaw M.N., International Law, Cambridge University Press, 4th edition, 1997, U.K., 595

underutilized international environmental law mechanism that the countries could potentially use

to effectively resolve the Trail smelter and similar disputes. To the extent that Canada and the

United States attempt to resolve disputes legally, rather than through diplomatic negotiation, the

best legal solution to those disputes may lie in international arbitration. International arbitration,

modeled after the famous Trail Smelter Arbitration, provides both a more diplomatically and

conceptually satisfying means of solving transboundary water pollution disputes than national

adjudication. Indeed, despite its contentiousness, the Trail smelter dispute provides a unique

opportunity to set the stage for renewed environmental cooperation between the United States

and its northern neighbor.'21

CONCLUSION:-

In this case Canada was held liable to the United States for the damages and injuries done by

fumes carried by the winds from a privately owned company of smelter in Canada and was

required to prevent such damages in future. The tribunal found it unnecessary to decide whether

the question should be answered on the basis of United States Law or the International Law,

since the law followed between the states of the United States in the manner of air pollution, is in

conformity with the general rules of International law. Pointing to the absence of international

decisions dealing with air pollution, the tribunal said, The nearest analogy is that of water pollution, but again found no interrelation decisions. On both air and water pollution, the tribunal found certain United States Supreme Court decisions which may be legitimately taken as

a guide in this field of international law, for it is reasonable to follow by analogy, in international

cases, precedent established by that court in dealing with controversies between the States of the

Union or with other controversies concerning the quasi-sovereign rights of that states, where no

contrary rule prevails in international law and no reason for rejecting such precedents can be

adduced from the limitations of sovereignty

21. Austen L. Parrish, TRAIL SMELTER DEJA VU: EXTRATERRITORIALITY,

INTERNATIONAL ENVIRONMENTAL LAW, AND THE SEARCH FOR SOLUTIONS TO

CANADIAN-U.S. TRANSBOUNDARY WATER POLLUTION DISPUTES, Boston

University Law Review, 2005, April. 2, 3.

inherent in the Constitution of the United States. The tribunal referred to one Swiss case, on

water pollution, Georgia vs Tennessee Copper Co.22 It concluded that

under the principles of international law, as well as the law of the United States, no State has the

right to use or permit the use of its territory in such a manner as to cause injury by fumes in or to

the territory of another or the properties or persons therein, when the case is of serious

consequences and the injury is established by clear and convincing evidence.'23

Considering the circumstances of the case, the Tribunal held that the Dominion of Canada is responsible by international law for the conduct of the Trail Smelter. Apart from the

undertakings of the Convention, it is therefore the duty of the Government of the Dominion of

Canada to see to it that this conduct should be in conformity with the obligation of the Dominion

under international law as herein determined.

Therefore, so long as the present conditions in the Columbia River Valley prevail, the Trail

Smelter shall be required to refrain from causing any damage through fumes in the State of

Washington; the damage herein referred to and its extent being such as would be recoverable

under the decisions of the courts of the United States in suits between private individuals. The

indemnity for such damage should be fixed in such a manner as the Governments should agree

upon.'24

The Trail Smelter arbitration also remains a historical anomaly; as such a dispute would likely be addressed through domestic litigation. With liberalization of jurisdictional rules in both

countries and the growth of environmental enforcement opportunities under domestic law,

citizens no longer need to rely on their federal

22. 206 U S 230 (1907)

23. William W. Bishop, International Law cases and Materials, Little Brown & Company, 1971,

Canada, 399

24. http://www.unescap.org/DRPAD/VC/document/compendium/int7.htm

governments to seek a remedy for transboundary pollution. In fact, when citizens recently sought

to remedy transboundary water pollution from the same Trail Smelter facility at issue in the

original arbitration, they sued the company in United States federal court under United States

domestic environmental law.'25

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