An additional problem has been the construction in Mexicali of two power plants that emit pollutants into California but which are not subject to U.S. pollution legislation. As a result, U.S. and Mexican state and federal environmental officials have been working together to harmonize U.S. and Mexican pollution controls across the border ("Three Nation Panel" A1).
In addition to disagreements between countries, disagreements under NAFTA can also arise between corporations headquartered in one country and the government of another country. The case of Canada's Loewen Group is an example. In that case, the Loewen Group had been sued by the O'Keefe family of Mississippi (Liptak 1). The O'Keefe's alleged that Loewen had not lived up to its obligations in a deal involving the purchase of funeral homes. The O'Keefe's sued Loewen for breach of contract and fraud. The Mississippi jury awarded the family $500 million even though an independent tribunal had valued the business under consideration at less than $8 million (Liptak 1).
In response, Loewen Group filed a lawsuit under Chapter 11 of NAFTA -- the controversial section that allows private parties to sue governments for unfair actions that affect the value of their investments (McKenna 1). At least two Canadian companies have previously sued unsuccessfully under Chapter 11. Loewen alleged that the Mississippi jury's verdict discriminated against it as a foreign company and sought millions of dollars in compensation from the U.S. Treasury (McKenna 1).
The NAFTA tribunal ruled that while Loewen was clearly wronged by the punitive Mississippi jury award, the U.S. government did not have to pay Loewen's damage claim (Liptak 1). The tribunal believed that overriding domestic court rulings would threaten NAFTA as well as the integrity of the U.S. justice system. Specifically, the panel noted that "There was unfairness here towards the f