Ottawa ready to sue Stellantis over Brampton factory, investing in Honda's Alliston plant: Joly

Well, just one day after Ottawa threatened legal action against Delantis for the sale of its Brampton, Ontario, assembly plant, Industry Minister Mélanie Joly, along with Ontario's Minister of Economic Development, Vic Fedeli, announced a major investment that could boost the province's auto industry. Now, Ottawa says it will contribute $313 million to Honda Canada. The funds will go towards the production of the next generation Honda Civic and the Honda CR-V. Take a listen. They will be producing 400,000 cars and they will be supporting 4,000 employees. They will also be bringing a new engine model that will be about 200,000 engines per year. So that's also good news. And out of this new investment by Honda, the federal government is putting $313 million in the Alliston facility. So this will lead to more hybrid cars production in Canada. Even though Minister Joly says today's announcement is positive news for Ontario's auto industry, the closing of the Stellantis assembly plant in Brampton still looms. Both Joly and Fedeli told reporters that they are still trying to stop that sale, even though technically the sale has already been completed. CBC's Megan Fitzpatrick was at the news conference in Woodbridge, Ontario and joins us now live. Megan, what more can you tell us? Well, there have been a lot of questions this week, Natasha, and hello from inside a busy active auto parts plant, so pretty noisy here. This is where the announcement was held about that investment at Honda, which actually was announced a couple days ago, but they were highlighting it. But a lot of questions about the Stellantis. ...sale that was announced by Stellantis on Monday that they're selling the plant to defence manufacturer Richel for an undisclosed amount. And just to talk about the federal government's role here, part of what's going on is that the federal government has given a lot of money to Stellantis, partly to invest in the Brampton plant and in the Windsor plant and in a battery project that now Stellantis has ended up pulling out of. Stellantis had said they will pay some... Some of the money back. Yesterday in a statement, Stellantis saying $24 million is what they intend to pay back. But Mélanie Joly has said that the government believes Stellantis is on the hook for hundreds of millions of dollars. So she repeated that again today when asked about the discrepancy. And she did indicate that the funding is all linked, the funding for Brampton and Windsor and that battery plant. She is maintaining that the company owes hundreds of millions of dollars. We don't know exactly how much money the federal government has given. We do know it's at least $220 million based on our reporting. So indications, Natasha, that there could be a fight coming here between the federal government and Stellantis over how much money is going to be paid back for reaching the contract, reaching the funding agreement, which is what the federal government says Stellantis has done. One of the other questions put to Minister Jolie by me during the news conference was reaction to something that Lana Payne said yesterday following the meeting with Jolie and Premier Ford and representatives of the company. Lana Payne had said there was one job during this trade war with the United States, and that was to prevent an auto plant in Canada from closing. And that's obviously what is on the horizon. So I asked her where things stand with the trade talks with the United States. Is there an end in sight to that trade war? And she said that Prime Minister Mark Carney and Dominic LeBlanc, who's the minister responsible for Canada-U.S. relations, are in active discussions, active conversations with President Trump and with his administration. Payne had also said that there are certain levers that can be pulled by the provincial and federal government. to try and reverse this sale. So she was asked what those levers are and why they're not being pulled. She and Vic Fedeli, the provincial minister responsible for economic development, mentioned that one of the next steps is to meet with the global CEO of Stellantis. And they were talking about putting various proposals to Stellantis about what can be done with the Brampton plant. Let's take a look into a bit more about what they said. Stellantis was in Canada, was operating through its Canadian company, so the levers we have is actually through the fact that they came to see us for money, to support their investments in key facilities in Brampton, in Windsor, and also in the battery plant. And so that's why we have that lever, and at the same time... We're putting an aggressive package on the table because we want Stellantis to keep the plant open. Don't sell the auto plant. When you sell an auto plant, it's gone. It's not going to come back. We don't want them to sell the auto plant. We want them to honour their commitment to the employees and work with us. We have new funds that we can help keep a warm plant until we look for something that we can put in there. The ministers didn't detail what that aggressive package is that's being put to Stellantis. But one of the other things we heard, Natasha, from the union yesterday was, why is this happening now? Stellantis has indicated for more than a year now that they're not going to make the Jeep product in that Brampton plant. It's going to be made in the United States instead. And it was back in late August, early September that they signed an MOU with Rochelle to sell the plant. So the union has been indicating they think this might be a little too late. Why are they trying to convince the company now to not sell? It's already happened. The union said that the sale has happened and the union has been saying they've been making proposals to Stellantis for a year now in terms of what could be done with the plant in the absence of that Jeep model being made there. The union and the company are in the midst of collective bargaining right now for a new contract for the thousands of workers that work not just at the Brampton plant, but in Windsor as well. And that's one of their concerns going forward, Natasha, is not just trying to protect the jobs of the Brampton workers. And if this plant is closing, when those layoffs are finalized, ensuring financial settlements for those workers, but also maintaining and preserving the jobs of the Stellantis workers at the other facilities. So there's a lot of uncertainty for all of those workers. We know the stress is being felt not just by the Brampton workers, but beyond as well. Auto workers in this country feeling anxiety about their job security. Still some unanswered questions really going forward in terms of what's going to happen with the Brampton plant because the ministers today indicated they're still trying to fight for it and prevent the sale. But according to the union, the sale's already happened. So we will wait for any updates on when this meeting with the global CEO of Stellantis might happen and what comes out of it. CBC's Megan Fitzpatrick in Woodbridge, Ontario. Megan, thank you so much. There are so many legal questions surrounding this story and whether or not the government is going to sue Stellantis. So we wanted to dig into all of that with our next guest, Stephanie Beneshai. She's a distinguished research professor at Osgoode Hall Law School. Stephanie, thank you so much for joining us. Good afternoon. Thank you for having me. So, Stephanie, I really want to understand a number of legal obligations and avenues that are available to the parties involved. So let's begin with the actual agreement that was signed in 2022. CBC News received a copy of that. It's quite redacted. Thank And I understand that you've had a chance to look at it as well. It's been provided to you. The issue that jumps out is the... Specification, the provision that was added in 2023, which says closing the Brampton plant before 2035, and we know it's been closed since 2023, before 2035 would be a violation of the contract you. if circumstances go beyond the automaker's reasonable control and made the facility commercially unviable. What do you interpret from that because the government says no you didn't fulfill your obligations and Stellantis said we just can't make money here. Right. So just to be clear, I'm just commenting on the redacted agreement, not providing any legal advice. But the provision that you're talking about, which is referred to as the brand default and came in as a 2023 amendment, comes with its own payment remedy too. And that That amount is redacted. The commitment is they agree to maintain production in Brampton until December 31, 2035. So selling federally funded assets like the equipment paid for partly with federal money can't be disposed of without minister's written consent and plant sales need to be notified in advance. I'm Whether the consent was sought or not isn't really public here. starting There does appear to be a general breach failing to meet kind of any term, including there's a specific number of jobs that have to stay in Canada, to which is 4,475, would be a default. speak And there is a guarantee by the parent company. So Ottawa could go straight to the U.S. parent demand now. and after 60 days. However, there are a number of exceptions to making this a default. And that includes the exception for circumstances beyond Stellantis' control. And tariffs could factor in there. But it does require substantial evidence and that they promptly tried to secure other mandates. Um, And obviously, the Rochelle deal will factor into that. There's also a retooling exception that work completed is as commercially practical. And there is the fact that Ottawa did agree to discuss options if tariffs or adverse market conditions seriously affected the overall project. And overall, it's not just kind of a straight path that Ottawa can sue. There's a process that needs to be followed. There's always like a standard dispute resolution, or generally speaking, there's a dispute resolution. Can I jump in on that, Can I add on that, Stephanie? Because I just want to... I want the audience to get a highlight on that. So now we're talking about what the federal government can do. So when the federal industry minister says we're going to take legal action, what avenues do they have? Right. So there's not a set path for every type of contract or dispute. You have to look at the contract itself. And in this particular contract, there's a path for dispute resolution where first the minister has to identify the problem, which she's done. The company needs to deliver an action plan within 30 days. Then they have to go back and forth and, sorry, determine whether they can resolve it in good faith. Then comes written notice in a 30-day window to fix the problem, which it appears that they might be in. And only then can the minister declare a default and demand payment. So suing isn't expressly conditioned on this, but most of the money remedies would depend on a declared default. And there are often disputes about whether the dispute resolution path itself has been followed. And so we can expect some of that will take place here. So this process sounds incredibly complicated. But let's say for the sake of this discussion, Stephanie, that the federal government is successful and we find out that Stellantis owes the federal government hundreds of millions of dollars. How do they go about collecting it? Well, they can there that is is anticipated. Right. So any amount that's owed under the agreement is a debt due to the crown or the government and is recoverable in the same way as any other kind of debt that is recoverable would be. In this case, the jurisdiction where that would be brought would be in Ontario or in federal court. If both the parties agree, which it's unclear if that would be the case here, there could be an arbitration. So in some cases, in many commercial disputes, instead of going to court, because it usually takes a long time for a matter to go to court, something like two years, instead the parties will agree to essentially a private form of determining the dispute. And an arbitrator will be appointed, the parties will agree on an arbitrator or they'll agree on a process for appointing the arbitrator, and the arbitrator will make that decision. And in such a case, the full aspect of the process won't necessarily be public or visible. And in commercial disputes, that's often a preferred route as a result. Okay, Stephanie Beneschai, thank you so much for your time today. My pleasure. Thanks very much.