The Ontario Superior Court has reserved judgment on whether to release a secret deal between the federal government and United States Steel Corp. that ended Ottawa's prosecution of the steel maker for failure to meet commitments it made when it took over Stelco Inc. in 2007.
Lawyers for the steel company's Canadian unions, salaried employees and retirees, the Ontario government and the city of Hamilton urged Judge Herman Wilton-Siegel to allow them to obtain the details of the agreement as part of the U.S. Steel Canada Inc. bankruptcy protection hearing.
The commitments U.S Steel made to settle the agreement are known to the company, which has said it may bid for the Canadian assets that were granted CCAA protection in September, 2014.
That one-sided knowledge handicaps the employee stakeholder groups and the governments as they try to negotiate with U.S. Steel to restructure the Canadian unit, lawyers for the stakeholders said.
"They know what their undertaking is, they know we don't, that is fairness 101," said Ken Rosenberg, a lawyer for the United Steelworkers, which represents workers and retirees at the company's Hamilton, Ont., and Nanticoke, Ont., operations. "How come they know and we can't?"
U.S. Steel is the only creditor that knows the information and the only potential bidder that can use the information from the secret deal to its advantage, Mr. Rosenberg said.
The legal fight centres partly on whether the CCAA trumps the protection the Investment Canada Act offers to buyers of Canadian assets when they reveal their plans to the government, so Investment Canada can determine if a takeover is of net benefit to Canada.
U.S. Steel made promises on job levels, steel production and capital spending when it took over Stelco in 2007. Investment Canada permitted the purchase, but then prosecuted U.S. Steel for failing to meet those commitments when the steel company slashed production and jobs during the 2008-2009 recession.
The prosecution ended in 2011 with the signing of an out-of-court settlement, the details of which remain private.
"There is no jurisdiction for this court to order the production of the settlement," Michael Barrack, a lawyer for U.S. Steel, told the court.
Mr. Barrack added that without U.S. Steel's takeover, what was once Stelco probably would not have survived the recession.
"It's likely the company would now be out of business," he said.