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A TransCanada Keystone Pipeline pump station operates outside Steele City, Nebraska, on March 10, 2014.

Reuters/Lane Hickenbottom

It took barely a nanosecond for anti-trade activists to decry what they say is the real meaning of TransCanada Corp.'s multibillion-dollar Keystone XL pipeline lawsuit.

"These destructive provisions that wrongly empower corporations to attack our safeguards show exactly why NAFTA was wrong and why the dangerous and far-reaching Trans-Pacific Partnership is worse and must be stopped in its tracks," the Sierra Club said.

The Council of Canadians quickly echoed the sentiment, complaining that trade agreements enable companies such as TransCanada to thwart the democratic will of Americans to manage their environment and economy.

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Wrong.

If there is a lesson in the Keystone saga, it is that Canadians should be thankful that NAFTA, the Canada-EU free-trade deal and the TPP give companies a tool to fight mistreatment at the hands of other governments.

TransCanada filed a notice of intent this week to sue the U.S. government for a whopping $15-billion (U.S.), tapping NAFTA's Chapter 11 dispute resolution rules.

So-called investor-state dispute settlement, or ISDS, has become a lightning rod. Chapter 11 and similar mechanisms are now standard in literally thousands of trade and investment treaties in force around the world.

Critics like to cast ISDS as a nefarious device that allows big companies to skirt legitimate environmental or health regulation. That's a stretch. What these clauses do is give foreign investors access to an independent arbitration process when they believe they've been treated worse than domestic investors, or when their investments have been expropriated without fair compensation.

These tribunals – a three-person panel in the case of NAFTA – can't overturn laws or rewrite regulations. They only have the power to award compensation.

And they are typically a long shot. Many cases are quickly dismissed because they have no merit. Compensation awards are almost always reduced.

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TransCanada's case looks like a Hail Mary.

A decision could take years, and if successful, the energy company's $15-billion claim would be among the largest sums ever awarded. (In 2014, investors in Yukos Oil were awarded a total of $50-billion over Russia's takeover of the company; they have yet to be paid.) TransCanada's claim exceeds the $8-billion cost of the cross-border pipeline.

The United States, which has 50 ISDS agreements in place around the world, has never lost a case, including a handful pursued by Canadian companies.

So it would be foolish to prejudge the outcome.

But the facts, as laid out in TransCanada's NAFTA filing, are compelling, and disturbing. The Obama administration insists it will vigorously defend itself.

U.S. President Barack Obama ultimately rejected Keystone on the grounds that it was not in the country's national interest. National interest is a murky notion, but TransCanada need not necessarily prove that its project isn't in the U.S. national interest to win. It must only prove that it is been treated unfairly versus local investors or other foreign rivals.

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And on that score, TransCanada would seem to have a case. The Obama administration argued that determining the national interest was contingent on Keystone not making "the problem of carbon pollution" worse, as Mr. Obama put it in a 2013 speech. And U.S. officials repeatedly concluded that the pipeline would not increase carbon emissions, affect the rate of development in Canada's oil sands or stem the flow of Canadian heavy crude into the U.S.

During the seven long years that the company's application languished at the State Department and the White House, the U.S. approved numerous other domestic pipelines, while opening up millions of acres for hydraulic fracturing and offshore areas to oil and gas development.

That, at least, suggests unequal treatment, applied simply because the pipeline crossed the Canada-U.S. border. What's more, TransCanada says Keystone is the only international pipeline the U.S. has ever rejected.

The reality, of course, is that Keystone became a political football. The Obama administration admitted as much when it finally rejected the project last November. U.S. Secretary of State John Kerry said "critical " in his rejection was that saying yes would have undermined the United States' ability to be a world leader in fighting climate change, even while acknowledging the pipeline would not boost greenhouse gas emissions.

"The decision elevated perceptions over reality, which is the hallmark of a decision tainted by politics," TransCanada concludes in its NAFTA filing.

Indeed.

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