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Max Planck Encyclopedia of Public International Law [MPEPIL]

Trail Smelter Arbitration

Russell A Miller

Content type:
Encyclopedia entries
Product:
Max Planck Encyclopedias of International Law [MPIL]

Module:
Max Planck Encyclopedia of Public International Law [MPEPIL]
Article last updated:
May 2007

From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 25 April 2025

Subject(s):
Responsibility of states — Pollution — Environmental disputes — Indigenous peoples — Arbitration — Mixed Claims Commissions — Judgments

Published under the auspices of the Max Planck Institute for Comparative Public Law and International Law under the direction of Professor Anne Peters (2021–) and Professor Rüdiger Wolfrum (2004–2020). 

A.  Introduction

1  The Trail Smelter Arbitration is generally associated with the ad hoc arbitration implemented by the governments of the US and Canada in 1935 to settle a dispute over air pollution emanating from a Canadian smelter—located in Trail, British Columbia—that harmed agricultural and timber interests across the border in the US, in Stevens County, Washington (Air Pollution, Transboundary Aspects). That arbitration generated two decisions—1938 and 1941—in which the panel articulated or acted upon two principles that have come to be widely regarded as the locus classicus and fons et origo of international environmental law (Environment, International Protection; Environmental Dispute Settlement).

B.  Background

2  The 1935 Convention for the Final Settlement of the Difficulties arising through Complaints of Damage done in the State of Washington by Fumes discharged from the Smelter of the Consolidated Mining and Smelting Company, Trail, British Columbia between the US and Canada (‘1935 Convention’) establishing the arbitral tribunal was the final phase in a decades-long effort to resolve the dispute between the two States over the harm done in the US as a consequence of lead and zinc smelting performed in Trail, British Columbia. Smelting began in Trail around the turn of the 19th century, originally under the auspices of US industrial interests, but eventually as part of the works of the Canadian firm Consolidated Mining and Smelter Company—later COMINCO, and today Teck Cominco. Sulphur dioxide emissions had devastated the area immediately surrounding the Trail smelter, leading British travel writer Frances MacNab to describe the smelter as an ‘outcrop of hell’ and the surrounding landscape as ‘mean, sordid, and depraved—a veritable blot on the face of nature’ (British Columbia for Settlers: Its Mines, Trade, and Agriculture [Chapman & Hall London 1898] 271–72). For the most part, the smelter had quelled local complaints of harm to private property by purchasing ‘smoke easements’ from Canadian landowners in the area. In the mid-1920s, however, the smelter erected two 400 foot smokestacks that directed emissions into the atmosphere where meteorological conditions directed the pollution down the narrow Columbia River Valley and across the US border, which lay only eight miles to the south. Americans alleged damage to crops, livestock, timber, and structures. The smelter was precluded from responding to the resulting outcry from American landowners through its usual purchase of ‘smoke easements’ because the Washington State Constitution, at the time, prohibited foreign land ownership. Civil legal proceedings were no more promising for the Americans. No long-arm jurisdiction existed by which the Canadian smelter could be hailed before local Washington courts; and the Americans were justifiably sceptical of their chances in the Canadian courts. A grassroots movement, consisting largely of American farmers—derisively referred to as ‘smoke farmers’ by the smelter’s supporters—formed under the title Citizens’ Protective Association (‘CPA’). The CPA won the strong support of Washington’s Senate delegation, which pressured the US State Department to work with Canada to have the matter referred to the International Joint Commission (‘IJC’), a permanent entity operating under the Treaty between the United States and Great Britain relating to Boundary Waters, and Questions arising between the United States and Canada (American-Canadian Ocean Boundary Disputes and Co-operation; Mixed Commissions). In 1931, following a thorough investigation guided by US and Canadian scientists, the IJC issued a unanimous, non-binding report assessing American damages at $350,000. Significantly, the IJC’s report did not recommend limiting the smelter’s emissions, in part because the smelter had already undertaken efforts to adapt its process to limit its hazardous emissions. The US government heeded the CPA’s wishes and rejected the proposed settlement, largely because it did not prohibit or limit continuing harm as a result of the smelter’s emissions. The 1935 Convention establishing the Trail Smelter Arbitration revived efforts to settle the matter.

C.  The Trail Smelter Arbitration

1.  1935 Convention

3  The 1935 Convention established an arbitral tribunal consisting of two national members and a neutral chairman (‘Tribunal’) (International Courts and Tribunals, Judges and Arbitrators). The Tribunal was aided by scientific experts appointed by the governments. The Tribunal heard arguments throughout the summer and fall of 1937, meeting in Washington, DC, Spokane, Washington, and Ottawa, Canada. The Tribunal also inspected the area in Stevens County, Washington, that was the subject of the dispute.

4  A large part of Trail Smelter’s legacy is attributable as much to the 1935 Convention as it is to the Tribunal’s decisions. In the 1935 Convention the issue of State responsibility, including the attribution of the private smelter’s activities to Canada, was resolved by Canada’s assumption of responsibility for the harm caused by the smelter to American interests (Responsibility of States for Private Actors). Pursuant to Art. I 1935 Convention, Canada agreed to pay the $350,000 in damages originally assessed by the IJC with respect to harm done through 1 January 1932 (Compensation). The first of the 1935 Convention’s four questions charged the panel with determining a) whether harm had occurred in the State of Washington since 1 January 1932; and b) if so, what indemnity Canada should pay as a consequence (Art. III (1)). Significantly, these questions also assume Canadian responsibility for any harm occurring after 1 January 1932. The Tribunal was not asked to determine whether the smelter’s activities legally could be regarded as an internationally wrongful act attributable to Canada, thereby triggering Canada’s responsibility to the US and requiring the payment of an indemnity. This, however, is the innovative polluter pays principle which the Trail Smelter Arbitration is credited with having established. To the degree the Tribunal is viewed as having resolved the issues of responsibility and the payment of indemnity for existing harm in its decisions, it did so only as a matter of dicta because Canada had, in the diplomatic process leading to the 1935 Convention, agreed to assume responsibility for past harm and to pay damages.

2.  The Tribunal’s First Decision

5  The 1935 Convention’s first question was primarily concerned with deciding facts: had harm occurred since 1932 and how should it be valued. In its first decision, the Trail Smelter Case (United States, Canada) (Decision of 16 April 1938) (‘First Decision’), the Tribunal concluded that harm had occurred between 1932 and 1937 and ordered the payment of an indemnity of $78,000 as the ‘complete and final indemnity and compensation for all damage which occurred between such dates’ (First Decision 1933).

3.  The Tribunal’s Second Decision

6  The Tribunal’s second decision, the Trail Smelter Case (United States, Canada) (Decision of 11 March 1941) (‘Second Decision’), was concerned with the final three questions presented by the 1935 Convention, namely, responsibility for, and the appropriate mitigation and indemnification of, future harm. Here, the arbitrators were required to engage the law. Art. III (2) 1935 Convention posed the second of the four questions presented to the Tribunal: ‘In the event [that harm has occurred since 1932], whether the Trail Smelter should be required to refrain from causing damage in the State of Washington in the future and, if so, to what extent?’ Relying, as mandated by the 1935 Convention, on ‘the law and practice followed in dealing with cognate questions in the United States of America as well as international law and practice’ (Art. IV), the Tribunal concluded, with respect to future harm, that:

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 consequence and the injury is established by clear and convincing evidence. (Second Decision 1965.)

7  The Tribunal had little international precedent with which to work in announcing this rule, noting that ‘[n]o case of air pollution dealt with by an international tribunal has been brought to [its] attention’ (Second Decision 1963). Instead, the Tribunal drew inspiration from domestic decisions. The Tribunal cited, but did not follow, a case decided by the Schweizerisches Bundesgericht [Federal Supreme Court of Switzerland] involving the transboundary hazards of a shooting range precariously situated on the border between two Swiss cantons. The Tribunal, however, made more thorough resort to two decisions of the US Supreme Court, analogizing the rule from the Supreme Court’s settlement of air pollution disputes between the ‘quasi-sovereign … States of the Union’ (Second Decision 1963). The Tribunal took assurance from the fact that the rule it announced had been articulated in ‘[a] great number of … general pronouncements by leading authorities concerning the duty of a State to respect other States and their territory’ (Second Decision 1963). The Tribunal has been criticized for analogizing the existence of an international law rule from decisions decided on the basis of US constitutional law in the context of disputes between ‘states within a single federal system’ (Rubin 269) (Analogy in International Law; Federal States; International Law and Domestic [Municipal] Law). Critics have also remarked that the Tribunal glossed over its strict attribution of international responsibility to Canada, as a matter of law, for future harm caused by the private smelter; a position that is not consistent with general State responsibility doctrine but which is in line with Canada’s voluntary assumption of responsibility in the case.

8  The substance of the rule announced by the Tribunal also warrants scrutiny. The rule announced by the Tribunal is acutely limited to the facts at hand. Only transboundary harm resulting from ‘fumes’ is proscribed (see also Hazardous Substances, Transboundary Impacts; Hazardous Wastes, Transboundary Impacts). The Tribunal also limited the rule by qualifying its applicability with a high threshold—an injury of ‘serious consequence’—and a high standard of proof—‘clear and convincing evidence’ (Second Decision 1965) (International Courts and Tribunals, Evidence). This, however, can be explained by the 1935 Convention’s mandate that the Tribunal ‘reach a solution just to all parties concerned’ (Art. IV). These qualifications on the applicability of the rule represent the marvel of the Tribunal’s work. It managed to show respect to both sovereign interests implicated by the case (Sovereignty). Canada’s sovereign right freely to permit industrial activity within its borders was given some regard alongside the American sovereign right to exclude foreign pollution from its territory.

9  The Tribunal’s Second Decision also answered the third question presented by the 1935 Convention: with respect to future harm, ‘what measures or régime … should be adopted or maintained by the Trail Smelter?’ (Art. III (3)). In light of the rule announced by the Tribunal, this inquiry must be understood as an attempt to establish a mitigation regime at the smelter that would reduce the effects of its operation being felt in the US to an acceptable level, that is, resulting in less than serious consequences. In order to fulfil this part of its charge, after issuing a ruling on other points in its First Decision, the Tribunal ordered a series of procedures under a temporary regime aimed at pursuing a ‘more adequate and intensive study … of meteorological conditions in the valley’ (First Decision 1934) and of the smelter’s operations. The detail with which the Tribunal mapped the interim investigation is remarkable, and the Tribunal gave determinative weight to the resulting scientific evidence in its subsequent Second Decision in which it imposed a permanent regime. The abatement of sulphur dioxide at the smelter that resulted from independent efforts begun in the late 1920s, and concretized by the Tribunal’s permanent abatement regime, had the mutually beneficial effect of radically reducing the smelter’s harmful emissions while generating a highly profitable fertilizer by-product. It has been remarked that ‘[a]mong North American smelters, Trail took the lead in efforts to abate pollution, not simply in reaction to litigation, but as the result of policies to promote better industrial management practices—developing technical innovations to reduce sulfides at the mine and the SO2 at the stack, and finding new markets for the by-products’ (Wirth 33).

10  Finally, the Tribunal’s Second Decision answered the fourth question presented by the 1935 Convention: ‘What indemnity or compensation, if any, should be paid on account of any future harm?’ (Art. III (4)). The Tribunal expressed its belief that the regime it implemented pursuant to the 1935 Convention’s third question would ‘remove the causes of the present controversy’ (Second Decision 1980). But, in order to respect the parties’ intention of conclusively resolving the dispute, the Tribunal ordered Canada to pay for the maintenance of American monitoring in the area and to pay future reparations as awarded pursuant to Art. XI 1935 Convention, which permits the parties to ‘make arrangements for the disposition of claims for indemnity for damage, if any, which may occur subsequently to the period of time covered by’ the Tribunal’s report. Of course, any future harm would be measured under the high threshold and high standard of proof established by the rule announced by the Tribunal.

D.  Subsequent Developments

11  More than half a century after the Tribunal issued its Second Decision in the Trail Smelter Arbitration, the smelter at Trail has re-emerged as a source of tension between the US and Canada. The present conflict is centred, not on air pollution, but on the harm done to the Columbia River downstream from the smelter and primarily in the US (see also International Watercourses, Environmental Protection). The CPA unsuccessfully sought to raise the issue of harm to the river in the Trail Smelter Arbitration. Where the CPA failed in the 1930s, the Coleville Indian tribe, whose lands border the Columbia River in Stevens County, Washington, has succeeded (Indigenous Peoples). Responding to the Coleville’s petition alleging the Columbia River’s contamination, the US Environmental Protection Agency (‘EPA’) issued a unilateral administrative order requiring the Canadian firm, Teck Cominco, to contribute to cleanup of the affected portions of the Columbia River in the US. Teck Cominco’s challenges to the extraterritorial authority of the EPA’s order were rebuffed by the US federal courts (Extraterritoriality).

E.  Trail Smelter’s Legacy

12  The precedential significance of the Trail Smelter Arbitration cannot be disputed. It was the first, and it remains one of only a small handful of international decisions touching upon issues of environmental and transboundary harm. Modern manifestations of the Trail Smelter principles have been integrated into a host of environmental conventions (Environment, Multilateral Agreements), as exemplified by the ubiquitous Principle 21 of the 1972 Stockholm Declaration of the United Nations Conference on the Human Environment (Stockholm Declaration [1972] and Rio Declaration [1992]):

States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or areas beyond the limits of national jurisdiction.

13  Notably, Principle 21 does not include the limiting facets—seriousness of harm and standard of proof—of the rule announced by the Trail Smelter Tribunal. The Trail Smelter principle has also found traction with the International Court of Justice (ICJ). For example, in its judgment of 25 September 1997 in the Gabčíkovo-Nagymaros Case (Hungary/Slovakia), the ICJ stated that: ‘The existence of the general obligation of States to ensure that activities within their jurisdiction and control respect the environment of other States or of areas beyond national control is now part of the corpus of international law relating to the environment’ (Case concerning the Gabčíkovo-Nagymaros Project [Hungary/Slovakia] [1997] ICJ Rep 7, 41). It is fair to conclude that some variation of the Trail Smelter principles now enjoy the status of customary international law.

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