TORONTO (AP) - The Supreme Court of Canada said Thursday it will not hear a case that pitted the Canadian government against Pittsburgh-based steel maker United States Steel Corp. over the company's 2007 purchase of Ontario-based Stelco. Inc.
Canada took U.S. Steel Corp. to court last year to meet commitments it made in 2007 on capital spending, production and research and development spending in Canada in return for approval to buy the former Stelco Inc.
Seeking a court order to force a company to maintain job and capital spending commitments is an unusual step for the Canadian government. But it reflects growing unease about the takeover of Canada's steel and mining industries and whether foreign owners will keep industrial jobs in the country.
U.S. Steel Canada shut down most of its Canadian operations in southern Ontario months after it purchased Stelco, affecting about 1,500 employees, because of weak markets. The company has since recalled some workers.
U.S. Steel said it couldn't live up to the promises it made when it bought the Hamilton steelmaker because demand for its production had been destroyed by the 2008 recession.
However, under the Investment Canada Act, foreign corporations can be subject to penalties, from fines to forced divestment of assets, if they break deals made during a takeover of a Canadian company.
In challenging the law, U.S. Steel argued that then-federal Industry Minister Tony Clement hadn't given a reason for rejecting company claims it couldn't meet promised Canadian levels of production and employment due to the 2008 recession.
U.S. Steel has also argued that the Canadian government's actions, such as introducing the idea of a $9,555 (CA$10,000) per day fine against the company, violated constitutional rights.
But the Supreme Court declined to hear the case Thursday, clearing the way for the federal government to proceed with the lawsuit. The court does not traditionally provide reasons for granting or denying leave to appeal.
Previously, two Federal Court judges allowed the government's lawsuit to proceed despite the company's objections.
U.S. Steel has operations in Canada, the United States and Europe.