Canada-based pulp and paper manufacturer Resolute Forest Products has filed a notice of arbitration under the North American Free Trade Agreement (NAFTA), claiming more than $70m in damages.
The firm is seeking compensation for the losses faced by its Laurentide mill in Quebec, owing to the government-aided revival of the Port Hawkesbury Paper mill in Point Tupper in 2012.
Idled for around a year, the rival paper mill had received more than $124m to help restart operations.
Resolute Forest Products said: "The company is seeking damages for direct losses of approximately $70m, consequential damages, and additional costs and relief deemed just and appropriate by an arbitral tribunal.
"Under NAFTA and applicable principles of international law, Canada is responsible for Nova Scotia's acts."
Port Hawkesbury mill's annual production capacity of some 360,000t of paper is nearly twice the capacity of the Laurentide mill which could generate around 191,000t annually.
Dwindling market conditions, fall in demand for speciality papers, and competition presented by the revived Port Hawkesbury mill had prompted Resolute to close its Laurentide mill in October 2014.
The mill had also axed 111 jobs earlier in 2012 after the paper machine at the plant was closed.
Image: Fall in demand for speciality papers, and competition presented by the revived Port Hawkesbury mill had prompted Resolute to close its Laurentide mill. Photo: courtesy of Rawich via FreeDigitalPhotos.net.