The Canadian government has the right to fine U.S. Steel (X.N: Quote) for breaking job-protection promises made when it bought Canadian steelmaker Stelco, the Supreme Court of Canada ruled on Thursday.

By refusing to hear an appeal by U.S. Steel, the court blocked an attempt by the steelmaker to overturn Canadian investment law, under which the government is seeking to levy C$10,000 a day in fines.

Ottawa wants the fines applied from November 1, 2008, when it determined U.S. Steel broke undertakings made to the government when it approved the company's takeover of Stelco. That would amount to more than C$11 million ($10. 5 million) plus any interest applied.

Pittsburgh-based U.S. Steel booked more than $5 billion in revenue in the third quarter, but only $22 million in net income, largely due to weak economic growth in both Europe and North America.

Earlier this year, Canada's Federal Court of Appeal struck down U.S. Steel's efforts to overturn Canadian investment law, after almost two years of procedural and legal challenges. The government sued the company in 2009, claiming the steelmaker's decision to shut down two former Stelco plants violated promises the company made about maintaining employment levels.

U.S. Steel bought Hamilton, Ontario-based Stelco in 2007 for $1.1 billion, and the decision to idle the facilities affected about 1,500 jobs. The company blamed weak demand for the shutdowns and denied that it broke any promises.

A U.S. Steel spokesman was not immediately available to comment on the Supreme Court decision.

The case name is U.S. Steel Corp et al. v. Attorney General of Canada (FC) (Civil) (By Leave) (34389).

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