Canada introduces modernized model FIPA with significant CETA influence

On May 13, 2021, Canada announced the introduction of a modernized Foreign Investment Promotion and Protection Agreement Model (“2021 Model FIPA”). According to Global Affairs Canada (“GAC”), this model will “help provide a stable, rules-based investment environment for Canadian businesses investing abroad and for foreign businesses investing in Canada”, while balancing “the interests of all Canadians...so that the benefits of Canada’s investment agreements are shared broadly across society”.

The changes follow on from extensive consultations with various stakeholders conducted throughout 2019 and 2020. The changes also mark the first comprehensive revision to Canada’s model FIPA since 2003-2004,[1] at which time revisions largely focused on Canada’s experience in implementing the North America Free Trade Agreement’s (“NAFTA”) investment chapter. Since that time, Canada’s trade policy has evolved substantially, with Canada entering into several milestone trade agreements, namely the Canada-US-Mexico Agreement (“CUSMA”),[2] or the “new NAFTA”, the Canada-EU Comprehensive Economic and Trade Agreement (“CETA”),[3] and the Comprehensive and Progressive Trans-Pacific Partnership (“CPTPP”).[4] Canada has also recently solidified its trade relationship with the UK by entering into the Canada-United Kingdom Trade Continuity Agreement (“Trade Continuity Agreement”), which substantively replicates CETA’s provisions on a bilateral basis.[5]

As we discuss below, the 2021 Model FIPA represents several key changes from the earlier model. These changes reflect case law principles developed over the years and the lessons Canada has learned from negotiations with key trade partners – in particular with regards to the CETA. Overall, the 2021 Model FIPA provides additional substantive clarity, granting investors with enhanced certainty. Looking forward, we expect this model will help inform Canada’s upcoming negotiations with the UK. With the Trade Continuity Agreement in force since April 1, 2021, Canada and the UK now have less than one year to initiate negotiations for a new bilateral trade agreement, which is hoped will be in place within three years.[6]

The 2021 Model FIPA, Expropriation, and the “Right to Regulate”

More precisely defined concept of indirect expropriation

To encourage investment and provide investors with certainty, bilateral investment treaties have historically offered compensation in exchange for expropriatory acts, which include the outright physical seizure of property and other acts that permanently destroy the economic value of the investment or deprive the owner of its ability to meaningfully manage, use, or control the investment.[7] This right is not absolute and States maintain a general “Police Power” to regulate in the public interest. For example, the tribunal in SD Myers v. Canada noted that “[t]he general body of precedent usually does not treat regulatory action as amounting to expropriation”.[8]

A question, therefore, arises regarding the criteria that should be applied to identify an expropriatory act, especially where indirect expropriation is concerned. Indeed, the distinction between expropriatory and regulatory acts can be crucial for investors, as both can significantly impair the financial value of an investment, but only the former warrants compensation.

The 2004 Model FIPA, which precluded direct and indirect expropriation “except for a public purpose, in accordance with due process of law, in a non-discriminatory manner and on prompt, adequate and effective compensation”,[9] provided minimal guidance on the meaning of indirect expropriation: it merely described this concept as “measures having an effect equivalent to nationalization or expropriation”.[10] This was not unlike other bilateral investment treaties of a similar era, such as NAFTA. NAFTA’s article 1110 described indirect expropriation as a “measure tantamount to nationalization or expropriation”.

Over time, arbitrators have assessed indirect expropriation by considering, among other things, a measure’s economic impact, the extent to which the measure interferes with reasonable investment-backed expectations, and a measure’s nature, purpose and character. For example, in Metalclad Corporation v. United Mexican States, the tribunal held that expropriation under NAFTA includes not only “open, deliberate and acknowledged takings of property”… but also “covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property even if not necessarily to the obvious benefit of the host State”.[11]

The 2021 Model FIPA reflects these principles, expanding on the definition of indirect expropriation in the following manner:

An indirect expropriation under paragraph 1 may occur when a measure or a series of measures of a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure. A non-discriminatory measure of a Party that is adopted and maintained in good faith to protect legitimate public welfare objectives, such as health, safety and the environment, does not constitute indirect expropriation, even if it has an effect equivalent to direct expropriation. The determination of whether a measure or a series of measures of a Party has an effect equivalent to direct expropriation requires a case-by-case, fact-based inquiry that shall consider:

(a) the economic impact of the measure or the series of measures, although the sole fact that a measure or a series of measures of a Party has an adverse effect on the economic value of a covered investment does not establish that an indirect expropriation has occurred;

(b) the duration of the measure or series of measures of a Party;

(c) the extent to which the measure or the series of measures interferes with distinct, reasonable investment-backed expectations; and

(d) the character of the measure or the series of measures.[12]

Many recent treaties have taken a similar approach. For example, this language is identical to that contained in the CPTPP’s article 9 and nearly identical to the CETA’s Annex 8-A. The 2021 Model FIPA therefore is less of a sea change, and more a re-affirmation of the position Canada has taken against an expansive definition of indirect expropriation.

Investors must now be careful in how they frame any claims on claims of indirect expropriation, and should make explicit reference back to the heads of indirect expropriation set out in the 2021 Model FIPA.

  Codification of the “Right to Regulate”

Concerns regarding the ability of bilateral investment treaties to interfere with a state’s right to regulate in the public interest, also known as the “Police Power” of the State, are nothing novel. A 2016 report on investor-state dispute settlement (“ISDS”) in the CETA, which was published by a group of non-profit organizations, sheds some light on these concerns:

ICS [Investment Court System], an ISDS mechanism, gives foreign corporations the ability to directly sue countries at international tribunals for compensation over health, environmental, financial and other domestic safeguards that they believe undermine their rights. These investor-state lawsuits are decided by private commercial arbitrators who are paid for each case they hear, with a clear tendency to interpret the law in favour of investors…

ICS can prevent governments from acting in the public interest both directly when a corporation sues a state, and indirectly by discouraging legislation for fear of triggering a suit. Globally, investors have challenged laws that protect public health such as anti-smoking laws, bans on toxics and mining, requirements for environmental impact assessments, and regulations relating to hazardous waste, tax measures and fiscal policies.[13]

While this concern is somewhat overblown, given the case law discussed above, Canada has been sensitive to these concerns. As such, the 2021 Model FIPA provides and explicit guarantee that each party maintains the right to regulate to achieve legitimate policy objectives:

The Parties reaffirm the right of each Party to regulate within its territory to achieve legitimate policy objectives, such as with respect to the protection of the environment and addressing climate change; social or consumer protection; or the promotion and protection of health, safety, rights of Indigenous peoples, gender equality, and cultural diversity.[14]

This update aligns with similar re-affirmations of the right to regulate found in the CETA and the CPTPP,[15] though the efficacy of these provisions remains a subject of debate.[16]

The inclusion of the clause as an operative part of the 2021 Model FIPA is a strong indicator that Canada will be aggressive in arguing its regulatory changes that negatively impact an investor are as a result of such bona fide regulation. As such, investors should make a special effort in underlining any potential defects in such arguments. For example, arguing that regulations are passed due to political, not public welfare, reasons; or that regulations are not rationally connected with a bona fide public welfare benefit (for example, bans on substances that are scientifically safe, but which are subject of public fear or mistrust).

Clarity on MFN slams the door on “treaty shopping”

In a nutshell, most-favoured-nation or “MFN” clauses prohibit discrimination; they generally ensure that investors and investments are accorded treatment that is no less favourable than that accorded to investors or investments of any other party or a non-party in like circumstances, subject to prescribed exceptions. For example, the 2021 Model FIPA’s MFN provisions begin with the following clause:

Each Party shall accord to an investor of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of an investment in its territory.[17]

Unfortunately, investors have relied upon (or attempted to rely upon) MFN clause language to engage in a form of “treaty shopping”. This could be achieved by successfully arguing that “treatment” includes not only the rights and advantages directly granted to investors in the host country (e.g., tax exemptions and terms for accessing public procurement), but also the rights and guarantees granted in host state bilateral investment treaties with third countries.[18] As such, an investor could cherry-pick the protections and procedures available under any Canadian bilateral investment treaty.

Treaty shopping attempts by investors have had varied results, which has given rise to general uncertainty, with outcomes said to be driven more by arbitral views than treaty language.[19] Under NAFTA, the import of a substantive clause from another treaty was never permitted. However, the issue of whether this was permissible was never expressly resolved, notwithstanding repeated efforts by claimants and lengthy responses by governments rejecting such efforts.[20] ADF Group Inc. v. United States of America is just one example, in which the investor attempted to import provisions from the U.S. trade agreements with Albania and Estonia, without success.[21]

In the 2021 Model FIPA, the Canadian government has provided clarity on its views on this issue, incorporating with the following provisions:

The “treatment” referred to in paragraphs 1 and 2 does not include procedures for the resolution of investment disputes between investors and States provided for in other international investment treaties and other trade agreements.

Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute “treatment”, and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.[22]

Of note, this addition aligns with the CETA, which contains nearly identical language,[23] as well as with the CPTPP (but only from a procedural perspective).[24] For Canada, this therefore serves as strict codification of principles that were already long-standing. However, it shuts the door to investors who are used to using this end-around from attempting the same with Canada or its future partners.

More clearly defined minimum standards of treatment, premised upon customary international law

A common provision in a bilateral investment treaty (or investment protection chapter of a free trade agreement), is one guaranteeing an investor a certain minimum standard of treatment. Sometimes known as “fair and equitable treatment”, such provisions establish a “floor below which treatment of foreign investors must not fall, even if a government were not acting in a discriminatory manner”.[25] NAFTA, for example, provided that “[e]ach Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security”.[26]

This particular obligation has been described as the most widely invoked standard in investment treaty arbitration.[27] It has also been the subject of constant dispute. At one end of the spectrum, state parties have claimed that the protection afforded by this clause is merely the minimum standards set by customary international law; at the other end of the spectrum, investors have claimed that its scope extended to all international obligations of a state, including treaty obligations.[28]

This has given rise to disputes where investors claim that breaches of promises made to them in the course of inducing investments amount to a breach of the fair and equitable treatment obligations of a host country. These claims are most successful where they arise from the realistic investment-backed expectations of a foreign investor. This usually requires a specific promise, made to the investor, for the purpose of an investment, and which results in that investment being made.

States have since waged an unceasing war on trying to stamp out this approach taken by several arbitral tribunals considering bilateral investment treaty disputes. States continue to push for arbitral tribunals to only accept the customary international law standard – which requires shocking and egregious behaviour on the part of the host country, not simply broken promises.

Although the 2004 Model FIPA already included more clarity on this issue than did NAFTA (i.e., by explicitly referencing customary international law),[29] the 2021 Model FIPA makes Canada’s position in this debate abundantly clear: that the relevant minimum standard of treatment is that that of customary – not conventional – international law. In particular, article 8 provides that a party only breaches this obligation if a measure constitutes one of the following:

(a) denial of justice in criminal, civil or administrative proceedings;

(b) fundamental breach of due process in judicial and administrative proceedings;

(c) manifest arbitrariness;

(d) targeted discrimination on manifestly wrongful grounds such as gender, race or religious beliefs;

(e) abusive treatment of investors, such as physical coercion, duress and harassment; or

(f) a failure to provide full protection and security.

Article 8 further provides that a “determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article” and the “fact that a measure breaches domestic law does not establish a breach of this Article”.

This article aligns very closely with the CETA’s article 8.10, which contains an identical version of the above enumerated list of conduct that will breach the standard, as well as provisions confirming that breaches of separate international agreements and domestic law do not constitute a breach. The CETA additionally includes a provision regarding the fair and equitable treatment obligation, which provides that “the Tribunal may take into account whether a Party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, and upon which the investor relied in deciding to make or maintain the covered investment, but that the Party subsequently frustrated”. The CPTPP also features additional clarity on this issue, containing explicit reference to customary international law and providing definitions for “fair and equitable treatment” (i.e., justice/due process) and “full protection and security” (i.e., police protection).[30]

Until there is extensive arbitral consideration of these terms, it will be important for investors to keep a close watch on how much tribunals rein themselves in on this point. Previous attempts to use simple language akin to that found in the CPTPP (i.e., limiting fair and equitable treatment to the customary international law standard) have met with mixed success. It also remains to be seen how an arbitral tribunal would consider the concept of “manifest arbitrariness” and whether the breach of promises and representations made with enough emphasis and specificity could fall into that category.

Updated ISDS mechanism with built-in arbitrator code of conduct

ISDS provisions minimize the risks associated with investing abroad, as they provide investors with access to a neutral forum for dispute settlement.

In recent years, Canada’s free trade agreements have featured highly divergent approaches to ISDS, in some cases limiting recourse, while in others, expanding opportunities. Differences may be attributed to Canada having less clout at the negotiating table – in 2018, Canada’s gross domestic product was merely $1.7 trillion, which is dwarfed by the GDPs of the U.S., EU, and Japan of $20.5 trillion, $18.7 trillion, and $4.97 trillion, respectively.[31] Alternatively, differences may be the result of Canada’s focus on competing trade priorities. In any event, as Canada’s historical approach to ISDS reflected that of the U.S., we would certainly expect to see some degree of change as Canada enters into agreements with other major trading partners, working to diversify its sources of trade and minimize its dependence on the U.S.

There is a public perception that Canada’s experience with ISDS has not always been the most positive. Under NAFTA, Canada was the most frequent respondent to arbitrations pursued under Chapter 11 – between January 1, 1996 and December 31, 2017, Canada was both sued more (a total of 41 times) and lost more than the U.S, which famously never lost a Chapter 11 arbitration, and Mexico. Collectively, these losses cost Canadian tax payers over $219 million, plus approximately $95 in legal fees.[32] However, this represents less than $15 million per year in costs, compared to the certainty that these provisions provide to foreign investors, which in turn spurs foreign investment in Canada. It should also be noted that the majority of the compensation paid by Canada was in cases where the dispute was settled, largely because the behaviour was egregious and indefensible. As such, these fears are greatly overblown, and represent fears and anxiety of globalization of certain NGOs, rather than practical reality.

Bilateral investment treaties have long been criticized for failing to provide benefits for all; and, as noted above, the ISDS process has been criticized for lacking transparency, conferring rights to foreign investors that are superior to those available to domestic investors, and protecting investors’ rights at the expense of human rights, environmental sustainability, health, labour protections, and Indigenous rights.[33] To tackle these concerns, Canada has adopted an inclusive approach to trade, which is reflected in the 2021 Model FIPA with provisions generally ensuring SMEs have better access to the benefits of the agreement, addressing equality and diversity, and providing for Indigenous peoples’ rights and participation.[34]

 Small claims & democratization of claims processes

Of particular note to SMEs is the 2021 Model FIPA’s “small claims”-like arbitration process for claims under $10 million, which represents a lower-cost alternative to traditional ISDS mechanisms.[35] These mechanisms allow for streamlined process and a slimmed down panel of a single arbitrator (which helps both availability and cost, as parties are generally responsible for arbitration costs). This opens up the process to smaller entities that would otherwise be shut out of a process that typically bears costs in the millions, which made these claims impractical.

There is, however, a missed opportunity. While ISDS does, generally, allow for “mass proceedings”, proceedings where a large number of defined and known claimants are consolidated into a single claim brought through a single counsel, it does not allow for “class proceedings”. Such proceedings would be reminiscent of class-action litigation – a large group of defined but unknown investors, represented by a representative putative litigant, claiming on behalf of the class.

Class action litigation allows for small (usually individual) claimants that otherwise would have neither the resources to bring a claim nor the expected value to justify one, to still seek compensation for an actionable wrong. There is no reason why a bilateral investment treaty should not have a similar mechanism to allow for individual investors to seek compensation for breaches where their individual damage may be far too low to justify a claim.

Such a mechanism would go a significant way to defusing one of the common complaints of ISDS: that it is a mechanism put in place to protect the interests of large multinational corporations.

 Arbitrator code of conduct & panel composition

Another noteworthy revision to the ISDS provisions is the inclusion of a mandatory arbitrator code of conduct, which is not unlike the restrictive code of conduct that features in CETA.[36] Among other things, this code of conduct requires arbitrators to refrain, for the duration of the proceedings, “from acting as counsel or party-appointed expert or witness in any pending or new investment dispute under this Agreement or any other international investment treaty” (emphasis added). Article 8.30 of CETA contains a nearly identical restriction.

In addition to the code of conduct, arbitrators themselves would be drawn from predefined panels that are to be selected by the parties. The process for selecting arbitrators, and the qualifications and preferences for such arbitrators, is again analogous to those set out under CETA, and reflect a growing preference by Canada for a codified and more judicial approach to investor-state arbitration.

Transparency & third party participation

Finally, the 2021 Model FIPA adopts UNCITRAL’s Rules on Transparency in Treaty-Based Investor-State Arbitration, which generally reflect a move away from the previous norm, in which arbitrations were held in private and in which interventions by third parties were rare. Now, subject to certain exceptions, these Rules place emphasis on transparency, providing that the large majority of documents created in the course of a proceeding, including substantive submissions and expert reports, are to be made public.

These Rules also govern the applicable procedures for submissions by third parties, which may be permitted taking into account whether a third party has a “significant interest” in the proceedings and the extent to which their submission would assist the arbitral tribunal in the determination of a factual or legal issue related to the proceedings.

These changes again reflect the consistent pattern of the Canadian government to push ISDS mechanisms towards a more democratic approach more similar to the common law court system than the ad hoc panel system of ages past. It also likely represents the best case for maintaining the legitimacy of ISDS mechanisms in the face of populist attack from both the left and right.

Conclusions

The 2021 Model FIPA represents a codification of the lessons learned by Canada over nearly two decades since its last major overhaul. While none of the changes are truly shocking to those that followed the ongoing case law in this space, it is nonetheless a strong embrace of reform of the ISDS system at the core of our bilateral investment treaties. It will be important to see how other countries, particularly large countries with strong preferences of their own (such as the UK) react and if they are open to the more State-friendly terms of the 2021 Model FIPA. It will also be interesting to see whether Canada seeks to go back to its existing bilateral investment treaty partners to modernize or otherwise amend existing agreements to implement the new framework.

[1]      The 2004 Model FIPA is available at: https://web.archive.org/web/20060513180648/http:/www.dfait-maeci.gc.ca/tna-nac/documents/2004-FIPA-model-en.pdf.

[2]      Entered into force on July 1, 2020.

[3]      Entered into provisional force on September 21, 2017; will take full effect once all EU member states have formally ratified it. See our previous article for background on CETA.

[4]      Entered into force on December 30, 2018. The CPTPP is currently in force between Canada and six other countries in the Asia-Pacific region: Australia, Japan, Mexico, New Zealand, Singapore, and Vietnam. Once fully implemented, CPTPP will also include Brunei, Chile, Malaysia and Peru. The CPTPP incorporates by reference a majority of the provisions from the Trans-Pacific Partnership Agreement, the negotiations for which the U.S. was a party.

[5]      Canada and the UK entered into an interim trade agreement to hold the parties over until a new bilateral trade agreement is reached. This followed the UK’s formal exit from the EU, which occurred on January 31, 2020, one consequence of which was that CETA was to cease in application as of January 1, 2021. The Trade Continuity Agreement was concluded on December 9, 2020 to “maintain the status quo”. See Government of Canada, “Canada-UK Trade Continuity Agreement (Canada-UK TCA) - Economic Impact Assessment” (December 8, 2020), online: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cuktca-acccru/economic_impact_assessment-evaluation_impact_economique.aspx?lang=eng.   

[6]      Ibid.  

[7]      UNCTAD, Expropriation: Series on International Investment Agreements II (2012), online: https://unctad.org/system/files/official-document/unctaddiaeia2011d7_en.pdf, Executive Summary, xi.

[8]      SD Myers v. Canada, Partial Award (November 13, 2000), online: https://www.italaw.com/sites/default/files/case-documents/ita0747.pdf at para. 281

[9]      2004 Model FIPA, art. 13.

[10]    Ibid.

[11]    Metalclad Corporation v. United Mexican States, Award, (August 30, 2000), online: https://www.italaw.com/sites/default/files/case-documents/ita0510.pdf at para. 103. See also Methanex v. USA, Final Award (August 3, 2005), online: https://www.italaw.com/sites/default/files/case-documents/ita0529.pdf, part IV, chapter D, at para. 7(the tribunal acknowledges the importance of commitments given by the regulating government).

[12]    2021 Model FIPA, art. 9(3).

[13]    The Council of Canadians et al, Trading Away Democracy: How CETA’s Investor Protection Rules Could Result in a Boom of Investor Claims Against Canada and the EU (September 2016), online: https://canadians.org/sites/default/files/publications/trading-away-1116.pdf.

[14]    2021 Model FIPA, art. 3.

[15]    See CUSMA, art. 14.16 (“Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health, safety, or other regulatory objectives”); CETA, art. 8.9 (“For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity”); and e.g., CPTPP, preamble (“REAFFIRM…the importance of preserving their right to regulate in the public interest”). For more information on other ways the CPTPP protects the right to regulate, see Government of Canada, “How to read the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”, online: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/chapter_summaries-sommaires_chapitres.aspx?lang=eng.

[16]    See e.g., Canadian Centre for Policy Alternatives, Making Sense of the CETA: An Analysis of the Final Text of the Canada-European Union Comprehensive Economic and Trade Agreement (September 2014), online: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/09/making_sense_of_the_ceta_INVESTMENT_0.pdf at 15 (“The ‘right to regulate’ is mentioned three times in the agreement. In the preamble, the parties simply ‘recognize that the CETA protects the right to regulate (“RECOGNIZING that the provisions of this Agreement preserve the right to regulate…yet the text fails to clearly and unequivocally confirm this right, especially in the investment chapter”).

[17]    2021 Model FIPA, art. 6(1).

[18]    International Institute for Sustainable Development, The Most-Favoured National Clause in Investment Treaties: IISD Best Practices Series (February 2017), online: https://www.iisd.org/system/files/publications/mfn-most-favoured-nation-clause-best-practices-en.pdf at 10.

[19]    OECD, 4th Annual Conference on Investment Treaties: Treaty Shopping and Tools for Treaty Reform, “Agenda and Conference Material”, (March 12, 2018), online: https://www.oecd.org/daf/inv/investment-policy/4th-Annual-Conference-on-Investment-Treaties-agenda.pdf at 10.

[20]    Ibid. See e.g., Pope & Talbot Inc. v. Government of Canada, Eighth Submission of the United States of America, online: https://2009-2017.state.gov/documents/organization/8252.pdf at 9, in which the U.S. submits argues that “[the investor] fundamentally misconstrues the nature of Article 1103’s provision for most-favored-nation treatment…Contrary to [investor’s] suggestion, Article 1103 addresses not the law applicable in investor-state disputes, but the actual ‘treatment’ accorded with respect to an investment of another Party as compared to that accorded to other foreign-owned investments. Article 1103 is not a choice-of-law clause”.

[21]    See International Centre for Settlement of Investment Disputes, In the Matter of an Arbitration Under Chapter Eleven of the North American Free Trade Agreement between ADF Group Inc. and United States of America, Award, Case No. ARB(AF)/00/1 (January 9, 2003), online: https://www.italaw.com/sites/default/files/case-documents/ita0009.pdf at paras. 193-198 (“The Investor’s theory appears to be two-fold. Firstly, the relevant provisions of the U.S.-Albania and U.S.-Estonia treaties provide for treatment to Albanian and Estonian investors and their investments in the United States that is more favorable than the treatment given to U.S. investors and their investments and (through the medium of Article 1103) to Canadian investors and their investments, in the United States. The treatment referred to by the Investor here consists of the U.S. measures involved in the present case, which measures, according to the Investor, would be inconsistent with the ‘fair and equitable treatment’ and ‘full protection and security’ clauses of the two treaties. Secondly, the pertinent provisions of the two treaties provide for more favorable treatment than the treatment available to the Claimant under the provisions of Article 1105(1) as interpreted in the FTC Interpretation of 31 July 2001”).

[22]    2021 Model FIPA, arts. 6(6)-(7).

[23]    CETA, art. 8.7(4).

[24]    CPTPP, art. 9.5 (“For greater certainty, the treatment referred to in this Article does not encompass international dispute resolution procedures or mechanisms, such as those included in Section B (Investor-State Dispute Settlement)”).

[25]    See United Mexican States v. Metalclad Corp., 2001 BCSC 664 at paras. 60-61 [Metalclad], citing S.D. Myers Inc. v. Government of Canada (13 November 2000) at para. 259.

[26]    NAFTA, art. 1105.

[27]    International Institute for Sustainable Development, Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) (May 2013), online: https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf at 17.

[28]    For an example of this debate, see generally Metalclad, supra note 26 at paras. 62-76.

[29]    See 2004 Model FIPA, art. 5.

[30]    CUSMA, art. 14.6; CPTPP, art. 9.6.

[31]    David A. Gantz, “Canada’s Approaches to Investor State Dispute Settlement: Addressing Divergencies among CETA, USMCA, CPTPP and the Canada-China FIPA” (April 2020) Arizona Legal Studies, Discussion Paper No. 20-13 at 2-3.

[32]    Jerry J. Lai, “A Tale of Two Treaties: A Study of NAFTA and the USMCA's Investor-State Dispute Settlement Mechanisms” (2021), 35:2 Emory Intl’ L. Rev. 259 at 262 at 274-275, 279.

[33]    The Canadian government ran a public consultation. For more details on the views expressed during the consultations, see Government of Canada, “2019 Consultation report and FIPA review”, online: https://www.international.gc.ca/trade-commerce/consultations/fipa-apie/report-rapport.aspx?lang=eng.

[34]    See e.g., 2021 Model FIPA, art. 30(1) (“[t]he disputing parties are encouraged to consider greater diversity in arbitrator appointments, including through the appointment of women”).

[35]    2021 Model FIPA, Section F, “Expedited Arbitration”.

[36]    CETA, Annex 29-B.

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