Debates of May 15th, 2007

Settlement of International Investment Disputes Act

[The Acting Speaker, Conservative, Andrew Scheer]

I will ask members to stay as close as possible to the topic of the bill, both in their questions and their--

[Some hon. members]

Oh, oh!

[The Acting Speaker, Conservative, Andrew Scheer]

Order, please. The hon. member has made a point about relevance. I will ask all members to try to stay on the subject material of the bill as much as possible in both their questions and their responses.

Does the hon. member for Mississauga South want to wrap up in a very short comment?

[Paul Szabo, Liberal, Mississauga South, ON]

Yes, Mr. Speaker. When it gets down to the competitiveness of Canada and foreign investment, our credibility is fundamental. It is a prerequisite, that integrity and the view of foreign investors. We want to invest abroad, but when we have domestic practices that do not sustain the integrity or credibility of the government, foreign investment suffers.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, earlier I heard the member for Mississauga South say that if Bill C-53 is passed, it will enable Canada to become a member of the International Centre for Settlement of Investment Disputes, or ICSID. He added that to become a member, all Canadian provinces and territories must commit.

What does he think the impact of becoming a member will be for Quebec and the other provinces?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I could go on at length about how important it is that Canada have this instrument, which is effectively a dispute resolution mechanism. It provides the framework if there is an award made. There is going to be a tribunal to deal with this.

All provinces and all territories in Canada, including Quebec, have extensive involvement in foreign investment transactions. The structure that has been presented in this treaty, which has been around since 1966, is going to be a good instrument for us to be part of, but the only concern right now is whether or not the government has the support. It says it does, but I do not know whether I have seen the commitment of the government such that we will see the other provinces come on board so that the competitiveness of Canada continues to flourish.

[Maurizio Bevilacqua, Liberal, Vaughan, ON]

Mr. Speaker, I want to take up the challenge raised by the secretary of state. I think she is right when she says that we need to talk about the issues related to giving Canada a more investment-friendly image. As the member for Mississauga South correctly pointed out, it is important that the fundamentals be put in place so that Canada can be viewed as a great place to invest.

If I may draw a little on the history of how we came to be the country that we are this year, I remember early on when we, the Liberal government, had inherited a $42 billion deficit and a skyrocketing national debt. We also had a tax system that was burdening the business community as well as individuals.

We had to turn all that around. We were very fortunate that we were very disciplined. We gave a strong signal to the IMF and the Wall Street Journal that in fact we were going to roll up our sleeves and bring about the type of positive change that the Canadian economy required. This is the connection between foreign investment and giving our country a friendly image abroad.

The point I am raising is that on interest deductibility and income trusts, there is not the type of signal that we want to send to foreign investors. It is not the type of signal that people are going to applaud. That is my concern with the manner in which the government is acting.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member for Vaughan, who is a past chair of the Standing Committee on Finance and has also been in cabinet, knows what challenges Canada faced directly. Tough decisions had to be made because we were compared to a banana republic in terms of our integrity and our financial position.

We were a basket case when it really came down to it, but when a government works hard, moves things in the right direction and gets its fiscal house in order, that means other things can happen. Good things happen. In fact, we grew to be probably one of the best-performing countries in the G-7, year after year. For how many years did the United Nations say that Canada was the best country in the world in which to live, work and raise a family?

The member is right. If the fundamentals are not there, if the perception is not there, and if the integrity and credibility of a government are in question, how are we to promote foreign investment and international trade?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I have a brief question. I very much regret that I was not able to be here when the secretary of state spoke on the introduction of Bill C-53. When this bill was introduced, she may very well have addressed this question.

I am not now in a position to ask her the question, but I am interested in asking members of the official opposition a question. Why now we are seeing a bill to propose that Canada become an implementer of this international convention on the settlement of investment disputes?

It is my understanding, and perhaps the hon. member for Mississauga South can correct me if I have not understood this accurately, that this convention has actually been open for signature ever since March 18, 1965. During many years of Liberal government, the decision was taken not to be a signatory to this, not to bring in legislation that would implement it. I wonder if he could comment on the reasons for not having done so.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, it is a question that I am not sure everyone can answer without knowing why half of the provinces, even today, have given only an expression of interest. It must indicate to all hon. members that this is not just about saying, “Let us sign onto a treaty because it is going to provide an instrument in which we can arbitrate damages”.

It sounds so simple, but it is not. It is a very complex agreement. I believe the schedule is 50 pages long. One does not need 50 pages to say, “Let us set up a tribunal”.

Yes, it has been around since then, but Canada has come through some very tumultuous times since that time. Indeed, we continue to have disputes on trade issues. Softwood lumber is one. How do those disputes tie into the mechanisms? We have to understand this. Even under the free trade agreement, how many times were there lawsuits going back and forth, dragging on, never to be resolved?

What happened to the effectiveness of a dispute resolution mechanism? We thought that had to work. International treaties and agreements may not be as simple as we would like them to be, but all I know is that Canada has signed on and--

[The Acting Speaker, Conservative, Andrew Scheer]

Resuming debate, the hon. member for La Pointe-de-l'Île.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

Mr. Speaker, from the beginning the Bloc Québécois has supported Bill C-53. Passing this bill will enable Canada to ratify the convention on the settlement of investment disputes between states and nationals of other states, and to become a member of the International Centre for Settlement of Investment Disputes, better known by its acronym, ICSID.

Bill C-53 integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. As my colleague opposite said, ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries. ICSID is responsible for settling disputes between a state and a foreign investor. There may be two types of conflicts. The first type are disputes over bilateral foreign investment protection treaties. The second are disputes over treaties between governments and foreign investors, for example the type that the Government of Quebec concludes regularly by eliciting foreign investments with the promise of providing electricity at an agreed price.

Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government to other countries, they already provide for recourse to ICSID arbitration, but not through the regular mechanism, since Canada has not ratified the convention. In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals.

Ultimately the ICSID is only a tribunal. I could have said so at the beginning, but I am saying it at the end. Where there are settlement difficulties, however, the problem is not usually the tribunal, but rather the poor investment protection treaties concluded by Canada.

The Bloc Québécois, of course, supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover. In fact this is not a new phenomenon. Agreements to protect investments have been signed by France and the United States since 1788. Today there are over 2,400 bilateral investment protection agreements around the world.

The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. However—and it is important to say so—almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.

In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent, and this is something to be noted. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill C-53, also means belonging to the international order in the area of investments.

In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals, and we have repeatedly spoken out against this.

This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.

The agreements that Canada signs with other countries contain a number of similar deviations, giving multinational corporations rights that they should not have and limiting the power of states to legislate and take action for the common good.

We said no—and we still say no—to chapter 11 of NAFTA. That chapter of NAFTA, the trade agreement between the United States, Canada and Mexico, deals with investments and provides that a dispute can be taken to ICSID. That chapter is a bad agreement in three respects.

The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces the profits from its investment. For instance, a plan to implement the Kyoto accord that forced the oil companies, the big polluters, to pay large sums could be challenged under chapter 11 and result in the government paying them compensation.

Let us remember that the Alberta oil companies are mainly owned by American interests. Chapter 11 could open the door wide to the most abusive proceedings.

Second, the definition of investor is so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.

Third, the definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.

The dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state—if they do, without going through the dispute resolution mechanism under the agreements signed in NAFTA.

How is it conceivable that a multinational corporation could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA, chapter 11, permits.

Because of these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a sword of Damocles that could come fall at any moment on any legislative or regulatory measure that might reduce corporate profits.

In 2005, the United States changed some of the provisions in their model investment protection agreement. In 2006, Canada followed suit, thus agreeing that they were extreme.

Since both countries have now acknowledged the harmful nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to initiate discussions with its American and Mexican partners to amend chapter 11 of NAFTA. It is important to bring this up now. Obviously, therefore, we are saying no to bad investment protection agreements.

In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment protection agreements, and all are identical. All those foreign investment protection agreements—sometimes called FIPAs—are bad and should be renegotiated.

In 2006, the government more or less acknowledged that these agreements were bad. It copied the changes made by the Bush administration the previous year.

Indeed, the Conservative government made some amendments to its FIPA program to correct the most glaring weaknesses. For example, they clarified the concept of expropriation by specifying that a non-discriminatory government measure that seeks to protect health and the environment or promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too early to evaluate the final effect of that clarification, but at first glance, it seems to be an improvement and we salute that.

It also restricted the concept of investment by specifying that the value of a good is equal to its fair market value. That put an end to the folly that added together all the potential profits that an investor hoped to earn from an investment. As for the rest, the model investment protection agreement continues to be based on Chapter 11 of NAFTA.

In our opinion, the government must continue to improve this model agreement, especially in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

Before ending my remarks, I want to emphasize that the government must submit treaties and international agreements to the House of Commons before ratifying them. At the beginning of the year, the government issued a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.

During the last election, however, the Conservative election platform was clear: the Conservatives made a commitment to submit all treaties and international agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties.

Apart from the amendments to the NATO treaty, which were the subject of a brief, last-minute debate and vote, none of these international treaties were submitted to the House. Today, international agreements have an effect of our lives that is comparable to the impact that the law can have on the lives of the citizens of all the countries with which Canada has signed bilateral agreements. There is no way to justify these treaties being concluded unilaterally and stealthily by the government, going over the heads of the representatives of the people.

The Bloc Québécois has introduced bills in the past to restore democracy and ensure the respect of Quebec and provincial jurisdictions in the conclusion of international treaties. Since the government promised to do this, we did not bring the issue up again at the time.

We are now seeing that the word of the Conservatives is not worth very much. The Bloc Québécois will raise this issue again and will bring forward proposals to restore democracy in the conclusion of international treaties. Such proposals will include requiring the government to present to the House all international treaties and agreements it has signed before ratifying them, requiring the government to publish all international agreements by which it is bound, requiring the vote and approval of the House following an analysis by a special committee tasked with examining international agreements and major treaties before the government may ratify them, and calling on the government to respect Quebec and provincial jurisdictions in the entire process of concluding treaties, that is, all stages of negotiation, signing and ratification.

I repeat, the Bloc Québécois is in favour of Bill C-53, which will open the door to signatory countries and foreign investors with which agreements have been signed. However, ICSID is a tribunal that simply hands down decisions regarding agreements. I would like to emphasize that, based on the principles of Chapter 11 of NAFTA, the 16 bilateral agreements signed by Canada are all bad agreements and that, unfortunately, even direct access to the ICSID tribunal could not replace the agreements that would be good for the countries with which we are signing them.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am pleased to speak to Bill C-53. As I understand it, the purpose of the bill is for Canada to implement the provisions of the international convention on the settlement of investment disputes.

I was not able to be here when the secretary of state introduced the bill and she may have addressed one of my questions that I posed to one of the Liberal members speaking to the bill. However, I reiterate the question because it seems to me it is something on which it is important for us to have some understanding. It has to do with the fact this convention has been open for signature for literally 42 years, from March 18, 1965 to this day. The obvious question that arises is, why now? What is the reason that today the government is proposing that something that has been on the books internationally and available for Canada to sign on to for years is suddenly a matter of sufficient importance and urgency to bring it forward in this Parliament?

In the absence of understanding that, I have proceeded to try to make sense out of the bill. I want to make it clear at the outset that the members of the New Democratic Party will not be voting to support Bill C-53 at this time. We have a number of concerns. I will try in the time available to me to summarize those concerns in three categories, first, with respect to matters of transparency, second, the issue of accessibility and third, matters of accountability. We find that this proposed agreement fails to meet the minimal test that we think is appropriate for a sovereign state to be able to seek reassurances that simply are not there.

First, I will speak briefly about transparency. The international convention on the settlement of investment disputes, proposes a consent based process for settling disputes. It is a difficulty that it is specified that once the consent of a party is given, there is no provision for there to be any revocation regardless of how flawed the process may be or how many concerns may arise in terms of how the whole process is being conducted.

The dispute settlement mechanism proposed by Bill C-53 will not just adjudicate individual contracts between foreign companies and sovereign states; it will in fact become the principal international process through which other investment agreements will be interpreted and applied with binding results. Article 48(5) of the convention clearly states:

The Centre shall not publish the award without the consent of the parties.

This creates a real concern about the transparency of the process. It seems that if matters are of sufficient import to our government, or for that matter to the corporations that are a party to such processes, there needs to be the assurance of there being some transparency around what has actually transpired.

The mechanism that is being proposed will exist under the aegis of the World Bank. That is an organization with which a great many NGOs have concerns. A great many countries, particularly the poorest of the poor countries in the world have major concerns with the World Bank. The New Democratic Party has raised concerns about it as well and in fact is pleased that the foreign affairs and international development committee currently is seized with some of those concerns and is looking at the issues of transparency, accountability and accessibility.

It seems to me at the very least that the government should not be jumping ahead without a more thorough examination of some of the concerns that have been brought to our attention through the experience of respected NGOs. One such NGO is the Halifax Initiative, an organization that was established after the G-8 was held in Halifax. It has nothing to do with me or my riding specifically. There was concern that there were no adequate responses to some of these serious issues. Another of the NGOs that presented on the matter before the committee was KAIROS, a highly respected multi-faith organization which is very involved in international development work around the world.

Concerns have not only arisen around the transparency and accountability of the World Bank operation which have massive implications for countries in the south but actually about the transparency of the Canadian government's decision-making as it relates to our participation in the World Bank.

These are issues that need to be examined more carefully with more satisfactory responses before we plunge into what is proposed here in the way of signing on to a convention. If for 42 years it has not been of sufficient or adequate usage by a series of Conservative-Liberal governments and the problems of transparency still remain with respect to the World Bank, it seems to me that it would be better if we put our house in order before we proceed with this new agreement.

Let me move briefly to the issue of accessibility. The process that is set out in the ICSID, which is the international convention that we are dealing with here, does not allow for third party testimony whatsoever. No matter how adversely some communities or other citizens may be impacted by certain contentious agreements between two parties, there is no allowance for what is called in legal terms amicus curiae briefs and is very problematic except with the full consent of the two parties to the arbitration.

There are citizens, communities and probably in some cases regional interests that could be massively impacted by some of these disputed agreements. It is not acceptable to us that there is no provision for some third party testimony being brought before an arbitration hearing. Couple that with the fact that there is no requirement for the decisions and the awards to be published, it is just a further reason for not being able to support this proposed process in its current form.

Most proceedings will probably be held in Washington. There is provision for a few designated centres elsewhere around the world, but they will take place in a small number of capital cities and will be entirely inaccessible in many instances to those third parties who may have a distinct and legitimate interest in the proceedings. Therefore, there are issues about accessibility. There is no question that countries in the southern hemisphere will most likely be impacted in adverse ways around such procedures and disputes.

Third, with respect to accountability, as I have already indicated, all decisions issued through the proposed dispute mechanism will be binding. The provisions for any appeals that could be launched to such binding decisions are very narrow and minimal.

According to article 52 in Bill C-53, annulment of a decision could only be permitted under five conditions: first, that the tribunal was not properly constituted in the first place; second, that the tribunal has manifestly exceeded its powers; third, that there was actually documented corruption in the tribunal itself; fourth, that there was a breach in the rules of procedure; and fifth, the award failed to state the reasons on which the decision was based.

Those are really very narrow legalistic provisions that would permit for any kind of appeal process whatsoever. Given the severe impact, the magnitude of the implications of decisions that may be rendered by such a dispute resolution body, when we combine the lack of transparency, the lack of accessibility with the lack of accountability, one has to be very concerned about why we need sign on to provisions that are this lacking in terms of really being transparent and accountable for its decisions.

Citizens cannot know which decisions are taken or how much their government is expected to pay in some cases where decisions are made that the government is a party to these decisions. We are talking largely about huge corporations, and in the instance of the government losing the decision, there is not even any kind of mandatory disclosure. In fact, the opposite is true.

It is not permissible for there to be disclosure of how much a government may actually be forced to pay in the event of such a decision being made that has the government, representing the people of one's country, on the losing side.

In that event, how is it possible for citizens to hold their government accountable, or foreign corporate entities for that matter? How is it possible to judge the legitimacy of ICSID decisions that are reached? I think it fundamentally erodes the democratic accountability and the transparency that needs to be obtained.

In conclusion, a great many Canadians remember, and certainly New Democrat members of Parliament remember all too well, the attempt of the previous government to plough ahead with the introduction of the multilateral agreement on investment. It was truly astounding when this came to light, it was actually a process that was so kind of clandestine and so below the radar that I remember asking questions on the campaign trail.

I hope my memory serves me correctly. It was either in 1997 during the federal election campaign or 2000, and my colleagues confirm that my first instinct was right. My memory is never perfect, I have to confess to that, but in 1997 the multilateral agreement on investments had just barely risen to public awareness and it was impossible to get any information about what this agreement was really all about.

Overwhelmingly, what we were hearing from people, the more we were able to delve into it, was that they were very concerned about the extent to which this multilateral agreement on investment would have severally curtailed the sovereign rights of states and citizens to the benefit, overwhelmingly, of large, transboundary, multinational corporations.

Had the ICSID process, the dispute mechanism that is here proposed in Bill C-53, existed at the time and had the multilateral agreement on investment gone ahead, cases of arbitration under the multilateral agreement on investment would actually have been channelled through the ICSID. As I mentioned at the outset when I raised questions about why now, why is this so-called new Conservative government now saying it has become very important for us to move ahead with this when it has been available for signature for 42 years, one really has to consider the adverse implications that would have accrued to Canada had we found ourselves in the situation of the MAI having gone ahead.

Thank goodness Canadians were not prepared for that to happen, but had it gone ahead it would have become subject to this disputes mechanism body with all the additional concerns that I have already raised.

With those reservations, the NDP has reached the conclusion that this is not a piece of legislation that we can support. We would have no recourse for arbitration decisions that would seriously erode the sovereign authority of the Canadian state had MAI gone into existence. We would have had no say whatsoever in the course of proceedings.

These are not light matters. These are not casual concerns. The ICSID process, while not substantive in itself, in our view has the very dark and worrisome potential to make bad financial investment agreements even worse. As I indicated at the outset, the New Democratic Party members of Parliament will not be voting for Bill C-53.

[Helena Guergis, Conservative, Secretary of State (Foreign Affairs and International Trade) (Sport)]

Mr. Speaker, I have a couple of comments for the hon. member and perhaps she would want to comment on them.

With regard to the business community in Canada, the Canadian Chamber of Commerce has written to the government and expressed that the business community very much would like to see Bill C-53 proceed. It would like to see Canada join along with the other 143 countries to date that have ratified.

I think what is important for the hon. member to know is that this is one of the most ratified instruments in the world. Of course, the international community is starting to realize the benefits of ICSID.

Perhaps the member would like to comment on whether she has had any conversations with the local business communities across the country. The member was a former party leader and I know that she would have had some connections with the business community. It would be very helpful to know what they have said to her.

I also want to point out that we are negotiating a foreign investment and protection agreement with China right now. I have been advised that having ICSID in place is something that would help us to proceed with this FIPA and go forward with respect to working with China. Does she have any comments on that?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I do not know whether it will surprise the secretary of state to hear this. I am sure many others will not be surprised to know that the Chamber of Commerce has not approached me, and I am not insulted by that. It is not surprising it has not done so.

There are various arguments in favour of signing on at this time. It is perhaps regrettable because if it had, it would have addressed some of the questions I raised, which I hope the secretary of state will choose to address in her wrap-up on the debate of Bill C-53 at second reading.

I have a great many corporations in my community, for which I have a good deal of regard and respect in terms of how they conduct themselves in a socially responsible way. In fact, it was thrilling for me that the Chamber of Commerce and the Greater Halifax Partnership jointly sponsored a major event on corporate social responsibility. One of the outstanding commentators on this topic came to address the subject, Stephen Lewis. There was a huge turn-out from the corporate community to address the questions of corporate social responsibility, and it made me feel very good about my community.

I do not want to misrepresent that speech and I would not even try to begin to articulate the thrust of the case for corporate social responsibility having been put to the business community in Halifax by Stephen Lewis, but it was well received.

Issues of transparency, accessibility and accountability in such disputed matters would rank very high with responsible corporations that take seriously the need to take responsibility for their actions and to ensure that people understand what kinds of disputes have occurred and then what kinds of decisions have come out of them.

With those comments, I look forward to the secretary of state addressing the question of why now. Other that having cited the Chamber of Commerce. I did not hear her speak about what other kinds of representations from other citizens or corporations were made to the government that brought it to the decision to bring this forward as legislation at this time. I look forward to hearing her comments on that.

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Mr. Speaker, I will be splitting my time with my colleague, the member for Lévis—Bellechasse.

I am pleased to have the opportunity to further explain Bill C-53, which implements Canada's obligation under the Implementation of the Convention on the Settlement of Investment Disputes.

Canada signed the ICSID convention on December 15, 2006. That signature was a public undertaking that Canada intended to pass legislation so we could ratify the convention. This bill is the fulfillment of that undertaking. I will say more later in my speech about the ratification of the convention.

The ICSID is an important convention for protecting investment around the world. ICSID awards can already be enforced in 143 countries. It is time to provide the benefit of ICSID to Canadian investors. However, to gain that protection for Canadian investors, Canada needs legislation to ensure that ICSID awards, wherever they are made, can be enforced in Canada.

Canada also needs to provide the privileges and immunities needed for ICSID to function in Canada. We need to ensure that persons using conciliation under the convention cannot abuse that process. Canada needs to ensure that it can appoint qualified persons to ICSID panels.

Previous speeches have provided an overview of the bill and its provisions dealing with enforcement. I will focus in this speech on privileges and immunities, conciliation and appointments to the panel.

Let me begin with privileges and immunities. The privileges and immunities provided for in this bill do not deal with the privileges and immunities of the foreign governments against which an award is made. Those privileges and immunities will continue to be governed by the Foreign Missions and International Organizations Act.

Instead, clause 5 of the bill deals with the privileges and immunities of the ICSID and of individuals working for the centre or engaged in ICSID arbitration. Generally, clause 5 simply faithfully incorporates into Canadian law the privileges and immunities which the convention requires.

ICSID is provided with the legal capacity of a private person. This means it will be able contract, acquire property and institute legal proceedings. ICSID will be immune from legal process except when it waives this immunity.

Officers and employees of ICSID and people acting as conciliators or arbitrators will also be immune from legal process, but their immunity is limited. They will have immunity only for acts they have done in the exercise of their functions and only if the ICSID does not waive this immunity.

If they are not Canadians, these people are entitled to the same immunities and immigration restrictions, registration requirements and national service obligations as Canada extends to representatives, officials and employees of comparable rank of other states. The same rules apply to foreign exchange and travel restrictions.

These rules would also apply to people appearing in ICSID proceedings as parties, agents, counsel, advocates, witnesses or experts. However, this immunity is generally limited to the period when they are travelling to and from the place where the proceedings are held and for the period of their stay there.

There is nothing new or unusual in the privileges and immunities which the convention and the bill provide to individuals. Immunity from legal process is limited to functional immunity. As to other privileges and immunities, Canada only needs to provide them on the same basis as it provides to officials of other states.

All Canada's policies that apply to the extension of such privileges and immunities to officials of foreign states will also apply to the privileges and immunities provided to people under this bill.

I should also note that ICSID does not have to pay taxes or customs duties. Canadian may also not levy taxes on the salary or benefits of ICSID staff members who are not Canadians. Similarly, Canada will not tax ICSID conciliators or arbitrators who do their work in Canada if the only basis for such tax is that the work was done in Canada.

These tax privileges, like other privileges and immunities, are exclusively related to ICSID and its activities. They do not limit Canada's ability to tax Canadians. Indeed, if ICSID arbitrations and conciliations are not conducted in Canada, these tax privileges have almost no revenue impact.

I turn next to clause 10, the portion of the bill that deals with conciliation.

In addition to arbitration, ICSID also provides a conciliation process for investor state disputes. Conciliation is a process in which the parties to the dispute use a third party to clarify issues and to try to bring about agreement between them on mutually accepted terms. If the disputing parties reach agreement, the third party prepares a report explaining the issues and the agreement reached by the parties.

Conciliation can only work if both the investor and the state can speak honestly and openly to the conciliator, but conciliation can break down. For conciliation to work, the parties and the conciliator have to be able to say things that might be damaging admissions in any subsequent court action or arbitration.

The convention deals with this problem by requiring parties to the convention to ensure that what is said or written in an ICSID conciliation process will not be used in any subsequent proceeding. Clause 10 implements this obligation.

I now turn to clause 11, which provides for the governor in council to designate persons to the ICSID panel of conciliators and the ICSID panel of arbitrators.

Articles 12 to 16 of the convention set up two panels, one for conciliators, one for arbitrators. Each state party to ICSID may designate four persons to each panel and the ICSID secretary general may also appoint ten. Panel members serve for renewable terms of six years, but continue in office until their successors are designated. People designated to panels must have recognized competency in the fields of law, commerce, industry or finance.

Articles 31 and 40 of the convention provide that if the secretary general of ICSID is required to appoint the chairman of a conciliation commission or an arbitral tribunal, he must select the chairman from the relevant panel. However, the parties to the dispute are free to appoint conciliators or arbitrators from outside the panel and may well agree on a chairman.

Being named to the panel provides no remuneration. Historically, the chances of a panellist actually being asked to arbitrate or conciliate a case are quite small. This is because there have only been 118 cases decided by the ICSID arbitral tribunals and 5 conciliation reports issued over the last 40 years. Therefore, only 118 arbitrators have been appointed to chair arbitral panels and only 5 conciliators have been selected to chair conciliation commissions. Remember as well that the parties can appoint a chairman from outside the panel.

Once this bill is declared in force in Canada, Canada will be in a position to ratify the ICSID convention. The convention also permits us to designate provinces and territories as entities that could use ICSID arbitration.

Some provinces with an interest in the convention still have concerns about the implementation and operation of the convention. We are working with the provinces and territories to resolve such concerns.

Canada can designate a province or a territory under the convention at the same time as the ratification or at any time later.

I urge the House to consider this bill on an expeditious basis. One hundred and forty-three countries are already party to the ICSID convention. Canadians with investments abroad are asking us to make the ICSID option available to them. It is time to act.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, people who are watching sometimes have difficulty understanding complicated bills. I must admit that Bill C-53 is rather complex. It deals with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

My question is for my colleague. The Bloc Québécois will support Bill C-53 so that disputes over bilateral agreements can be handled by the International Centre for Settlement of Investment Disputes, which I think is a good thing.

Will my colleague agree that the problem does not lie in supporting an international dispute settlement centre, but in the fact that the conventions signed by the Government of Canada are often bad conventions?

Can my colleague promise in this House that his government will no longer sign bilateral treaties without first bringing them before Parliament for discussion with the elected members here in this House?

[Deepak Obhrai, Conservative, Calgary East, AB]

Mr. Speaker, I thank the Bloc for supporting this important legislation.

To date, this convention has been ratified by 143 countries making it one of the most ratified instruments in the world. If there were anything wrong with this instrument, we would not have so many countries signing this convention.

By signing this convention we would not only be providing protection to our investors but we would be providing them with a mechanism to solve any disputes that arise. I am happy to tell the member that over a period of time, over 40 years, not many disputes have occurred where the ICSID Convention has been used. Nevertheless, we need to ratify this to give our businesses the same kind of level playing field that other businesses have in 143 countries around the world.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I have a couple of questions following the parliamentary secretary's intervention.

His last comment about this convention having been on the books for 40 years raises a further question. If in fact very few disputes have come before that body, is it because there are considerable concerns about the possibility that decisions could be rendered that could impact negatively on citizens or particular communities as a result of the dispute mechanism decisions that have been rendered? Perhaps he could indicate what he thinks that may suggest.

Second, I raised some concerns earlier about transparency, accessibility and accountability. I think a lot of people feel strongly about there needing to be transparency and accountability when we enter into such agreements. I wonder whether he could address that.

Third, as far as I understand it, either no provinces or very few provinces have given any indication that they are prepared to support this process and yet that would be a further stage of ratification, I believe, that would be required. Perhaps the parliamentary secretary--

[The Deputy Speaker, NDP, Bill Blaikie]

The hon. Parliamentary Secretary to the Minister of Foreign Affairs.

[Deepak Obhrai, Conservative, Calgary East, AB]

Mr. Speaker, as I mentioned, to date, 143 countries have signed this convention. Also, subsequent agreements that we have signed, the free trade agreement and NAFTA, provide for the ICSID arbitrators to resolve the investor state disputes both in Canada and in the country which the investor is a national party. That indicates the importance of this convention.

I cannot say why the provinces did not sign this but it is more important to know that we need to have a level playing field for our investors dealing with other countries as well.

I do not know why she says that there is no accountability in this process. We are discussing this act here in Parliament and it very clearly states the process. The idea that just because few disputes came before it there must be something wrong with the convention, that is not the idea. I do not know where she gets the idea that there should be disputes all the time every time. Most of the time, there are laws and situations in countries and the investors follow the local laws and do not need to go to these arbitrations. However, these are measures that give confidence to businesses and to everybody else that should those things arise dispute mechanisms are everywhere, including the WTO and NAFTA. This is something that is required and is needed.

As for the provinces, for whatever concerns they have, we will act together, but this law needs to be passed here in Parliament and we will actually be working with everybody to create that environment. Canada is a nation of trading. Over 40% of our GDP is based on foreign--

[The Deputy Speaker, NDP, Bill Blaikie]

Resuming debate, the hon. member for Lévis--Bellechasse.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, it gives me great pleasure to rise today in this House to express my support for the bill that was described so well by my friend from Simcoe—Grey, the Secretary of State for Foreign Affairs, International Trade and Sport, and also by my friend from Calgary East, the Parliamentary Secretary to the Minister of Foreign Affairs.

Bill C-53 implements, in Canadian law, an international convention of the World Bank, the ICSID Convention. The purpose of Bill C-53 is therefore to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This convention covers arbitration and international conciliation between governments and foreign investors, what is commonly called investor-state dispute settlement.

These disputes can arise in a variety of situations, for example, when the country where the foreign investor is located passes laws that discriminate against the investor or in case of nationalizations.

International arbitration is a proven method for resolving disputes. It is a way of resolving them without resorting to the legal system. It has long been acknowledged that the parties to a dispute can resort to arbitration and the results of the arbitration process will be recognized by the courts. For example, commercial arbitration awards in Canada, that is to say between businesses, are recognized and enforced by the courts.

It is up to the parties to decide whether they want to resort to arbitration or the legal system. The flexibility that this provides is often much appreciated. In the case of the convention implemented by Bill C-53, which we are debating today, one of the great advantages of relying on arbitration is that it denationalizes the process. I will explain what is meant by that.

When a dispute arises between a foreign investor and the host country, the investor has the option of pursuing the matter before the courts of the host country. Usually—and this would be the case in Canada, in Quebec, or anywhere else in the country—the foreign investor would be entitled to a fair and equitable hearing. The host country’s courts would not be prejudiced against the foreign investor and would reach a decision under the law. Sometimes, though, this would not happen. The court might well lean in the direction of its own government at the expense of the foreign investor, which, in a case of interest to us, could well be a Canadian company doing business abroad. I should say as well that another advantage of the arbitration process is that the parties choose the arbiters. When the matters in dispute are highly specialized, for example petroleum development or marine issues, choosing arbiters who are experts in the field can make the process more effective and result in better decisions.

The arbitration process in the ICSID Convention is therefore one of the processes that are most often used for settling disputes between investors and states. My colleagues pointed out that more than 150 countries have already signed on to this arbitration process. The Convention has been ratified and is one of the international instruments to which the largest number of states belong. What distinguishes the convention to be implemented here in Canada by this bill is the mechanism for enforcing arbitration awards. It is an effective mechanism and that will help to protect investors. This is a key advantage of the ICSID Convention.

In the great majority of cases, the losing party in arbitration will pay the award of an arbitral tribunal without the need for the successful party to take any enforcement proceedings. The same is true for investor state arbitration.

In Canada, arbitral awards, including investor state arbitral awards, are currently enforced pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This New York convention permits a limited review of an arbitral award by domestic courts. It allows a court to refuse to enforce an award if to do so would be contrary to public policy. In addition, it permits a state to exclude certain subjects from the application of the convention and thus from enforcement.

ICSID provides a better enforcement mechanism. It does not permit a state to exclude from dispute settlement any matter which the state has consented to submit to arbitration. ICSID awards are enforceable as if they were final decisions of a local court. This simple, efficient mechanism guarantees better protection for Canadian investors abroad.

We can also think of companies like Bombardier, the mining companies, the large consulting engineering firms and SNC Lavalin, whose head office is in Montreal.

Here are a few of the elements or clauses that make this bill an advantageous one for our businesses in Quebec and Canada.

For example clause 8 in the bill provides for the automatic recognition and enforcement of an award given by an ICSID tribunal. Such an award is recognized and deemed to be a final judgment by a superior court of Canada.

Under the same clause, any superior court of Canada may recognize and enforce awards coming under the law. The superior courts include the Federal Court. The Federal court will have the necessary jurisdiction to hear requests for recognition of awards involving the Government of Canada and awards involving foreign governments and their political subdivisions.

This same convention provides explicitly that awards are binding on the parties and cannot be subject to any judicial appeal or remedy.

Thus a foreign tribunal cannot hear a request to the effect that an ICSID arbitral tribunal has gone beyond its jurisdiction or was not properly constituted. These cases, when they are undertaken for awards other than those of the ICSID, delay resolution of the dispute and payment of damages. The convention does not allow such dilatory remedies.

Clause 7 of the bill provides that an award under the convention is not subject to any remedy, such as appeal, review and annulment in a Canadian court of justice. From this we can infer the very final effect of awards given under the convention. The decision to seek arbitration is entirely voluntary, but once the parties have agreed to it they cannot seek remedy from any other body, such as a court of justice.

The only remedies allowed in erroneous decisions are those laid down in the convention. Requests for review, interpretation or annulment of an award are heard, should the case arise, by the Secretary-General of ICSID.

Thus questions of error concerning awards cannot be submitted to national tribunals, but there remains a guarantee that erroneous awards will be remedied.

The ICSID Convention provides a good mechanism for resolving disputes and enforcing awards efficiently. This is an international instrument promoting arbitration and fair solutions for international investment disputes. This is why our government is presenting for second reading Bill C-53, which implements the ICSID Convention here, in Canadian law.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I would like my colleague from Lévis—Bellechasse to elaborate.

As I mentioned earlier, the Bloc Québécois supports Bill C-53 because it is a good thing to have recourse to the International Centre for Settlement of Investment Disputes when dealing with international treaties between governments or agreements between corporations and foreign governments. We are pleased with this and we will support Bill C-53.

However, there is a problem. Treaties signed by the Government of Canada with other countries are not submitted to this House for review. I would like my colleague for Lévis—Bellechasse to elaborate on this and tell us if he is prepared to undertake that, in future, the Conservative government will not sign an international treaty with any country without submitting it to Parliament for examination. This will avoid potential errors. In fact, 308 individuals are better than 100.

This will allow us to ask all the necessary questions in order to avoid making mistakes and finding ourselves before the International Centre for Settlement of Investment Disputes.

Will my colleague from Lévis—Bellechasse show us the authority he is capable of and assure this House today, on behalf of his party, that, in future, no international treaty will be signed without being submitted for review to this chamber of Parliament?

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, I want to thank the hon. member for his question. That is precisely what we are doing in the parliamentary debate today. In order for Bill C-53 to come into force it has to be passed by the House of Commons and then go through the parliamentary process at the Senate, during which time all parliamentarians have the opportunity to speak to the bill. If the hon. member wants to make constructive comments on the bill, I invite him to do so now.

Nearly 153 countries have signed this convention that will allow numerous foreign companies that do business abroad to get better legal assurances that the contracts they sign with other parties in other countries are respected.

In Quebec, this has even more significance because in 2008 there will be a conference of the leading experts on the matter in order to continue to improve the arbitration process. We have to recognize that in many cases this is better than having lengthy, expensive legal disputes in foreign courts.