Settlement of International Investment Disputes Act

An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention)

This bill was last introduced in the 39th Parliament, 1st Session, which ended in October 2007.


Peter MacKay  Conservative


Not active, as of May 15, 2007
(This bill did not become law.)


This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment implements the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature in Washington on March 18, 1965.


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.


May 15, 2007 Passed That the Bill be now read a second time and referred to the Standing Committee on Foreign Affairs and International Development.

Settlement of International Investment Disputes ActGovernment Orders

January 29th, 2008 / 10:20 a.m.
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Vivian Barbot Bloc Papineau, QC

Mr. Speaker, on May 15, 2007, I had the opportunity here in the House to talk about why the Bloc Québécois supports Bill C-53, which is identical to Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Today, therefore, I will talk about how international treaties are now typically drafted with no regard whatsoever for democracy.

I would like to begin by saying that the Bloc Québécois wants all treaties to go through the House of Commons. The current way of doing things completely disregards democracy. Bill S-5, which provides for the coming into force of tax conventions, shows how important international treaties are to our daily lives. These days, treaties are brought before Parliament only when they require enabling legislation.

In Canada, Parliament and parliamentarians play a minimal role in negotiating and ratifying international treaties. The federal executive controls all phases of the process. The executive is also responsible for what takes place in negotiations, which are, for the most part, secret. This secrecy is an important part of the federal government's negotiation strategy. Next to nothing, and sometimes nothing at all is disclosed before the parties sign an agreement in principle on the content and even the wording of the treaty. Even though the provinces are usually kept abreast of negotiations for trade agreements, they participate very little in the process and, with few exceptions, are totally excluded from the decision-making process.

Where international treaties are concerned, democracy is totally absent. There is no complete compilation of such treaties. Governments release them when and if they see fit, and people cannot be sure they are all being disclosed. The treaty section at the Department of Foreign Affairs does not even have a list of signed treaties to consult. The government is not required to table treaties in the House of Commons. It does not even have to inform the House or the public that it has signed or ratified treaties. The House does not get to approve treaties. The government can sign and ratify any treaty it wants without consulting the representatives of the people. At the very most, treaties requiring legislative changes are brought before Parliament before ratification.

In Quebec, since 2002, a vote in the National Assembly is required. Being in no way involved in the negotiation of treaties, the House of Commons cannot consult the public. It is therefore not surprising to see people increasingly expressing their opposition in the streets. In fact, there is no other place for them to be heard. The government is not required to consult the provinces either, even though it cannot implement treaties that concern areas of provincial jurisdiction and the provinces are not bound by the federal government's signature. It is totally absurd that no formal consultation mechanism is in place.

The government is preventing the provinces from being able to act internationally by controlling their international relations and by not allowing them to reach treaty-like agreements. This is unacceptable.

It used to be that international treaties governed relations between states and had little or no impact on how society functioned or on the lives and rights of citizens. At the time, it was acceptable for the government to unilaterally sign or ratify treaties.

Now, however, international treaties, especially trade agreements, affect the power of the state, the workings of society and the role of citizens. Furthermore, they often have an even greater impact than many bills. The Canadian treaty ratification process is not in line with this new reality. The people's representatives must be involved in decisions that affect the people they represent.

During the election campaign, the Conservatives promised to bring treaties before the House prior to ratifying them, but they still have not kept that promise. Recently, the government signed an investment protection agreement with Peru. This agreement is based on chapter 11 of NAFTA, which has been criticized by many. Yet the government concluded it without putting it to the House. When the House presses the government to honour its international commitments, as it has done in the case of the Kyoto protocol, the government does what it pleases, with no regard for the will of the people or the promise it made when it signed the treaty.

As was the case when Bill S-5 was passed, the fact that Bill C-9 will be passed quickly is an opportunity to show the government that democracy is not something to be feared when concluding fair treaties. The government must honour its promise to submit to the elected representatives any treaties that it intends to ratify, as it is forced to do here today with the three tax treaties. Once it has ratified them, it must honour them, as we hope it will honour the tax treaties we are discussing here today, and the Kyoto protocol, which the House is pressing it to honour.

This failure to involve the representatives of the people is an anachronism. It is impossible to tell from the division of legislative powers provided in the Constitution Act, 1867 which level of government, federal or provincial, has authority to sign a treaty with a foreign government. No provision is made in the Canadian Constitution for a jurisdiction anything like external relations or international relations. This is understandable, however, because when the Constitution Act, 1867 was passed by the British Parliament in London, Canada was still a colony of the British Empire. In 1867, the British Parliament reserved for the British Crown the power to represent the Dominion of Canada internationally and to enter into treaties with foreign countries on its behalf.

Under section 132 of the Constitution Act, 1867, however, the federal government was given responsibility for implementing, in Canada, treaties entered into by the British Crown, where these were applicable to this country.

In 1931, pursuant to the Statute of Westminster, Canada, as well as several other dominions of the British Empire, acquired full independence and, along with it, the authority to act with all the attributes of a sovereign state on the international scene. It was then that the federal government acquired jurisdiction over external affairs. Considered a royal prerogative when the Constitution was written, this authority was transferred to the government which, as the sovereign's representative, exercises it alone and without involving Parliament.

Once the governor in council approves an agreement reached between Canada and a foreign country, no matter who negotiated the treaty, that agreement becomes an international treaty. The representatives of the people do not have a say in it because the federal government has simply inherited a royal prerogative dating back to the British Empire.

Parliament only becomes involved when the ratification of a treaty requires an enabling statute. Canadian legislation may have to be amended because of the treaty. The legislative implementation of these treaties is the only occasion when Parliament has a say in the entry into force of a treaty in Canada.

It should be pointed out that many treaties requiring the Canadian state to adopt specific standards are not presented to Parliament for the adoption of enabling legislation. In such cases, the government believes that the Canadian legislation already conforms to the international obligations adopted or that the subject of the treaty does not require the adoption of new legislative provisions.

Consequently, no amendments are made to existing laws nor is a new law adopted by Parliament. For example, Parliament did not adopt legislation to implement or approve the ratification of the International Convention on the Rights of the Child. In such cases, the treaty never goes before Parliament.

In short, Canada is less democratic today that in was in the 20's. In June 1926, Prime Minister King introduced a resolution that was unanimously adopted by the House of Commons. It read as follows:

Before Her Majesty's Canadian ministers recommend ratification of a treaty or convention involving Canada, Parliament's approval must be obtained.

In 1941, Mackenzie King reiterated his commitment to this formula:

With the exception of treaties of lesser importance or in cases of extreme urgency, the Senate and the House of Commons are invited to approve treaties, conventions and formal agreements before ratification by or on behalf of Canada.

Over the years, approval by resolution has been sought less and less. During the cold war, the government dropped the convention of seeking Parliament's approval before signing treaties or engaging in military intervention on foreign soil.

The government even stopped tabling treaties in Parliament. Except for the Kyoto protocol, not one treaty has been approved by resolution since 1966—over 40 years ago—and that was the Auto Pact. As for Kyoto, the government has refused to honour it. So much for democracy.

Furthermore, Canada is less democratic than the rest of the industrialized world. Most other major industrialized democracies support greater involvement of their parliaments in ratifying treaties. For example, the constitutions of France, Germany, Denmark, Italy and the United States require legislative approval of some types of international agreements prior to ratification.

Some countries that share constitutional traditions with Canada have tried to enshrine their parliament's role in examining treaties.

In the United Kingdom, a convention established in the 1920s, the Ponsonby Rule, requires the tabling of international agreements in both Houses of Parliament at least 21 days before they are to be ratified. This gives parliamentarians the opportunity to debate them before the government ratifies them, even though these debates are not binding. This kind of thing does not exist in Canada.

More recently, in 1996, Australia changed its procedure for concluding treaties. Under this procedure, treaties must be tabled in parliament at least 15 sitting days before any binding decision is made by the executive branch; a national interest analysis of the expected impact of the treaty obligations must be done, for each treaty, and tabled in parliament; a standing joint committee on treaties must be established to examine potential treaties and report on them. There is nothing of the sort in Canada.

As usual, Canada trails Quebec.

In Canada, the provinces pass laws in their constitutional fields of jurisdiction. As the British Privy Council ruled in 1937 in the labour conventions case, the provinces' legislative authority also extends to the implementation of international treaties.

As soon as a treaty or part of a treaty involves a provincial jurisdiction, the provisions in question can be implemented only by the provinces. Since 1964, Quebec has concluded some 550 international agreements involving many fields of jurisdiction for which it has full or partial responsibility, such as culture, economic development, drivers' licences, international adoption, the environment, science and technology, and communication.

For a major agreement to be binding, the Government of Quebec must first submit it to the Quebec National Assembly for approval. Only then will Quebec be bound by an international agreement entered into by Canada and agree to pass legislation to implement the agreement. Furthermore, under the legislation, Quebec's Department of International Relations must list and publish all of Quebec's international agreements. There is nothing of the sort in Canada.

The Bloc Québécois has introduced three bills on treaties to modernize the entire process for concluding international treaties.

The Bloc Québécois bill on treaties was designed to build transparency and democracy into the process of negotiating and concluding international treaties. Since such treaties have an increasingly large impact on our lives, it was more important than ever to make such a change. Moreover, the bill required that the federal government respect the provinces' jurisdictions.

The bill provided for five changes: all treaties were to be put before the House of Commons, the House was to approve important treaties, a parliamentary committee was to consult civil society before Parliament voted on important treaties, treaties were to be published in the Canada Gazette and on the Department of Foreign Affairs website and the government was to consult with the provinces before negotiating a treaty in an area of provincial jurisdiction.

The treaty bill came to a vote only once, on September 28, 2005. All the federalist parties voted against it.

No strangers to contradiction, the Conservatives made two promises about international treaties during the last election campaign. They promised to put international treaties before the House prior to ratification and to give the provinces a role in concluding treaties pertaining to their jurisdictions. Both these promises were broken.

Since they were elected, the Conservatives have amended NAFTA. They have signed two investment protection agreements based on NAFTA chapter 11, one of which has been ratified. They have concluded a military cooperation agreement to authorize British soldiers to train in Canada. They have signed cooperation agreements on higher education, even though education does not come under Ottawa's jurisdiction. They have concluded an agreement to facilitate technology transfers from Canada to China. And they have amended the free trade agreement with Chile.

Aside from the amended NATO treaty, which was brought before the House at the last minute for a mini-debate and vote, none of these international treaties has come before the House.

And where is the nation of Quebec in all this? The federalist parties say they rejected the Bloc Québécois bill because of two clauses, 4 and 6.

First, clause 4 provided for a mechanism for consulting with the provinces:

Canada shall not, without consulting the government of each province in accordance with the agreements entered into under section 5, negotiate or conclude a treaty

(a) in an area under the legislative authority of the legislatures of the provinces; or

(b) in a field affecting an area under the legislative authority of the legislatures of the provinces.

As for clause 6, it recognized the validity of the Gérin-Lajoie doctrine:

Nothing in this Act in any manner limits or affects the royal prerogative of Her Majesty in right of a province with respect to the negotiation and conclusion of treaties in an area under the legislative authority of the legislatures of the provinces.

The clause on consulting Quebec and the provinces is nothing revolutionary. When the federal government discusses, in an international forum, the text of a treaty having an impact on the provinces, then it consults the provinces beforehand.

Under an agreement concluded in 1975—and still in effect—between the Trudeau government and the provinces, Ottawa consults the provinces at every stage of the negotiation of treaties involving human rights.

Every federalist party in Ottawa is more centralist than Pierre Elliott Trudeau on the issue of international relations.

It is not just a Bloc Québécois bill that the federalist parties have rejected, it is a Quebec law. Section 22.1 of the Act respecting the Ministère des Relations internationales requires the consent of the Government of Quebec with respect to the signing, ratification or adherence by the Government of Canada, before the latter acts internationally on any agreement concerning matters under Quebec's constitutional jurisdiction.

As far as the section recognizing the provinces' right to negotiate and conclude international treaties in their jurisdictions is concerned, it was simply a recognition of the Gérin-Lajoie doctrine which every Government of Quebec has been following since 1965.

The Gérin-Lajoie doctrine is closely linked to Quebec's independence: the provinces are completely sovereign within their jurisdictions and they must exercise their authority over the entirety of their jurisdictions, which includes signing and ratifying international treaties.

In closing, these are some of the arguments in favour of more involvement by parliamentarians in the negotiation and ratification of international treaties for the good of democracy.

Settlement of International Investment Disputes ActRoutine proceedings

October 29th, 2007 / 3:05 p.m.
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The Speaker Liberal Peter Milliken

The Chair is satisfied that this bill is in the same form as Bill C-53 was at the time of prorogation of the first session of the 39th Parliament.

Accordingly, pursuant to order made on Thursday, October 25, 2007, the bill is deemed read the second time and referred to the Standing Committee on Foreign Affairs and International Development.

(Bill read the second time and referred to a committee)

Settlement of International Investment Disputes ActRoutine proceedings

October 29th, 2007 / 3:05 p.m.
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Beauce Québec


Maxime Bernier ConservativeMinister of Foreign Affairs

moved for leave to introduce Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Mr. Speaker, pursuant to the special order made previously, I would like to inform the House that this bill is in the same form as Bill C-53 was in the previous session at the time of prorogation.

(Motions deemed adopted, bill read the first time and printed)

Business of the HouseGovernment Orders

June 14th, 2007 / 3:10 p.m.
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York—Simcoe Ontario


Peter Van Loan ConservativeLeader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, I will be happy to address that in the affirmative in a moment but there is more that we should know about in terms of the business we are doing.

We will continue today with Bill C-42, the quarantine act, Bill C-58, the railway transportation bill and Bill C-21, An Act to amend the Criminal Code and the Firearms Act (non-registration of firearms that are neither prohibited nor restricted).

Tonight we have the emergency debate pursuant to Standing Order 52 that the Speaker has determined should proceed.

On Friday we will call Bill C-33, the income tax bill and Bill C-6, the aeronautics bill.

Next week is got the job done week when the House has completed the nation's business for this spring's session. During the got the job done week we will continue and hopefully complete the business from this week, as well as some new legislation and legislation that will be out of committee or the Senate.

The list of bills that are currently on the order paper, in addition to those I have identified for this week that I would like to see completed by the House before the summer recess are: Senate amendments to Bill C-31, An Act to amend the Canada Elections Act and the Public Service Employment Act.

There are also the following bills: Bill C-32, An Act to amend the Criminal Code (impaired driving) and to make consequential amendments to other Acts; Bill C-44, An Act to amend the Canadian Human Rights Act and Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Another bill includes Bill C-54, An Act to amend the Canada Elections Act (accountability with respect to loans).

By the end of next week, Canadians expect that the Senate will have completed its consideration of budget Bill C-52 without any amendments so that they can relax for the summer with the knowledge that $4.3 billion in the 2006-07 year end measures will be in play.

If there are amendments, we will have to be here in the House to respond and protect measures that might otherwise be lost, such as a $1.5 billion for the Canada ecotrust for clean air and climate change; $600 million for patient wait times guarantees; $400 million for the Canada infoway; $100 million for the CANARIE project to maintain the research broadband network linking Canadian universities and research hospitals; $200 million for protection of endangered spaces; and much more.

May 31st, 2007 / 11:05 a.m.
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The Chair Conservative Kevin Sorenson

That gives us a Wednesday meeting with national defence. Okay.

The second issue is that the analysts from the Library of Parliament, with the clerk of the committee, will prepare a draft work plan for the study of Bill C-53. It's our first piece of legislation that we'll be dealing with. It deals with investments in Canada. We're going to get the report on that. It's a very brief bill.

Madame Lalonde, did you want to speak?

Business of the HouseOral Questions

May 17th, 2007 / 3:10 p.m.
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Peter Van Loan Conservative York—Simcoe, ON

I would not do that.

Tomorrow is an allotted day.

Next week is constituent consultation week, when the House will be adjourned to allow members to return to their ridings and meet with constituents to share with them the activities of Parliament since the last constituency break.

For the interest of members, I will quickly review our plan for the context of our overall legislative agenda.

As he requested, this is currently strengthening the economy week, where a number of financial bills moved forward. The budget bill was sent to committee and, hopefully, it will be reported back tomorrow, or soon, so we can deal with it at third reading when the House returns after the break.

Bill C-40, an act to amend the Excise Tax Act, was read a third time and sent to the Senate. Bill C-53, an act to implement the convention on the settlement of investment disputes, Bill C-33, the sales tax bill and Bill C-47, the Olympics symbol bill were all sent to committee and we all would like to see those back in the House for report stage and third reading.

In an earlier week, Bill C-36, the bill that makes changes to the Canada pension plan and the Old Age Security Act, was made into law after receiving royal assent.

Strengthening accountability through democratic reform week was a success with the consideration of Bill C-43, Senate consultation. We had three new democratic reform bills introduced that week: Bill C-55, to expand voting opportunities; Bill C-56, an act to amend the Constitution Act, democratic representation; and Bill C-54, a bill that would bring accountability with respect to loans. We hope to continue debate on that particular bill later today.

Bill C-16, fixed dates for elections, was given royal assent and is now law, which I think is the cause of the commotion now in all the committees where Liberals are using procedural tactics. Now they feel they can do it with a free hand.

Two other democratic reform bills are in the Senate, Bill C-31, voter integrity, and Bill S-4, Senate tenure. I really would like to have the term limits bill from the Senate for an upcoming democratic reform week if the opposition House leader can persuade his colleagues in the Senate to finally deal with that bill after 352 days. We may get 352 seconds in a filibuster, but they have had 352 days so far. They have been stalling for a year.

During the consultation week, I will be interested in hearing what our constituents think of the plight of Bill S-4 and the irony of those unaccountable senators delaying it.

We dedicated a good deal of our time focusing on making our streets and communities safer by cracking down on crime. Now that we have had the help of the NDP, we restored the meaningful aspects that the Liberals gutted in committee to Bill C-10, the bill to introduce mandatory penalties for violent and gun crimes. We are continuing to debate that bill today at third reading.

Bill C-48, the bill dealing with the United Nations convention on corruption, was adopted at all stages.

Bill C-26, the bill to amend the Criminal Code with respect to interest rates, was given royal assent.

Bill C-22, the age of protection, was given final reading and sent to the Senate, although it did spend close to, if not in excess of, 200 days in committee where the Liberals were obstructing and delaying its passage.

We made progress on Bill C-27, the dangerous offenders legislation. We would like to see that back in the House.

Bill C-9, An Act to amend the Criminal Code (conditional sentence of imprisonment) and a host of other justice bills are working their way through the system.

Members can advise their constituents that when we return, we will be reviving two themes, back by popular demand. Beginning May 28, we will begin again with strengthening accountability through democratic reform with: Bill C-54, political loans; Bill C-55, additional opportunities for voting; and Bill C-56, democratic representation.

Up next is a second go-round on strengthening the economy week with Bill C-52, the budget implementation bill, which will be called as soon as it is reported back from committee.

In the near future, we will have the improvement of aboriginal people quality of life week with Bill C-44. This bill will grant first nations residing on Indian reserves access to the Canadian charter of human rights. They have been denied this right for 30 years. Unfortunately, Bill C-44 is being delayed by the opposition. This is another bill being delayed by the opposition in committee.

After Bill C-44, I intend to debate Bill C-51. The agreement establishes the use and ownership of land and resources and will foster economic development. This bill illustrates Canada's commitment to the North and to settling land claims.

I wish all members a productive constituent consultation week and look forward to more progress on the government's legislative agenda when the House returns on May 28.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 6:20 p.m.
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Jay Hill Conservative Prince George—Peace River, BC

Mr. Speaker, if you were to seek it I think you would find unanimous consent to apply the results of the vote previously taken to the motion on Bill C-53, with Conservative members voting yea, and I would like to add the hon. member for Edmonton—St. Albert.

The House resumed consideration of the motion that Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), be read the second time and referred to a committee.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 4:50 p.m.
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Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, all the agreements that Canada has signed on the protection of foreign investment have major deficiencies and are based to some extent on NAFTA chapter 11. As I said in my speech, most of the agreements Canada has signed are bad. A tribunal such as ICSID, which is the subject of Bill C-53, will always judge, treat and evaluate things on the basis of the agreement that was signed between the two countries. We are talking here about Canadian foreign investment. One hundred and fifty-six countries have signed this convention and can go directly to the ICSID tribunal.

We have international relations and Canadian foreign investment. I understand that the laws of Canada and of the various provinces and Quebec take priority when we are dealing with people who are here. However, when we are dealing with foreigners, we need some basis. This basis is primarily the agreements that have been signed. Everything depends on that.

As I said and say once again, this is just a tribunal. There are also the agreements that were signed, and unfortunately, most of them are bad. They should all be renegotiated, just like chapter 11 of NAFTA.

This is the basis on which people can at least seek justice on the international scene for Canadian foreign investment. I do not think that the reverse happens very often because I hope that Canada treats foreign investors fairly. It does not allow them to do everything they want, of course, whenever they want, or to be more important and take precedence over all the laws and regulations of Canada, which must be obeyed. Justice should always be done, therefore, on the basis of the international agreements that were negotiated but are mostly bad. In the future, all these agreements should be submitted to the House so that we can evaluate them.

That being said, I would tell the NDP member that he should table the amendments to Bill C-53; that would reassure them.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 4:45 p.m.
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Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, my Bloc colleague's comments raised as many questions as they gave information about the view of this very complex international convention. The points made by the previous speaker, the member for Timmins—James Bay, cited a number of very legitimate concerns and provided reasons why the NDP will oppose Bill C-53.

The NDP is very concerned that the ICSID falls under the jurisdiction of the World Bank, an organization that the NDP has cited numerous concerns about in the past, partly in terms of transparency but also in terms accessibility for users of this tribunal process, this quasi-judicial arbitration process.

I am concerned that the House of Commons today, as we entertain Bill C-53, is not digging deep enough into how we envision this tribunal unfolding and the precedent setting status that it will have.

One of the most alarming concerns that I would like my colleague to comment on is that one of the arguments used by the government in favour of ratifying the international convention is that ICSID shelters foreign investors from the courts of any country or jurisdiction in which the investment is made. I thought we would be alarmed that we are setting up some kind of a dual parallel process that will shelter investors from the courts in the jurisdiction in which the investment is taking place.

In other words, this quasi-judicial arbitration process being set up by the World Bank will have precedence and primacy over the courts of the provinces of Quebec or Manitoba or the Federal Court if it, in fact, is an investment in the federal jurisdiction.

Are we prepared to cede that jurisdiction to an outside party such as the World Bank? Is our confidence in the World Bank such that we are willing to forgo our own court's jurisdiction? If we are interested in the best interests of Canadians, we should be throwing our confidence and faith in our own court system and let this foreign investor be judged by our high standards instead of a new arbitration process, which will likely be residenced in Washington, D.C. and under the jurisdiction of the World Bank.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 4:30 p.m.
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Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, first, I would like to confirm that the Bloc Québécois supports Bill C-53 in principle. I would also like to suggest to my colleague in the NDP that he should introduce the adjustments he would like to see in committee.

The passage of this bill will enable Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and join the International Centre for Settlement of Investment Disputes.

I will certainly be referring to this centre in my speech, and since it has a rather long name, I will just call it ICSID.

Bill C-53 incorporates the requirements of the convention into our domestic law, especially in regard to ensuring that arbitration awards are upheld and granting ICSID and its staff the immunities they need.

ICSID was established in 1965 by the World Bank under the Washington Treaty. One hundred and fifty-six countries are currently members. ICSID arbitrates disputes between states and foreign investors. These disputes can be of two kinds: first, disputes over compliance with bilateral foreign investment protection agreements, and second, disputes involving agreements between governments and foreign investors. The Government of Quebec regularly concludes agreements of this kind, encouraging foreign investment through promises, for example, to provide electricity at a particular price.

Canada joining ICSID will have no effect on the provinces and Quebec, except that they too will be able to provide for recourse to ICSID in the agreements they reach with investors.

The bilateral treaties binding on the federal government already provide for recourse to ICSID arbitration, although by means of a complementary arbitration system rather than the regular system, which is only available to countries that have ratified the convention.

The only thing that Canada’s joining ICSID will change is that Canada will be able to participate in the negotiations to amend the ICSID convention or regulations and rules and will be assured of being able to participate in the appointment of arbitration tribunals. Canada will therefore be able to participate directly in ICSID.

Ultimately, ICSID is only a tribunal. The problem, however, is not the tribunal but the bad treaties that Canada signs to protect investment.

The Bloc Québécois supports the negotiation of investment protection agreements provided, of course, that 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.

This is not a new idea. The first known agreement that included provisions relating to protection of foreign investments was signed between France and the United States in 1788, more than two centuries ago.

In the world today, there are more than 2,400 bilateral investment protection agreements. If we include the tax treaties that deal with the tax treatment of investments and foreign income, we find about 5,000 bilateral treaties concerning foreign investment.

The Bloc is in favour of negotiating such agreements and we recognize that they promote investment and growth. These agreements are almost all based on the same principles.

First, there is a respect for property rights regardless of the owner’s nationality. Second, there can be no nationalization without fair and prompt financial compensation. Third, there is a prohibition against treating property located within a country’s territory differently depending on the owner's origins. Finally, there is free movement of capital resulting from the operation and the disposal of investment.

In every case, when these rights are not respected, states may submit disputes over compliance with an agreement to an international arbitration tribunal. In the majority of cases, investors, themselves, may submit the dispute to an international tribunal, but only with the consent of the state. In many cases, the international arbitration provided in the agreement takes place before ICSID. By agreeing to this, as Bill C-53 provides, we are also agreeing to an international order in the field of investment.

In the investment protection agreements that they sign, only two countries, Canada and the United States, systematically grant investors the right to appeal directly to international tribunals. 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 contain a number of similar deviations that give multinationals rights they should not have and that limit the power of the state to legislate and take action for the common good.

The investments chapter of NAFTA, chapter 11, provides that a dispute can go to ICSID. That chapter is a bad agreement in three respects: the definition of expropriation, the definition of investor and the definition of investment.

The definition of expropriation is so vague that any government measure—except for a general tax measure—can be challenged by a foreign investor if it diminishes the profits generated by the investment. A plan to implement the Kyoto accord, which would have major polluters such as oil companies pay dearly, could be challenged under chapter 11 and result in government compensation. American companies have majority interests in Alberta oil companies. Chapter 11 opens the door to the most improper legal disputes.

The definition of investor is so broad that it includes any shareholder. Therefore anyone could take the state to court and attempt to obtain compensation for a government measure that allegedly reduced a company’s profits.

As for the definition of investment, it too is so broad that it even includes the future profits that an investor hopes to earn. In the case of expropriation, not only does the state find itself forced to pay fair market value, but it must also include revenues that the investor expects to earn in future. It would no longer be possible to nationalize electricity, as Quebec did in the 1960s.

Take the example of SunBelt, a corporation with a Canadian shareholder and a Californian shareholder. The corporation closed its doors when the Government of British Columbia withdrew the right it had granted for the bulk export of water. The Canadian shareholder, based on Canadian laws, received compensation equivalent to the value of his investment, or $300,000. The American shareholder, based on NAFTA chapter 11, included potential future revenue in its claim: $100 million. For better or for worse, the case was settled out of court for an undisclosed amount.

Given the amounts of money in issue, chapter 11 is a deterrent to any government action, particularly in relation to the environment, whose effect would be to reduce the profits of a foreign-owned corporation.

As well, the dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state. How is it conceivable that a multinational 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 permits.

Given these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good and to legislate about the environment, and is a Damocles’ sword that could come crashing down at any moment on any legislative or regulatory measures whose effect was to reduce corporations’ profits.

In 2005, the United States changed some of the provisions in their standard form investment protection agreement. In 2006, Canada followed suit. Since both countries have now acknowledged the harmful and extreme nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to enter into discussions with its American and Mexican partners to amend chapter 11 of NAFTA

We say 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 agreements, carbon copies of chapter 11. All of these foreign investment agreements are faulty and should be renegotiated.

In 2006, the government recognized to some degree that these agreements were bad. Copying the amendments made by the Bush administration the previous year, the Conservative government made changes to its FIPA program to correct the most obvious shortcomings.

It clarified the concept of expropriation by specifying that a non-discriminatory government measure that is intended to protect health and the environment or to promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too soon to evaluate the real impact of that clarification, but at first glance, it looks like an improvement.

it restricted the concept of investment by specifying that the value of property is equal to its fair market value. That put an end to the folly of adding together all the potential profits that an investor might hope to earn from an investment. As for the rest, the standard investment protection agreement continues to be based on chapter 11 of NAFTA.

The government must continue to improve this standard agreement, particularly in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

Also, the government should submit international treaties and agreements to the House of Commons before ratifying them. At the start of the year, the government sent out 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.

Yet, the Conservative platform in the last election was clear: the Conservatives made a commitment to submit all international treaties and agreements for approval before ratifying them.

Since the Conservatives took office, Canada has signed 24 international treaties.

With the exception of the amendment to the NATO treaty, for which a mini-debate and a vote took place at the last minute, none of these international treaties were presented to the House.

Today, the consequences of international agreements on our lives are comparable to those that legislation may have. Nothing, absolutely nothing justifies the government quietly signing such agreements unilaterally, by going over the heads of people's representatives.

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.

In conclusion, the International Centre for Settlement of Investment Disputes is indeed necessary to ensure that the states are treated fairly by multinational corporations. We must also ensure that the agreements signed by Canada are good agreements that respect all the stakeholders.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 4:25 p.m.
See context


Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I appreciate the member's question, but the issue we are looking at here is that we believe chapter 11 has failed some of the basic tests of allowing for a fair and open study of whether or not a particular company has been aggrieved.

As for this new dispute mechanism, it looks to us as though we are being asked to go from one really ugly dance partner to an uglier dance partner. We feel the situation could be improved.

We have to go with some fundamental principles. Again, there has to be open access for all interested parties. There has to be the open and full disclosure of all evidence being brought forward. There has to be the clear transparency of judges. Simply having a dispute panel working behind the scenes whereby people actually get to suggest their own arbitrators is not sufficient, especially when we have the public interest at stake, and, in this case, clean groundwater and $350 million of Canadian taxpayers' money that is on the hook.

Right now I do not feel any more confident about going under the proposal that is under Bill C-53 than I do going under chapter 11 of NAFTA. They are both flawed attempts to override the ability of a sovereign state to come forward in a House like this with clear legislation to protect the best interests of its citizens.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 4:20 p.m.
See context


Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, the NDP member told us he would vote against Bill C-53 concerning the ICSID. In the end, it is just a tribunal. In my opinion, it is not necessarily the tribunal that presents a problem, but the poor investment protection treaties Canada negotiates and signs without the House's approval.

Consequently, does he not believe that this convention, which could be signed with the adoption of Bill C-53, could protect Canadian investments abroad and also protect Canada and other countries against investments? As I said, the centre is just a tribunal. The treaties Canada signs are not necessarily the best and should have tougher conditions with more bite. Because if necessary, the tribunal could put things right again.

Settlement of International Investment Disputes ActGovernment Orders

May 15th, 2007 / 3:55 p.m.
See context


Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I am pleased to rise to speak to Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

One of my colleagues from the Liberal Party in the previous intervention talked about the lack of confidence in the chair and said that the eyes of the nation are upon us. I certainly believe that is the situation in the House.

People watching back home must have been wondering about the cluster of Reform Party members in the previous debate licking their wounds in outraged indignation. It reminded me of when I was a kid and Gilles “The Fish” Poisson once lost a Texas cage match to “Killer” Kowalski and he talked about how he had been hard done by.

As serious as the issues are, they are sometimes somewhat surreal. I think people back home wonder exactly what we are debating here because we seem to be in a bubble sometimes, separated from the reality of working people and their workplace.

I want to speak to this bill in terms of concrete examples. I am going to focus specifically on how a bill like this would be enacted. It is all very well to talk about the need for an international convention on the settlement of investment disputes because these happen all over the place and we need to set some high standards.

In recent years, and particularly with the chapter 11 case with NAFTA, we have seen some very disturbing trends emerging. The New Democratic Party members will certainly be voting against this bill because we have concerns about the lack of transparency, the lack of accessibility, and the lack of accountability.

When we talk about protecting investments overseas and in Canada, we are talking about how it needs to be based on the rule of law. We certainly believe that law is a guiding principle, but there are a number of principles about law that have to be applied. A number of the dispute mechanisms seem to be basically circumventing some of the basic principles of law.

If there were to be a dispute in court, the interested parties should be able to speak to it. That is a fundamental principle of law. We do not see that, for example, in chapter 11 of NAFTA. We did not see that in what was laid out in the multi-lateral investment agreement that came out in 1997. There needs to be a transparency of judgments, and yet with this ICSID bill that is before us there is no obligation to even publish the evidence and the awards.

One of the most fundamental issues in terms of legal jurisprudence is the need for transparency and full disclosure of evidence, so that evidence can be weighed publicly, not behind closed doors. There is a fundamental difference between being judged by a jury of peers in one's community and being judged by a couple of buddies in a backroom.

I am going to speak about a specific case and how I see it unfolding under chapter 11 because I believe it resonates the application for applying the principles on a larger scale. That case is the $350 million claim against the Government of Canada by one Vito G. Gallo. I have his request for arbitration under chapter 11 of the free trade agreement. I have read Mr. Gallo's claim from start to finish and it is very interesting. I know most of the case fairly well.

He says he is the sole owner of 1532382 Ontario Inc., a company incorporated under the laws of the province of Ontario. I would agree that this company is incorporated in Ontario. I would also agree with him that the Adams Mine, a former iron ore mine, is located 10 kilometres southeast of the town of Kirkland Lake. That is in my riding. Other than that I would question most of the evidence that he has brought forward to the arbitration dispute panel.

That gets back to the issue under Bill C-53 about the need to fully disclose evidence. For example, in Mr. Gallo's claim, he states that he owns and controls the enterprise, meaning the Adams Mine as a possible site for landfill.

I find that very interesting. We have to go back a bit into the history of this site. In 1990 Dofasco shut down the Adams Mine. It was an iron ore operation in my riding which lost a number of good paying jobs. The issue then became its possible use as a landfill, but the landfill was fairly challenged because we had 360 million litres of groundwater flowing through it every year.

At that time the owners were Notre Development, a small company out of North Bay, and the City of Toronto, which was a partner. The city of Toronto paid for most of the initial costs. It was the taxpayers in Toronto, not investors, who paid for the studies.

The studies were based on an unproven concept called hydraulic containment. It stated that 360 million litres of groundwater, which people in my riding contended fed the entire agricultural belt in the valley below, flowed through the pits every year. The theory was that pipes would be installed and for 1,000 years the groundwater of northern Ontario would be used to wash 20 years worth of garbage. It was seen then as somewhat of a cockamamie plan, but the city of Toronto paid for the studies to get this to ground level.

In 1997 it went before an environmental assessment board in Ontario at a time when Premier Mike Harris, who was considered a very close supporter of the dump, changed the environmental assessment act in Ontario, and changed it dramatically.

We suddenly had a scoped EA for what would be the single largest dump project in Canadian and possibly North American history. It was subject to a very narrowly scoped EA, which looked at only the question of whether the computer models supplied by the proponent were feasible. At that time all the other issues of groundwater contamination and the potential threat in the surrounding environment were ignored.

It was actually passed at that time in a very narrowly focused area, but there were issues with 2 of the 12 or 13 drill holes. There were two serious questions about whether those proved the theory of this dump or they did not. I am explaining this just as background so everyone has the full sense of what I am talking about in terms of this multilateral investment agreement that we are looking at now.

The city of Toronto stepped back and decided it was no longer going to be a proponent. Therefore, it was no longer the key proponent, but it was possibly a customer for this site. Throughout this, it was an Ontario company bidding on a municipal contract. There was no discussion at any point that this was in any way an international project.

In 2000 the city of Toronto walked away from this proposal because of the dangerous issues of liability. Nobody wanted to accept the liability for having to guarantee that pumps on a theoretically unproven site could run for 1,000 years. It also stepped aside because it was probably the largest civil disobedience action in Ontario history at that point.

The federal and provincial governments were very cognizant of the fact that the Algonquin nation had brought forward a very serious prima facie case for unextinguished aboriginal title at that site. There were numerous questions, as well as the potential groundwater threat from this unproven site.

The city of Toronto was not willing to accept the liability. Canadian Waste Services at that time, which was the new partner, also walked away, so the site was left without a customer. If we check the records for the last seven years, regardless of what happened with Michigan, the city of Toronto said time and time again, “We will never go back to this site. No matter what, we will never go back there”. It was a site without a customer.

Then in 2002-03 a new company was formed, which was 1532382 Ontario Inc. It set itself up as the new proponent. What is this company? We do not really know.

I have a corporation profile report. What is the jurisdiction for 1532382 Ontario Inc.? It is Ontario. What is the former jurisdiction? It is not applicable. The corporation type is an Ontario business corporation. What is its registered address? It is Suite 101, Don Mills, Ontario. Its mailing address is 225 Duncan Mill Road, Suite 101, Don Mills, Ontario. If you are not seeing much of an international investor angle here, you are like me, Mr. Speaker.

Page 2 of this very paltry corporate report says that the administrator is Brent W. Swanick. His address is 104 Yorkminster Road, North York, Ontario. The first director is not applicable. The officer type is president. The resident is Canadian.

We do not see anything on this paltry two page report of any connection as to who is behind this Ontario numbered company, a company that picked up a site that was derelict, that had no customers and no possibility of a customer. Then it decided to go into business to bid on a municipal contract. We have an Ontario numbered company bidding under the province of Ontario for a municipal contract. The only contract it could get from the city of Toronto was that it would not deal with the company.

The deal was contingent upon two key issues, and they are raised in NAFTA chapter 11 challenge. First was the fact that it applied for a take water permit in 2003. The second issue was that it applied through the MNR to purchase 2,000 acres of Crown land at what we thought was the outrageously low price of $22 an acre. In fact, I helped initiate a local bidding campaign that said we would spend $5 to $10 more an acre and we would outbid it. There is a fundamental principle. If we are to dispose of Crown land assets in the province of Ontario, we have to go through due diligence and bring this out into the public. We cannot simply do this behind the scenes.

The other issue with this 2,000 acres was it was subject to a land claim issue with the Algonquin nation. It came forward very clearly with its prima facie evidence that said that there had been no consultation with the nation. It said that it had be consulted. Therefore, it was an obligation of the Ontario government to hold up the disposal of the Crown land until that was addressed.

The other issue that was very pertinent at the time was whether the take water permit at the site should have been allowed. On August 12, 2003, Dr. Ken Howard, who has been recognized as the key hydrogeologist in the province of Ontario, was brought in to review the information. Dr. Ken Howard was also brought in to deal with Walkerton and was the key provincial guy for bringing forward all the recommendations for provincial legislation out of the Walkerton report.

He studied the Adams Mine environmental assessment process. He said that the decision to issue the certificate at that site specifically was based on the results of drill holes 98-1 and 98-2. He concluded that the drill hole results were “seriously deficient” and that the director of approvals branch approved the dump on evidence that “had virtually no scientific merit” and were “effectively worthless”.

We will not find that in my mysterious friend Vito Gallo's submission. Neither will we find any of the issues before the NAFTA tribunal about this first nations land issue or the fact that there was widespread opposition to this plan or the fact that there was no customer. However, that might not matter. Under chapter 11, a mysterious numbered company is going before a tribunal and saying it wants a dispute mechanism where all this evidence does not come through and the public interest does not get to be heard.

The other question I find really interesting in this is I have never heard of Vito Gallo. Now maybe that is not an uncommon thing. There are lots of people of whom have not heard, but I have heard of many of the people who have been involved in the Adams Mine over the years because I have paid very close attention to it.

For example, I was very aware of the Cortellucci group of companies out of southern Ontario. In the May 9, 2003 issue of the Toronto Star they were identified as key owners of this Adams Mine proposal. In fact, Mr. Mario Cortellucci has given serious amounts of money through clan Cortellucci to the Conservative government. However, I am not bringing that up here because I am not being partisan. I am just pointing that out as a side issue. When Mr. Cortellucci was asked by the Toronto Star if he was in fact the owner of the Adams Mine at that point, he said he was just one of a dozen or so investors.

Now we have a situation where we have this numbered company. We do not know what it is except we know it is an Ontario company run by an Ontario administrator. Maybe we have no I.D. to prove this, but this man is purporting to be an American who has international rights to come in because he has been circumvented in all his other points. There are questions about who else is involved in this.

We know the Cortellucci Group of Companies was identified. In 2003 a lawsuit was launched by Canada Waste Services over the ownership of the site. It never mentioned Vito Gallo, but it mentioned the Notre Development Corporation and the Cortellucci Group of Companies. In fact, it referred to the Cortellucci agreement.

We would think it would be incumbent upon the Government of Canada, before we fork out $350 million to Vito, my friend, to find out who is behind this numbered company.

We do not know if any of the due diligence has been done. All we know is this numbered company tried to sue the Ontario government in 2003-04, after it was shut down when the provincial Liberal government revoked the permit based on a number of key issues. The first was new evidence. The second was as a result of the Walkerton inquiry. It was the idea that in Ontario in the 21st century we did not use groundwater to wash garbage. It is kind of an odious thought. Ontario decided that is not even a 20th century idea and it is not even a 19th century idea. We do not use groundwater to wash garbage. Therefore, it suspended the permit, not just for that site, but for any site in Ontario on the bases that we do not use a lake full of fresh groundwater in which to throw our garbage.

At that point this numbered company, 1532382 Ontario Inc., sued the Ontario government, which is fair. They are investors. They took their case of $300 million and they went against the Ontario government. However, we did not see that case go anywhere. Nothing seemed to happen.

We know there were some negotiations with some of the investors about whether to accept a payout. Then, lo and behold, just a few months ago, Vito G. Gallo said that he owned the mine, that he was the direct beneficiary of all the possible benefits that should have accrued, going back to when Toronto was paying for the cost.

We had no evidence to know at what point Vito Gallo stepped into the Adams Mine. We do not know if Vito Gallo is the only investor. We do not know if Vito Gallo is one of a hundred investors, one of ten investors, or one of five investors. We do know this company that he says he owned as an American investor is an Ontario numbered company. It was an Ontario numbered company bidding under provincial rules for a municipal waste contract in the province of Ontario. There was nothing international about this whatsoever. Yet he is now before a NAFTA tribunal, asking for $350 million, and the Canadian taxpayers will not have our lawyers there bringing forward witnesses.

One would think that if we are going to talk about international trade law that has jurisprudence on its side and accountability and fairness, then fairness would include the right of a domestic government to bring forward legislation that is fair. If it does affect business, there is a process. However, the government might have compelling reasons, such as Dr. Howard's evidence, to act on this.

Another doctor I would like to mention is Dr. Larry Jensen. He is the provincial geologist for the Kirkland Lake region. He spent 40 years studying the faults of the Adams Mine.

I found it absolutely strange when I was at the environmental assessment hearing and I looked at the maps of the experts which showed all the fault lines. They were very vague. There was hardly anything there. In fact, they were not Dr. Jensen's maps; they were maps from the 1950s.

I will conclude on this. Dr. Larry Jensen was a the provincial geologist in the Kirkland Lake region for 40 years. He studied the Adams Mine every day. He said that the Adams Mine proposal was,

—a disaster for the not too distant future, perhaps not for the residents of Kirkland Lake itself, but for all those people and the wild life to the south and southeast in the Timiskaming region and beyond, as far as to the mouth of the Ottawa River—an area hundreds of times larger than Toronto itself.

When we have evidence like that, jurisprudence says all the evidence has to be brought out. The first piece of evidence that has to be brought out in any international dispute mechanism is who are these people behind this numbered company who are going after the Canadian taxpayer for a hit of $350 million?

Until we see how the new international convention protection that ensures these kind of operations cannot put the hit on Canadian law will be merged with investor relations, we will not support any bill like this. We are doing our job in this House and in our provincial legislation to protect the public interest.

The House resumed consideration of the motion that Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), be read the second time and referred to a committee.