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, 2nd Session, which ended in September 2008.

Sponsor

Maxime Bernier  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.

Votes

Jan. 30, 2008 Passed That the Bill be now read a third time and do pass.

November 22nd, 2007 / 11:10 a.m.
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Alan H. Kessel Legal Advisor, Department of Foreign Affairs and International Trade

Thank you, Mr. Chairman. Good morning to you and committee members.

The Minister of Foreign Affairs is unfortunately not able to join us today. He is out of the country. He has asked me to speak on his behalf, and I am delighted to have a very competent team with me who will be able to answer many of your questions when we get to that portion of the discussion this morning.

I am pleased to speak to you today on the subject of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, which I will refer to as “the Convention” in my remarks.

The Convention was sponsored by the World Bank to facilitate and increase the flow of international investment. The Convention establishes rules under which investment disputes between states and nationals of other states may be solved by means of conciliation or arbitration. It also creates the International Centre for the Settlement of Investment Disputes, known as ICSID to administer cases brought under the Convention. Canada signed the Convention on December 15, 2006.

Mr. Chairman, before a country can join ICSID, as it's fondly known, it needs to pass legislation providing for ICSID awards to be enforceable in its courts. Bill C-9, which is under study by the committee, deals with enforcement of ICSID awards for or against the federal government and foreign governments, including constituent subdivisions designated by foreign governments.

There are numerous reasons to support Canada's adherence to the convention. It would contribute to enforcing Canada's image as an investment-friendly country. It would provide additional protection to Canadian investors abroad by allowing them to have recourse to ICSID arbitration in their contracts with foreign states. It would also allow investors of Canada and foreign investors in Canada to bring investment claims under ICSID arbitral rules, where such clauses are contained in our foreign investment protection agreements and free trade agreements.

International investment arbitration is growing in importance. For instance, the stock of Canadian direct investment abroad in 2005 increased to a record $469 billion. As a result of the globalization of investment, the number of investment disputes has greatly increased in the last five years.

ICSID arbitration has soared. Only 110 ICSID arbitrations have been completed over the past 40 years, but 105 proceedings are now under way. The NAFTA parties alone have faced over 40 investor-state arbitration claims since NAFTA entered into force.

The tremendous growth in investment and investor-stated disputes has made Canada's failure to ratify ICSID the focus of attention by Canadian business, the Canadian legal community, and our trading partners. To date, 143 states have ratified the ICSID convention. The majority of our major trading partners are parties to it, except for Mexico, India, and Brazil. Ratifying ICSID would bring Canadian policy into line with our OECD partners. In a survey conducted by the ICSID centre in 2004, 79% of the respondents said ICSID plays a vital role in their country's legal framework and 61% said ICSID membership has contributed to a positive investment climate.

The ICSID regime provides several important advantages, and compared to other arbitration mechanisms, the ICSID regime provides better guarantees regarding enforcement of awards and more limited local court intervention. Any arbitral award rendered under the auspices of ICSID is binding and any resulting pecuniary obligation must be enforced as if the award were a final domestic court judgment.

Moreover, all ICSID contracting states, whether or not parties to the dispute, are required by the convention to recognize and to enforce ICSID arbitral awards. Investors often prefer to rely on such arbitrations rather than on the local courts of the country whose measures are in dispute, to ensure an independent resolution of the dispute.

ICSID's relationship to the World Bank assists investors in obtaining compliance with ICSID awards and its roster of arbitrators gives investors access to well-qualified arbitrators at ICSID-controlled rates, with extensive experience in international investment arbitration. ICSID also provides important institutional support for litigants.

The ICSID convention is a well-known tool for the settlement of investment disputes, therefore the interpretation of the convention and its usefulness are predictable. It is difficult to quantify how often Canadian businesses active abroad would use the convention for protecting their activities.

Canada already has numerous links with ICSID. Provisions consenting to ICSID arbitration are commonly found in contracts between governments of other countries and Canadian investors. The NAFTA in chapter 11, the Canada-Chile FTA, and most of our bilateral foreign investment protection agreements, or FIPAs, provide for ICSID as a dispute settlement option that can be chosen by an investor if both the state of the investor and the host state for the investor are party to ICSID.

However, Canada and Canadian investors cannot benefit from this choice if Canada is not a member. This is an increasingly important problem. Within Canada the use of ICSID would be consistent with the government's policy of supporting the use of alternative dispute resolution mechanisms, or ADRs, for investor-state disputes. While ICSID is less expensive and more efficient than current alternatives, it is not expected to lead to increased litigation against the government.

For Canada, as a shareholder of the World Bank, there is no additional cost for joining ICSID by adopting the convention.

Provincial and territorial legislation is needed to ensure the enforcement of arbitral awards rendered in a dispute involving a province or territory designated as a constituent subdivision and which has consented to ICSID arbitration. The federal government has provided assurances that any province and territory that so wishes would be designated a constituent subdivision under the Convention.

The provinces and territories have indicated that they support the Convention in principle. They have also recommended that all jurisdictions, including the federal government must be take steps for the adoption of the legislation implementing the Convention.

Ontario passed implementing legislation in 1999. British Columbia, Saskatchewan, Newfoundland and Labrador, and Nunavut passed such legislation in 2006.

The Minister of Foreign Affairs would encourage you to study this bill and improve it in order to facilitate adherence by Canada to the convention as soon as possible.

Thank you, Mr. Chairman.

November 22nd, 2007 / 11:10 a.m.
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Conservative

The Chair Conservative Kevin Sorenson

I call this meeting to order.

Our orders of the day include the commencement of our study on Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

In our first hour we will hear testimony from the Department of Foreign Affairs and International Trade. We have Allan Kessel, legal adviser, and from the international trade side of the department we will be hearing from Robert Ready, director of the services trade policy division.

We are also pleased to have from the trade law division Riemer Boomgaardt, special counsel; Sylvie Tabet, senior counsel and deputy director; and Meg Kinnear, senior general counsel and director general.

In our second hour we will hear from the Canadian Chamber of Commerce, so we will introduce them when we begin that.

This is one of the first pieces of legislation that this committee has looked at, other than a private member's bill, so we look forward to this. This is a fairly small bill. We want to hear from the department to better understand exactly what the bill does and the safeguards it provides for Canadian investment and others.

So we thank you for being here and being part of that.

On the protocol for the committee, we like to hear from you in the first portion of the committee business and then go into the first round of questioning. In the first round we'll begin with the opposition and then go to the government.

We welcome you here and look forward to hearing what you have to say. The time is yours.

Mr. Kessel.

November 20th, 2007 / 11:55 a.m.
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Conservative

The Chair Conservative Kevin Sorenson

No. Bill C-9 is foreign affairs. We can call those from the foreign affairs department but not from any other department.

November 20th, 2007 / 11:10 a.m.
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Conservative

The Chair Conservative Kevin Sorenson

Now back to Bill C-9.

Mr. Obhrai.

November 20th, 2007 / 11:10 a.m.
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Conservative

The Chair Conservative Kevin Sorenson

I think that's something we can do. I don't know if we have to do that first off. We've already started on Bill C-9. May I suggest we just finish our discussion on Bill C-9 and then we go to the steering committee thing?

From what I understand here, that the chair, the vice-chair, a member from the Bloc Québécois, the parliamentary secretary do compose the subcommittee on agenda... You want a replacement on there, and I don't think there's any problem at all with that.

November 20th, 2007 / 11:05 a.m.
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Conservative

Deepak Obhrai Conservative Calgary East, AB

Thank you very much, Mr. Chair.

Let me congratulate you on being the chair again, and of course Mr. Wilfert and Madame Barbot on being vice-chairs of the new committee—I'm sure we'll all be working very well together—and of course the new members who have come, Raymond Chan and Paul and everybody else. We're looking forward to the session.

And of course, Gerry, it's very nice to see you, and Angela, it's nice to see you again.

Having done the nice things, let's get to business.

Concerning Bill C-9 and inviting the Minister of Foreign Affairs on Thursday, November 22, the minister is not in the country, so that's not possible. I say we just leave it as “senior departmental officials” who are available and continue with that.

As well, I think we would like to propose a list of a few witnesses for this, so that we can listen to the so-called expert witnesses. We have a list of these, which basically just means the Canadian Chamber of Commerce and others who are out there.

November 20th, 2007 / 11:05 a.m.
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Conservative

The Chair Conservative Kevin Sorenson

Good morning. This is meeting number 2 of the Standing Committee on Foreign Affairs and International Development, Tuesday, November 20, 2007.

Today we meet to discuss the results of our steering committee work. The subcommittee on agenda and procedure met last week. You'll notice in the packet that's been given to you this morning that besides the motions that have been presented and the budget that will be looked at this morning, you have your report from the steering committee.

We want to first take a look at that; then we will have time for the remainder of the committee business. The only item that is on the agenda today is committee business. If everything works out as planned, next Thursday we'll begin with some legislation that's coming down the pike.

So take your report, the first report of the subcommittee on agenda and procedure.

On Thursday, November 15, we met and came up with some recommendations to this committee. All members of the steering committee were there. The committee decided that we could begin a study. In conjunction with conversations with the clerks and researchers, we felt that we could recommend that we proceed with the study of Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States on Thursday, November 22, 2007, by inviting the Minister of Foreign Affairs and/or other senior departmental officials.

The rest of the report basically deals with a budget. We would want to adopt that budget, or at least make a recommendation to the committee to adopt a budget, and then move into our motions.

Mr. Obhrai.

Settlement of International Investment Disputes ActRoutine proceedings

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

Conservative

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)