Foreign Affairs Committee on Nov. 22nd, 2007

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Go ahead, Mr. Goldring.

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you for appearing today.

I'd certainly agree that this is a positive initiative with little downside to it. The more confidence there is in the international investment, the lower the cost will be vis-à-vis the risk factor to it.

My question is more to the relationship. You say two countries have not signed on to it, or agreed to it, but there are several countries, such as Great Britain, that have territories that are virtually self-governing. I think particularly of the Turks and Caicos Islands, or you might look at the Cayman Islands and other areas known for their offshore banking and offshore investment.

Have those countries, by themselves, made independent application, or are they under Great Britain's initiative? How do they fit into this, and is this intended to deal with these types of circumstances?

[Meg Kinnear]

We are just checking. We have a list of countries that have acceded and the territories they might have brought with them. I can't answer that off the top of my head, but it's certainly public knowledge, and we're trying to see if one of the materials we have from ICSID lists that. Basically it's something I think each country considers when they accede; depending on their relationship with the territories or other units like that, they will accede with or without them.

I'm sorry; I don't have that list with me. We can certainly undertake to provide it to you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We will have to get you on the second round, I'm afraid.

We'll go to Mr. Dewar, please.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair.

Thank you to our panel for being here today.

The question I wanted to start with, and you've kind of touched on it, is on provincial compliance. Just to clarify with you, if provinces don't sign on, is it an all-in, all-out? Is there a niche here?

The way you're reacting suggests that if a jurisdiction in, say, Manitoba or another province decides that it doesn't want to go in on the agreement, it can be excluded from it. Is that the case?

[Meg Kinnear]

What the federal government has said to all the provinces is that if you want to be what's called “designated” as a constituent subdivision, just tell us and we will do that.

The one thing you have to do before being designated is pass your own legislation, basically similar to this kind of legislation, enabling it. In fact, many years ago, the federal government worked with the provinces to basically create a model, so it's been very easy for them to do that if they want to, and as you know, five of them have.

Others, we know, are working on it, and others may decide, for whatever internal reason, that they don't want to or need to. So we have said that this is up to you, and if at any time later you decide that you would like to be designated, just tell the federal government. There is no problem with that, but it's totally up to the province to decide when they would like to do that.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you.

Our party has been on the record as having concerns, as you know. A couple of concerns we have are about transparency and accessibility and accountability.

The transparency issue.... I understand it, and it's good news when you hear that it's not going to cost anything and that it's win-win. I'm from the school that believes there's also no free lunch. Transparency vis-à-vis the World Bank is an issue, not just with our party but with many, including people who are within the World Bank, if you talk to them off-line.

My concern, and my understanding of this agreement, is that it's a consent-based process. Once you consent to the process, what avenues do you have for appeal? And when a decision is made, what access do citizens have in terms of for-the-record decisions? Are we subject to the ATI here, and do we have any access to published decisions so that one can view any particular case?

I'll just start with that, and that's the transparency issue.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Dewar.

[Meg Kinnear]

Transparency, as you know, has been a big issue in international arbitration.

ICSID itself has actually taken a lead, and they amended their rules in April 2006 to go farther on transparency than any of the other existing regulations. Now at ICSID it is standard to have open hearings. There are obviously some exceptions for things like confidential business information. Those are obvious exceptions that we have in domestic law, as well.

Documents and pleadings are made publicly available. You can go on the ICSID website at any time and you will have access to all awards issued by the tribunals. ICSID has also gone a long way towards enabling what are known as amici curiae types of briefs where interested third parties would like to have a say or have something to contribute to the process. So ICSID has actually been a leader in that.

The other thing to note here is that Canada itself has been very forthcoming that this is extremely important to us, and we have built it into our model foreign investment protection and promotion agreements, or FIPAs.

We have made sure that if you are exerting a right under that FIPA, one of the things that is a given is that these will be, for example, open hearings. Documents will be publicly available, and awards will be published. We've actually taken the step before, saying that if you want to go under our FIPA and exert a right under that FIPA, here's what comes with the package: transparency.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

[Paul Dewar, NDP, Ottawa Centre, ON]

There are a couple of changes you've noted, and those were changes as of April 2006. The information that I had suggested that the amici curiae briefs weren't allowed previously, and you're saying that it's changed.

[Meg Kinnear]

There is a process now to ask tribunals to submit an amicus curiae brief, or the equivalent of that. It is always at the discretion of the tribunal, depending on how helpful it can be and on how relevant it is. That's exactly the same kind of test we have domestically.

[Paul Dewar, NDP, Ottawa Centre, ON]

With the compliance of both parties.

[Meg Kinnear]

No, it's not on consent. A tribunal could, if it were interested; even if a party didn't want the amicus to submit a brief, the tribunal could say, no, we actually would like to hear this.

In fact, that has happened.

[Paul Dewar, NDP, Ottawa Centre, ON]

But it doesn't have to--

[The Chair, Conservative, Kevin Sorenson]

Thank you, Madam Kinnear.

We'll try to keep on the timelines here.

We'll come back to the government side and then to the Liberals, but first I want to ask this one question.

You've referred a number of times to NAFTA, and we know that there is a NAFTA panel, there's a NAFTA dispute mechanism there. I come from a rural riding where it has been in the news for the last five years about the BSE and the problems we've had. I became involved in the chapter 11 part of the NAFTA agreement.

Just so that I get this clear, if we had been a signatory to ICSID, the only other option we would have had.... In that dispute, we went through the NAFTA panel. Am I correct in saying that we would have had another option of being able to go through ICSID, in a case like that?

[Meg Kinnear]

No. Again, I get back to the basic difference. There are two things to distinguish. On the one side, NAFTA--or FIPAs--gives you a substantive right. You will not expropriate, you will not discriminate--that kind of thing.

[The Chair, Conservative, Kevin Sorenson]

But there is a panel. There is the NAFTA panel.

[Meg Kinnear]

Yes, there is a panel. That's right. And the procedural rights come under a variety of instruments. ICSID is but one of those instruments.

If, for example, ICSID had been in place, if we had done this before those cases were brought up, the investor, for example, in the Canadian cattlemens' case, would have had the option of requesting that the case be heard by an ICSID convention panel at the ICSID facilities, and if they were successful, then enforcement would have come through ICSID. It would have been an additional mechanism they would have had as an option, but it would always be pursuing a NAFTA right or NAFTA claim. That's what doesn't change.

[The Chair, Conservative, Kevin Sorenson]

But in that case it would have been a positive option.

[Meg Kinnear]

Definitely it would have been one more option...that's right; a positive option? It would have been one more choice they would have had. It would give them the option of...the leader in, you know, the world's running these and enforcement. It would have been the easiest enforcement mechanism--so not just another option but probably the best option.

[The Chair, Conservative, Kevin Sorenson]

It's a shame this wasn't done a long time ago.

We'll go to Mr. Goldring, please.

[Peter Goldring, Conservative, Edmonton East, AB]

My question was going to be along that same line, that the understanding of this would be that the organization itself would be covering the costs of grievances.

Could you explain this convention itself? Is it a type of rules? Is it a type of standards? There must be a lot of text to it. Is this something that gives guidance to many of these countries so that it never gets to the grievance stage?

If they're signatories to it, they're fully apprised of it. By being a signatory, it's certainly an encouraging thing for countries to want to sign up to it, just because of the confidence it would give investors.

So can this be perceived as a type of guidance mechanism before it comes to the grievance level?

[Meg Kinnear]

In terms of costs, the cost of the running of the organization essentially is already covered by the contributions Canada makes to the World Bank. So that's basically covered.

Now, the fact is that in each individual arbitration, a tribunal has, at the end of the day, the right to say that one party or the other will cover the costs of the tribunal, that kind of issue. Again, it's very similar to domestic law where at the end of the day a judge can order a party--often the losing party--to cover the costs.

In terms of conciliation settlement, I think it's important to note that ICSID is certainly best known as an arbitral facility, but they also have conciliation facilities with the ability to conciliate. So there is yet another way, hopefully, to try to settle disputes and resolve them before they get into a formal dispute settlement process.

The third thing to note in that respect is that Canada's model, FIPA, and all of our investment treaties actually have built in a first layer that says the two parties who are adverse in interest must sit down and try to resolve the dispute before going ahead into formal dispute settlement procedures.

There's a last thing I wanted to note. You asked if it set out rules, etc. You might have seen us referring to this, the ICSID convention, the governing rules. Then they have attached special rules that apply in an arbitration process.

We have many copies of this. It's also on the website. We can provide web addresses, certainly, but in terms of having rules to go to, these would be those rules.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll go to the Liberals now. We're still in five-minute rounds.