Foreign Affairs Committee on Nov. 22nd, 2007

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Thank you very much.

Thank you to all of you for being here today.

I have a couple of questions. The first is on the appeal process for a loser in a dispute mechanism. What appeal process exists in that case? What is the makeup of the tribunal? Is it shared among the member states?

I know I'm going to get calls, as all of us are, about the multilateral agreement on investment. People are going to bring that up, as misunderstood as it was. Perhaps you could just share with us your views on how this differs from the MAI, to assuage any concerns that you hear, as we do also.

Thank you.

[Meg Kinnear]

First of all, in terms of appeal, part of the appeal process allows parties to go to what's called an annulment process. If a party wants to take an award that they're unhappy with one step further, they ask the ICSID to set up an annulment panel, and the annulment panel will hear and determine. At the end of the day, once that's done, that's the end of the road in terms of further appellate mechanisms.

Secondly, in terms of the makeup of the panels, the ICSID has rosters, and every country is entitled, upon accession to ICSID, to name four individuals to that roster. Those individuals are usually well-known judges, well-known advocates, well-known arbitrators, and they are named to the list. Then any country and any investor that has a dispute is then able to go to that roster and say, “Here's a list of 100 eminent authorities or eminent arbitrators. We think we would like to nominate Mr. or Ms. So-and-So as our arbitrator.”

Many treaties, including Canada's treaties, also allow you to nominate what's called off-roster. In other words, if you aren't keen on any of the names in the actual formal roster, you can put forward your own names. That is the makeup of the panels.

In terms of MAI, that covers, again, the substantive obligations: you shall not expropriate, you shall not discriminate, etc. It did not affect anything that would be done under the ICSID convention. It doesn't cover the same materials.

Again, I go back to the basic distinction between the treaties, which provide your substantive rights, versus the ICSID, which gives you a place to prosecute those rights and a better, easier way to enforce them at the end of the day.

So they really are two separate things. This is not part of MAI or the MAI debate, whatever one might think of it.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Thank you for that.

I have one brief question. If a country doesn't enforce an ICSID decision, and it has force in law, as I understand it, within the signatories, what recourse is there to put pressure on that country to enforce that decision from ICSID? Surely of the 143 countries that are there, some of them do not have, one might say, the level of quality of the judiciary and quality of the governance structures that we do.

To put it politely, if the country is not willing to enforce that decision, then what recourse does the winner of that decision have?

[Meg Kinnear]

The answer will be in the realm of speculation, because it has never happened. There have been over 200 awards. They have all been honoured. It has never happened.

We would expect that as state members to the World Bank.... The World Bank obviously has a very great interest in having decisions enforced. Hopefully we never get to that situation, but if so, certainly, there would, I assume, be a certain amount of diplomatic discussion at the World Bank level and elsewhere.

But as I say, that's speculation, because it has never happened. Any award that's been rendered by the ICSID, in the ICSID facility, has always been honoured.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Chan, go ahead, please, very quickly.

[Raymond Chan, Liberal, Richmond, BC]

Okay.

It's between states and nationals of other states, right, not between nationals of different states?

Also, when did China sign on to that convention?

If some of the provinces have not signed on in Canada, does that mean that those Canadians who reside in those provinces would not have the benefit of the convention?

[The Chair, Conservative, Kevin Sorenson]

That's a good question.

[Meg Kinnear]

If Canada and China sign a FIPA--and you know that's being negotiated now--all Canadians will get the benefit of that. So if we are able to pass this bill, they will then also have the option of going under ICSID convention arbitration.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Ms. Kinnear.

Madame Barbot.

[Vivian Barbot, Bloc, Papineau, QC]

Last December, the government made public its use of the supplementary ICSID mechanism, the mechanism Canada will no longer be able to use when it signs the Convention. Does the fact that Canada signs the Convention mean that previously negotiated treaties must be renegotiated?

[Sylvie Tabet]

No, in fact, that's simply an option. In our treaties, investors can generally choose to use different types of arbitral rules, including the Convention and ICSID rules or the rules of the supplementary mechanism. That will be the investor's choice, whereas investors currently cannot choose the ICSID option.

[Vivian Barbot, Bloc, Papineau, QC]

Even in treaties that are considered bad treaties, the government will have this new option. Investors will be able to go to ICSID if Canada has signed.

[Sylvie Tabet]

I don't know what bad treaties you're referring to, but all our treaties contain a reference to ICSID, in addition to other dispute settlement mechanisms. Once we've signed, they will have access to those rules.

[Vivian Barbot, Bloc, Papineau, QC]

So there's an obligation to go back to treaties that were previously imperfect.

[Sylvie Tabet]

No.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Madame Barbot.

Mr. Goldring is next, and then we'll go to Mr. Dewar.

[Peter Goldring, Conservative, Edmonton East, AB]

You mentioned some 200 grievances that had been dealt with. What is the size range of those, and what size of investor or investment are we talking about? By giving us the range in dollars from the lower to the upper, it would tell us what the investors.... Obviously some would be small in smaller countries, and there'd be quite a range.

[Meg Kinnear]

The damage awards range from the millions to the billions. They are not small claims types of issues because it costs something to bring this kind of a claim forward. But they have been all over the map in terms of the range of dollars.

[Peter Goldring, Conservative, Edmonton East, AB]

So they range from millions of dollars. That's a small amount in terms of international investment. We're obviously not talking about individual investment, we're talking about corporations and large organizations. So it would be considered from millions into the upper stratosphere, if you like.

[Meg Kinnear]

Yes, it could be. Obviously there would be lots of corporations and lots of big corporations. But some observers have been interested to note that not just big companies and big corporations use it. We've had experience in the NAFTA context, and if you look at the caseload of the ICSID over the years, small and medium-sized enterprises have used this. So it's not just something that large companies feel comfortable with.

On the BSE case that was mentioned today, about 196 farmers are all individual claimants here. These are individual farmers who actually operate home farms. So it is a tool that is not just limited to any particular size of company.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Dewar, please.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you.

I want to go back to the transparency issue. In article 48(5), my understanding is that the awards would be published with the consent of both parties. Is that correct?

[Meg Kinnear]

Yes, it says that the centre shall not publish the award without the consent of the parties. The centre shall, however, promptly include in its publication excerpts of the legal reasoning. So they can put the legal reasoning if someone for some reason tries to say they don't want the particular facts. It is unheard of, frankly. If you look on the web you will see that you always get the full award.

The other really important point here is from a Canadian perspective. Our FIPA requires publication of the entire award, and it would override any kind of situation where someone might say, under article 48(4), they only want excerpts or they don't consent. So we've taken care of that in our FIPA.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you.

My other question is about when it's seen as beneficial for someone--in this case, Canada--to withdraw. How does one withdraw if one prefers to do so?

[Meg Kinnear]

There is a termination clause. I will try to get you the exact citation. There is an ability—