Thank you for the opportunity to speak to you.
First, I'd like to say a word of caution: it's difficult to evaluate any treaty without looking at the text, and I understand that negotiations haven't been concluded, so the text isn't available. I will just make it clear that I haven't reviewed the text, so I say all of this with a certain caution.
I'd like to point out at the outset that this is a trade agreement. It's not a FIPA, and it's not, as I understand it, like NAFTA, a hybrid trade and investment agreement. Judging by the information available on the DFAIT website, there are no aspirations at this time to include an investment chapter in the free trade agreement or certain other topics, including intellectual property rights, procurement, and so on. It could be that I'm wrong about that; I'm judging only from the list of topics covered on the website.
With all of that said, I'm actually quite supportive of this approach to the free trade agreement with India. I think it does have the potential to benefit Canadian businesses looking to improve their level of access to India, for goods, exports, and services exports.
I think it's a good idea to take the more modest approach that I see reflected in this treaty. It excludes such sensitive topics as investment, which for other reasons, I think both from an Indian and a Canadian perspective, are raising concerns based on recent information about how investor-state arbitration is being used. That calls for further attention and study, including from a Canadian point of view, keeping in mind that with the exception of NAFTA, Canada has never ratified a FIPA or a free trade agreement with a country whose nationals have owned substantial assets in Canada. We haven't had to think as much about the risks and liabilities that come with the very strong provisions for foreign investor protection that investor-state arbitration entails. We haven't had to look too closely at how that affects Canada as a capital importing country in the relationship outside of NAFTA.
That situation is changing, and it may change quite dramatically in light of a number of treaties that are under discussion and negotiation. I would not put Canada's relationship with India at quite the same level as some of those other treaties. Nevertheless, I think it is significant that Indian companies own several billion dollars of assets in Canada. That's an order of a presence, an inward investment presence, that goes beyond that of other countries Canada has concluded FIPAs with to this point.
Along those lines, I'll elaborate by speaking a bit more of my impressions as to why the proposed FIPA with India has not been concluded. My understanding, especially from colleagues in India, is that it is because the Indian government is not committing to investor-state arbitration in any treaties at this time, and that would include the FIPA with Canada or other possible treaties. The reason for that is that India has joined other countries in initiating a review of its exposure to investor-state arbitration and the risks and liabilities that creates for its governing and regulatory decisions affecting foreign investors in India.
It's also reviewing the issue of whether investor-state arbitration gives special advantages to foreign companies that domestic companies don't enjoy in their own home economy and jurisdiction. These issues have arisen in India because of its experience in about the last 18 months where it has faced approximately six new investor-state arbitration claims against it by investors from a variety of other countries.
My understanding is that it's because of India's caution that investor-state arbitration is presently off the table in a Canada-India FIPA, and I assume, although I have no reason to confirm this, that may be part of the explanation for why investment is not among the list of topics contemplated for the free trade agreement.
I'd like to speak briefly to some of the comments that were just made about investor-state arbitration and the role that it might play in protecting Canadian investors from arbitrary discriminatory treatment and so on in India. I think that's an important consideration to take into account. Indeed, it has always historically been the primary consideration in Canada's other FIPAs. Because the investment flows were predominantly one way or they were not particularly significant, Canada didn't have to think as much about how consents to investor-state arbitration would affect governing decisions here and would affect domestic investors in Canada attempting to compete with foreign investors. I'd like to add a little more information to shed a bit more light on just how much we can rely on investor-state arbitration, even to protect Canadian investors abroad.
The points I would make are based on the record of investor-state arbitration cases decided under Canada's FIPAs and NAFTA to date when the claim was brought by a Canadian national, usually a Canadian company. There are 17 such cases that are known on the public record wherein a Canadian investor has used investor-state arbitration to sue another country. Ten of them arose under NAFTA, including nine cases against the United States, and seven cases arose under FIPAs concluded by Canada with a variety of countries, such as Venezuela, Costa Rica, and other countries.
The record of Canadian investors in those cases is zero wins and 17 losses. No Canadian investor has ever recovered compensation in a known case involving investor-state arbitration. By comparison, in the several hundred cases to date brought in investor-state arbitration proceedings, the success rate of the investor is around 45% to 50%. That fact in itself might be helpful. I don't know that it tells the whole story. It's just one piece of information, but I'd just like to highlight it as one reason why I think there is legitimate cause for further reflection on just how well investor-state arbitration is serving Canadian interests, including the interests of Canadian companies abroad.
We should keep in mind that there are other instruments available to protect Canadian companies abroad, such as the contracts that they conclude, which can also provide for arbitration, such as the commercial risk insurance that's available in the marketplace, and such as the channeling of their investments through third countries that have concluded investment treaties with India. Some of the claims against India have gone through what we would call “holding platforms” in a third state, such as Mauritius, and there's no reason why a significant Canadian company cannot structure its investments in India to take advantage of the same protections available through those third country investment treaties without exposing Canada and Canadian companies to any of the risks or disadvantages that would follow from a direct commitment to investor-state arbitration between India and Canada.
I would offer those as my opening comments. I thank you again for the opportunity to speak to you.