Madam Chair and distinguished committee members, thank you for this invitation.
I must say that generally speaking, I agree with my distinguished colleagues.
We heard from Mr. Yves Fortier earlier. I can tell you that he is the most highly respected arbitrator in the world, which is remarkable. We are fortunate to be able to hear his point of view, even though I do not fully agree with him on certain points.
Since my speaking time is very short, I will simply focus on the main question. Does arbitration between an investor and a state work against Canada's interests? Like my colleagues, I would say that my general answer is definitely not. It does not run counter to Canada's interests. Quite the contrary. Although I will mention a number of reservations, I would like to point out that these reservations are already largely built into Canadian practice in recent agreements.
I'd like to begin by addressing the criticisms and responses to them. I will then ask whether there are alternatives to arbitration between an investor and a state? After that, I have a few things to say about the proposed establishment of an international arbitration tribunal.
There have certainly been criticisms, throughout history. There are sometimes complaints about contradictory decisions or poor decisions that have been handed down. As there have been some 700 such decisions, it's not unlikely that this should occur along the way.
There have been questions about the appointment of arbitrators. At the outset, there were questions about whether certain arbitrators might not deal with the process strictly as trade arbitrators, by which I mean they would view disputes as essentially trade decisions. As you can see, trade interests exist alongside public and policy interests. I believe that most arbitrators today understand this.
Who are these arbitrators? At the beginning, arbitrators were mainly Canadians, Americans and Europeans. This was gradually extended to include others, but the developing states' initial trepidation was well-founded. Some claims were said to have been clearly frivolous or politically sensitive. The more fundamental problem, or at least the problem that many academics have studied, is the fact that states can struggle to respond to certain types of claims. For example, in mining disputes, when a company blamed the state for contravening a number of the conditions in a treaty, South American states tended to argue that the company had infringed some fundamental human rights, that it had made things terribly difficult for their indigenous communities, or other similar claims. From the procedural standpoint, it's very difficult for a company to submit a defence of this kind.
Are there answers to these criticisms? I believe that there are, not only with respect to the rules but also the process.
It's true that much has been done in terms of the appointment of arbitrators. There are codes of conduct. Arbitrators are appointed much more carefully. Attempts are gradually being made to appoint women and people in Asia who have thus far never been appointed, and these efforts are beginning to pay off. From this clearly important standpoint, there is now much more diversity in the community of arbitrators. I can tell you that those who in a position to appoint Yves Fortier are very pleased.
From a procedural standpoint, many treaties, including some signed by Canada, the European Union and the United States, now allow certain types of claims to be excluded. This may not make the claimants happy, but claims deemed to be frivolous or clearly unfounded will be excluded under certain treaties, including Canadian treaties. So in terms of procedure, that's one answer.
An examination of bilateral treaties, and the chapters on investment in some of Canada's major trade treaties, shows that procedural reforms have been added. The process is therefore well underway, but certainly not finished.
Are there other options? Some say that the system can be eliminated. My colleague Mr. Côté has given a good explanation of why governments don't want to be responsible for many of these cases. We don't have the gunboats, unfortunately. The gunboat era is over. States prefer to have these disputes dealt with independently in a much less politicized framework.
It is often argued that all cases should be sent to domestic courts, but that's a simplistic solution. In a book that I wrote on this topic, the first chapter goes into considerable detail on how this issue affects Canada. If 80% of cases against Canada were sent to Canadian courts, we would end up dealing with administrative tribunals that render justice formally, but that do not award compensation. For businesses bringing the complaints, this option is therefore thoroughly inadequate.
Were we to return to the situation in which all disputes are sent to domestic courts, there would be 189 different solutions. That's not what we want. The obvious advantage of arbitration in the existing system is that the treaty creates applicable rules on the one hand, and on the other hand, an arbitration tribunal has all the advantages of such tribunals in terms of procedure and sentencing. The system works. But if there were 180 different systems, it wouldn't work. These so-called solutions, unfortunately, really don't cut the mustard.
So some of my views may differ somewhat from those of my colleague Mr. Fortier.
Upon lengthy political debate, the European Union proposed a system, the creation of an international investment arbitration tribunal. The judges on that tribunal would be known and no doubt selected from among the world's leading experts in the field. Rather than abolish the law of the investor state, the tribunal would enforce the treaties. The law would thus always be applied, but by a known tribunal and, let's hope, one whose members would enjoy considerable respect.
Would it be preferable to have a system such as the one we now have, under which the parties appoint their own judges, that is to say, their adjudicators? It's hard to say. First of all, there's a political issue. How many states will follow Canada in emulating the European Union? Some would, but, for now, not many. The tribunal would likely be established, but how many states would expose their investment interests to the tribunal's decisions? It remains to be seen, and this is a solution for certain states, but perhaps not for others.
Let's not forget the Appellate Body of the World Trade Organization, or WTO, which has been so successful that the United States, under the Trump administration, feared it and halted its proceedings. However, it can't be denied that the tribunal has consolidated WTO jurisprudence and made a strictly arbitral system more consistent. Consequently, I'd be inclined to give it a chance, and I understand why Canada has emulated the European Union. I don't think we should fear that system.
The risk, of course, is that we'll have a two-tiered system that both arbitrates and is subject to the decisions of this tribunal as a result of the some 3,000 trade and bilateral investment treaties. This may be the biggest problem left for countries like Canada, which are trying to modernize the system. At least 2,000 treaties will probably not be renewed in the near future.
Thus, in any case, we'll have a system in which most, but not all, treaties will be much more modern, like most Canadian treaties, as Professor Charles-Emmanuel Côté said. Those treaties won't be modernized in many states, and certain provisions will therefore be subject to interpretation and, in some instances, to criticism. We will very likely be living in what, for now, will remain more or less a two-tiered system. In my view, however, Canada would do well to forge ahead and try to clarify rules and procedures. We have an interest in trying to support the international investment arbitration tribunal model.
If I may, just to conclude, you don't throw the baby out with the bath water. You try to ensure that the heat of the bath water is right for the baby. What's right for one baby might not be right for another.
There are serious issues out there, but personally I have a lot of respect for the way the Canadian government has tried to modernize as far as it can go. It modernized its own treaties, it modernized the system and it encouraged modernization. That is the way that I would hope to see the system advancing.
Thank you very much.