Mr. Speaker, I stand to speak today to Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).
This bill implements the international convention on the settlement of international disputes between states and nationals of other states which was open for signature in Washington back on March 18, 1965. It generally creates a set of rules for mutually agreed upon arbitration hearings between investors and foreign state governments. It ensures that the courts in any of the signatory countries have the legal means to enforce any decisions in the ICSID hearings.
As a trading nation, Canada and Canadian and international investors require protection, stability and confidence. Should disputes arise, and they do, it is essential that fair, equitable and judicious treatment is available when necessary.
The ICSID convention is an international instrument sponsored by the World Bank to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.
The ICSID convention entered into force, as I said, on October 14, 1966 and my understanding is that 156 countries have signed the agreement with Canada signing on December 15, 2006. As of January 2007, 143 states have ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to the convention.
Investment disputes brought under the convention are administered by the international center for settlement of investment disputes located in Washington, D.C. In the last few years the activity of the centre has soared due to increased flows of cross-border investment and the number of investment treaties referred to ICSID arbitration.
While the centre had over 110 arbitrations in total during the first 40 years of its existence, there are currently 105 proceedings underway. Since its inception, the centre has established itself as a reliable and effective organization for resolving investment disputes.
Once ratified the convention will provide additional protection to Canadian investors abroad by allowing them to include in their contracts with foreign states the option of arbitration under ICSID convention. In addition Canadian investors doing business in the country with which Canada has a foreign investment promotion and protection agreement will have recourse to ICSID arbitration for violations of that agreement as well.
Becoming a party to the ICSID convention will also make Canada a more attractive destination for international investors and that will mean jobs for Canadians.
The most significant advantage of the convention is the enforcement of arbitral awards. Unlike awards issued by other arbitral institutions, domestic courts cannot refuse to enforce decisions issued under the ICSID convention. Rather, such awards are enforceable in any country that has ratified the convention as if they were a final judgments of the courts in that state.
The tremendous growth in investment and investment-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. As I have indicated, 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 the 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. Those are significant numbers.
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 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 investments 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.
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 free trade agreement, 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 parties to the ICSID.
Obviously Canada must become a party to the ICSID because Canada and Canadian investors cannot benefit from the choice if Canada is not a member. This is an increasingly important problem. Within Canada the use of ICSID would be consistent with the policy of supporting the use of the alternative dispute resolution mechanisms 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.
Under a government whose recent record is one of stifling international participation by Canadian companies, it is important that we pass a bill that protects the rights of our investors in other jurisdictions. With hugely increased trade with emerging giants, such as China, and other countries with governance structures much different from our own, it is important, in fact it is essential, that Canada be a part of the international convention on the enforcement of investors' rights.