Mr. Speaker, it gives me great pleasure to rise today in this House to express my support for the bill that was described so well by my friend from Simcoe—Grey, the Secretary of State for Foreign Affairs, International Trade and Sport, and also by my friend from Calgary East, the Parliamentary Secretary to the Minister of Foreign Affairs.
Bill C-53 implements, in Canadian law, an international convention of the World Bank, the ICSID Convention. The purpose of Bill C-53 is therefore to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This convention covers arbitration and international conciliation between governments and foreign investors, what is commonly called investor-state dispute settlement.
These disputes can arise in a variety of situations, for example, when the country where the foreign investor is located passes laws that discriminate against the investor or in case of nationalizations.
International arbitration is a proven method for resolving disputes. It is a way of resolving them without resorting to the legal system. It has long been acknowledged that the parties to a dispute can resort to arbitration and the results of the arbitration process will be recognized by the courts. For example, commercial arbitration awards in Canada, that is to say between businesses, are recognized and enforced by the courts.
It is up to the parties to decide whether they want to resort to arbitration or the legal system. The flexibility that this provides is often much appreciated. In the case of the convention implemented by Bill C-53, which we are debating today, one of the great advantages of relying on arbitration is that it denationalizes the process. I will explain what is meant by that.
When a dispute arises between a foreign investor and the host country, the investor has the option of pursuing the matter before the courts of the host country. Usually—and this would be the case in Canada, in Quebec, or anywhere else in the country—the foreign investor would be entitled to a fair and equitable hearing. The host country’s courts would not be prejudiced against the foreign investor and would reach a decision under the law. Sometimes, though, this would not happen. The court might well lean in the direction of its own government at the expense of the foreign investor, which, in a case of interest to us, could well be a Canadian company doing business abroad. I should say as well that another advantage of the arbitration process is that the parties choose the arbiters. When the matters in dispute are highly specialized, for example petroleum development or marine issues, choosing arbiters who are experts in the field can make the process more effective and result in better decisions.
The arbitration process in the ICSID Convention is therefore one of the processes that are most often used for settling disputes between investors and states. My colleagues pointed out that more than 150 countries have already signed on to this arbitration process. The Convention has been ratified and is one of the international instruments to which the largest number of states belong. What distinguishes the convention to be implemented here in Canada by this bill is the mechanism for enforcing arbitration awards. It is an effective mechanism and that will help to protect investors. This is a key advantage of the ICSID Convention.
In the great majority of cases, the losing party in arbitration will pay the award of an arbitral tribunal without the need for the successful party to take any enforcement proceedings. The same is true for investor state arbitration.
In Canada, arbitral awards, including investor state arbitral awards, are currently enforced pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This New York convention permits a limited review of an arbitral award by domestic courts. It allows a court to refuse to enforce an award if to do so would be contrary to public policy. In addition, it permits a state to exclude certain subjects from the application of the convention and thus from enforcement.
ICSID provides a better enforcement mechanism. It does not permit a state to exclude from dispute settlement any matter which the state has consented to submit to arbitration. ICSID awards are enforceable as if they were final decisions of a local court. This simple, efficient mechanism guarantees better protection for Canadian investors abroad.
We can also think of companies like Bombardier, the mining companies, the large consulting engineering firms and SNC Lavalin, whose head office is in Montreal.
Here are a few of the elements or clauses that make this bill an advantageous one for our businesses in Quebec and Canada.
For example clause 8 in the bill provides for the automatic recognition and enforcement of an award given by an ICSID tribunal. Such an award is recognized and deemed to be a final judgment by a superior court of Canada.
Under the same clause, any superior court of Canada may recognize and enforce awards coming under the law. The superior courts include the Federal Court. The Federal court will have the necessary jurisdiction to hear requests for recognition of awards involving the Government of Canada and awards involving foreign governments and their political subdivisions.
This same convention provides explicitly that awards are binding on the parties and cannot be subject to any judicial appeal or remedy.
Thus a foreign tribunal cannot hear a request to the effect that an ICSID arbitral tribunal has gone beyond its jurisdiction or was not properly constituted. These cases, when they are undertaken for awards other than those of the ICSID, delay resolution of the dispute and payment of damages. The convention does not allow such dilatory remedies.
Clause 7 of the bill provides that an award under the convention is not subject to any remedy, such as appeal, review and annulment in a Canadian court of justice. From this we can infer the very final effect of awards given under the convention. The decision to seek arbitration is entirely voluntary, but once the parties have agreed to it they cannot seek remedy from any other body, such as a court of justice.
The only remedies allowed in erroneous decisions are those laid down in the convention. Requests for review, interpretation or annulment of an award are heard, should the case arise, by the Secretary-General of ICSID.
Thus questions of error concerning awards cannot be submitted to national tribunals, but there remains a guarantee that erroneous awards will be remedied.
The ICSID Convention provides a good mechanism for resolving disputes and enforcing awards efficiently. This is an international instrument promoting arbitration and fair solutions for international investment disputes. This is why our government is presenting for second reading Bill C-53, which implements the ICSID Convention here, in Canadian law.