How Businesses Benefit from Foreign Investment Protection Agreements: Setting the Stage for the Canada-China FIPA

Transcription

1 How Businesses Benefit from Foreign Investment Protection Agreements: Setting the Stage for the Canada-China FIPA Canada-China Investment Protection & Business Cooperation Forum John W. Boscariol McCarthy Tétrault LLP International Trade and Investment Law Group (416) LinkedIn: Twitter:

2 Foreign Investment Protection Agreements 1 promotion of foreign investments reciprocal protection for investors ensures a stable, predictable environment for inward and outward flows of FDI provides business with alternatives to diplomacy or recourse to domestic host legal system direct access to international arbitration

3 Foreign Investment Protection Agreements 2 key differences with international trade agreements private investor-dispute settlement mechanism investors may sue host country government for losses or damages arising from a breach of the investment treaty submission of claim before arbitral tribunal under International Centre for Settlement of Investment Disputes (ICSID) Convention (China -1993, Canada 2013) Additional Facility Rules of ICSID United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules other arbitration rules

4 Foreign Investment Protection Agreements 3 basic investor protection obligations national treatment most-favoured-nation treatment fair and equitable treatment (minimum standard) performance requirements transfers expropriation and compensation

5 Foreign Investment Protection Agreements 4 potential carve-outs or limitations existing non-conforming measures pre-establishment vs post-establishment measures prudential measures taxation measures cultural industries essential security interests (national security) government procurement subsidization programs

6 Key Trends Growth in Investment Protection Treaties & Claims 5 first investment treaty signed in 1959 (Germany Pakistan) by 1990, 385 signed by end of 2013, over 3,200 investment protection agreements signed investor-state claims negligible in early 1990s 568 claims by end of 2013 (75% against developing/transition economies)

7 Key Trends Challenging Developed Country Measures 6 traditional framework between developed / capital exporting countries and developing capital importing countries historical context for Canada and China now NAFTA Chapter 11 EU-Canada Comprehensive Economic and Trade Agreement China-Canada Foreign Investment Protection Agreement in 2013, claims against developed countries 48% developing countries 33% transition economies 19%

8 Most Common Target Countries 7 top 10 respondent countries for investment treaty claims (number of cases) Argentina (53) Venezuela (36) Czech Republic (27) Egypt (23) Canada (22) Ecuador (22) Mexico (21) Poland (16) United States (15) India (14) Source: UNCTAD, April 2014 to date, only 2 investor-state claims filed against China

9 Opportunities for Foreign Investors 8 toolkit for challenging harmful trade and investment measures domestic remedies appeals, court action lobbying diplomatic, government-to-government trade and investment agreements government-to-government mechanisms investor-state claims

10 Opportunities for Foreign Investors 9 firm s strategic decision-making process consultations during FIPA negotiation project evaluation and political risk assessment structuring investments to benefit from FIPA use of FIPA in addressing harmful government measures negotiations submission of claim

11 Opportunities for Foreign Investors 10 does the FIPA apply? standing as an investor of party to FIPA limitation period substantive claim reservations and exceptions damages or loss (not removal of measure)

12 John W. Boscariol McCarthy Tétrault LLP International Trade and Investment Law Group www. Direct Line: LinkedIn: Twitter: