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2019 | OriginalPaper | Chapter

CETA and Investment: What Is It About and What Lies Beyond?

Authors : Nathalie Bernasconi-Osterwalder, Howard Mann

Published in: Foreign Investment Under the Comprehensive Economic and Trade Agreement (CETA)

Publisher: Springer International Publishing

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Abstract

In this concluding chapter, the authors take a critical overview of the results of the CETA investment negotiations, including but not limited to the issues raised in other Chapters of this book. Our assessment is that much of the drafting of CETA on the balance between investor rights and government policy space will create changes in form, but very limited, if any, changes in substance. The changes to the investor-state dispute settlement system are significant, but have no impact on the basic premise that gives foreign investors broad rights to sue states in international processes disconnected from other elements of domestic law and the interests of other stakeholders. These changes are of more than just form, but their impact will be constrained by the lack of real substantive change we see in the obligations on states and rights of investors. Overall, we see the protection of the investor’s right to profits and property as the ongoing predominant theme, maintaining and in some cases furthering the basic thrusts of prior investment treaties. Significant change will have to wait for another day.

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previous chapter A Latin American View on the CETA Investment Chapter

Mann et al. (2005), pp. 126–130.

European Commission, Final Report: A Trade SIA Relating to the Negotiation of a Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, March 2011, http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147755.pdf.

Ibid., pp. 355 and 360.

Ibid., pp. 357 and 360.

Ibid., pp. 358–359.

See for a full discussion of this and other related issues in Perezcano (2017) and Onwuamaegbu (2017).

Schacherer (2018).

For an overview of MFN provisions in various investment treaties and the evolution of case law, see Nikiema (2017). See also, Bernasconi-Osterwalder (2014), pp. 14–16.

Claire Daigrement, in her chapter on MFN in this book, argues this is a regrettable step. We respectfully disagree, noting that allowing the use of ISDS clauses in other agreements, which are objectively more favourable to investors, would simply undo the reforms undertaken with respect to the CETA dispute settlement mechanism. See Crépet Daigrement (2018).

This is exactly the case with NAFTA, for example, and other Canadian agreements. S. 10 of the North American Free Trade Implementation Act (1993) reads simply: “The Agreement is hereby approved.” We have not sought to analyze possible similar legislation in other CETA covered jurisdictions, but assume the breadth of definition of “measure” would examples to a similar effect.

Canada Model BIT (2004), Annex III. Exceptions from Most-Favoured-Nation Treatment: “[the MFN Treatment] shall not apply to treatment accorded under all bilateral or multilateral international agreements in force or signed prior to the date of entry into of this Agreement.” The same language appears in Canada-Peru BIT (2006), Annex III, para. 1; Canada-Kuwait BIT (2011), Annex II, para. 1; Canada-Burkina Faso (2015), Annex III, Para. 1.

Art. 8(1) of the Canada-China BIT (2012) states that the general MFN provision does not apply to “treatment accorded under any bilateral or multilateral international agreement in force prior to 1 January 1994”, thus creating a cut-off date. The cut-off date in this case still included treaties based on older models and thus will limit the effect of new drafting in the Canada-China BIT. This raises a separate question about the goal of this provision, which appears to have been quite deliberately drafted to include greater investor rights through prior treaty provisions.

Crépet Daigrement (2018).

Dumberry (2018).

Clayton v. Canada, NAFTA/UNCITRAL/PCA Case No. 2009-04, Award on Jurisdiction and Liability, 17 March 2015.

Merrill & Ring Forestry L.P. v. Canada, NAFTA/UNCITRAL, Award, 31 March 2010.

Dumberry (2018). The result in Bilcon was seen as so egregious that the then Conservative government of Canada, a government that did not have environmental protection as a priority issue, initiated a judicial review of the award. See Attorney General of Canada v. Clayton et al., Notice of Application (16 June 2015), Toronto, T-1000-15 (FC). The judicial review is pending. Nonetheless, the negotiators did not alter the language on FET in the face of the Bilcon decision.

See Titi (2018).

CETA, Art. 22.3.

Mbengue and Negm (2018).

CETA, Art. 8.1.

CETA, Art. 8.18(3).

There has been an ongoing debate in ISDS arbitrations whether an investment made by corruption, fraud, etc. should be disqualified from ISDS processes as a matter of jurisdiction or whether this should be one factor to be considered on the merits. By including paragraph 8.18(3) CETA makes this point very clearly, and thereby crosses the threshold to establish an obligation and a remedy for breach of that obligation. This is one of the approaches first taken in the IISD Model Agreement (Arts. 13, 22 and 32) to ensure clarity on this issue. See European Commission, Final Report: A Trade SIA Relating to the Negotiation of a Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada (n. 2), pp. 108, 114 and 118.

Schreuer (2010), p. 131.

CETA, Art. 8.4(1).

As noted by Schneiderman (2016), p. 39: “[…] in the case of international investment law, we are witness to a continuing preoccupation with the protection of property. It is reminiscent of vested rights doctrine and Lochnerism of the nineteenth century, coupled with a ‘fanatic’ and fundamental view of property rights that ‘underwrites every expectation of profit.”

Bernasconi-Osterwalder N (2014) Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). http://www.iisd.org/library/commentary-draft-investment-chapter-canada-eu-comprehensive-economic-and-trade-agreement

Crépet Daigrement C (2018) Most favored nation treatment. In: Mbengue MM, Schacherer S (eds) Foreign investment under the comprehensive economic and trade agreement (CETA). Springer

Dumberry P (2018) Fair and equitable treatment. In: Mbengue MM, Schacherer S (eds) Foreign investment under the comprehensive economic and trade agreement (CETA). Springer

Mann H, von Moltke K, Peterson LE, Cosbey A (2005) IISD model international agreement on investment for sustainable development. ICSID Rev—Foreign Invest Law J 20(1):91–145CrossRef

Mbengue MM, Negm M (2018) An African view on the CETA investment chapter. In: Mbengue MM, Schacherer S (eds) Foreign investment under the Comprehensive Economic and Trade Agreement (CETA). Springer

Nikiema S (2017) The Most-Favoured-Nation Clause in Investment Treaties, IISD Best Practice Series. http://www.iisd.org/library/iisd-best-practices-series-most-favoured-nation-clause-investment-treaties

North American Free Trade Implementation Act (1993) Pub. L. No. 103–328, 107 Stat. 2057

Onwuamaegbu U (2017) Limiting the participation of developed states: impacts on investor-state arbitration. In: de Mestral A (ed) Second thoughts: investor-state arbitration between developed democracies. Centre for International Governance Innovation (CIGI)

Perezcano H (2017) Risks of a selective approach to investor-state arbitration. In: de Mestral A (ed) Second thoughts: investor-state arbitration between developed democracies. Centre for International Governance Innovation (CIGI)

Schneiderman D (2016) Global constitutionalism and international economic law: the case of international investment law. In: Bungenberg M, Herrmann C, Krajewski M, Terhechte J (eds) European yearbook of international economic law 2016. Springer, Cham, pp 23–44CrossRef

Schacherer S (2018) The CETA and sustainable development: interpretative issues. In: Mbengue MM, Schacherer S (eds) Foreign investment under the Comprehensive Economic and Trade Agreement (CETA). Springer

Schreuer C (2010) Fair and equitable treatment. In: Hoffmann AK (ed) The protection of foreign investments through modern treaty arbitration—diversity and harmonisation, ASA Special Series No. 34, p. 125 et seq

Titi C (2018) The right to regulate. In: Mbengue MM, Schacherer S (eds) Foreign investment under the comprehensive economic and trade agreement (CETA). Springer

Title: CETA and Investment: What Is It About and What Lies Beyond?
Authors: Nathalie Bernasconi-Osterwalder
Howard Mann
Publisher: Springer International Publishing
Book: Foreign Investment Under the Comprehensive Economic and Trade Agreement (CETA)
Print ISBN: 978-3-319-98360-8

Electronic ISBN: 978-3-319-98361-5

Copyright Year: 2019
DOI: https://doi.org/10.1007/978-3-319-98361-5_13