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

Chapter 8 of CETA contains the rules on the establishment of investments, non-discriminatory treatment, the protection of investments and the resolution of investment disputes. The notion of investment is fundamental to an understanding of this chapter. The notion of investment has a dual function: it limits the scope of the substantive protection afforded by Chapter 8, and establishes an arbitral tribunal’s jurisdiction ratione materiae. Against this background, CETA reflects a desire to limit adjudicators’ discretion in finding an investment. However, as will be argued in the present contribution, adjudicators still retain considerable discretion in finding an investment protected under CETA.

The drafters of the CETA expropriation provision seem to have learnt lessons from the past. Expropriation in investment law has indeed been a controversial provision, accused of creating a regulatory chill for host States. Article 8.12 then includes many precisions on aspects that were not well-settled in case law. Even it is a classical expropriation clause in some respect, it also introduces several innovations, such as: a precise list of the criteria that should be taken into account by adjudicators to identify an indirect expropriation; an implicit reference to the proportionality test; several precise rules about compensation. It also prevents conflicts of norms with intellectual property (IP) rules by excluding some IP State measures from the field of expropriation. On the whole, it can be said that this provision shows a great deference vis-à-vis States’ right to regulate and should not render possible any international responsibility of the Parties on the ground of expropriation for legitimate regulation measures. It then participates to a general evolution of international investment law towards a better consideration for States legitimate interests.

Investments form a substantial portion of Canada-European Union (EU) economic relations. The CETA’s Investment Chapter is designed to give investors greater certainty, stability, transparency, and protection for their investments, and to secure access for Canadian and European investors to each other’s respective markets. In the course of negotiation of the CETA, Canada and the EU agreed to incorporate certain reform approaches to investment protection and investment dispute resolution provisions. This chapter seeks to discuss and contextualize these approaches from an African perspective by comparing it to the specific and innovative features enshrined in African international investment agreements (IIAs) and model treaties including, inter alia, the Pan-African Investment Code (PAIC). The latter is the first continent-wide African model investment treaty elaborated under the auspices of the African Union (AU).

The CETA Investment Chapter incorporates several of the substantive and procedural refinements developed in recent international investment policy-making. In particular, the agreement establishes a permanent investment court as an alternative to traditional investor-State dispute settlement (ISDS). The underlying concerns driving the current European Union (EU) proposal for reforming ISDS are very similar to the concerns that inspired the Calvo doctrine in Latin America in the nineteenth century. Inspired by the CETA Investment Chapter, the EU proposes the establishment of a multilateral investment court with an appeals mechanism. A similar proposal is under consideration at the United Nations Commission on International Trade Law (UNCITRAL). Consequently, it is quite likely that the proposal for a multilateral court will soon be considered by Latin American countries, whose reactions are expected to reflect their diversified views on ISDS. In spite of the denunciation of the ICSID Convention and of some bilateral investment treaties by certain countries in the region, most Latin American countries have, in general, a positive attitude towards ISDS and might be supportive of the creation of a multilateral investment court. Yet, there are other emerging alternatives in parallel to the EU alternative, which are currently under consideration by several Latin American countries in other fora. It remains still unclear which reform alternative will to prevail and it is likely that international investment regime will be relying on traditional investor-State dispute settlement for the next years. The present contribution seeks to present and discuss the diverse positions of Latin American countries and their potential reaction to the proposal of a multilateral court.