Harper's Boon to the Arbitration Industry

The ICSID Convention dates to 1965. It was pushed originally by the World Bank, Western Europeans, and U.S. as a way to protect companies in newly-independent countries emerging from colonization. Now it is coming to Canada.

For decades, ICSID was a sleepy place in which occasional arbitrations were held under contracts for specific investment projects. ICSID's caseload exploded from about 2000, after countries in the 1990s increasingly allowed foreign investors as a group to sue them under treaties like NAFTA.

Even so, nearly all ICSID lawsuits by foreign investors have been against developing countries. This is because developed countries rarely agreed to investor-state arbitration in treaties amongst themselves or, for that matter, in contracts. The main exception was Canada's acceptance of investor-state arbitration at the U.S.' bidding under NAFTA. With Canada's ratification of the ICSID Convention, the NAFTA allowance for ICSID lawsuits against Canada, and by Canadian investors against the U.S., will be operational.

Canada quietly ratifies controversial international investment convention

In August 2012, the Financial Post reported that Canada was close to ratifying the ICSID Convention, a binding set of rules for how investor-to-state disputes (like the Lone Pine case against Quebec's fracking moratorium) are handled that some countries (e.g. Bolivia, Venezuela, Ecuador) are pulling out of because of how these rules undermine state sovereignty. Canada had signed the Convention, and already agrees to 99 per cent of its arbitration rules, but could not be a full member until all of the provinces had passed ratifying legislation.

Apparently that has quietly happened, despite our request that the holdout provinces seek public approval for ratification, since the Harper government announced November 1 that it had was now a full member of ICSID. Trade Minister Ed Fast declared, "Ratifying this investment treaty is an important step toward further ensuring predictability and stability for Canadian investors operating abroad. This is the latest example of how our pro-trade, pro-investment plan to help our businesses grow and succeed abroad continues to get results for our exporters, workers, investors and businesses."