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Towards a New Horizon in Investor–State Dispute Settlement? Reflections on the Investment Tribunal System in the Comprehensive Economic Trade Agreement (CETA)

  • ELSA SARDINHA
Abstract

The Comprehensive Economic Trade Agreement (CETA) between Canada and the European Union is the first treaty to specify new rules governing the identity and tenure of arbitral members and provide a more extensive review function through a two-tiered investment tribunal system (ITS). CETA signals a shift towards a more public and judicialized system, akin to that of many national legal systems and the World Trade Organization. The ITS creates a permanent first instance tribunal and an appeal tribunal (featuring a pre-elected roster of tribunal members), which is competent to review the tribunal’s decisions for errors of law and fact, as well as on the grounds of Article 52 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) making it a novel one-stop-appellate-shop. This treaty comment assesses the operation of, and reasons for, key provisions of CETA’s Investment Chapter and examines the extent to which it addresses points of criticism and lessons learned from the experience of arbitrating under the North American Free Trade Agreement and other open-textured treaties. The analysis draws analogies to, and distinctions from, other treaties and relevant jurisprudence that have influenced the negotiators. Among CETA’s most striking features are its purported modification of existing arbitral rules (ICSID Convention, ICSID Additional Facility Rules, and UNCITRAL Arbitration Rules) and its removal of disputing party involvement in the selection of the tribunal in favour of a roster appointed ex ante by the state parties, which results in a considerable amount of the investor’s autonomy being stripped away. While these and other issues must be further analyzed and balanced in the context of present discussions regarding the creation of a multilateral investment tribunal, CETA nevertheless contains significant procedural and substantive innovations and stands as a guide for future treaty negotiations and reforms of investor–state dispute settlement.

L’Accord économique et commercial global (AECG) entre le Canada et l’Union européenne est le premier traité d’investissements à préciser de nouvelles règles régissant l’identité et le mandat d’arbitres et à étendre la possibilité de contrôle judiciaire par le biais d’un système de tribunaux sur les investissements (STI) à deux instances. L’AECG représente un changement vers un système plus ouvert et judiciaire, semblable à ceux de nombreux systèmes juridiques internes et à celui de l’Organisation mondiale du commerce. Le STI de l’AECG est doté d’un tribunal permanent de première instance ainsi que d’un tribunal d’appel (dont les membres sont pré-élus) qui est compétent pour examiner les décisions du tribunal en matière d’erreurs de droit et de fait ainsi que pour des motifs énumérés à l’article 52 de la Convention pour le Règlement des Différends relatifs aux Investissements entre États et Ressortissants d’autres États (Convention CIRDI) — donc une instance d’appel novatrice à-tout-faire. La présente analyse portant sur l’AECG évalue l’opération et la raison-d’être des principales dispositions de son chapitre sur l’investissement, et examine dans quelle mesure ce dernier répond aux critiques et aux leçons tirées de l’expérience d’arbitrage en vertu de l’Accord de libre échange nord-américain et d’autres traités rédigés dans des termes ambigus. L’analyse identifie des parallèles et des différences entre l’AECG, d’une part, et d’autres traités ainsi que la jurisprudence pertinente qui a pu influencer les négociateurs, d’autre part. Parmi les caractéristiques les plus frappantes de l’AECG figurent la modification proposée des règlements d’arbitrage existants (selon la Convention CIRDI, le Règlement du Mécanisme supplémentaire du CIRDI, et le Règlement d’arbitrage de la CNUDCI), et sa suppression du droit des parties à un différend de désigner les membres du tribunal en faveur d’une liste d’arbitres pré-établie par les États parties — ce qui entraîne une diminution considérable de l’autonomie des investisseurs. Bien que ces questions et d’autres devront faire l’objet de réflexions plus poussées, vu les discussions en cours concernant la création éventuelle d’un tribunal d’investissement multilatéral, l’AECG revêt néanmoins d’importantes innovations de procédure et de fond et constitue un guide pour les négociations futures et les réformes des mécanismes de règlement des différends entre investisseurs et États.

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1 Comprehensive Economic and Trade Agreement between Canada, of the One Part, and the European Union and Its Member States, of the Other Part, 29 February 2016 (signed 30 October 2017, approved by the European Parliament on 15 February 2017), online: <http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf> [CETA].

2 On the eve of CETA’s, supra note 1, scheduled signature on 27 October 2016, Belgium’s consent to the deal was blocked by opposition from its regional parliaments in Wallonia and Brussels. This opposition was ultimately overcome and the agreement signed the next day, but only after ambassadors from all twenty-eight European Union (EU) member states agreed to a compromise, set out in a four-page addendum to CETA, addressing concerns about competition for Wallonia’s farmers from Canada. CETA entered into force provisionally on 21 September 2017. For a discussion of the challenges ahead for ratification of CETA’s Investment Chapter, see infra note 29. Notably, on 6 September 2017, Belgium requested an Opinion from the Court of Justice of the EU (CJEU) regarding the compatibility of CETA’s Investment Tribunal System with the exclusive competence of the CJEU to provide definitive interpretation of EU law, the general principle of equality and the “practical effect” requirement, the right of access to the courts, and the right to an independent and impartial judiciary.

3 Although not referred to as the investment tribunal (or court) system anywhere in the text of CETA’s Investment Chapter, the term “investment tribunal system” (ITS) will be used in this discussion to refer to the investor–state arbitration provisions in CETA, supra note 1. Interestingly, the relevant section of the draft EU–Vietnam FTA, infra note 77 (yet to undergo legal scrubbing) is headed “investment tribunal system,” a designation also used by the European Commission (EC) on its website.

4 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965, 575 UNTS 159 [ICSID Convention].

5 CETA, supra note 1, art 8.30(1).

6 European Commissioner, Cecilia Malmström, acknowledged the deliberate structural shift towards a more judicial model, explaining that “[b]y making the system work like an international court, these changes will ensure that citizens can trust it to deliver fair and objective judgements.” EC, CETA: EU and Canada Agree on New Approach on Investment in Trade Agreement (29 February 2016), online: < http://trade.ec.europa.eu/doclib/press/index.cfm?id=1468>.

7 Akin to the process that initially brought the ITS concept to the fore, on 27 December 2016, the EU announced its call for public input on further reforms to investor–state dispute settlement (ISDS) and, specifically, on the proposed multilateralization of the ITS. The deadline for comments closed on 15 March 2017. The results of the questionnaire received pursuant to the open consultation regarding a multilateral investment court can be found online: <http://trade.ec.europa.eu/consultations/index.cfm?consul_id=233>. In December 2016, Argentina, Brazil, India, Japan and other nations reportedly met and rejected the multilateral investment court initiative: Investment Treaty News, “European Union and Canada co-host discussions on a multilateral investment court” (13 March 2017), online: <https://www.iisd.org/itn/2017/03/13/european-union-and-canada-co-host-discussions-on-a-multilateral-investment-court/>.

8 Leaked on October 2015, the draft of the Regional Comprehensive Economic Partnership’s (RCEP) investment chapter can be found online: <http://keionline.org/node/2474>.

9 Of the twelve original signatories of the Trans-Pacific Partnership (TPP), infra note 233 — which retains the prevailing ISDS practice of party-appointed arbitrators and no appellate review and from which the United States recently withdrew — seven states are included in the RCEP negotiations: Australia, Brunei Darussalam, Japan, Malaysia, New Zealand, Singapore, and Vietnam. The leaked draft RCEP Investment Chapter, while still heavily bracketed, is strikingly similar in form and content to the TPP.

10 See, eg, Elsa Sardinha, “The Impetus for the Creation of an Appellate Review Mechanism” (2017) 32:3 ICSID Review – Foreign Investment Law Journal (forthcoming).

11 EC, Directorate General for Trade, Note for the Attention of the Trade Policy Committee (5 August 2014), appending the 1 August 2014 “consolidated version of all chapters, annexes, declarations, understandings as well as side letters” of CETA, online: <https://www.tagesschau.de/wirtschaft/ceta-dokument-101.pdf>; Janyce McGregor, “Stephen Harper Confident as Final EU Trade Deal Released,” CBC News (26 September 2014), online: <http://www.cbc.ca/news/politics/stephen-harper-confident-as-final-eu-trade-deal-released-1.2778715>.

12 Janyce McGregor, “EU Quietly Asks Canada to Rework Trade Deal’s Thorny Investment Clause,” CBC News (21 January 2016), online: <http://www.cbc.ca/news/politics/canada-europe-trade-isds-ceta-1.3412943>.

13 EU, Proposal for Investment Protection and Resolution of Investment Disputes, Transatlantic Trade and Investment Partnership (12 November 2015), art 9 [EC Fact Sheet].

14 N Jansen Calamita, “The (In)compatibility of Appellate Mechanisms with Existing Instruments of the Investment Treaty Regime” (2017) 18:4 Journal of World Investment and Trade 585 at 595.

15 ICSID Convention, supra note 4, arts 37–40.

16 ICSID Rules of Procedure for Arbitration Proceedings (10 April 2006), online: <https://icsid.worldbank.org/apps/ICSIDWEB/icsiddocs/Pages/ICSID-Convention-Arbitration-Rules.aspx> [ICSID Arbitration Rules].

17 Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes, as amended 10 April 2006, reprinted in ICSID Additional Facility Rules, Doc ICSID/11 (April 2006), online: <https://icsid.worldbank.org/ICSID/StaticFiles/facility/AFR_English-final.pdf> [ICSID Additional Facility Rules].

18 UNCITRAL Arbitration Rules, 15 December 1976, 15 ILM 701 (1976), revised in 2010 <https://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-2010-e.pdf> [UNCITRAL Arbitration Rules].

19 CETA, supra note 1, art 8.23(2).

20 Ibid, art 8.22(1).

21 ICSID Arbitration Rules, supra note 16, Rule 40 (Ancillary Claims).

22 ICSID Additional Facility Rules, supra note 17, art 47 (Ancillary Claims).

23 UNCITRAL Arbitration Rules, supra note 18, art 22.

24 CETA, supra note 1, art 8.22(1): “An investor may only submit a claim pursuant to Article 8.23 if the investor: … (d) has fulfilled the requirements related to the request for consultations; (e) does not identify a measure in its claim that was not identified in its request for consultations.”

25 Calamita, supra note 14 at 604; see also Roberto Castro de Figueiredo, “Fragmentation and Harmonization in the ICSID Decision-Making Process” in Jean Kalicki & Anna Joubin-Bret, eds, Reshaping the Investor-State Dispute Settlement System (Leiden: Brill, 2015) 522.

26 Calamita, supra note 14 at 603, 613.

27 North American Free Trade Agreement, 17 December 1992, 32 ILM 289, 605 (1993) [NAFTA].

28 According to art 30.7(2) of Bill C-60 (Canada’s Implementation Bill for CETA), the agreement will “enter into force on the first day of the second month following the date the Parties exchange written notifications certifying that they have completed their respective internal requirements and procedures or on such other date as the Parties may agree.” Therefore, provisional application will end, and CETA will enter into force, one month after the Senate passes Bill C-30 and the Government of Canada sends the formal written notification of ratification.

29 The EU’s internal approval process requires that the national Parliament of each EU member state ratify CETA. In contrast, an EU-only agreement would enter into force immediately after the European Parliament gives its approval. In May 2016, the Council of the EU (where national government ministers from each EU member state meet to coordinate policies and discuss, amend, and adopt laws) and the Canadian federal government decided that CETA is a “mixed agreement” because it touches upon both the exclusive competence of the EU and the competences of the individual member states. Prior to that, in November 2015, the EC requested an opinion from the CJEU on the draft EU–Singapore Free Trade Agreement, 17 October 2014, online: <http://trade.ec.europa.eu/doclib/press/index.cfm?id=961> [EU–Singapore FTA], which is also a mixed agreement, to clarify whether such investment treaties touch upon national competences and, thus, whether approval by national parliaments in each of the EU member states is required. In March 2017, the CJEU ruled that the EU–Singapore FTA cannot be ratified by the EU alone and must be concluded with the joint agreement of the EU and all of its member states. EU–Singapore FTA Opinion of the Court of Justice, Opinion 2/15, 16 March 2017, online: <http://curia.europa.eu/juris/liste/jsf?num=C-2/15#>; EC, CETA Explained (24 January 2017), online: <http://ec.europa.eu/trade/policy/in-focus/ceta/ceta-explained/>; Council of Canadians, European Union Trade Ministers to Discuss CETA Today (13 May 2016), online: <http://canadians.org/blog/european-union-trade-ministers-discuss-ceta-today>.

30 See, eg, Open Parliament, Bill C-30 Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act: An Act to Implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and Its Member States and to Provide for Certain Other Measures (7 March 2017), online: <https://openparliament.ca/bills/42-1/C-30/>.

31 On 24 January 2017, twenty-five members of the European Parliament (MEPs) voted in favour of the draft recommendation to approve CETA, supra note 1, fifteen voted against, and one abstained. “CETA: Trade Committee MEPs Back EU–Canada Agreement,” European Parliament Press Release, European Parliament News (24 January 2017), online: <http://www.europarl.europa.eu/news/en/news-room/20170124IPR59704/ceta-trade-committee-meps-back-eu-canada-agreement>.

32 The Brexit referendum was held on 23 June 2016 for the public to vote on whether the United Kingdom (UK) should leave or remain in the EU. The “leave” vote won by 52% to 48%.

33 Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community, 13 December 2007, [2007] OJ C306/01.

34 See, eg, Damian Chalmers, Trade after Brexit, Brexit Special no 4, LSE Law–Policy Briefing Paper no 23-2017 (27 March 2017) at 2, online: <https://ssrn.com/abstract=2941354>: “The negotiating positions are less hard-line than might appear. It is quite possible for significant trade integration to remain between the UK and the EU. The negotiating positions of the two involve a spectrum of alternatives which range from a very loose free trade agreement, on the one hand, to an ‘EEA-lite’, on the other, which secures full free movement of companies, goods, services and capital and significant liberalisation of free movement of persons. The challenge is with this spectrum, however. Its breadth allows for very divergent negotiating positions.”

35 See, eg, Dominican Republic–Central America Free Trade Agreement, 5 August 2004, entered into force 1 March 2006 by El Salvador and United States, 1 April 2006 by Honduras and Nicaragua, 1 July 2006 by Guatemala, 1 March 2007 by Dominican Republic, 1 January 2009 by Costa Rica, online: <https://ustr.gov/trade-agreements/free-trade-agreements/cafta-dr-dominican-republic-central-america-fta/final-text> [CAFTA-DR]; EU–South Korea Free Trade Agreement, 6 October 2010, online: <http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=OJ:L:2011:127:TOC)\>.

36 CETA, supra note 1, arts 26(3), 8.27(2), (3), (12), (15), (17), 8.28(3), (7), (8), 8.29.

37 Ibid, art 8.9(3).

38 Canada learned from the note of interpretation experience under NAFTA, supra note 27. On 31 July 2001, the NAFTA Free Trade Commission (FTC) issued a note of interpretation on the minimum standard of treatment pursuant to art 1131, which gives the three NAFTA trade ministers authority to issue interpretations of the treaty that are binding on NAFTA tribunals. See, eg, Pope & Talbot Inc v Government of Canada, UNCITRAL/NAFTA, Award in Respect of Damages (31 May 2002). Subsequent NAFTA cases have uniformly applied the FTC note, thereby establishing a consistent test for NAFTA art 1105 (minimum standard of treatment).

39 CETA, supra note 1, ch 26, art 26(1).

40 Andreas Fischer-Lescano, The Limits of EU and Constitutional Law for the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA), translated by Elisabeth Schmalen, Centre of European Law and Politics, University of Bremen (October 2014) at 10–11, online: <https://blog.campact.de/wp-content/uploads/2014/12/Gutachten_CETA_engl_final_27112014.pdf>.

41 See, eg, Sardinha, supra note 10.

42 CETA, supra note 1, art 8.27(1).

43 Interestingly, CETA’s state-to-state dispute resolution provisions in ch 29 retain the term “arbitrators.”

44 Luca Pantaleo, “Lights and Shadows of the TTIP Investment Court System” in Luca Pantaleo, Wybe Douma and Tamara Takacs, eds, Tiptoeing to TTIP: What Kind of Agreement for What Kind of Partnership, TMC Asser Institute Centre for International and European Law, Centre for the Law of EU External Relations, Cleer Papers 2016/1 (2016) at 77.

45 CETA, supra note 1, art 8.27(2).

46 Ibid, art 8.27(6).

47 Ibid, art 8.27(7).

48 Ibid, art 8.39(7).

49 Ibid, art 8(1): “[D]isputing party means the investor that initiates proceedings pursuant to Section F or the respondent. For the purposes of Section F and without prejudice to Art. 8.14, an investor does not include a Party.”

50 Ibid, art 8.27(17).

51 Ibid.

52 Ibid, art 8.27(8).

53 Ibid.

54 Ibid.

55 Ibid, art 8.27(5).

56 Ibid.

57 Ibid.

58 Ibid, art 8.27, n 9.

59 ICSID Convention, supra note 4, arts 12–13.

60 Ibid, art 40(1).

61 Ibid, art 39.

62 Ibid, art 39.

63 Ibid, art 14.

64 CETA, supra note 1, art 8.27(4).

65 Ibid, art 8.27(4).

66 Ibid, art 8.27(11).

67 Ibid, art 8.27(12).

68 Ibid, art 8.27(15).

69 Ibid, art 8.27(13).

70 Ibid, art 8.27(15).

71 Ibid, art 8.27(14).

72 Ibid.

73 August Reinisch & Lukas Stifter, “European Investment Policy and ISDS” (2015) ELTE Law Journal 24, online: <http://eltelawjournal.hu/wpcontent/uploads/2016/03/2015_1_01_August-Reinisch_Lukas-Stifter.pdf>.

74 CETA, supra note 1, arts 8.27(9), 8.23(5).

75 Ibid.

76 Ibid, art 8.27(10).

77 Draft EU–Vietnam Free Trade Agreement, 1 February 2016, online: <http://trade.ec.europa.eu/doclib/press/index.cfm?id=1437> [EU–Vietnam FTA].

78 Canada, Vietnam, and the EU and several of its members states have been parties to a World Trade Organization (WTO) dispute.

79 CETA, supra note 1, art 8.27(16).

80 Ibid, art 8.39(7).

81 Ibid, art 8.28(1).

82 Ibid, art 8.29; Global Affairs Canada, Joint Statement by European Commissioner for Trade and Canada’s Minister of International Trade on Canada–EU Trade Agreement (29 February 2016), online: <http://news.gc.ca/web/article-en.do?nid=1036759>: “These modifications reflect our desire to reform investment protection and dispute-resolution provisions … including working with other trading partners to pursue the establishment of a multilateral investment tribunal, a project to which the EU and Canada are firmly committed.”

83 EU–Vietnam FTA, supra note 77, art 15.

84 CETA, supra note 1, art 8.28(2).

85 Ibid, art 8.28(2); EU–Vietnam FTA, supra note 77, art 28(4).

86 Hussein Nuaman Soufraki v United Arab Emirates, ICSID Case no ARB/02/7, Decision of the Ad Hoc Committee on the Application for Annulment of Mr Soufraki (5 June 2007) at para 118: “[T]he requirement that an excess of power must be ‘manifest’ applies equally if the question is one of jurisdiction. A jurisdictional error is not a separate category of excess of power”; Compañía de Aguas del Aconquija SA and Vivendi Universal (formerly Compagnie Générale des Eaux) v Argentine Republic, ICSID Case no ARB/97/3, Decision on Annulment (3 July 2002) at para 86; Industria Nacional de Alimentos, SA and Indalsa Perú, SA v Republic of Peru, ICSID Case no ARB/03/4, Decision on Annulment (5 September 2007) at para 101.

87 Understanding on Rules and Procedures Governing the Settlement of Disputes, 15 April 1994, 1869 UNTS 401 (1994), art 11 [DSU]; WTO Analytical Index: DSU, online: <https://www.wto.org/english/res_e/booksp_e/analytic_index_e/dus_05_e.th#fnt955>. In EC – Hormones, the Appellate Body stated that the “duty to make an objective assessment of facts is, among other things, an obligation to consider the evidence presented to a panel and to make factual findings on the basis of that evidence. The deliberate disregard of, or refusal to consider, the evidence submitted to a panel is incompatible with a panel’s duty to make an objective assessment of the facts.” European Communities – Measures Concerning Meat and Meat Products (Hormones), WTO Doc WT/DS26/AB/R, WT/DS48/AB/R, Appellate Body Report (13 February 1998) at 135. See also European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WTO Doc WT/DS135/AB/R, Appellate Body Report (5 April 2001) at 3243, para 159 [EC – Asbestos]; United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WTO Doc WT/DS166/AB/R, Appellate Body Report (19 January 2001) at para 151 [US – Wheat Gluten].

88 Total SA v Argentine Republic, ICSID Case no ARB/04/01, Decision on Annulment (1 February 2016) at para 173; Background Paper on Annulment for the Administrative Council of ICSID (10 August 2012) at para 84.

89 Hussein Nuaman Soufraki v United Arab Emirates, ICSID Case no ARB/02/7, Decision on Annulment (5 June 2007) at paras 38–40: “The excess of power should at once be textually obvious and substantively serious”; Wena Hotels Ltd v Arab Republic of Egypt, ICSID Case no ARB/98/4, Annulment Proceeding (5 February 2002) at para 25: “The excess of power must be self-evident rather than the product of elaborate interpretations one way or the other. When the latter happens the excess of power is no longer manifest”; Azurix Corp v Argentine Republic, ICSID Case no ARB/01/12, Decision on the Application for Annulment of the Argentine Republic (1 September 2009) at para 68.

90 EU–Vietnam FTA, supra note 77, art 13(4).

91 CETA, supra note 1, art 8.27(6) provides for the nationality distribution for each three member divisions of the tribunal. Art 8.28(5) merely provides: “The division of the Appellate Tribunal constituted to hear the appeal shall consist of three randomly appointed Members of the Appellate Tribunal.”

92 Ibid, arts 8.28(3), 8.28(7).

93 Ibid, arts 8.27(4), 8.28(4).

94 Ibid, art 8.28(4).

95 Ibid, art 8.28(6).

96 Ibid, art 8.28(7).

97 Ibid. It is also silent about whether Appellate Tribunal members could then serve as members of the first instance tribunal.

98 Ibid, art 8.28(8).

99 Ibid, art 8.29(a).

100 Ibid, art 8.29(b).

101 Ibid, art 8.29(c).

102 Ibid, art 8.29. EC, Recommendation for a Council Decision Authorising the Opening of Negotiations for a Convention Establishing a Multilateral Investment Court for the Settlement of Investment Disputes, Doc COM(2017) 493 final (13 September 2017), online: <http://ec.europa.eu/transparency/regdoc/rep/1/2017/EN/COM-2017-493-F1-EN-MAIN-PART-1.PDF>.

103 Ibid.

104 See, eg, Compañía de Aguas del Aconquija SA and Vivendi Universal (formerly Compagnie Générale des Eaux) v Argentine Republic, ICSID Case no ARB/97/3, Award (21 November 2000) at para 2.

105 CETA, supra note 1, ch 29 (Dispute Settlement).

106 Reinisch & Stifter, supra note 73 at 12.

107 EC, Investment Provisions in the EU–Canada Free Trade Agreement (February 2016), online: <http://trade.ec.europa.eu/doclib/docs/2013/november/tradoc_151918.pdf> [CETA Report].

108 Canada has never included an umbrella clause or general observance of undertakings clause in its international investment agreements (IIAs), albeit there are two instances of foreign investment and protection agreements (FIPAs) that provide for investor–state arbitration for juridical or legal stability agreements (Canada–Peru Foreign Investment and Protection Agreement, 14 November 2006, Can TS 2007 No 10, art 22(1)(b); replaced by the Canada–Peru Free Trade Agreement, 29 May 2008, Can TS 2009 No 15, which, at art 819(2), also permits claims to arbitration pursuant to its ISDS provisions for breaches of legal stability agreements; Canada–Panama Foreign Investment and Protection Agreement, 12 September 2012, Can TS 1998 No 35; Canada–Panama Free Trade Agreement, 14 May 2010, Can TS 2013 No 9), arts 9.20, 9.21. The EU does not appear to have taken a consistent position on this issue.

109 CETA, supra note 1, art 8.18(1).

110 Ibid, art 8.18(5).

111 Ibid, art 8.18(2).

112 Namely, national treatment (ibid, art 8.6); most-favoured-nation treatment (art 8.7); treatment of investors and covered investments (fair and equitable treatment, art 8.10); compensation for losses (due to conflict, civil strife, and so on, art 8.11); expropriation (art 8.12); transfers (art 8.13); and subrogation (art 8.14).

113 Ibid, art 8.18(3).

114 See, eg, Fraport AG Frankfurt Airport Services Worldwide v Philippines, ICSID Case no ARB/03/25, Award (16 August 2007).

115 Philip Morris Asia Limited (Hong Kong) v Commonwealth of Australia, UNCITRAL, PCA Case no 2012-12, Award on Jurisdiction and Admissibility (15 December 2015), online: <http://www.pcacases.com/web/sendAttach/1711>.

116 EU–Singapore FTA, supra note 29.

117 CETA, supra note 1, ch 8, s A (definitions and scope), art 8.1: “[C]overed investment means, with respect to a Party, an investment: (a) in the territory; (b) made in accordance with the applicable law at the time the investment is made; (c) directly or indirectly owned or controlled by an investor of the other Party; and (d) existing on the date of entry into force of this Agreement, or made or acquired thereafter.”

118 Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco, ICSID Case no ARB/00/4, Decision on Jurisdiction (23 July 2001) at para 52.

119 Phoenix Action, Ltd v Czech Republic, ICSID Case no ARB/06/5, Award (15 April 2009) [Phoenix Action]; Reinisch & Stifter, supra note 73 at 13.

120 Inceysa Vallisoletana SL v Republic of El Salvador, ICSID Case no ARB/03/26, Award (2 August 2006).

121 Phoenix Action, supra note 119.

122 See, eg, NAFTA, supra note 27, art 1118 (settlement of a claim through consultation and negotiation), which states that “[t]he disputing parties should first attempt to settle a claim through consultation or negotiation”; Energy Charter Treaty, 17 December 1994, 2080 UNTS 95, art 26 (settlement of disputes between an investor and a contracting party). See also Christian Tams, “Procedural Aspects of Investor-State Dispute Settlement: The Emergence of a European Approach?” (2014) 15 Journal of World Investment & Trade 603; Reinisch & Stifter, supra note 73 at 16.

123 SGS Société Générale de Surveillance SA v Islamic Republic of Pakistan, ICSID Case no ARB/01/13, Decision of the Tribunal on Objections to Jurisdiction (6 August 2003) at paras 183–84.

124 Ethyl Corporation v Canada, UNCITRAL, Award on Jurisdiction (24 June 1998) at para 84: “The consultations requirement may be disregarded when it is demonstrated that in fact no remedy was available and any attempt would have been futile.”

125 Ibid; SGS Société Générale de Surveillance SA v Islamic Republic of Pakistan, ICSID Case no ARB/01/13, Decision on Jurisdiction (6 August 2003) at para 184.

126 CETA, supra note 1, art 8.23(1): “If a dispute has not been resolved through consultations, a claim may be submitted under this Section.” Reinisch & Stifter, supra note 73 at 12.

127 CETA, supra note 1, art 8.22(1)(b).

128 Ibid, art 8.19(1).

129 Ibid, art 8.18(1).

130 Ibid.

131 Ibid, art 8.18(7).

132 Ibid, art 8.18(3).

133 Ibid, art 8.23(5) (submission of a claim to the tribunal).

134 Ibid, art 8.39(6) (final award).

135 Ibid, art 8.18(2).

136 Ibid, arts 8.18(5), 8.18(4).

137 Ibid, art 8.18(6).

138 CETA Report, supra note 107: “CETA introduces statutory limits (3 years, extended if a domestic court proceeding is pursued) for bringing a claim. Of the 3,000 agreements with investment dispute settlement provisions in existence, only the ones to which the US and Canada are party to have such arrangements.” NAFTA, supra note 27, art 1116(2) (claim by an investor of a party on its own behalf); art 1117(2) (claim by an investor of a party on behalf of an enterprise); art 1121(1)(b) (conditions precedent to submission of a claim to arbitration).

139 CETA, supra note 1, art 8.23.

140 Ibid, art 8.18(8). The investor will also be deemed to have withdrawn its notice requesting a determination of the respondent pursuant to art 8.21 of CETA, if applicable.

141 Ibid.

142 Ibid, art 8.22(1)(d).

143 Ibid, art 8.22(1)(e).

144 Metalclad Corporation v Mexico, ICSID Case no ARB(AF)/97/1, Award (30 August 2000) at paras 66–69.

145 International Bar Association, Rules for Investor–State Mediation, adopted by IBA Council Resolution (4 October 2012), online: <http://www.ibanet.org/ENews_Archive/IBA_July_2008_ENews_ArbitrationMultipleLang.aspx>.

146 Ibid, art 9.

147 CETA, supra note 1, art 8.20(1).

148 Ibid.

149 Ibid, art 8.20(4).

150 Reinisch & Stifter, supra note 73.

151 W Michael Reisman, International Investment Arbitration and ADR: Married but Best Living Apart, in Investor-State Disputes: Prevention and Alternatives to Arbitration II, UN Doc UNCTAD/WEB/DIAE/ IA/2010/8 (29 March 2010) at 22–27, online: <http://www.unctad.org/en/docs/webdiaeia20108_en.pdf>; Nancy A Walsh & Andrea K Schneider, “Becoming Investor-State Mediation” (2012) 1 Penn St JL & Intl Aff 86 at 88, online: <http://elibrary.law.psu.edu/jlia/vol1/iss1/5>.

152 Luke Peterson, “In an Apparent First, Investor and Host-State Agree to Try Mediation under IBA Rules to Resolve an Investment Treaty Dispute,” Investment Arbitration Reporter (14 April 2016), online: <https://www.iareporter.com/articles/in-an-apparent-first-investor-and-host-state-agree-to-try-mediation-under-iba-rules-to-resolve-an-investment-treaty-dispute/> (reporting on the SYSTRA v Republic of the Philippines mediation). See also UN Conference on Trade and Development (UNCTAD), Series on International Investment Agreements II: Investor-State Dispute Settlement: A Sequel (2014) at 61, online: <http://unctad.org/en/PublicationsLibrary/diaeia2013d2_en.pdf>.

153 CETA, supra note 1, art 8.21(1).

154 Ibid, art 8.21(2).

155 Ibid, art 8.21(4).

156 European Parliament and Council Regulation 912/2014 Establishing a Framework for Managing Financial Responsibility Linked to Investor-to-State Dispute Settlement Tribunals Established by International Agreements to Which the European Union Is Party, [2014] OJ L257/121.

157 See, eg, Luca G Radicati di Brozolo & Federica Iorio, “Arbitration under Investment Protection Agreements between the EU and Non-Member States” (2015) 8 World Arbitration Reports 20: “If the EC decides that the EU should defend against the claim, either because the EU would bear at least part of the financial responsibility for the alleged breach or because the dispute also concerns treatment afforded by the EU institutions.”

158 CETA, supra note 1, art 8.22(1)(b): “An investor may only submit a claim pursuant to Article 8.23 if the investor: … allows at least 180 days to elapse from the submission of the request for consultations and, if applicable, at least 90 days to elapse from the submission of the notice requesting a determination of the respondent.”

159 Ibid, art 8.21(4).

160 Ibid, art 8.22(1)(b).

161 Ibid, art 8.21(6).

162 Ibid, art 8.21(7).

163 Cooperation between the EUs Institutions, online: <http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3Al10125>.

164 Hannes Lenk, “Issues of Attribution: Responsibility of the EU in Investment Disputes under CETA” in Andrea Bjorklund et al, eds, TDM CETA Special (2016) 13(1) Transnational Dispute Management 22.

165 Ibid.

166 ICSID Convention, supra note 4, art 67. EU cannot be a party to the ICSID Convention, which can only be signed by states that are members of the World Bank or the International Court of Justice; the EU is neither of these.

167 Ibid, art 54.

168 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 UNTS 38.

169 CETA, supra note 1, art 8.41(6).

170 Ibid, art 8.41(8).

171 Ibid, art 8.22(1).

172 Ibid, art 8.22(1)(f), (g).

173 ICSID Convention, supra note 4, art 26.

174 Albeit the ICSID Convention, ibid, contains a presumptive exclusive jurisdiction, which can only be varied pursuant to art 26.

175 CETA, supra note 1, art 8.22(5).

176 Ibid, art 22(2).

177 Ibid, art 8.22(3).

178 Ibid, art 8.22(1)(e).

179 Reinisch & Stifter, supra note 73 at 18.

180 ICSID Convention, supra note 4, Rule 40 (Ancillary Claims).

181 ICSID Additional Facility Rules, supra note 17, art 47 (Ancillary Claims).

182 UNCITRAL Arbitration Rules, supra note 18, art 22 (amendments to the claim or defence).

183 CETA, supra note 1, art 8.22(4).

184 See, eg, Ethyl Corporation v Government of Canada, UNCITRAL, Award on Jurisdiction (24 June 1998) at para 91.

185 See, eg, Agreement between the Government of Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments, 12 September 2012, art 21, online: <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/china-text-chine.aspx?lang=eng> (conditions precedent to submission of a claim to arbitration) [Canada–China FIPA].

186 CETA, supra note 1, art 8.23(1).

187 Ibid, art 8.23(2).

188 NAFTA, supra note 27, art 1120 (submission of a claim to arbitration).

189 CETA, supra note 1, art 8.23(3).

190 Ibid.

191 Ibid, art 8.23(4).

192 ICSID Convention, supra note 4, art 25(2): “National of another Contracting State” means: “(b) any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.”

193 CETA, supra note 1, arts 8.23(6), 8.44(3(b).

194 Ibid, art 8.44(3(b).

195 Ibid, art 8.23(7).

196 Ibid, art 8.23(8).

197 Lévesque, Céline & Newcombe, Andrew, “Canada” in Chester Brown, ed, Canada in Commentaries on Selected Model Investment Treaties (Oxford: Oxford University Press, 2013) at 108–10.

198 CETA, supra note 1, art 8.24.

199 Ibid, art 8.25(1).

200 NAFTA, supra note 27, art 1122 (consent to arbitration).

201 CETA, supra note 1, art 8.25(2).

202 Ibid, art 8.26(2): “The disclosure shall be made at the time of the submission of a claim, or, if the financing agreement is concluded or the donation or grant is made after the submission of a claim, without delay as soon as the agreement is concluded or the donation or grant is made.”

203 Ibid, art 8.26(1). Recent case law ordering identification of third-party funders. See, eg, Muhammet Çap & Sehil Inşaat Endustri v Turkmenistan, ICSID Case no ARB/12/6, Provisional Order no 3 (12 June 2015) at para 13.

204 While the independence and impartiality requirement is not expressly stated to apply to the Appellate Tribunal, it would be illogical if it did not.

205 EU–Vietnam FTA, supra note 77, art 14(1) also prohibits double-hatting. The draft EU–Singapore FTA, supra note 29 (Chapter 9 Investment and Annex 9-F Code of Conduct for Arbitrators and Mediators) does not contain an explicit prohibition on arbitrators acting an counsel in other cases.

206 CETA, supra note 1, arts 8.30(1), 8.27(5).

207 George Kahale, III, “Is Investor-State Arbitration Broken?” (2012) 9 Transnational Dispute Management 7 at 6; Audley Sheppard, “International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer,” Oxford Scholarship Online (September 2009) at 1.

208 Kahale, supra note 207 at 9. Other critics of the practice of party-appointed arbitrators include, eg, Ruth Mackenzie & Phillipe Sands, “International Courts and Tribunals and the Independence of the International Judge” (2003) 44 Harv Intl LJ 271; Phillipe Sands, “Developments in Geopolitics: The Ends(s) of Judicialization” (ESIL Annual Meeting Closing Speech, 12 September 2015), online: <http://www.jus.uio.no/pluricourts/english/news-and-events/events/2015/esil-2015-en/video-and-streaming/final-lecture.html>; Malcolm Langford, Daniel Behn & Runar Hilleren Lie, “The Ethics and Empirics of Double Hatting” (2017) 6 ESIL Reflections 7.

209 Sebastian Perry, “When GAR Met Gary,” GAR News (26 November 2014) at 5, online: <https://www.wilmerhale.com/uploadedFiles/Shared_Content/Editorial/News/Documents/when-gar-met-gary.pdf>.

210 Dennis H Hranitzky & Eduardo Silva Romero, “The ‘Double Hat’ Debate In International Arbitration,” New York Law Journal (14 June 2010), online: <http://www.newyorklawjournal.com/id=1202462634101/The-Double-Hat-Debate-in-International-Arbitration>.

211 CETA, supra note 1, art 8.30(1).

212 Ibid.

213 IBA Guidelines on Conflicts of Interest, online: <http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx>.

214 That said, arbitral institutions look to the IBA Guidelines in determining whether disclosures by arbitrators are automatically disqualifying, border-line requiring further inquiry, or acceptable/no conflict.

215 Blue Bank International & Trust (Barbados) Ltd v Bolivarian Republic of Venezuela, ICSID Case no ARB/12/20, Decision on the Parties Proposal to Disqualify a Majority of the Tribunal (12 November 2013) at para 68: “The Chairman notes that the Parties have referred to other sets of rules or guidelines in their arguments, such as the IBA Guidelines. While these rules or guidelines may serve as useful references, the Chairman is bound by the standard set forth in the ICSID Convention”; Abaclat and Others (Case formerly known as Giovanna a Beccara and Others) v Argentine Republic, ICSID Case no ARB/07/5, Decision on the Proposal to Disqualify a Majority of the Tribunal (4 February 2014) at para 78.

216 CETA, supra note 1, art 8.30(3):

217 Ibid, art 8.30 (2).

218 Ibid, art 8.23(2).

219 CETA Report, supra note 107.

220 CETA, supra note 1, art 8.30(3).

221 Ibid, art 8.30(4).

222 Ibid, art 8.31(1). The use of the word “Tribunal” in art 8.31(1), rather than the “Tribunal and Appellate Tribunal” makes it unclear whether the appellate tribunal must also be guided by the Vienna Convention on the Law of Treaties, 23 May 1969, 1155 UNTS 331, and other rules and principles of international law in interpreting the provisions of this agreement. “Tribunal” is defined at the start of the Investment Chapter as only “a tribunal established under Arts. 8.27 or 8.43, not 8.28.”

223 NAFTA, supra note 27, art 1131 (governing law).

224 CETA, supra note 1, art 8.31(2).

225 Ibid.

226 CETA Report, supra note 107.

227 CETA, supra note 1, art 8.31(3).

228 CETA Report, supra note 107.

229 See, eg, US–Oman Free Trade Agreement, 19 January 2006, online: <http://www.ustr.gov/trade-agreements/free-trade-agreements/oman-fta/final-text> art 10.21.3(b): “[A] decision of the Joint Committee declaring its interpretation of a provision of this Agreement under Art. 19.2.3(b) (Joint Committee) shall be binding on a tribunal, and any decision or award issued by a tribunal must be consistent with that decision.”

230 ICSID Arbitration Rules, supra note 16, Rule 41(5): “Unless the parties have agreed to another expedited procedure for making preliminary objections, a party may, no later than 30 days after the constitution of the Tribunal, and in any event before the first session of the Tribunal, file an objection that a claim is manifestly without legal merit.” See also John R Crook, “ICSID’s Rule 41(5): Breakthrough or Backwater?” in N Jansen Calamita et al, eds, International Investment Law and Its Intersections and the Future of ICSID (2013) 211. The first dismissal under Rule 41 was in Global Trading Resource Corp v Ukraine, ICSID Case no ARB/09/11, Award (1 December 2010), online: <http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1771_En&caseId=C660>.

231 CAFTA-DR, supra note 35, is composed of the United States, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. Implementation dates, depending upon the country, ranged from 1 March 1 2006 through 1 January 2009.

232 US–Model Bilateral Investment Treaty (2012), art 28(4), online: <http://www.state.gov/documents/organization/188371.pdf>: “Without prejudice to a tribunal’s authority to address other objections as a preliminary question, a tribunal shall address and decide as a preliminary question any objection by the respondent that, as a matter of law, a claim submitted is not a claim for which an award in favor of the claimant may be made.”

233 The Trans-Pacific Partnership was signed in Auckland, New Zealand, in February 2016. The United States withdrew in January 2017. Trans-Pacific Partnership, 4 February 2016, online: <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/tpp-ptp/text-texte/toc-tdm.aspx?lang=eng> [TPP].

234 See, eg, Crook, supra note 230.

235 Methanex Corp v US, NAFTA/UNCITRAL, Final Award of the Tribunal on Jurisdiction and Merits, Part VI (3 August 2005): finding that the Tribunal lacked jurisdiction over any of the claims and, even if the tribunal had jurisdiction, the claims would have failed on the merits.

236 Methanex Corp v US, NAFTA/UNCITRAL, Partial Award (7 August 2002) at paras 109, 126 (quoting US submission), cited in the Non-Disputing State Party Submission of the US submission in Renco Group, Inc v Republic of Peru, ICSID Case no UNCT/13/1 (10 September 2014) at para 1, online: <http://www.state.gov/documents/organization/232051.pdf>.

237 CETA, supra note 1, art 8.32(1).

238 CETA Report, supra note 107.

239 CETA, supra note 1, art 8.33(1).

240 Ibid, art 8.33(2).

241 Ibid, art 8.33(3).

242 Ibid, art 8.32(6).

243 Ibid, art 8.32(5).

244 Ibid, art 8.33(4).

245 Aïssatou Diop, “Objection under Rule 41(5) of the ICSID Arbitration Rules” (2010) 25 ICSID Rev 2 at 328.

246 Trans-Global Petroleum, Inc v Jordan, ICSID Case no ARB/7/25, Decision on the Respondent’s Objection under Rule 41(5) of the ICSID Arbitration Rules (12 May 2008) at para 95.

247 Ibid at para 88.

248 CETA, supra note 1, art 8.35.

249 Ibid.

250 Ibid.

251 UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration, 17 March 2015, online: <http://www.uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-Transparency-E.pdf> [Transparency Rules].

252 N Jansen Calamita, “Dispute Settlement Transparency in Europe’s Evolving Investment Treaty Policy” (2014) 15 Journal of World Investment and Trade 645 at 672.

253 Metalclad Corporation v Mexico, ICSID Case no ARB(AF)/97/1, Decision on a Request by the Respondent for an Order Prohibiting the Claimant from Revealing Information (27 October 1997).

254 Methanex Corporation v United States, UNCITRAL, Decision of the Tribunal on Petitions from Third Persons to Intervene as Amicus Curiae (15 January 2001).

255 See, eg, Celine Levesque, “Influences on the Canadian FIPA Model and the US Model BIT: NAFTA Chapter 11 and Beyond” (2006) 44 CYIL 249.

256 CETA, supra note 1, art 8.36(2); Transparency Rules, supra note 251, art 3(1).

257 CETA, supra note 1, art 8.36(3); Transparency Rules, supra note 251, art 3(2).

258 CETA, supra note 1, art 8.36(4).

259 Ibid, art 8.36(5).

260 Ibid.

261 Ibid, art 8.36(6).

262 Ibid, art 8.37.

263 Ibid.

264 Ibid, art 8.38(1)(a).

265 Ibid, art 8.38(1)(b).

266 Ibid, art 8.38(1)(c).

267 Ibid, art 8.38(2).

268 Ibid, art 8.38(3).

269 Ibid, art 8.38(4).

270 NAFTA, supra note 27, art 1135(1).

271 CETA, supra note 1, arts 8.39(1), (2).

272 Ibid.

273 Ibid, art 8.39(3).

274 Ibid, art 8.39(4).

275 Ibid, art 8.39(5).

276 Ibid.

277 Ibid, art 8.39(6).

278 Ibid, art 8.39(7).

279 Ibid.

280 EC Fact Sheet, supra note 13.

281 ICSID Annual Report (2015) at 31, online: <https://icsid.worldbank.org/en/Pages/resources/ICSID-Annual-Report.aspx>. The 2016 annual report does not provide any update to this figure.

282 CETA, supra note 1, art 8.40.

283 NAFTA, supra note 27, art 1137(3) (receipts under insurance or guarantee contracts).

284 CETA, supra note 1, art 8.41(1).

285 Ibid, art 8.41(2).

286 Ibid, art 8.41(3)(a).

287 Ibid, art 8.41(3)(b).

288 ICSID Convention, supra note 4, art 54(1).

289 CETA, supra note 1, art. 8.41(4).

290 Ibid, art 8.41(5).

291 Ibid, art 8.41(6).

292 Ibid, art 8.42(1).

293 Ibid, art 8.42(2).

294 Ibid.

295 Ibid, art 8.43(1).

296 Ibid, art 8.43(2).

297 Ibid, art 8.43(3).

298 Ibid.

299 Ibid, art 8.43(4).

300 Ibid, art 8.43(5).

301 Ibid, art 8.43(6).

302 Ibid, art 8.43(7).

303 Ibid, art 8.43(8).

304 A specialized sub-committee of the Joint Committee.

305 Ibid, art 8.44(1).

306 Ibid, art 8.44(3)(a).

307 Ibid, art 8.44(3)(e).

308 Ibid, art 8.44(2).

309 Gus van Harten, ISDS in the Revised CETA: Positive Steps, But Is It a “Gold Standard”? CIGI Investor–State Arbitration Commentary Series no 6 (20 May 2016), online: <https://www.cigionline.org/publications/isds-revised-ceta-positive-steps-it-gold-standard>.

310 Reform of the IIA Regime: Four Paths of Action and a Way Forward, UNCTAD IIA Issues Note (June 2014), online: <http://unctad.org/en/PublicationsLibrary/webdiaepcb2014d6_en.pdf>.

311 CETA Report, supra note 107.

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Canadian Yearbook of International Law/Annuaire canadien de droit international
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