Settling international investment disputes has changed for Canadians. With the coming into force of the Settlement of International Investment Disputes Act (the Act) on November 1, 2013, Canada has now ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Convention). The Convention is a multilateral international treaty which entered into force on October 14, 1966, and which has now been ratified by 150 of its 158 signatory countries (as of November 1, 2013). This facilitates international investment by providing a mechanism for settling disputes between governments and foreign investors. Although Canada signed the Convention in 2006 and passed the Act in 2008, ratification was delayed until all provinces and territories also passed implementing legislation.
Ratification means that Canada can join the International Centre for Settlement of Investment Disputes (the Centre), established in Washington D.C. by the Convention under the auspices of the World Bank. Canadian international investors can now take advantage of this forum for the conciliation and arbitration of investment disputes between countries that are parties to the Convention (Contracting States) and investors who are nationals of other Contracting States. Consent of the parties is required and cannot be unilaterally withdrawn once given.
Arbitration and conciliation are presided over by tribunals chosen from panels of qualified arbitrators and conciliators with international investment expertise. Contracting States may each designate four representatives to sit on conciliation and arbitration panels.
Awards rendered by the tribunals are binding on Contracting States, and are not subject to appeal or other remedies, except those provided under the Convention. Parties are limited to requesting a supplementary decision or rectification of the award, as well as its annulment, interpretation or revision. The Act gives jurisdiction to Canada’s provincial superior courts to recognize and enforce awards, and prohibits them from awarding other remedies, making interim orders or determining a matter arbitrated under the Convention without agreement of the parties.
Negotiation confidentiality is protected. All statements, views, admissions, offers of settlement, reports or recommendations made during a conciliation proceeding are without prejudice. Accordingly, they may not be used in any other proceeding without the consent of the parties, including proceedings before a court, administrative tribunal or arbitrator.
The Centre is similarly given certain privileges and immunities. For example, conciliators and arbitrators have immunity from legal process and immigration restrictions in the course of their duties. The Centre is exempt from taxation and customs duties.
Canadian foreign investors will likely welcome ratification of the Convention, as it gives them a neutral, efficient and expert mechanism for international dispute resolution – an advantage where the alternative may be an unfamiliar and unpredictable legal system.