The TPP and Canada: ISDS cause for concern? Not really.

Last Week in the Globe and Mail, Lisa Sachs and Lise Johnson from the Columbia Center on Sustainable Development penned a piece warning Canadians of the many dangers of ISDS. A visitor from a planet in another galaxy might be surprised to learn after reading the article that, by some small miracle, despite ISDS’s 50+ years of existence democracy and the rule of law have not completely collapsed on Earth.

Let’s briefly skim through a few of Lisa and Lise’s assertions in the article and see where they may not be quite right.

investor-state dispute settlement (ISDS) mechanism that allows foreign investors to sue state parties for violating broad investor protections contained in the agreement.

This is true. But it’s also true that foreigners who come to Canada to do business already have the right to sue the government in a domestic court if they think they have been mistreated or had their rights violated. Every other person in Canada has the same right. This is judicial review and it is an uncontroversial reality in any democratic country. ISDS simply takes a familiar process into an international forum.

While Canadian governments have insisted that the tribunals have gotten it wrong on many issues, they have had little recourse.

This seems to allude to the lack of appellate mechanisms in the global investment treaty arbitration system, which is a fair point. There’s an argument to be made that standing appellate bodies may be a good idea and may help contribute to consistent jurisprudence (but whether consistency in ISDS is actually problematic is a whole other question meriting separate discussion).

It’s interesting, though, that Lisa and Lise go on to cite the recent Bilcon decision as being emblematic of all that is wrong with ISDS and yet conveniently ignore that Ottawa has sought review of the arbitral decision by the Federal Court of Canada. So much for having no recourse?

a forthcoming analysis shows that less than 20 per cent of the 34 claims filed against Canada under NAFTA would have any case for damages in domestic courts, and only half of those would have had an arguable case for the equivalent damages.

This may or may not be the case. But I think the more important question to ask in light of this is, if this is indeed the case, what does that say about the friendliness of Canada’s legal and regulatory environment to direct foreign investment?

Many of the concerns about how ISDS favours foreign investors over broader public interests are based on the increasing use of the “fair and equitable treatment” standard.

This is a standard that has been subject to intense levels of analysis in academic literature. Lisa and Lise characterize the principle as if it was invented out of thin air to give cover to big corporations to do whatever they want. In reality, it is a principle that has been intricately applied and developed over the years by arbitrators.


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