Investment Treaty Arbitration: Canada

Argentina (29 April 1993)

yes

yes

yes

yes

no

18-month domestic litigation requirement^[iv]

unrestricted

yes

Armenia (29 March 1999)

yes

yes

yes

yes

no

6 months

limited

yes

Barbados (17 January 1997)

yes

yes

yes

yes

no

6 months

limited

yes

Benin (12 May 2014)

yes

yes

yes

yes

no

90 days

limited

yes

Burkina Faso (11 October 2017)

yes

yes

yes

yes

no

180 days

limited except declaratory relief

yes

Cameroon (16 December 2016)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

China (01 October 2014)

yes

yes

yes

yes

no

idiosyncratic^[v]

limited^[vi]

yes

Costa Rica (29 September 1999)^[vii]

yes

yes

yes

yes

no

6 months

limited

yes

Côte D’Ivoire (14

December 2015)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Croatia (30 January 2001)

yes

yes

yes

yes

no

6 months

limited

yes

Czech Republic (22

January 2012)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Ecuador (06 June 1997)^[viii]

yes

yes

yes

yes

no

6 months

limited

yes

Egypt (03 November 1997)

yes

yes

yes

yes

no

6 months

limited

yes

Guinea (27 March 2017)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Honduras FTA (1 October 2014)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Hong Kong (6 September 2016)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Hungary (21 November 1993)

yes

yes

yes

yes

no

6 months

unrestricted

yes^[ix]

Jordan (14 December 2009)^[x]

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Kosovo (19 December 2018)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Kuwait (19 February 2014)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Latvia (24 November 2011)

yes

yes

yes

yes

no

6 months

limited

yes

Lebanon (19 June 1999)

yes

yes

yes

yes

no

6 months

limited

yes

Mali (8 June 2016)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Moldova (23 August 2019)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Mongolia (24 February 2017)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Nigeria (signed, not in force)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Panama (13 February 1998)

yes

yes

yes

yes

no

6 months

limited

yes

Philippines (13 November 1996)

yes

yes

yes

yes

no

6 months

limited

yes

Poland (22 November 1990)

yes

yes

yes

yes

no

6 months

unrestricted

Yes

Romania (23 November 2011

yes

yes

yes

yes

no

6 months

limited

yes

Russia (27 June 1991)^[xi]

yes

yes

yes

yes

no

6 months

unrestricted

yes

Senegal (5 August 2016)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Republic of Serbia (27 April 2015)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Slovak Republic (14 March 2012)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Tanzania (9 December 2013)

yes

yes

yes

yes

no

180 days

limited except declaratory relief

yes

Thailand (24 September 1998)

yes

yes

yes

yes

no

6 months

limited

yes

Trinidad & Tobago (08 July 1996)

yes

yes

yes

yes

no

6 months

limited

yes

Ukraine (24 July 1995)

yes

yes

yes

yes

no

6 months

limited

yes

Uruguay (2 June 1999)

yes

yes

yes

yes

no

6 months

limited

yes

Venezuela (28 January 1998

yes

yes

yes

yes

no

6 months

limited

yes

Canada–United States–Mexico Agreement (1 July 2020) (superseded NAFTA)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

only as between the United States and Mexico

European Union Comprehensive Economic and Trade Agreement (21 September 2017)

(provisional effect  but investment protection provisions suspended)

yes

yes

yes

yes

no

180 days

limited

yes

UK (1 April 2021) (rolls over most of CETA – provisional effect but investment protection provisions suspended)

yes

yes

yes

yes

no

180 days

limited

yes

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (30 December 2018)

yes

yes

yes

yes

no (provisions on submission of a claim to arbitration in relation to

an investment authorization or investment agreement are

suspended)

6 months

limited except declaratory relief

yes

Trans-Pacific Partnership (Signed, not in force)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Chile FTA (5 July 1997) (Amended 5 Feb 2019)

yes

yes

yes

yes

no

180 days

limited except declaratory relief

yes

Colombia FTA (15 August 2011)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Korea FTA (1 January 2015)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Panama FTA (1 April 2013)

yes

yes

yes

yes

no

90 days

limited except declaratory relief

yes

Peru FTA (1 August 2009)

yes

yes

yes

yes

no

6 months

limited except declaratory relief

yes

Dual citizenship

Treatment of dual citizenship varies. The latest 2021 Model Foreign Investment Promotion and Protection Agreement (Model FIPA) relies on effective and dominant citizenship to invoke the BIT, as do several newer treaties (eg, Peru, Senegal, Serbia). Permanent residence is also subordinated to citizenship (2021 Model BIT, Korea, Honduras, Ivory Coast).

Other treaties have no mention of dual citizenship (eg, Argentina, Czech Republic, Hungary and Chile).

Yet others exclude dual nationals. Investors of these states cannot hold Canadian citizenship (eg, Armenia, Ecuador, Latvia, Panama, the Philippines, Thailand and Ukraine). For others, a mutual exclusion applies so that an investor cannot possess the citizenship of the other state (eg, Barbados, China and Costa Rica).

Finally, the Lebanon treaty considers dual citizens as Canadian citizens in Canada and Lebanese citizens in Lebanon.

Direct or indirect investment

All of Canada’s investment treaties define an ‘investment’ with some variations, such as describing what constitutes a qualifying indirect investment (eg, ‘…any kind of asset owned or controlled either directly, or indirectly…’)

Indirect control of assets/enterprises

In general, most if not all Canadian treaties apply to investments controlled indirectly by an investor of a contracting state.

Certain treaties expressly address this issue. In some treaties, an investment is covered if an investor controls the enterprise that owns the investment (eg, CETA and CUSMA, Benin, Ivory Coast, Croatia and Hong Kong).

In other treaties, investments made through an investor of a third state are also expressly covered (eg, China, Peru, Slovak Republic and Poland).

Eligible assets

Many treaties have a non-exhaustive list of eligible assets that count as investments (eg, Barbados – includes movable and immovable property and any related property rights, such as mortgages, liens or pledges).

Specified inclusions and peculiarities

Some Canadian treaties contain more unique provisions relating to qualifying investments, including:

• investments related to financial institutions (eg, Peru);
• investments relating to a loan to an enterprise (eg, CETA, China, Kosovo, Mongolia and Jordan);
• loan or debt security issued by a financial institution that is treated as regulatory capital by the party in whose territory the financial institution is located, (eg, Kosovo, Mali, Moldova, Nigeria, Senegal and CPTPP);
• Investments as loans directly related to a specific investment (eg, Argentina);
• investments that have changed in form requiring local approval (eg, Thailand); and
• investments relating to intellectual property rights specifically listed in the treaties (eg, Argentina, Benin, CETA, Chile, Hungary, Moldova, Mongolia, Peru, Russia, Tanzania and CPTPP).

Exceptions to what constitutes ‘investment ’in the 2021 Model FIPA

Investments shall involve the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. In this context, investment does not mean:

• a claim to money that arises solely from: (i) commercial contract for the sale of a good or service between nationals or enterprises (ii) the extension of credit in connection with a commercial transaction, such as trade financing; and
• an order or judgment in a judicial or administrative action.^[xi]

Principles of international law

Several of Canada’s treaties differ with respect to the application of the principles of international law in determining the scope of the FET standard, including:

• no reference to principles of international law at all in the treaty with Hungary;

• no stated requirement that FET treatment be ‘in accordance with principles of international law’ in the treaties with the Czech Republic, CETA, Peru, Romania, Slovak Republic, Colombia, Chile and Panama; and

• FET standard treatment limited to that required by the customary international law minimum standard of treatment of aliens in the treaties with the Benin, Chile, Czech Republic, Jordan, Kosovo, Kuwait, Latvia, Moldova, Peru, Romania, Slovak Republic, Tanzania, Chile, Colombia, Mongolia, NAFTA, Cameroon, Korea, Serbia, Honduras, Burkina Faso, China, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Serbia, Senegal and CUSMA and CPTPP. Specific content of the minimum standard may be subject to debate.

Due process

FET includes the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process in the treaty with Chile, Colombia, CETA, CUSMA, CPTPP and Korea.

Constrained Standard

Contrary to the common wording of many Freedom of Information and Protection of Privacy Act (FIPPAs), the CETA contains a list of six grounds that would constitute a breach of the obligation of FET. These have also been included in the 2021 Model FIPA:^[i]

‘(a) denial of justice in criminal, civil or administrative proceedings;

(b) fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings;

(c) manifest arbitrariness;

(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief;

(e) abusive treatment of investors, such as coercion, duress and harassment; or

(f) a breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with paragraph 3 of [article 8.10].’

Compensation for expropriation

Canada’s treaties use different language with respect to the calculation of compensation for expropriation, including: fair market value (FMV), market value and genuine value.

Treaties with China, Philippines, Thailand, Korea, CUSMA and CPTPP use FMV; treaties with Hungary use market value; and treaties with Argentina, Armenia, Ecuador, and more use genuine value.

Compensation payable (interest and applicable period)

Canada’s treaties have varied approaches regarding interest as it applies to compensation owed for the expropriation of an investment. For example:

• Lebanon: the interest rate is equivalent to the rate paid by the government of the territory where expropriation took place in its general borrowing;
• The Philippines: there is no mention of the applicable interest rate until payment;
• Russia: the compensation shall be made within two months of the date of expropriation.

Other treaties have different approaches.

Indirect expropriation

Most of Canada’s treaties cover ‘indirect expropriation’ by prohibiting measures tantamount to expropriation.

Certain treaties include an explicit reference to ‘indirect expropriation’, eg, CETA, CPTPP, CUSMA, Czech Republic, Hong Kong, Jordan, Kosovo, Peru, Romania and Tanzania.

Exceptions to expropriation

Certain Canadian treaties also include exceptions to expropriation, including:

• intellectual property rights related measures that are consistent with an international agreement to which both contracting parties are signatories are excluded in the treaty with China;
• intellectual property rights related measures that are consistent with World Trade Organization are excluded in the treaties with Benin, Jordan, Kosovo, Kuwait, Moldova, Peru, Tanzania, Chile, Colombia, Panama, NAFTA, Honduras, and Cameroon, Burkina Faso, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Senegal and Serbia; and
• Issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement in the CUSMA and CPTPP.

Review by a judicial authority

In certain treaties (eg, Panama, Honduras, Cameroon, and Korea) a Canadian 'judicial authority' is defined to include courts and 'any other competent administrative or quasi-judicial authority'.

Various treaties grant an affected investor the right to a prompt review by a judicial authority of the party making the expropriation (eg, Burkina Faso, China, Ivory Coast, Guinea, Kosovo, Mali, Nigeria and Senegal).

Taxation 

Specific conditions for bringing expropriation claims for taxation measures are set out in certain treaties (eg, CUSMA, CPTPP, CETA, Burkina Faso, China, Hong Kong, Kosovo, Mali, Moldova, Nigeria and Serbia).

Other, mostly older, BITs contain no separate taxation procedures (eg, Argentina, Chile, Czech Republic, Hungary, Poland, Russia and the Slovak Republic).

Scope of MFN treatment

Generally, Canadian treaties limit the scope of MFN or national treatment to claims regarding the management, use, enjoyment or disposal of investments and returns, although the 2021 Model FIPA expands this to include establishment, acquisition and expansion.

Common exceptions to MFN and national treatment

Several Canadian treaties contain common exceptions to MFN treatment (including exceptions regarding sectors, such as aviation and/or telecommunications sectors, and exceptions with respect of treaties signed after a certain date).

See, eg, Armenia, Barbados, China, CETA, CUSMA, Ecuador, Egypt, Latvia, Panama, South Africa, Ukraine, Venezuela, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria and Senegal.

Given the breadth of application, these common exceptions are set out in detail with reference to the Armenia treaty, as follows:

• Excludes MFN treatment to any existing or future bilateral or multilateral agreement: (a) establishing, strengthening or expanding a free trade area or customs union; (b) negotiated within the framework of the GATT or its successor organisation and liberalising trade in services; or (c) relating to: (i) aviation; (ii) telecommunications transport networks and telecommunications transport services; (iii) fisheries; (iv) maritime matters, including salvage; or (v) financial services; and
• Excludes national treatment to (a)(i) any existing non-conforming measures maintained within the territory of a contracting party; and (ii) any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government’s equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors; (b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); (c) an amendment to any non-conforming measure referred to in subparagraph (a), to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with those obligations; (d) the right of each contracting party to make or maintain exceptions within the sectors or matters listed in the Annex to this Agreement.

Specified exceptions related only to MFN treatment

Certain Canadian treaties contain other specific exceptions from MFN treatment, including:

• importation of dispute resolution mechanisms in another treaty (Maffezini-type claims^[1]) (eg, CETA, Cameroon, Chile, China and Peru);
• aviation, fisheries and maritime matters including salvage and any bilateral/multilateral agreement in force prior to 1 January 1994 (eg, Benin, Kuwait, Tanzania, Peru (FTA) and China);
• financial services (eg, Benin, Burkina Faso, Ivory Coast, Guinea and Mali);
• ownership of real estate by nationals of Arab States (eg, Lebanon);
• taxation (Thailand);
• current and future technical assistance and development aid programmes under any treaty (Mongolia);
• measures falling within article 5 of the TRIPS Agreement, or an exception to, or derogation from the National Treatment obligations or the obligations that are imposed by article 4 of TRIPS (CPTPP and CUSMA);
• existing or future treaties relating to road, rail and inland waterway transportation (eg Mali); and
• previously agreed bilateral or multilateral treaties, both in force or signed (eg, Burkina Faso, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Senegal and Serbia).

Other specified MFN and national treatment exceptions

Certain Canadian treaties contain other specific exceptions to MFN and national treatment, including:

• agreements that (i) establish a free trade area or customs union; (ii) liberalise trade in services; (iii) for mutual economic assistance, integration or cooperation; or (iv) relate to taxation (eg Armenia, Argentina, Hungary, Poland, Romania, Russia and Cameroon);
• with respect to CETA, (i) procurement by a party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is 'covered procurement' within the meaning of article 19.2 (Scope and coverage); or (ii) subsidies, or government support relating to trade in services, provided by a party;
• with respect to CPTPP, any treatment referred to does not encompass international dispute resolution procedures or mechanisms, such as those included Investor-State Dispute Settlement;
• with respect to CUSMA, any measure that is an exception to, or derogation from, the obligations under CUSMA article 14.12; any measure that a party adopts or maintains with respect to sectors, subsectors or activities, as set out in its Schedule to Annex I or II of CUSMA;
• certain treaties and measures with specified third states (eg, in the treaty with China: measures in respect of investors or investments of investors of Peru);
• civil aviation, real property, customs brokers, customs clerks, gambling, betting and lotteries in the treaty with Trinidad and Tobago;
• existing non-conforming measures (eg, Benin, Ivory Coast, Guinea, Hong Kong, Jordan, Kosovo, Moldova, Nigeria, Serbia and Tanzania)
• procurements, grants and subsidies (eg, Benin, Cameroon, Chile, China, Hong Kong, Jordan, Kuwait and Peru);
• review decisions under the Investment Canada Act (eg, Benin, Chile, Kuwait, Tanzania, Honduras and Korea);
• the rights or preferences provided to aboriginal peoples (eg, Burkina Faso, Ivory Coast, Guinea, Hong Kong, Kosovo, Mali, Moldova, Nigeria, Senegal and Serbia);
• adopting or maintaining non-conforming measures with respect to: maritime cabotage; licensing fishing or fishing-related activities including entry of foreign fishing vessels to Canada’s exclusive economic zone, territorial sea, internal waters or ports, and use of any services therein (eg Burkina Faso, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Senegal and Serbia).

Specified exceptions related only to national treatment

Certain Canadian treaties contain other specific exceptions relating only to national treatment, including:

• adopting or maintaining non-conforming measures with respect to: the rights or preferences provided to socially or economically disadvantaged minorities, residency requirements for ownership of oceanfront land, government securities, telecommunications services and the establishment or acquisition in Canada of an investment in the services sector (eg Burkina Faso, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Senegal and Serbia);
• acquisition of real estate situated within 10 kilometres of the borders; retail trade; provision of postal and telegraphic services; fishing for domestic sale; and broadcasting (eg, Panama);
• atomic agency; air transportation; overseas and coastal shipping; telephone/telegraph services; submarine cable services (eg, Croatia);
• business in agriculture, commerce and service as well as building construction and business in industry and handicrafts (eg, Thailand);
• enterprises in industries including nuclear, maritime, air transport, state budget financed sectors, salt extraction, rare earths extraction, television or radio and land (eg, Ukraine); are
• with respect to CUSMA and CPTPP, national treatment does not apply to any measure that falls within an exception to, or derogation from, the obligations that are imposed by the relevant article on National Treatment (CUSMA article 20.8; CPTPP article 18.8) or article 3 of the TRIPS Agreement.

Specified inclusions related to MFN and national treatment

Certain Canadian treaties contain specific inclusions for national and MFN treatment, including:

• in the treaty with Chile: the better of the treatment required under the Decree Law 600 of 1974 or the treaty;
• in the treaty with China: an expansion of national treatment only with respect to the expansion, management, conduct, operation and sale or other disposition of investment, not acquisition and new investment and only to sectors that do not require prior approval and subject to prescribed formalities and other information requirements. Intellectual property is included as long as it is consistent with international agreements to which both contracting states are parties.

Treaty shopping

Some of Canada’s investment treaties aim prevent or discourage ‘treaty shopping’ by accessing the provisions of other treaties through MFN.^[2]For example, article 8.7(4) CETA and articles 6(6) and 6(7) of the 2021 Model FIPA provide:

MFN ‘treatment’ does not include procedures for the resolution of investment disputes between investors and States provided for in other international investment treaties and other trade agreements. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute ‘treatment’, and thus cannot give rise to a breach of MFN treatment, absent measures adopted by a party pursuant to those obligations.

Full protection and security

All of Canada’s investment treaties feature ‘full protection and security’. Some of Canada’s more recent treaties and its 2021 Model FIPA clarify that full protection and security is limited to the physical security of investors and covered investments.   

Umbrella clauses specifically limited to particular uses

Canada’s investment treaties do not contain umbrella clauses. However, certain Canadian treaties contain limited umbrella clauses in respect of taxation measures that breach an agreement with an investor, by way of exception to the general tax carve-out (eg, Cameroon and Ecuador). 

Compensation in case of armed conflict/civil unrest

All of Canada’s treaties provide some measure of protection against armed conflict or civil unrest, and some include natural disasters, such as guaranteeing non-discriminatory treatment in respect of compensatory measures.

Examples of the types of events included in the scope of this protection include:

• ‘revolution and civil strife’ (eg, Argentina);
• ‘armed conflict, state of emergency or natural disaster’ (eg, CETA);
• ‘civil disturbance’ (eg, Czech Republic);
• ‘war, state of national emergency, revolt, insurrection or riot’ (eg, Tanzania); and
• ‘armed conflict, revolution, revolt, insurrection, riot, civil strife, a state of national emergency or natural disaster’ (eg, Hong Kong).

Denial of benefits

Canada’s newer FIPAs and FTAs include a denial of benefits clause that permits the disputing state to deny the application of the agreement to the investor if it is owned or controlled by an investor of a third State against whom the disputing party maintains sanctions or similar measures (eg, China).

Subject-matter exclusions

Most Canadian treaties include an exception for cultural industries, including publishing, newspapers, film, music, and radio. The exception applies either by exempting investments in a cultural industry (eg, Ecuador) or by providing that the treaty does not apply to measures relating to a cultural industry (eg, Cameroon).

Various treaties also include exclusions for environmental and other measures to protect human, animal or plant life or health (eg, China, Mali).

Limitations on indirect expropriation for environmental, health and safety measures

In addition to the subject matter exclusions, certain treaties clarify that indirect expropriation does not include non-discriminatory measures adopted in good faith to protect legitimate public welfare objectives such as health, safety and the environment, even if it has an effect equivalent to direct expropriation (eg, CETA, Kosovo, Moldova, 2021 Model FIPA).

Reviews under the Investment Canada Act

As noted above, certain treaties exempt Investment Canada Act reviews from national treatment and/or MFN. Other treaties, however, exempt such review from dispute resolution entirely (eg, Burkina Faso, Cameroon, China).

Taxation measures

Most Canadian treaties include a limited carve-out for taxation measures. In many cases, this provides for a particular process to be followed before a claim relating to a tax measure can be brought under the treaty.

For example, in certain treaties a claim cannot be brought under the treaty unless the tax authorities of the contracting States fail to reach a determination in respect of the impugned measures within a specified time (usually six months) (eg, Ecuador).

Other treaties limit claims about taxation measures to particular forms of treatment, such as expropriation (eg, China, Ecuador), MFN and national treatment (eg, Burkina Faso, Mali), or to particular taxes (eg, Cameroon).

Restriction on arbitrable matters

Certain Canadian treaties contain restrictions on arbitrable matters. For example:

• claims brought by financial institutions are restricted in various ways in certain treaties (eg, Benin, China, Jordan, Kosovo, Hong Kong, Latvia, Mongolia, Nigeria, Peru, Senegal and Tanzania); and
• claims based on new business enterprise permit decisions or on acquisition (or share of) of an existing enterprise (eg, Costa Rica and Croatia).

Fork in the road and waiver of local remedies

Canada’s treaties do not contain pure fork-in-the-road provisions. As noted in relation to the designations used in the Table at section I above, Canada’s earliest treaties contain no restrictions on access to the local courts of the host state and are thus shown as ‘Unrestricted’. Canada’s second generation of treaties typically provide that:

‘[a]n investor may submit a dispute as referred to in paragraph (1) to arbitration in accordance with paragraph (4) only if: (b) the investor has waived its right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind’.

An analogous requirement usually exists for cases where the claim is brought on behalf of an enterprise owned or controlled by the claimant investor that is incorporated under the law of the respondent state. These treaties are shown as ‘Limited’. Most of Canada’s recent treaties contain a similar provision but permit the claimant investor to initiate or continue proceedings for ‘injunctive, declaratory or other extraordinary relief, not involving the payment of damages’. These are shown as ‘Limited except for declaratory relief’.

Arbitrator appointment

Certain Canadian treaties explicitly specify the procedure for arbitrator appointment (eg, Benin, CETA, Chile, China, Ivory Coast, CPTPP, CUSMA, Hong Kong, Jordan, Kosovo and Peru). 

Choice of forum

Most of Canada’s investment treaties provide for ICSID (including Additional Facility) or UNCITRAL ad hoc arbitration, at the election of the disputing investor with some exceptions. Notably, certain treaties provide for other forums subject to agreement between the disputing or state parties (eg, Burkina Faso, Jordan, Kuwait, Peru).

Domestic requirement

The Costa Rica treaty provides that where Costa Rica is a respondent, there should be no prior judgment on the subject matter of the dispute rendered by a Costa Rican court.

Conditions precedent based on timing, notice and filing requirements exist in various other treaties, such as the treaties with Burkina Faso, Ivory Coast, Guinea, Hong Kong, Mali, Nigeria, Senegal and Serbia.

Notice periods

The majority of Canada’s treaties require advance notice or consultations prior to the submission of a claim to arbitration. There are several variations of this requirement, the details of which are reflected in the table in question 1.

Mandatory commencement

The Argentina treaty is the only treaty that has a mandatory commencement provision that triggers three months after written notification is issued using the UNCITRAL Rules.

Restriction on the type and timing of award 

Canada’s treaties generally address the type and timing of awards. For example, awards are generally restricted to covering issues of liability, the quantum of monetary damages and restitution of property, and the time limit for rendering an award is generally three years; punitive damages, although generally not considered recoverable, are expressly prohibited in the treaties with Benin, Burkina Faso, CETA, China, Ivory Coast, Guinea, Hong Kong, Jordan, Kosovo, Kuwait, Mali, Moldova, Mongolia, Nigeria, Peru, Senegal, Serbia, Tanzania, Chile, Colombia, Panama, Honduras, Korea, CPTPP and Cameroon.

Alternatives to arbitration

The 2021 Model FIPA[i] includes various alternatives to resolve an investment dispute without having recourse to arbitration, such as:

• mandatory consultations prior to submitting a claim;
• enhanced mediation provisions, which can suspend the arbitration process and deadlines at any point to allow the disputing parties to meaningfully engage without being pressed by competing arbitration timelines; and
• an extension of time-limits for submitting a claim to arbitration when the claimant is actively pursuing remedies under domestic laws.

Other key features include:

• Obligations for claimants to disclose third-party funding.
• Enhanced transparency provisions.
• The explicit right of tribunals to appoint their own experts on issues such as the rights of indigenous peoples, scientific matters and other factual issues.
• An encouragement for disputing parties to nominate women to tribunals.
• An arbitrator code of conduct to prevent conflicts of interest and ensure that they have appropriate qualifications.
• A consent-based expedited arbitration mechanism for claims under C$10 million.

A commitment to consider using a permanent first instance investment tribunal or an appellate mechanism, should it be developed under other institutional arrangements.

Office of the Deputy Attorney General of Canada

Justice Building
284 Wellington Street
Ottawa, Ontario
K1A 0H8
Canada

Global Affairs Canada and the Department of Justice

The Government of Canada’s Trade Law Bureau (JLT), a joint unit of Global Affairs Canada and the Department of Justice manage Canada’s investment treaty arbitrations.

Internal counsel: Trade Law Bureau (JLT), Global Affairs Canada and Justice Canada.

External counsel are generally not used.

Canada signed the ICSID Convention on 15 December 2006. The Canadian federal government passed the Settlement of International Investment Disputes Act, S.C. 2008, c.8 to ratify the ICSID Convention in March 2008. On 1 November 2013, Canada ratified the Convention and it entered into force on 1 December 2013. Quebec is the only province that has not adopted specific implementing legislation.

The New York Convention came into force in Canada on 10 August 1986 (ratified 12 May 1986) via the United Nations Foreign Arbitral Awards Convention Act, R.S.C., 1985, c. 16 (2nd Supp.). Canada declared, however, that the Convention applies only to differences arising out of commercial legal relationships, whether contractual or not. Each province and territory has separately enacted legislation adopting the Convention except Quebec, although Quebec’s Code of Civil Procedure 25.01 article 652 allows consideration of the New York Convention.

Federally, article 5(4) of the Commercial Arbitration Act, R.S.C., 1985, c. 17 (2nd Supp.) provides that Canada interprets the expression ‘commercial arbitration’ in article 1(1) of the attached Commercial Arbitration Code (based on the UNCITRAL Model Law) to include investment dispute claims under certain of its Free Trade Agreements (Colombia, Chile and Peru). Each provincial or territorial jurisdiction, with the exception of Quebec (although Quebec’s Code of Civil Procedure 25.01 article 649 allows consideration of the Model Law), has enacted legislation adopting the UNCITRAL Model Law (eg, British Columbia’s International Commercial Arbitration Act, R.S.B.C. 1996, c. 55). In March 2014, the Uniform Law Conference of Canada (ULCC) finalised a new Uniform International Commercial Arbitration Act, which the Provinces have been asked to consider adopting. The ULCC adopted the act on 1 December 2016 as the Uniform Arbitration Act (2016).

Generally, Canada is compliant. Canada unsuccessfully sought to set aside an adverse award made in favour of SD Myers Inc, pursuant to NAFTA Chapter 11 (Decision of the Federal Court rendered on 13 January 2004). On 2 May 2018, the Federal Court of Canada denied Canada’s application for the set aside of the Tribunal’s award in Bilcon of Delaware et al v Government of Canada, PCA Case No. 2009-04, issued on 17 March 2015. More recently, the Government of Canada unsuccessfully attempted to set aside the final award in this case in Canada (Attorney General) v Clayton, 2018 FC 436.

The government of Canada’s current attitude toward investment arbitration can best be described as ambivalent.  Canada agreed with the United States not to carry investment arbitration over from NAFTA to the CUSMA. Canada also agreed in the CETA with the European Union to replace traditional investment arbitration with a new model that features a standing “investment court” with an appellate body in place of ad hoc tribunals. Canada had suspended its negotiation for new investment treaties pending the finalisation of a new model FIPA, which was unveiled in 2021, and leaves traditional bilateral arbitration ISDS firmly in place. 

Canadian courts generally recognise and enforce investment arbitration awards, including when the application for review is made by the government of Canada (SD Myers Inc and Bilcon). In reviewing applications to set aside investment arbitration awards, provincial courts generally rule according to the criteria set out in provincial legislation implementing the New York Convention and/or the UNCITRAL Model Law (see, eg, Metalclad v Mexico, Bayview v Mexico, Cargill v Mexico and Feldman v Mexico). For an example of enforcement see Sistem v Kyrgyzstan.

Canadian courts have similarly been slow to set aside awards, even where one or more of the grounds set out in the UNCITRAL Model Law are established (see Popack v Lipszyc). Multiple courts have confirmed rights to interim relief, including worldwide Mareva injunctions (Sociedade de Fomento Industrial Private Limited v Pakistan Steel Mills Corporation (Private) Ltd; CE International Resources Holdings LLC v Yeap, SA Minerals Ltd Partnership and Tantalum Technology Inc).

More recently, large awards issued against states have been enforced in Ontario, including a C$1.2 billion award in favour of Crystallex International Corporation against Venezuela, although the application at the Superior Court level was unopposed by Venezuela. See also, SA Minerals Ltd. Partnership and Tantalum Technology Inc; China Citic Bank Corporation Limited v Yan; Stans Energy Corp v The Kyrgyz Republic; and Belokon v Kyrgyz Republic.

N/A

Export Development Canada (EDC)

EDC is Canada’s export credit agency supporting and developing export trade by providing insurance, among other services, to Canadian companies. Political risk insurance can cover up to 90 per cent of losses to investments caused by a broad range of risks resulting from unpredictable events (eg, breach of contract, creeping or outright expropriation, political violence, currency conversion or transfer, repossession, non-payment by a government).

Multilateral Investment Guarantee Agency (MIGA)

Canada is one of the 29 original members of MIGA. The MIGA Convention was ratified through the Bretton Woods and Related Agreements Act, R.S.C., 1985, B-7 (Schedule V) in Canada. With this multilateral political risk insurance for medium or long-term investments, Canadian citizens and entities may benefit from MIGA’s protection against the risks of transfer restriction (including inconvertibility), expropriation, war and civil disturbance, breach of contract and non-honouring of sovereign financial obligations. MIGA can also insure Canadian-funded investment through an investor of the host country.

Peter A Allard (Canada) v The Government of Barbados (Barbados-Canada FIPPA, UNCITRAL) – Award, 27 June 2016

Abitibi Bowater Inc v The Government of Canada (NAFTA, UNCITRAL) – Consent Award, 15 December 2010

ADF Group Inc v United States of America (NAFTA, ICSID Additional Facility) – Award, 9 January 2003

Air Canada v Bolivarian Republic of Venezuela (Canada–Venezuela FIPA, ICSID Additional Facility Case No. ARB(AF)/17/1) – Award, 13 September 2021

Alasdair Ross Anderson and others v Republic of Costa Rica (Canada–Costa Rica FIPPA, ICSID Additional Facility) – Award, 19 May 2010

Apotex Holdings Incand Apotex Inc v United States of America (NAFTA, ICSID Additional Facility) – Award, 25 August 2014

Apotex Inc v United States of America (NAFTA, UNCITRAL) – Award on jurisdiction and admissibility, 14 June 2013

Bear Creek Mining Corporation v Republic of Peru (Canada–Peru FTA, ICSID) – Award, 30 November 2017

Bilcon of Delaware et al v The Government of Canada (NAFTA, PCA Case No. 2009-04) – Award on Jurisdiction and Liability, 17 March 2015; Award set-aside application denied by Federal Court on 2 May 2018; Award on damages, 10 January 2019

Canfor Corporation v United States of America, Tembec et al v United States of America and Terminal Forest Products Ltd v United States of America (NAFTA, UNCITRAL) – Joint Order of the Costs of Arbitration and for the Termination of Certain Arbitral Proceedings, 19 July 2007

The Canadian Cattlemen for Fair Trade v United States of America (NAFTA, UNCITRAL) – Award on Jurisdiction, 28 January 2008

Chemtura Corporation v The Government of Canada (NAFTA, UNCITRAL) – Award, 2 August 2010

Copper Mesa Mining Corporation v Republic of Ecuador (Canada–Ecuador FIPPA, UNCITRAL) – Redacted Award 15 March 2016

Crystallex International Corporation v Bolivarian Republic of Venezuela (Canada–Venezuela FIPPA, ICSID Additional Facility) – Award, 4 April 2016

Detroit International Bridge Company v The Government of Canada (NAFTA, UNCITRAL) – Award on jurisdiction 2 April 2015; Award on costs 17 August 2015

Dow Agro Sciences LLC v The Government of Canada (NAFTA, UNCITRAL) – Settled on 25 May 2011

Eli Lilly and Company v The Government of Canada (NAFTA, UNCITRAL) – Award, 16 March 2017

EnCana Corporation v Republic of Ecuador (Canada–Ecuador FIPPA, UNCITRAL, Administered by LCIA) – Award, 3 February 2006

Ethyl Corporation v The Government of Canada (NAFTA, UNCTIRAL) – Award on Jurisdiction, 24 June 1998, settled

EuroGas Inc and Belmont Resources Inc v Slovak Republic (Canada–Slovak Republic FIPPA, ICSID Case No. ARB/14/14) – Award, 18 August 2017

Frontier Petroleum Services Ltd v Czech Republic (Canada–Czech and Slovak Federal Republic FIPPA, UNCITRAL) – Award 12 November 2010

Glamis Gold Ltd V United States of America (NAFTA, UNCITRAL) – Award, 8 June 2009

Global Telecom Holding SAE v Canada (Canada–Egypt FIPPA, ICSID Case No. ARB/16/16) – Award 27 March 2020

Gold Pool Limited Partnership v Republic of Kazakhstan (Canada– Russian Federation BIT, PCA Case No. 2016-23) – Award, 30 July 2020

Gold Reserve Inc v Bolivarian Republic of Venezuela (Canada–Venezuela FIPPA, ICSID Additional Facility) – Award, 22 September 2014; Decision issued on request for correction, 15 December 2014

Grand River Enterprises Six Nations Ltd, et al v United States of America (NAFTA, UNCITRAL) – Award, 12 January 2011

Hussein Nuaman Soufraki v United Arab Emirates (Italy–United Arab Emirates FIPPA, ICSID) – Annulment of Award, 5 June 2007

Infinito Gold Ltd v Republic of Costa Rica (Canada–Costa Rica FIPA, ICSID Case No. ARB/14/5) – Award, 3 June 2021(n.b. annulment proceedings currently stayed)

JML Heirs LLC and JM Longyear LLC v Canada (NAFTA) – Discontinued 26 June 2015

Lion Mexico Consolidated L.P. v United Mexican States (NAFTA, ICSID Case No. ARB(AF)/15/2); Award – 20 September 2021

The Loewen Group Inc and Raymond L Loewen v United States of America (NAFTA, ICSID Additional Facility) – Award, 26 June 2003; Supplementary Decision issued 13 September 2004

Melvin J Howard, Centurion Health Corp & Howard Family Trust v The Government of Canada (NAFTA, UNCITRAL) – Order For the Termination of the Proceedings and Award on Costs, 2 August 2010; Correction issued 9 August 2010

Mercer International Inc v Canada (NAFTA, ICSID) – Award, 6 March 2018; Decision on request for supplementary decision, 10 December 2018

Merrill & Ring Forestry LP v The Government of Canada (NAFTA, UNCITRAL) – Award, 31 March 2010

Mesa Power Group LLC v The Government of Canada (NAFTA, UNCITRAL) – Award, 24 March 2016; Correction to award, 1 June 2016; Decision of US Court for District of Columbia denying Mesa Power’s petition to vacate the award

Methanex Corporation v United States of America (NAFTA, UNCITRAL) – Award, 3 August 2005

Mobil Investments Inc and Murphy Oil Corporation v The Government of Canada (NAFTA, ICSID Case No. ARB(AF)/07/4) – Award, 20 February 2015

Mobil Investments Canada Inc and Murphy Oil Corporation v The Government of Canada (NAFTA, No. ARB/15/6) – Award, 4 February 2020

Mondev International Ltd v United States of America (NAFTA, ICSID Additional Facility) – Award, October 11, 2002

Nova Scotia Power Incorporated v Bolivian Republic of Venezuela (Canada–Venezuela FIPPA, ICSID Additional Facility) – Partial Award on Jurisdiction, 22 April 2010; Award, 30 April 2014

Pope & Talbot Inc v The Government of Canada (NAFTA, UNCITRAL) – Award, 31 May 2002 (on damages), 26 November 2002 (on costs)

Quadrant Pacific Growth Fund L.P. and Canasco Holdings Inc v Republic of Costa Rica (Canada-Costa Rica FIPPA, ICSID Additional Facility) – Discontinued, 27 October 2010

Rusoro Mining Ltd v Bolivarian Republic of Venezuela (Canada–Venezuela FIPPA, ICSID Additional Facility) – Award, 22 August 2016

SD Myers, Inc v The Government of Canada (NAFTA, UNCITRAL) – Partial Award (13 November 2000); Final Award, 30 December 2002

Saint Marys VCNA, LLC v Government of Canada (NAFTA) – Consent Award, 29 March 2013

TransCanada Corporation and TransCanada PipeLines Limited v The United States of America (NAFTA) – Discontinued, 24 March 2017

United Parcel Service of America Inc v The Government of Canada (NAFTA, UNCITRAL) – Award, June 11, 2007

Vannessa Ventures Ltd v Bolivarian Republic of Venezuela (Canada-Venezuela FIPPA, ICSID Additional Facility) – Award, 16 January 2013

Vito G Gallo v The Government of Canada (NAFTA, UNCITRAL) – Award, 15 September 2011

WalAm Energy Inc v Republic of Kenya (ICSID, ARB/15/7)

Westmoreland Mining Holdings LLC v Canada (ICSID Case No. UNCT/20/3)

Windstream Energy LLC v The Government of Canada (NAFTA, UNCITRAL) – Award, 27 September 2016

Aecon Construction Group Inc. (Canada) v The Republic of Ecuador (Canada–Ecuador FIPA, UNCITRAL), PCA Case 2020-19

Air Canada v Bolivarian Republic of Venezuela (Canada–Venezuela FIPPA, ICSID Additional Facility Case No. ARB(AF)/17/1)

Alhambra Resources Ltd and Alhambra Cooperatief U.A. v Republic of Kazakhstan (ICSID ARB/16/12)

Carlos Sastre and others Eco Oro Minerals Corp v Republic of Colombia (Canada–Colombia FTA United Mexican States (NAFTA, ICSID Case No. ARB/16/41UNCT/20/2)

Coropi Holdings Limited, Kalemegdan Investments Limited and Erinn Bernard Broshko v Republic of Serbia (BIT Canada - Serbia 2014, ICSID Case No. ARB/22/14)

Eco Oro Minerals Corp v Republic of Colombia (Canada–Colombia FTA, ICSID Case No. ARB/16/41)

Espiritu Santo Holdings, LP v United Mexican States (NAFTA, ICSID Case No. ARB/20/13)

First Majestic Silver Corp. v United Mexican States (NAFTA, ICSID Case No. ARB/21/14)

Gabriel Resources Ltd and Gabriel Resources (Jersey) v Romania (Canada–Romania FIPPA, ICSID Case No. ARB/15/31)

Galway Gold Inc v Republic of Colombia (Canada–Colombia FTA, ICSID Case No. ARB/18/13)

Geophysical Service Inc v Canada (NAFTA, UNCITRAL), Notice of Arbitration 18 April 2019

Gran Colombia Gold Corp v Republic of Colombia (Canada–Colombia FTA, ICSID Case No. Arb/18/23)

Infinito Gold Ltd v Republic of Costa Rica (Canada–Costa Rica FIPPA, ICSID Case No. ARB/14/5)

Koch Industries, Inc. and Koch Supply & Trading, LP v Canada (NAFTA, CUSMA, ICSID Case No. ARB/20/52)

Lion Mexico Consolidated LP v United Mexican States (NAFTA, ICSID Case No. ARB(AF)/15/2)

Lone Pine Resources Inc v The Government of Canada (NAFTA, UNCITRAL, ICSID Case No. UNCT/15/2)

Lupaka Gold Corp. v Republic of Peru (Canada–Peru FTA, ICSID Case No. ARB/20/46)

Montero Mining and Exploration Ltd v United Republic of Tanzania (Canada–Tanzania, ICSID Case No. ARB/21/6)

Rand Investments Ltd and others v Republic of Serbia (Canada-Serbia FIPPA, ICSID Case No. ARB/18/8)

Red Eagle Exploration Limited v Republic of Colombia (Canada-Colombia FTA, ICSID Case No. ARB/18/12)

Resolute Forest Products Inc v The Government of Canada (NAFTA, UNCITRAL, PCA Case No. 2016-13)

Sanitek S.a.r.l., Sari Haddad and Elias Doumet v Republic of Armenia (Canada–Armenia, ICSID Case No. ARB/21/17)

Spanish Solar 1 Limited and Spanish Solar 2 Limited v Kingdom of Spain (ICSID Case No. ARB/21/39)

TC Energy Corporation and TransCanada Pipelines Limited v United States of America (NAFTA, ICSID Case No. ARB/21/63)

Tennant Energy, LLC v The Government of Canada (NAFTA, UNCITRAL, PCA Case No. 2018-54)

CEN Biotech IncMercer International Inc v The Government of Canada (NAFTA)

Winshear Gold Corp v United Republic of Tanzania (ICSID Case No. ARB/20/25)

Westmoreland Mining Holdings LLC v Canada (ICSID Case No. UNCT/20/3)

Resolute Forest Products Inc v Government of Canada (UNCITRAL)

WalAm Energy Inc v Republic of Kenya (ICSID)