Canada and Investment Treaty Arbitration: Three Prominent Issues--ICSID Ratification, Constituent Subdivisions, and Health and Environmental Regulation

Barry Leon, Andrew McDougall, & John Siwiec1

This article addresses three issues regarding Canada’s experience with investor-state arbitration. The first issue concerns the fact that Canada has not ratified the ICSID Convention. While the advantages of ICSID membership seem clear, Canada has been unable to garner support from all of its provinces and territories before ratifying the treaty. The second issue relates to Canada’s federal structure and its obligations under investment treaty agreements. Increasingly, Canada has had to foot the bill for measures its provinces and territories have taken contrary to Canada’s obligations under NAFTA Chapter Eleven. Debate exists over who should ultimately be held to pay for damages awarded through investor-state arbitration in these instances. The third issue relates to how Canada has emerged as a leader in defending investment treaty claims relating to health and environmental protection regulation. Recent decisions involving Canada seem to indicate that a state’s investment treaty obligations should not impede its ability to regulate in the public interest. This article concludes that, although Canada has room to improve, Canada’s investment treaty system largely works.