Canada Introduces Modernized Model FIPA With Significant CETA Influence – International Law – Canada – Mondaq News Alerts

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On May 13, 2021, Canada announced the introduction of a modernized Foreign Investment Promotion and
Protection Agreement Model
("2021 Model
FIPA
"). According to Global Affairs Canada
("GAC"), this model will "help
provide a stable, rules-based investment environment for Canadian
businesses investing abroad and for foreign businesses investing in
Canada", while balancing "the interests of all
Canadians...so that the benefits of Canada's investment
agreements are shared broadly across society".

The changes follow on from extensive consultations with various
stakeholders conducted throughout 2019 and 2020. The changes also
mark the first comprehensive revision to Canada's model FIPA
since 2003-2004,1 at which time revisions largely
focused on Canada's experience in implementing the North America Free Trade
Agreement
's ("NAFTA")
investment chapter. Since that time, Canada's trade policy has
evolved substantially, with Canada entering into several milestone
trade agreements, namely the Canada-US-Mexico Agreement
("CUSMA"),2 or the "new NAFTA", the
Canada-EU Comprehensive Economic and Trade
Agreement
("CETA"),3 and
the Comprehensive and Progressive Trans-Pacific
Partnership
("CPTPP").4 Canada
has also recently solidified its trade relationship with the UK by
entering into the Canada-United Kingdom Trade Continuity
Agreement
("Trade Continuity
Agreement
"), which substantively replicates
CETA's provisions on a bilateral basis.5

As we discuss below, the 2021 Model FIPA represents several key
changes from the earlier model. These changes reflect case law
principles developed over the years and the lessons Canada has
learned from negotiations with key trade partners - in particular
with regards to the CETA. Overall, the 2021 Model FIPA provides
additional substantive clarity, granting investors with enhanced
certainty. Looking forward, we expect this model will help inform
Canada's upcoming negotiations with the UK. With the Trade
Continuity Agreement in force since April 1, 2021, Canada and the
UK now have less than one year to initiate negotiations for a new
bilateral trade agreement, which is hoped will be in place within
three years.6

The 2021 Model FIPA, Expropriation, and the "Right to
Regulate"

More precisely defined concept of indirect expropriation

To encourage investment and provide investors with certainty,
bilateral investment treaties have historically offered
compensation in exchange for expropriatory acts, which include the
outright physical seizure of property and other acts that
permanently destroy the economic value of the investment or deprive
the owner of its ability to meaningfully manage, use, or control
the investment.7 This right is not absolute and
States maintain a general "Police Power" to regulate in
the public interest. For example, the tribunal in SD Myers v.
Canada
noted that "[t]he general body of precedent
usually does not treat regulatory action as amounting to
expropriation".8

A question, therefore, arises regarding the criteria that should
be applied to identify an expropriatory act, especially where
indirect expropriation is concerned. Indeed, the distinction
between expropriatory and regulatory acts can be crucial for
investors, as both can significantly impair the financial value of
an investment, but only the former warrants compensation.

The 2004 Model FIPA, which precluded direct and indirect
expropriation "except for a public purpose, in accordance with
due process of law, in a non-discriminatory manner and on prompt,
adequate and effective compensation",9 provided minimal
guidance on the meaning of indirect expropriation: it merely
described this concept as "measures having an effect
equivalent to nationalization or expropriation".10
This was not unlike other bilateral investment treaties of a
similar era, such as NAFTA. NAFTA's article 1110 described
indirect expropriation as a "measure tantamount to
nationalization or expropriation".

Over time, arbitrators have assessed indirect expropriation by
considering, among other things, a measure's economic impact,
the extent to which the measure interferes with reasonable
investment-backed expectations, and a measure's nature, purpose
and character. For example, in Metalclad Corporation v. United
Mexican States
, the tribunal held that expropriation under
NAFTA includes not only "open, deliberate and acknowledged
takings of property". but also "covert or incidental
interference with the use of property which has the effect of
depriving the owner, in whole or in significant part, of the use or
reasonably-to-be-expected economic benefit of property even if not
necessarily to the obvious benefit of the host State".11

The 2021 Model FIPA reflects these principles, expanding on the
definition of indirect expropriation in the following manner:

An indirect expropriation under paragraph 1 may occur when a
measure or a series of measures of a Party has an effect equivalent
to direct expropriation without formal transfer of title or
outright seizure. A non-discriminatory measure of a Party that is
adopted and maintained in good faith to protect legitimate public
welfare objectives, such as health, safety and the environment,
does not constitute indirect expropriation, even if it has an
effect equivalent to direct expropriation. The determination of
whether a measure or a series of measures of a Party has an effect
equivalent to direct expropriation requires a case-by-case,
fact-based inquiry that shall consider:

(a) the economic impact of the measure or the series of
measures, although the sole fact that a measure or a series of
measures of a Party has an adverse effect on the economic value of
a covered investment does not establish that an indirect
expropriation has occurred;

(b) the duration of the measure or series of measures of a
Party;

(c) the extent to which the measure or the series of measures
interferes with distinct, reasonable investment-backed
expectations; and

(d) the character of the measure or the series of measures.12

Many recent treaties have taken a similar approach. For example,
this language is identical to that contained in the CPTPP's
article 9 and nearly identical to the CETA's Annex 8-A. The
2021 Model FIPA therefore is less of a sea change, and more a
re-affirmation of the position Canada has taken against an
expansive definition of indirect expropriation.

Investors must now be careful in how they frame any claims on
claims of indirect expropriation, and should make explicit
reference back to the heads of indirect expropriation set out in
the 2021 Model FIPA.

Codification of the "Right to Regulate"

Concerns regarding the ability of bilateral investment treaties
to interfere with a state's right to regulate in the public
interest, also known as the "Police Power" of the State,
are nothing novel. A 2016 report on investor-state dispute
settlement ("ISDS") in the CETA, which
was published by a group of non-profit organizations, sheds some
light on these concerns:

ICS [Investment Court System], an ISDS mechanism, gives foreign
corporations the ability to directly sue countries at international
tribunals for compensation over health, environmental, financial
and other domestic safeguards that they believe undermine their
rights. These investor-state lawsuits are decided by private
commercial arbitrators who are paid for each case they hear, with a
clear tendency to interpret the law in favour of investors.

ICS can prevent governments from acting in the public interest
both directly when a corporation sues a state, and indirectly by
discouraging legislation for fear of triggering a suit. Globally,
investors have challenged laws that protect public health such as
anti-smoking laws, bans on toxics and mining, requirements for
environmental impact assessments, and regulations relating to
hazardous waste, tax measures and fiscal policies.13

While this concern is somewhat overblown, given the case law
discussed above, Canada has been sensitive to these concerns. As
such, the 2021 Model FIPA provides and explicit guarantee that each
party maintains the right to regulate to achieve legitimate policy
objectives:

The Parties reaffirm the right of each Party to regulate within
its territory to achieve legitimate policy objectives, such as with
respect to the protection of the environment and addressing climate
change; social or consumer protection; or the promotion and
protection of health, safety, rights of Indigenous peoples, gender
equality, and cultural diversity.14

This update aligns with similar re-affirmations of the right to
regulate found in the CETA and the CPTPP,15 though the
efficacy of these provisions remains a subject of debate.16

The inclusion of the clause as an operative part of the 2021
Model FIPA is a strong indicator that Canada will be aggressive in
arguing its regulatory changes that negatively impact an investor
are as a result of such bona fide regulation. As such,
investors should make a special effort in underlining any potential
defects in such arguments. For example, arguing that regulations
are passed due to political, not public welfare, reasons; or that
regulations are not rationally connected with a bona fide
public welfare benefit (for example, bans on substances that are
scientifically safe, but which are subject of public fear or
mistrust).

Clarity on MFN slams the door on "treaty
shopping"

In a nutshell, most-favoured-nation or "MFN" clauses
prohibit discrimination; they generally ensure that investors and
investments are accorded treatment that is no less favourable than
that accorded to investors or investments of any other party or a
non-party in like circumstances, subject to prescribed exceptions.
For example, the 2021 Model FIPA's MFN provisions begin with
the following clause:

Each Party shall accord to an investor of the other Party
treatment no less favourable than that it accords, in like
circumstances, to investors of a non-Party with respect to the
establishment, acquisition, expansion, management, conduct,
operation and sale or other disposition of an investment in its
territory.17

Unfortunately, investors have relied upon (or attempted to rely
upon) MFN clause language to engage in a form of "treaty
shopping". This could be achieved by successfully arguing that
"treatment" includes not only the rights and advantages
directly granted to investors in the host country (e.g.,
tax exemptions and terms for accessing public procurement), but
also the rights and guarantees granted in host state bilateral
investment treaties with third countries.18 As such, an
investor could cherry-pick the protections and procedures available
under any Canadian bilateral investment treaty.

Treaty shopping attempts by investors have had varied results,
which has given rise to general uncertainty, with outcomes said to
be driven more by arbitral views than treaty language.19
Under NAFTA, the import of a substantive clause from another treaty
was never permitted. However, the issue of whether this was
permissible was never expressly resolved, notwithstanding repeated
efforts by claimants and lengthy responses by governments rejecting
such efforts.20ADF Group Inc. v. United
States of America
is just one example, in which the investor
attempted to import provisions from the U.S. trade agreements with
Albania and Estonia, without success.21

In the 2021 Model FIPA, the Canadian government has provided
clarity on its views on this issue, incorporating with the
following provisions:

The "treatment" referred to in paragraphs 1 and 2 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
this Article, absent measures adopted or maintained by a Party
pursuant to those obligations.22

Of note, this addition aligns with the CETA, which contains
nearly identical language,23 as well as with the CPTPP (but
only from a procedural perspective).24 For Canada, this
therefore serves as strict codification of principles that were
already long-standing. However, it shuts the door to investors who
are used to using this end-around from attempting the same with
Canada or its future partners.

More clearly defined minimum standards of treatment, premised
upon customary international law

A common provision in a bilateral investment treaty (or
investment protection chapter of a free trade agreement), is one
guaranteeing an investor a certain minimum standard of treatment.
Sometimes known as "fair and equitable treatment", such
provisions establish a "floor below which treatment of foreign
investors must not fall, even if a government were not acting in a
discriminatory manner".25 NAFTA, for example, provided
that "[e]ach Party shall accord to investments of investors of
another Party treatment in accordance with international law,
including fair and equitable treatment and full protection and
security".26

This particular obligation has been described as the most widely
invoked standard in investment treaty arbitration.27 It has also been
the subject of constant dispute. At one end of the spectrum, state
parties have claimed that the protection afforded by this clause is
merely the minimum standards set by customary international law; at
the other end of the spectrum, investors have claimed that its
scope extended to all international obligations of a state,
including treaty obligations.28

This has given rise to disputes where investors claim that
breaches of promises made to them in the course of inducing
investments amount to a breach of the fair and equitable treatment
obligations of a host country. These claims are most successful
where they arise from the realistic investment-backed expectations
of a foreign investor. This usually requires a specific promise,
made to the investor, for the purpose of an investment, and which
results in that investment being made.

States have since waged an unceasing war on trying to stamp out
this approach taken by several arbitral tribunals considering
bilateral investment treaty disputes. States continue to push for
arbitral tribunals to only accept the customary
international law standard - which requires shocking and egregious
behaviour on the part of the host country, not simply broken
promises.

Although the 2004 Model FIPA already included more clarity on
this issue than did NAFTA (i.e., by explicitly referencing
customary international law),29 the 2021 Model FIPA makes
Canada's position in this debate abundantly clear: that the
relevant minimum standard of treatment is that that of customary -
not conventional - international law. In particular, article 8
provides that a party only breaches this obligation if a measure
constitutes one of the following:

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

(b) fundamental breach of due process in judicial and
administrative proceedings;

(c) manifest arbitrariness;

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

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

(f) a failure to provide full protection and security.

Article 8 further provides that a "determination that there
has been a breach of another provision of this Agreement, or of a
separate international agreement, does not establish that there has
been a breach of this Article" and the "fact that a
measure breaches domestic law does not establish a breach of this
Article".

This article aligns very closely with the CETA's article
8.10, which contains an identical version of the above enumerated
list of conduct that will breach the standard, as well as
provisions confirming that breaches of separate international
agreements and domestic law do not constitute a breach. The CETA
additionally includes a provision regarding the fair and equitable
treatment obligation, which provides that "the Tribunal may
take into account whether a Party made a specific representation to
an investor to induce a covered investment, that created a
legitimate expectation, and upon which the investor relied in
deciding to make or maintain the covered investment, but that the
Party subsequently frustrated". The CPTPP also features
additional clarity on this issue, containing explicit reference to
customary international law and providing definitions for
"fair and equitable treatment" (i.e.,
justice/due process) and "full protection and security"
(i.e., police protection).30

Until there is extensive arbitral consideration of these terms,
it will be important for investors to keep a close watch on how
much tribunals rein themselves in on this point. Previous attempts
to use simple language akin to that found in the CPTPP
(i.e., limiting fair and equitable treatment to the
customary international law standard) have met with mixed success.
It also remains to be seen how an arbitral tribunal would consider
the concept of "manifest arbitrariness" and whether the
breach of promises and representations made with enough emphasis
and specificity could fall into that category.

Updated ISDS mechanism with built-in arbitrator code of
conduct

ISDS provisions minimize the risks associated with investing
abroad, as they provide investors with access to a neutral forum
for dispute settlement.

In recent years, Canada's free trade agreements have
featured highly divergent approaches to ISDS, in some cases
limiting recourse, while in others, expanding opportunities.
Differences may be attributed to Canada having less clout at the
negotiating table - in 2018, Canada's gross domestic product
was merely $1.7 trillion, which is dwarfed by the GDPs of the U.S.,
EU, and Japan of $20.5 trillion, $18.7 trillion, and $4.97
trillion, respectively.31 Alternatively, differences may
be the result of Canada's focus on competing trade priorities.
In any event, as Canada's historical approach to ISDS reflected
that of the U.S., we would certainly expect to see some degree of
change as Canada enters into agreements with other major trading
partners, working to diversify its sources of trade and minimize
its dependence on the U.S.

There is a public perception that Canada's experience with
ISDS has not always been the most positive. Under NAFTA, Canada was
the most frequent respondent to arbitrations pursued under Chapter
11 - between January 1, 1996 and December 31, 2017, Canada was both
sued more (a total of 41 times) and lost more than the U.S, which
famously never lost a Chapter 11 arbitration, and Mexico.
Collectively, these losses cost Canadian tax payers over $219
million, plus approximately $95 in legal fees.32 However, this
represents less than $15 million per year in costs, compared to the
certainty that these provisions provide to foreign investors, which
in turn spurs foreign investment in Canada. It should also be noted
that the majority of the compensation paid by Canada was in cases
where the dispute was settled, largely because the behaviour was
egregious and indefensible. As such, these fears are greatly
overblown, and represent fears and anxiety of globalization of
certain NGOs, rather than practical reality.

Bilateral investment treaties have long been criticized for
failing to provide benefits for all; and, as noted above, the ISDS
process has been criticized for lacking transparency, conferring
rights to foreign investors that are superior to those available to
domestic investors, and protecting investors' rights at the
expense of human rights, environmental sustainability, health,
labour protections, and Indigenous rights.33 To tackle these
concerns, Canada has adopted an inclusive approach to trade, which is
reflected in the 2021 Model FIPA with provisions generally ensuring
SMEs have better access to the benefits of the agreement,
addressing equality and diversity, and providing for Indigenous
peoples' rights and participation.34

Small claims & democratization of claims processes

Of particular note to SMEs is the 2021 Model FIPA's
"small claims"-like arbitration process for claims under
$10 million, which represents a lower-cost alternative to
traditional ISDS mechanisms.35 These mechanisms allow for
streamlined process and a slimmed down panel of a single arbitrator
(which helps both availability and cost, as parties are generally
responsible for arbitration costs). This opens up the process to
smaller entities that would otherwise be shut out of a process that
typically bears costs in the millions, which made these claims
impractical.

There is, however, a missed opportunity. While ISDS does,
generally, allow for "mass proceedings", proceedings
where a large number of defined and known claimants are
consolidated into a single claim brought through a single counsel,
it does not allow for "class proceedings". Such
proceedings would be reminiscent of class-action litigation - a
large group of defined but unknown investors, represented by a
representative putative litigant, claiming on behalf of the
class.

Class action litigation allows for small (usually individual)
claimants that otherwise would have neither the resources to bring
a claim nor the expected value to justify one, to still seek
compensation for an actionable wrong. There is no reason why a
bilateral investment treaty should not have a similar mechanism to
allow for individual investors to seek compensation for breaches
where their individual damage may be far too low to justify a
claim.

Such a mechanism would go a significant way to defusing one of
the common complaints of ISDS: that it is a mechanism put in place
to protect the interests of large multinational corporations.

Arbitrator code of conduct & panel composition

Another noteworthy revision to the ISDS provisions is the
inclusion of a mandatory arbitrator code of conduct, which is not
unlike the restrictive code of conduct that features in CETA.36
Among other things, this code of conduct requires arbitrators to
refrain, for the duration of the proceedings, "from acting as
counsel or party-appointed expert or witness in any pending or new
investment dispute under this Agreement or any other
international investment treaty
" (emphasis
added). Article 8.30 of CETA contains a nearly identical
restriction.

In addition to the code of conduct, arbitrators themselves would
be drawn from predefined panels that are to be selected by the
parties. The process for selecting arbitrators, and the
qualifications and preferences for such arbitrators, is again
analogous to those set out under CETA, and reflect a growing
preference by Canada for a codified and more judicial approach to
investor-state arbitration.

Transparency & third party participation

Finally, the 2021 Model FIPA adopts UNCITRAL's Rules on Transparency in Treaty-Based
Investor-State Arbitration
, which generally reflect a move
away from the previous norm, in which arbitrations were held in
private and in which interventions by third parties were rare. Now,
subject to certain exceptions, these Rules place emphasis on
transparency, providing that the large majority of documents
created in the course of a proceeding, including substantive
submissions and expert reports, are to be made public.

These Rules also govern the applicable procedures for
submissions by third parties, which may be permitted taking into
account whether a third party has a "significant
interest" in the proceedings and the extent to which their
submission would assist the arbitral tribunal in the determination
of a factual or legal issue related to the proceedings.

These changes again reflect the consistent pattern of the
Canadian government to push ISDS mechanisms towards a more
democratic approach more similar to the common law court system
than the ad hoc panel system of ages past. It also likely
represents the best case for maintaining the legitimacy of ISDS
mechanisms in the face of populist attack from both the left and
right.

Conclusions

The 2021 Model FIPA represents a codification of the lessons
learned by Canada over nearly two decades since its last major
overhaul. While none of the changes are truly shocking to those
that followed the ongoing case law in this space, it is nonetheless
a strong embrace of reform of the ISDS system at the core of our
bilateral investment treaties. It will be important to see how
other countries, particularly large countries with strong
preferences of their own (such as the UK) react and if they are
open to the more State-friendly terms of the 2021 Model FIPA. It
will also be interesting to see whether Canada seeks to go back to
its existing bilateral investment treaty partners to modernize or
otherwise amend existing agreements to implement the new
framework.

Footnotes

1. The
2004 Model FIPA is available at: https://web.archive.org/web/20060513180648/http:/www.dfait-maeci.gc.ca/tna-nac/documents/2004-FIPA-model-en.pdf.

2.
Entered into force on July 1, 2020.

3.
Entered into provisional force on September 21, 2017; will take
full effect once all EU member states have formally ratified it.
See our previous article for background on
CETA.

4.
Entered into force on December 30, 2018. The CPTPP is currently in
force between Canada and six other countries in the Asia-Pacific
region: Australia, Japan, Mexico, New Zealand, Singapore, and
Vietnam. Once fully implemented, CPTPP will also include Brunei,
Chile, Malaysia and Peru. The CPTPP incorporates by reference a
majority of the provisions from the Trans-Pacific Partnership Agreement,
the negotiations for which the U.S. was a party.

5. Canada
and the UK entered into an interim trade agreement to hold the
parties over until a new bilateral trade agreement is reached. This
followed the UK's formal exit from the EU, which occurred on
January 31, 2020, one consequence of which was that CETA was to
cease in application as of January 1, 2021. The Trade Continuity
Agreement was concluded on December 9, 2020 to "maintain the
status quo". See Government of Canada, "Canada-UK Trade
Continuity Agreement (Canada-UK TCA) - Economic Impact
Assessment" (December 8, 2020), online: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cuktca-acccru/economic_impact_assessment-evaluation_impact_economique.aspx?lang=eng.

6.
Ibid.

7.
UNCTAD, Expropriation: Series on International Investment
Agreements II
(2012), online: https://unctad.org/system/files/official-document/unctaddiaeia2011d7_en.pdf,
Executive Summary, xi.

8. SD
Myers v. Canada
, Partial Award (November 13, 2000), online: https://www.italaw.com/sites/default/files/case-documents/ita0747.pdf
at para. 281

9. 2004
Model FIPA, art. 13.

10.
Ibid.

11.
Metalclad Corporation v. United Mexican States, Award,
(August 30, 2000), online: https://www.italaw.com/sites/default/files/case-documents/ita0510.pdf
at para. 103. See also Methanex v. USA, Final Award
(August 3, 2005), online: https://www.italaw.com/sites/default/files/case-documents/ita0529.pdf,
part IV, chapter D, at para. 7(the tribunal acknowledges the
importance of commitments given by the regulating
government).

12.
2021 Model FIPA, art. 9(3).

13.
The Council of Canadians et al, Trading Away Democracy: How
CETA's Investor Protection Rules Could Result in a Boom of
Investor Claims Against Canada and the EU
(September 2016),
online: https://canadians.org/sites/default/files/publications/trading-away-1116.pdf.

14.
2021 Model FIPA, art. 3.

15.
See CUSMA, art. 14.16 ("Nothing in this Chapter shall be
construed to prevent a Party from adopting, maintaining, or
enforcing any measure otherwise consistent with this Chapter that
it considers appropriate to ensure that investment activity in its
territory is undertaken in a manner sensitive to environmental,
health, safety, or other regulatory objectives"); CETA, art.
8.9 ("For the purpose of this Chapter, the Parties reaffirm
their right to regulate within their territories to achieve
legitimate policy objectives, such as the protection of public
health, safety, the environment or public morals, social or
consumer protection or the promotion and protection of cultural
diversity"); and e.g., CPTPP, preamble
("REAFFIRM.the importance of preserving their right to
regulate in the public interest"). For more information on
other ways the CPTPP protects the right to regulate, see Government
of Canada, "How to read the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP)", online: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/chapter_summaries-sommaires_chapitres.aspx?lang=eng.

16.
See e.g., Canadian Centre for Policy Alternatives,
Making Sense of the CETA: An Analysis of the Final Text of the
Canada-European Union Comprehensive Economic and Trade
Agreement
(September 2014), online: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/09/making_sense_of_the_ceta_INVESTMENT_0.pdf
at 15 ("The 'right to regulate' is mentioned three
times in the agreement. In the preamble, the parties simply
'recognize that the CETA protects the right to regulate
("RECOGNIZING that the provisions of this Agreement preserve
the right to regulate.yet the text fails to clearly and
unequivocally confirm this right, especially in the investment
chapter").

17.
2021 Model FIPA, art. 6(1).

18.
International Institute for Sustainable Development, The
Most-Favoured National Clause in Investment Treaties: IISD Best
Practices Series
(February 2017), online: https://www.iisd.org/system/files/publications/mfn-most-favoured-nation-clause-best-practices-en.pdf
at 10.

19.
OECD, 4th Annual Conference on Investment Treaties:
Treaty Shopping and Tools for Treaty Reform
, "Agenda and
Conference Material", (March 12, 2018), online: https://www.oecd.org/daf/inv/investment-policy/4th-Annual-Conference-on-Investment-Treaties-agenda.pdf
at 10.

20.
Ibid. See e.g., Pope & Talbot Inc. v.
Government of Canada
, Eighth Submission of the United States
of America, online: https://2009-2017.state.gov/documents/organization/8252.pdf
at 9, in which the U.S. submits argues that "[the investor]
fundamentally misconstrues the nature of Article 1103's
provision for most-favored-nation treatment.Contrary to
[investor's] suggestion, Article 1103 addresses not the law
applicable in investor-state disputes, but the actual
'treatment' accorded with respect to an investment of
another Party as compared to that accorded to other foreign-owned
investments. Article 1103 is not a choice-of-law
clause".

21.
See International Centre for Settlement of Investment Disputes,
In the Matter of an Arbitration Under Chapter Eleven of the
North American Free Trade Agreement
between ADF Group Inc.
and United States of America
, Award, Case No. ARB(AF)/00/1
(January 9, 2003), online: https://www.italaw.com/sites/default/files/case-documents/ita0009.pdf
at paras. 193-198 ("The Investor's theory appears to be
two-fold. Firstly, the relevant provisions of the U.S.-Albania and
U.S.-Estonia treaties provide for treatment to Albanian and
Estonian investors and their investments in the United States that
is more favorable than the treatment given to U.S. investors and
their investments and (through the medium of Article 1103) to
Canadian investors and their investments, in the United States. The
treatment referred to by the Investor here consists of the U.S.
measures involved in the present case, which measures, according to
the Investor, would be inconsistent with the 'fair and
equitable treatment' and 'full protection and security'
clauses of the two treaties. Secondly, the pertinent provisions of
the two treaties provide for more favorable treatment than the
treatment available to the Claimant under the provisions of Article
1105(1) as interpreted in the FTC Interpretation of 31 July
2001").

22.
2021 Model FIPA, arts. 6(6)-(7).

23.
CETA, art. 8.7(4).

24.
CPTPP, art. 9.5 ("For greater certainty, the treatment
referred to in this Article does not encompass international
dispute resolution procedures or mechanisms, such as those included
in Section B (Investor-State Dispute
Settlement)").

25. See United Mexican States v. Metalclad
Corp
., 2001 BCSC 664
at paras. 60-61 [Metalclad],
citing S.D. Myers Inc. v. Government of Canada (13
November 2000) at para. 259.

26.
NAFTA, art. 1105.

27.
International Institute for Sustainable Development, Commentary
to the Draft Investment Chapter of the Canada-EU Comprehensive
Economic and Trade Agreement (CETA)
(May 2013), online: https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf
at 17.

28.
For an example of this debate, see generally Metalclad,
supra note 26 at paras. 62-76.

29.
See 2004 Model FIPA, art. 5.

30.
CUSMA, art. 14.6; CPTPP, art. 9.6.

31.
David A. Gantz, "Canada's Approaches to Investor State
Dispute Settlement: Addressing Divergencies among CETA, USMCA,
CPTPP and the Canada-China FIPA" (April 2020) Arizona Legal
Studies, Discussion Paper No. 20-13 at 2-3.

32.
Jerry J. Lai, "A Tale of Two Treaties: A Study of NAFTA and
the USMCA's Investor-State Dispute Settlement Mechanisms"
(2021), 35:2 Emory Intl' L. Rev. 259 at 262 at 274-275,
279.

33.
The Canadian government ran a public consultation. For more details
on the views expressed during the consultations, see Government of
Canada, "2019 Consultation report and FIPA review",
online: https://www.international.gc.ca/trade-commerce/consultations/fipa-apie/report-rapport.aspx?lang=eng.

34.
See e.g., 2021 Model FIPA, art. 30(1) ("[t]he
disputing parties are encouraged to consider greater diversity in
arbitrator appointments, including through the appointment of
women").

35.
2021 Model FIPA, Section F, "Expedited
Arbitration".

36.
CETA, Annex 29-B.

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