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CCCA_V7No4_Dept-ForeignInvest-FIN_CCCA_V6No4 13-11-25 12:09 PM Page 11 International arbitration Canada ratifies World Bank’s treaty on investment disputes By Barry Leon and John Siwiec As its preamble states, the ICSID Convention focuses on “the need for international co-operation for economic n December 1, 2013, Canada As foreign investment became increas- development, and the role of private Obecame the 150th country to ing important to the global economy, and international investment” and “the possi- join the Convention on the Settlement of in particular to developing countries, this bility that from time to time disputes may Investment Disputes Between States and approach was seen as neither predictable arise in connection with such investment Nationals of Other States (“ICSID nor efficient. From the late 1950s, coun- between” a foreign investor and the state Convention”). Canada’s ratification of tries began negotiating treaties that pro- in which the foreign investor has invested. the Convention will reduce the risks to vide for direct claims by investors against The Convention provides a system for Canadian companies investing abroad host states. The dispute resolution mecha- investor-state dispute settlement by offer- and promote greater stability and pre- nism chosen in the treaties is internation- ing standard clauses, detailed procedural dictability for their investments. al arbitration. rules and institutional support. The Canadian investors abroad will have Convention states that “[t]he jurisdiction access to impartial binding arbitration ICSID Convention of the Centre shall extend to any legal through the International Centre for The ICSID Convention was developed in dispute arising directly out of an invest- Settlement of Investment Disputes the 1960s through the World Bank to de- ment, between a Contracting State (or (ICSID), a part of the World Bank Group, politicize the resolution of foreign invest- any constituent subdivision or agency of a to resolve their investment claims against ment disputes. The Convention, which Contracting State designated to the foreign host countries. ICSID is the lead- came into force in 1966, enables invest- Centre by that State) and a national of ing international institution for investor- ment claims to be brought in arbitration another Contracting State, which the par- state disputes. that is largely independent of state courts. ties to the dispute consent in writing to Investment claims arbitrated through submit to the Centre.” Growth of investment other arbitral institutions or under ad hoc The key benefit of ICSID is that each protection treaties rules are subject to greater recourse to member state is committed to recognize Prior to the advent of bilateral and multilat- state courts. as binding and enforce an ICSID arbitral eral treaties that give foreign investors stand- With the proliferation of investment award as if it were a final judgment of that ing to bring claims against the host state of treaties — now in excess of 2,500 — and state’s courts. ICSID awards are not open their investment if they are expropriated or the growth of claims against both devel- to appeal and are subject to limited review otherwise discriminated against, foreign oping and developed countries, ICSID only by a second ICSID tribunal, known VEER.COM investors had to rely on their home state to has become the primary method of arbi- as an ICSID annulment committee, rather trating claims. than by any state’s courts. take up their cause with the host state. HIVER 2013 CCCA Canadian Corporate Counsel Association 11