Chapter 11 of the North American Free Trade Agreement (NAFTA) deals with investor-state arbitration (ISA), which is a mechanism that allows an investor of a NAFTA country to pursue legal action against the government of another NAFTA country for allegedly breaching its investment obligations under the treaty. Instead of in national courts, these cases are dealt with behind closed doors by un-appointed arbitrators. Some feel that this private process is not ideal and unnecessary because domestic legal systems are robust enough to protect foreign investors. Others view this arbitration system as a beneficial way to de-politicize investment disputes, removing national courts — which could show bias in favor of their own nation — from the equation.
CIGI senior fellows Armand de Mestral and David Schneiderman explain the reasoning behind Chapter 11’s inclusion in the original NAFTA agreement, though they disagree on how to proceed with its renegotiation; one sees the benefits of ISA and encourages further enhancements, while the other believes that Chapter 11 should be repealed. Both, however, agree that that it is highly unlikely Canada, the United States or Mexico will walk away from the agreement entirely.