Does Canadian Law Provide Remedies Equivalent to NAFTA Chapter 11 Arbitration?

Investor-State Arbitration Series, Paper No. 4

May 27, 2016

It is often alleged that the provisions for investor-state arbitration (ISA) are not needed in international trade agreements to protect the interests of foreign investors in developed democracies because these countries possess well-established judicial systems where justice is given on an impartial basis by impartial judges. It is alleged that if foreign investors were to go to domestic courts, they would find all the remedies they require. To test this hypothesis, this paper looks at the situation in Canada. All 35 North American Free Trade Agreement (NAFTA) claims against Canada are considered with a view to determining whether Canadian courts would be empowered to award the same damages that might be awarded by an ad hoc arbitral tribunal, were the claimant to be successful. Somewhat surprisingly, damages fully equivalent to those that might be awarded by a NAFTA tribunal would be available in only four cases. In many other cases, only administrative law remedies and no damages would be available. In some cases, no remedy would be available at all. This is due, in part, to the absence of property and contract guarantees in the Constitution of Canada. The result might well be different in other developed democracies.

Part of Series

Investor-State Arbitration

Launched in November 2014, this project addresses a central policy issue of contemporary international investment protection law: is investor-state arbitration (ISA) suitable between developed liberal democratic countries? The project reviews legal and policy reactions to ISAs taking place within these countries and summarizes the substantive grounds upon which claims are being made and their impact on public policy making by governments. The project reviews, critically assesses and critiques arguments made in favour and against the growing use of ISA between developed democracies — paying particular attention to Canada, the European Union, Japan, South Korea, the United States and Australia, where civil society groups and academic critics have come out against ISA.

About the Authors

Armand de Mestral is a senior fellow at CIGI. He is an expert in international economic law, and professor emeritus and Jean Monnet Chair in the Law of International Economic Integration at McGill University.

Robin Morgan is a 2016 graduate of the McGill Faculty of Law. Prior to studying law at McGill, he studied pure and applied sciences at Marianopolis College, where he received distinction in law and social justice and completed the honours science program.