Canada, together with its North American Free Trade Agreement (NAFTA) partners the United States and Mexico, has responded to a variety of criticisms that have been levelled against Chapter 11, Part B, of NAFTA, which establishes the right of foreign investors from the three countries to claim damages by way of arbitration for alleged violations of Chapter 11, Part A. These responses have fallen short of actual amendment of NAFTA, but they have changed the way investor-state arbitration (ISA) is being practised by taking significant steps toward more transparent procedures. Canada and the United States have also made significant strides toward responding to criticisms of the substantive standards of protection of foreign investors by changing the drafting of their respective model bilateral investment treaty or foreign investment protection agreement and by incorporating different formulations of these standards in subsequent trade and investment treaties such as the Trans-Pacific Partnership Agreement. Canada’s acceptance in the Comprehensive Economic and Trade Agreement of the European Union’s proposal for a standing tribunal to replace ad hoc arbitration constitutes another significant response to the critics of ISA.

Part of Series

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.
  • 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.

  • Lukas Vanhonnaeker is a doctoral candidate at McGill University. He completed his bilingual (French/English) bachelor’s degree in law at the Facultés Universitaires Saint-Louis (Brussels, Belgium) in 2010 and his master’s degree in law at the Catholic University of Louvain, Belgium, in 2012.