Abstract
This paper addresses two related questions: (1) does the experience of the three NAFTA Parties suggest that they would be more comfortable with a court structure replacing arbitration and (2) does this reflect the discomfort of developed democracies with investor-state arbitration (ISA)? To answer these questions the paper examines the experience of the three states Parties to NAFTA Chapter 11, the steps that they have taken over the years to change the procedure or interpretation of Chapter 11, the evolution of their Model BITs, other investment treaty practice and the extent to which they appear to have embraced the European Union’s call for some form of standing foreign investment tribunal to replace investor-state arbitration.
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Notes
- 1.
Gantz (2017), pp. 236–237.
- 2.
Id., at 236 (“Including Chapter 11 in NAFTA was (…) not a radical move for the United States. The sources were the United States-Canada Free Trade Agreement (for the obligations to the investor), various U.S. BITs, and the 1992 ‘model’ BIT (for ISDS).” [footnote omitted]).
- 3.
For NAFTA Chapter 11 claims against Canada, see http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng (last accessed Feb. 21, 2020), for the US, see https://2009-2017.state.gov/s/l/c3741.htm and https://www.state.gov/cases-filed-against-the-united-states-of-america-5/ (last accessed Feb. 21, 2020) and for Mexico see https://2009-2017.state.gov/s/l/c3742.htm and https://www.state.gov/cases-filed-against-the-united-mexican-states/ (last accessed Feb. 21, 2020) (the website of the USTR was used for Mexico as no official website of the Mexican government lists the cases taken against Mexico).
- 4.
Ethyl Corporation v. The Government of Canada, UNCITRAL, Award on Jurisdiction, Jun. 24, 1998.
- 5.
S.D. Myers, Inc. v. Government of Canada, UNCITRAL, Second Partial Award, Oct. 21, 2002.
- 6.
Pope & Talbot Inc. v. Government of Canada, UNCITRAL, Award in Respect of Damages, May 31, 2002.
- 7.
Sun Belt Water, Inc., a United States company, served the Government of Canada with a “Notice of Intent to Submit a Claim to Arbitration” in November 1998. No valid claim has been filed.
- 8.
Dow AgroSciences LLC v. Government of Canada, UNCITRAL, settled.
- 9.
Windstream Energy LLC v. Government of Canada, PCA Case No. 2013-22, Award, Sept. 27, 2016.
- 10.
See Canada—Certain Measures Affecting the renewable Energy Generation Sector, Case DS412 and Canada—Measures Relating to the Feed-in Tariff Program, Case DS426.
- 11.
Lone Pine Resources Inc. v. The Government of Canada, ICSID Case No. UNCT/15/2, Notice of Intent to Submit a Claim to Arbitration Under Chapter 11 of NAFTA, Nov. 8, 2012.
- 12.
AbitibiBowater Inc. v. The Government of Canada, UNCITRAL, Consent Award, Dec. 15, 2010.
- 13.
Mobil Investments Canada Inc. and Murphy Oil Corporation v. Canada, ICSID Case No. ARB(AF)/07/14, Award, Feb. 20, 2015.
- 14.
Eli Lilly and Company v. The Government of Canada, UNCITRAL, Case No. UNCT/14/2, Final Award, Mar. 16, 2017.
- 15.
United Parcel Service of America, Inc. v. The Government of Canada, UNCITRAL, Award on the Merits, May 24, 2007.
- 16.
William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware Inc. v. Government of Canada, UNCITRAL, PCA Case No. 2009-04, Award on Jurisdiction and Liability, Mar. 17, 2015.
- 17.
Court of Appeal for Ontario, The Council of Canadians, and Dale Clark, Deborah Bourque, and George Kuehnbaum on their own behalf and on behalf of all members of the Canadian Union of Postal Workers, and Bruce Porter on his own behalf and on behalf of all members of the Charter Committee on Poverty Issues v. Her Majesty The Queen in Right of Canada as represented by the Attorney General of Canada, Nov. 30, 2006, C43995.
- 18.
Schneiderman (1996), p. 499.
- 19.
See e.g. Sforza and Vallianatos (1998):
Ethyl Corporation’s $251 million lawsuit against a new Canadian environmental law should set off alarm bells throughout the public interest world. The suit, brought under the terms of the North American Free Trade Agreement, demonstrates the serious danger that present and future international economic pacts could pose to environmental regulations and other laws that protect the public.
- 20.
See e.g. Mann and von Moltke (1999).
- 21.
See e.g. Van Harten (2007).
- 22.
See supra note 18.
- 23.
See de Mestral and Morgan (2017).
- 24.
Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1, Award, Aug. 20, 2000.
- 25.
Supreme Court of British Columbia, The United Mexican States v. Metalclad Corporation, May 5, 2001, 2001 BCSC 664.
- 26.
The Loewen Group, Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB(AF)/98/3, Award, Jun. 26, 2003.
- 27.
See e.g. Rubins (2005), p. 1.
- 28.
Methanex Corporation v. United States of America, UNCITRAL, Final Award of the Tribunal on Jurisdiction and Merits, Aug. 3, 2005.
- 29.
See https://www.iisd.org/library/amicus-curiae-submissions-nafta-chapter-11-tribunal-methanex-corp-v-united-states-america (last accessed Feb. 21, 2020).
- 30.
See de Mestral (2013).
- 31.
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded Jun. 10, 1958, entered into force Jun. 7, 1959, 330 UNTS 38, 21 UST 2517, 7 ILM 1046 (1968).
- 32.
Canada became a party to the ICSID convention in 2013 (Canada signed the ICSID Convention on Dec. 15, 2006 and the Convention entered into force on Dec. 1, 2013) and Mexico became a party in 2018 (Mexico signed the ICSID Convention on Jan. 11, 2018). Thus the review committee procedure was not available in any of these Chapter 11 cases. See https://icsid.worldbank.org/en/Pages/about/Database-of-Member-States.aspx (last accessed Feb. 21, 2020).
- 33.
See supra note 3 and accompanying text.
- 34.
See below.
- 35.
Glamis Gold Ltd. v. The United States of America, UNCITRAL, Award, Jun. 8, 2009.
- 36.
See e.g. Been and Beauvais (2003), p. 30.
- 37.
See Gantz (2017), pp. 237 et seq.
- 38.
Id.
- 39.
See supra note 2.
- 40.
See Gantz (2017), pp. 249–252.
- 41.
See e.g. GAMI Investments, Inc. v. The Government of the United Mexican States, UNCITRAL, Final Award, Nov. 15, 2004; Cargill, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/05/2, Award, Sept. 18, 2009; Corn Products International, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/04/1, Award, Aug. 18, 2009; Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. The United Mexican States, ICSID Case No. ARB(AF)/04/5, Award Nov. 21, 2007.
- 42.
See e.g. Bayview Irrigation District et al. v. United Mexican States, ICSID Case No. ARB(AF)/05/1, Award, Jun. 19, 2007; Billy Joe Adams, Juan Alarcon, Roberto Alonzo et al. v. United Mexican States, UNCITRAL, discontinued; Metalclad, supra note 24; Waste Management, Inc. II v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Award, Apr. 30, 2004.
- 43.
See e.g. Fireman’s Fund Insurance Company v. The United Mexican States, ICSID Case No. ARB(AF)/02/1, Award, Jul. 17, 2006 and International Thunderbird Gaming Corporation v. The United Mexican States, UNCITRAL, Award, Jan. 26, 2006.
- 44.
See e.g. European Communities—Export Subsidies on Sugar, DS265, 266 and 283 and Mexico—Taxes on Soft Drinks, DS308.
- 45.
See https://www.nafta-sec-alena.org/Home/Dispute-Settlement/Decisions-and-Reports (last accessed Feb. 21, 2020).
- 46.
See Phippen (2017).
- 47.
See infra.
- 48.
See infra.
- 49.
Comprehensive Trade and Economic Agreement between Canada and the European Union (CETA), signed Oct. 30, 2016, provisionally entered into force.
- 50.
See infra.
- 51.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), signed Mar. 8, 2018, entered into force Dec. 30, 2018 (Canada, Australia, Japan, Mexico, New Zealand, and Singapore) and Jan. 14, 2019 (Vietnam).
- 52.
CETA, supra note 49, Chapter 8, Section F.
- 53.
North American Free Trade Agreement (NAFTA), concluded Dec. 17, 1992, entered into force Jan. 1, 1994, 32 ILM 289, 605 (1993), Art. 1131(2):
2. An interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section.
- 54.
In 1998, the Canadian government had already issued a paper suggesting the possibility of interpreting NAFTA Chapter 11 to permit enhanced transparency and the disclosure of information related to the nature of Chapter 11 claims. However, the NAFTA Parties could not reach a consensus as to whether it was necessary to act in respect of transparency (see VanDuzer (1999), p. 13).
- 55.
Highly mediatised cases included, against the US, Lowewen (supra note 26) and Methanex (supra note 28) and, against Canada, Pope & Talbot (supra note 6) and S.D. Myers (supra note 5).
- 56.
See NAFTA Free Trade Commission, North American Free Trade Agreement—Notes of Interpretation of Certain Chapter 11 Provisions, Jul. 31, 2001, http://www.international.gc.ca/ (last accessed Feb. 21, 2020).
- 57.
Office of the US Trade Representative, “NAFTA Commission Announces New Transparency Measures”, Oct. 7, 2003, https://ustr.gov/about-us/policy-offices/press-office/press-releases/archives/2003/october/nafta-commission-announces-new-transparen (last accessed Feb. 21, 2020).
- 58.
Statement of the NAFTA Free Trade Commission on Non-Disputing Party Participation, Oct. 7, 2003, http://www.naftaclaims.com/commissionfiles/Nondisputing-en.pdf (last accessed Feb. 21, 2020).
- 59.
Supra note 29.
- 60.
See NAFTA Free Trade Commission, North American Free Trade Agreement—Notes of Interpretation of Certain Chapter 11 Provisions, Jul. 31, 2001, http://www.international.gc.ca/ (last accessed Feb. 21, 2020).
- 61.
See infra.
- 62.
United States Department of State, “United States Concludes Review of Model Bilateral Investment Treaty”, Apr. 20, 2012, https://2009-2017.state.gov/r/pa/prs/ps/2012/04/188198.htm (last accessed Feb. 21, 2020).
- 63.
Treaty Between the Government of the United States of America and the Government of [Country] Concerning the Encouragement and Reciprocal Protection of Investment (2012), https://ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf (last accessed Feb. 21, 2020), Art. 28(10).
- 64.
Agreement Between the Government of Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments, signed Sept. 9, 2012, entered into force Jan. 10, 2014.
- 65.
Free Trade Agreement between Canada and Peru, signed May 29, 2008, entered into force Aug. 1, 2009.
- 66.
Free Trade Agreement between Canada and Colombia, signed Nov. 21, 2008, entered into force Aug. 15, 2011.
- 67.
Free Trade Agreement between Canada and Panama, signed May 14, 2010, entered into force Apr. 1, 2013.
- 68.
Free Trade Agreement between Canada and the Republic Honduras, signed Nov. 5, 2013, entered into force Oct. 1, 2014.
- 69.
Free Trade Agreement between Canada and the Republic of Korea, signed Sept. 22, 2014, entered into force Jan. 1, 2015.
- 70.
See e.g. Free Trade Agreement Between the United States of America and the Republic of Korea, signed Jun. 30, 2007, entered into force Mar. 15, 2012, Annex 11-D (“Possibility of a Bilateral Appellate Mechanism”), United States-Peru Trade Promotion Agreement, signed Apr. 12, 2006, entered into force Feb. 1, 2009, Annex 10-D (“Appellate Body or Similar Mechanism”), United States-Panama Trade Promotion Agreement, signed Jun. 28, 2007, entered into force Oct. 31, 2012, Annex 10-D (“Possibility of a Bilateral Appellate Mechanism”), Free Trade Agreement between Singapore and the United States of America, signed May 6, 2003, entered into force Jan. 1, 2004, Art. 15.19(10), Free Trade Agreement between the Kingdom of Morocco and the United States of America, signed Jun. 15, 2004, entered into force Jan. 1, 2006, Art. 10(19) and Annex 10-D (“Possibility of a Bilateral Appellate Mechanism”).
- 71.
See e.g. Canada-Korea FTA (supra note 69) Annex 8-E (“Possibility of a Bilateral Appellate Mechanism”) and CETA, supra note 49, Art. 8.28 (“Appellate Tribunal”).
- 72.
CETA, supra note 49, Art. 8.9.
- 73.
Id., Arts. 8.32 and 8.33.
- 74.
See id., Arts. 8.30 and 8.36.
- 75.
Early drafts of the CETA’s investment chapter were made public on Nov. 21, 2013 and on Sept. 26, 2014.
- 76.
Hübner et al. (2016), p. 30.
- 77.
CETA, supra note 49, Chapter 8, Section F.
- 78.
McGregor (2016).
- 79.
Tapp (2017).
- 80.
Government of Canada (2017), para. 3:
Ministers are pleased to announce that they have agreed on the core elements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Ministers agreed to Annex I and II, which incorporate provisions of the TPP, with the exception of a limited set of provisions, which will be suspended. The annexes also incorporate a list of four specific items on which substantial progress was made but consensus must be achieved prior to signing.
See Annex II—List of Suspended Provisions to the Trans-Pacific Partnership Ministerial Statement (supra note 80), para. 2:
2. Investment Agreement and Investment Authorisation (ISDS applies to these)
-
9.1 Definitions—suspend “investment agreement” and “investment authorisation” and associated Footnotes (5–11)
-
9.19.1 Submission of Claim to Arbitration—a(i) B and C; (b)(i) B and C (investment authorisation or investment agreement), chausette, footnote 31
-
9.19.2 Submission of Claim to Arbitration, footnote 32
-
9.19.3 Submission of Claim to Arbitration—(b)delete investment authorisation or investment agreement
-
9.22.5 Selection of Arbitrators
-
9.25.2 Governing Law
Annex 9-L Investment Agreements.
-
- 81.
See Office of the United States Trade Representative (2017).
- 82.
Free Trade Agreement Between Australia and the United States, signed May 18, 2004, entered into force Jan. 1, 2005.
- 83.
Agreement between the United States of America and the Hashemite Kingdom of Jordan on the establishment of a Free Trade Area, signed Nov. 24, 2000, entered into force Dec. 17, 2001. However, a BIT exists between Jordan and the US providing for ISA (Treaty Between the Government of the United States of America and the Government of the Hashemite Kingdom of Jordan concerning the encouragement and reciprocal protection of investment, signed Jul. 2, 1997, entered into force Jun. 12, 2003).
- 84.
Gantz (2017), pp. 246–247.
- 85.
See US-Singapore FTA, supra note 70, Art. 15.15.1(a)(i), Free Trade Agreement Between the Government of Chile and the Government of the United States of America, signed Jun. 6, 2003, entered into force Jan. 1, 2004, Art. 10.15(a)(i), US-Korea FTA, supra note 70, Art. 11.6.1(a).
- 86.
See supra.
- 87.
Bolen (2016).
- 88.
Trans-Pacific Partnership, https://ustr.gov/sites/default/files/TPP-Final-Text-Investment.pdf (last accessed Feb. 21, 2020), Draft Chapter 9—Investment, Section B.
- 89.
Gantz (2017), p. 252.
- 90.
The US withdrew from the negotiations of the TPP on Jan. 30, 2017. See https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/timeline_negotiations-chronologie_negociations.aspx?lang=eng (last accessed Feb. 21, 2020).
- 91.
Transatlantic Trade and Investment Partnership, Draft text on Trade in Services, Investment and E-Commerce, Sept. 2015, http://trade.ec.europa.eu/doclib/docs/2015/july/tradoc_153669.pdf (last accessed Feb. 21, 2020).
- 92.
Id., Chapter II—Investment, Section 3.
- 93.
See Office of the United States Trade Representative, “U.S.-EU Joint Report on T-TIP Progress to Date”, 2017, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/january/us-eu-joint-report-t-tip-progress-0 (last accessed Feb. 21, 2020):
We still have significant work to do to resolve our differences in several important areas of the negotiations, inter alia, (…) how best to achieve our shared objective of providing strong investor protection while preserving the right of governments to regulate, including with respect to dispute resolution mechanisms.
- 94.
See https://investmentpolicy.unctad.org/international-investment-agreements/countries/136/mexico (last accessed Feb. 21, 2020).
- 95.
Additional Protocol to the Framework Agreement of the Pacific Alliance, signed Feb. 10, 2014, entered into force May 1, 2016.
- 96.
Free Trade Agreement between the United Mexican States and the Republic of Panama, signed Apr. 3, 2014, entered into force Jul. 1, 2015.
- 97.
Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, concluded Mar. 18, 1965, entered into force Oct. 14, 1966.
- 98.
See https://icsid.worldbank.org/en/Pages/about/Database-of-Member-States.aspx (last accessed Feb. 21, 2020).
- 99.
Free Trade Agreement between Mexico and the European Union, draft Title on Investment and Trade in Services of April 2017, http://trade.ec.europa.eu/doclib/docs/2017/may/tradoc_155521.pdf (last accessed Feb. 21, 2020), Chapter II, Section C.
- 100.
European Commission (2014).
- 101.
de Mestral (2017).
- 102.
Energy Charter Treaty (ECT), concluded Dec. 17, 1994, entered into force Apr. 16, 1998, 2080 UNTS 95; 34 ILM 360 (1995).
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de Mestral, A., Vanhonnaeker, L. (2020). The North American Experience with Investor-State Arbitration: Does It Lead to a Permanent Investment Court?. In: Ünüvar, G., Lam, J., Dothan, S. (eds) Permanent Investment Courts. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/8165_2020_49
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