The rogue state of Canada?

Who’s the bad boy of international arbitration? Well, the Argentine Republic, of course. And then the Bolivarian Republic. Followed to nobody’s surprise by Ecuador. But the country formerly known as Dominion is in the running: number six most sued according to the United Nations. That is deucedly odd, when you think about it.

What the hell? Canada? Well, Canada is a member of NAFTA, and Chapter 11 of NAFTA protects property rights. So when any level of government in Canada does something that an American or Mexican investor can credibly claim is tantamount to expropriation, they become vulnerable to arbitration.

Now Canada is about to ratify the Washington Convention, which would open up ICSID to its companies. In the way of Canada’s hyperfederalism, the hold-up is with provincial ratification. (In many ways, Canada is the European Union with elections and an army.) Given the country’s experience with NAFTA, there is some worry about the possibility that ICSID will overrule the country’s sovereignty.

These worries are overblown. The Washington Convention does not automatically open the way for foreign investors to go to arbitration. That requires either domestic enabling legislation or an investment treaty. What ICSID does do, is allow companies to enforce their judgments against third countries in Canadian courts. That is something that Canada’s myriad mining and petroleum companies will embrace.

Now, it also means that NAFTA arbitration decisions can be enforced around the globe ... but the fact of the matter is that Canada is a small country right next to the United States, and NAFTA decisions could already be enforced there. Giving French courts the same privilege is not going to change a whole lot. It also removes the ability of national courts to review arbitration decisions, but as a practical matter NAFTA had already removed that. Note that the Ontario Court of Appeal’s recent decision had to do with a case against Mexico.

In short, for those of you who worry about this sort of thing, Canada is already in deep with the big legal web of international property rights protection. (I like to call it the Empire, because it is cool and ironic.) Joining ICSID won’t change anything.

Comments

[Bernard Guerrero]

Ok, but why is your wife flashing a Latin Kings hand sign? Surely there has to be a gang that's a better embodiment of Canadian-ness? Moose Salvatrucha 13, maybe?

[Noel Maurer]

Hahahahahh hahahah hah! It was hard to find photos that combine the ideas of Canada and a rogue state. Cigars and booze with three old friends at a wedding and my wife representing --- both taken in Canada --- were all we could come up with.

[Bernard Guerrero]

On a mostly unrelated note, two (I think) somewhat different theories on Mexico. Your thoughts?:
http://www.washingtonpost.com/world/the_americas/in-mexicos-murder-city-the-war-appears-over/2012/08/19/aacab85e-e0a0-11e1-8d48-2b1243f34c85_story.html

http://www.washingtonpost.com/world/americas/el-chapo-wanted-drug-lord-grows-stronger-in-mexicos-sierra-madre/2011/10/14/gIQAfcUDNM_story.html