A Closer Look at Canada’s Imminent Accession to the ICSID Convention

Abstract

Canada appears to be on the verge of its long anticipated accession to the ICSID Convention. Accession will benefit Canadian investors abroad by giving them access to an arbitration process that is well known and specifically adapted for investor-state arbitration. Providing foreign investors in Canada with access to ICSID arbitration may also enhance international perceptions of Canada as a welcoming place to invest. In this short article we examine one other consequence of Canadian accession. ICSID arbitration avoids costly and time consuming judicial review of arbitral awards in investor-state cases. Only annulment of awards on very limited grounds is permitted. While such a limited review is likely to be attractive to investors, it will also curtail Canada’s ability to challenge investor-state awards against it, even those that are manifestly wrong or abhorrent to public policy. Though the real effect of the different review standard in ICSID arbitrations is hard to predict, the cases brought against Canada under NAFTA to date make clear that Canada must consider the impact of ICSID accession on its ability to challenge awards in investor-state arbitrations.

Keywords: Investment, International, Canada

JEL Classification: K33, K4, F02, F21