Investment Promotion and Protection in the Canada-UK Trade Relationship

46 Pages Posted: 19 Jan 2019

See all articles by Andrea Bjorklund

Andrea Bjorklund

McGill University - Faculty of Law

Y. Kryvoi

The British Institute of International and Comparative Law (BIICL)

Jean-Michel Marcoux

University of Victoria - Faculty of Law

Date Written: November 18, 2018

Abstract

A new investment agreement between Canada and the UK constitutes a crucial opportunity to include innovative provisions from recent international agreements and to explore new possibilities to construct a more legitimate regime. In order to support evidence-based decision-making in the negotiation of such an agreement, a comprehensive review of the range of opportunities must be provided. What are the provisions that can be included in an investment agreement between the two states to address controversial issues and support the reform of the international investment regime?

The objectives underlying the final report are to allow policy-makers to undertake the negotiation process with a clear sense of the various provisions that are available to address the most controversial issues of international investment law and their legal implications. The report demonstrates that an investment agreement can respond to legitimacy concerns raised by a variety of stakeholders. More specifically, it provides a side-by-side comparison of provisions that have already been included in IIAs and model agreements for three specific themes: 1) dispute settlement possibilities; 2) the breadth of investment protection; and 3) obligations imposed on foreign investors.

For each theme of the knowledge synthesis, the material that has been collected and analyzed is synthesized through a side-by-side comparison of provisions and their legal implications.

1. Dispute settlement possibilities: The mechanism allowing private investors to submit investment
claims to international arbitration has come under increasing public scrutiny, with several actors
criticizing its lack of legitimacy. Some policy-makers and negotiators have responded to these criticisms through various means. The report focuses particularly on six approaches that have been included in IIAs and model agreements. These approaches range from a reformed investor-state dispute settlement mechanism through the inclusion of new provisions, a return to diplomatic protection and state-to-state arbitration, reliance on domestic courts, alternative dispute resolution mechanisms, hybrid approaches, and an investment court system.

2. Breadth of investment protection: Addressing concerns raised by stakeholders can also be achieved by further clarifying the content of standards of protection that are traditionally included in IIAs. An enhanced level of precision is especially visible with respect to fair and equitable treatment (FET) and expropriation. Various options have been used by states to qualify FET provisions and to list the elements included in this standard of protection. Other provisions include a limiting definition of indirect expropriation or various forms of carve-outs, including for general regulatory measures.

3. Obligations imposed on foreign investors: With a view to countering the generally asymmetric nature of IIAs, some states have chosen to address foreign investors’ responsibilities in various ways. Some examples refer to these responsibilities in the preamble of an IIA or in provisions referring to the concept of corporate social responsibility. More constraining provisions impose direct obligations on foreign investors, call for an explicit consideration of the investment’s negative impact or deny substantive protection for investment made through corruption or other fraudulent means.

Keywords: International Investment Law, ICSID, ISDS, Investor-State Arbitration, UNCITRAL, UNCTAD, FDI, Brexit

JEL Classification: F21, K33, K40

Suggested Citation

Bjorklund, Andrea and Kryvoi, Yarik and Marcoux, Jean-Michel, Investment Promotion and Protection in the Canada-UK Trade Relationship (November 18, 2018). Available at SSRN: https://ssrn.com/abstract=3312617 or http://dx.doi.org/10.2139/ssrn.3312617

Andrea Bjorklund

McGill University - Faculty of Law ( email )

3644 Peel Street
Montreal H3A 1W9, Quebec
Canada
5143985372 (Phone)

Yarik Kryvoi (Contact Author)

The British Institute of International and Comparative Law (BIICL) ( email )

Charles Clore House
17 Russell Square
London, WC1B 5JP
United Kingdom

HOME PAGE: http://www.kryvoi.net

Jean-Michel Marcoux

University of Victoria - Faculty of Law ( email )

PO Box 2300, STN CSC
McGill at Ring Rds (Fraser Bldg)
Victoria, British Columbia V8W 3B1
Canada

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