That's the title of a new paper by Armand de Mestral and Robin Morgan. Here's the abstract:
It is often alleged that the provisions for investor-state arbitration (ISA) are not needed in international trade agreements to protect the interests of foreign investors in developed democracies because these countries possess well-established judicial systems where justice is given on an impartial basis by impartial judges. It is alleged that if foreign investors were to go to domestic courts, they would find all the remedies they require. To test this hypothesis, this paper looks at the situation in Canada. All 35 North American Free Trade Agreement (NAFTA) claims against Canada are considered with a view to determining whether Canadian courts would be empowered to award the same damages that might be awarded by an ad hoc arbitral tribunal, were the claimant to be successful. Somewhat surprisingly, damages fully equivalent to those that might be awarded by a NAFTA tribunal would be available in only four cases. In many other cases, only administrative law remedies and no damages would be available. In some cases, no remedy would be available at all. This is due, in part, to the absence of property and contract guarantees in the Constitution of Canada. The result might well be different in other developed democracies.
And this is from the paper:
The conclusion based on the above findings is self-evident: Canadian law does not generally provide foreign investors with remedies equivalent to those provided for under Chapter 11. Indeed, only 8.6 percent of the Chapter 11 disputes would have an arguable remedy for damages equivalent to those under Chapter 11, while only a total of 17.2 percent of disputes would have an arguable case for any damages whatsoever, whether equivalent or partial. There are two primary reasons for these findings concerning remedies under Canadian law. First, both provincial and federal governments in Canada have broad powers to expropriate. Quite simply, if the government decides to expropriate without compensation, and makes this explicit in the expropriating act, it can do so. The second reason is a lack of constitutional protection for property rights, as well as the nonapplicability of equality and anti-discrimination safeguards to corporations under section 15 of the Canadian Charter. This, combined with the principle of parliamentary sovereignty, makes it such that legislative regimes challenged under Chapter 11 are perfectly valid under Canadian law unless they fall afoul of the separation of powers. Nevertheless, the analysis of Chapter 11 cases submitted against Canada indicates that in the great majority of cases there is no domestic remedy equivalent to one sought under Chapter 11.
This leads the authors to ask some good questions:
... Interestingly, the US model BIT includes a proviso that it does not give foreign investors more rights than they would have under domestic law. This is not language that Canada has adopted and this paper shows that foreign investors do in fact enjoy remedies under NAFTA Chapter 11 Part B that they would not enjoy in its absence. Should Canadians be concerned that their government has conceded special rights to foreign investors under Chapter 11, or should they be more concerned that their Constitution does not assure them the guarantees of property and contract enjoyed in the United States and Europe? ...
