Canada will finally adopt the International Centre for
Settlement of Investment Disputes
("ICSID") convention as of December 1,
2013. The convention, which has been adopted by 150 other countries
including most of Canada's frequent trading partners, will have
significant impact on the arbitration of international contract
disputes between investors and foreign states.
Canada signed the ICSID convention in 2006, and adopted federal
legislation to implement it in March, 2008. However, each province
and territory was also required to adopt implementing legislation.
That process took five years.
What is the ICSID Convention?
The convention, established in 1966, provides a mechanism to
resolve international investment disputes between a signatory state
and individual investors of another contracting state through
settled and internationally enforceable arbitration provisions. The
convention has growing relevance in an increasingly global economy,
particularly since many modern international trade agreements (such
as NAFTA) give investors rights to sue foreign governments
Several of Canada's frequent trading partners have already
ratified the convention. Notable exceptions include Brazil, India,
South Africa and Mexico.
Significance of Ratification to Canadian Investors
The convention creates an autonomous and self-contained system
for the conduct of arbitration proceedings between signatory states
and foreign investors.
The convention will apply comprehensively to all elements of a
legal dispute arising out of an investment between a signatory
state and individual investors of another signatory state. It also
provides for the recognition and enforcement of any arbitral
awards; awards will be binding on any signatory state, and any
pecuniary obligations imposed will be enforced like a final
judgment of the state's domestic court. The convention requires
that all signatory states, whether or not parties to the dispute,
recognize and enforce ICSID arbitral awards.
As of December 1, 2013, Canadians who invested in other ICSID
member states may, with the written consent of the parties to the
dispute or after the member state has exhausted local
administrative or judicial remedies, rely on the dispute settlement
process and the guaranteed enforcement of arbitral awards. Foreign
investors in Canada will also have reciprocal rights.
To learn more about the ICSID convention click here. For a full list of signatory
states click here.
Please contact any member of our Corporate and Commercial or
Litigation Law Groups to discuss this convention.
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