Canada: Canada Ratifies The ICSID Convention: Enhancing Legal Rights And Protections For Canadian Investments Abroad


If the effectiveness of any dispute-settlement process is to be measured by the existence of impartial and well-defined rules, finality of the outcome and enforceability of the decision, Canada's ratification on November 1, 2013, of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and its coming into effect on December 1, 2013, should be widely recognized as a watershed event for Canadian businesses investing overseas.

It has taken Canada almost 50 years to become a member of the ICSID Convention, and the recent ratification now makes Canada (as the 150th country) one of the last to do so. Very few countries in the world have not joined the ICSID Convention. Countries that have chosen not to do so include Cuba, Iran, North Korea and Russia. Others such as Bolivia, Ecuador and Venezuela, which became members several years ago, have since decided to denunciate their membership on the basis that the ICSID rules restrict their national sovereignty to deal as they wish with foreign investors.

The long delay in Canada's ratification is not due to any material reservation relating to the merits of ICSID membership, but rather can be attributed to Canada's federalist constitutional framework. Since the enforcement procedures for international arbitration awards rendered under the ICSID Convention must be implemented into law by provincial and territorial governments, unanimity between the federal government, on the one hand, and provincial and territorial governments, on the other hand, was required, before ratification could take place. This proved to be elusive for many years, with Alberta and Québec, in particular, withholding their consent, and latterly Québec being the remaining holdout.

The ICSID Convention

The 1965 ICSID Convention was established by the World Bank to facilitate investor-state arbitrations. It created for the first time an institutional framework and arbitration rules to resolve disputes between foreign investors and states by allowing foreign investors to launch arbitration proceedings directly against the host state in which they had made their investments. In doing so, it effectively rendered it unnecessary for foreign investors to petition their home country's government to engage in diplomatic protection and force resolution under public international law to secure redress for harmful measures taken by the host state against their investment.

During the first 30 years of the ICSID Convention, very few investment disputes were brought for resolution under it. This has since changed to a remarkable degree and, as of 1995, the number of cases being brought under the ICSID Convention has been rapidly increasing each year; just last year a record number of 50 investment disputes were filed with ICSID.

The growth in the number of cases is attributable to the use of ICSID arbitration clauses in investment contracts for dispute resolution, and due to the ever-increasing number of bilateral investment treaties that provide for resolution of disputes under the aegis of the ICSID Convention. For more information read Osler Update " Canada Revitalizes Program of Bilateral Trade and Investment Initiatives" (Spring 2007).

While most of Canada's foreign investment promotion and protection agreements (also known as bilateral investment treaties) already provide for the possibility of resort to ICSID (as does Chapter 11 of NAFTA), until Canada ratified the ICSID Convention, Canadian investors contemplating launching an investor-state arbitration were prevented from seeking the benefits of the ICSID Convention and its dispute resolution rules (instead they had to resort to the ICSID Additional Facility Rules or the UNCITRAL Rules, and had to rely on the 1958 New York Convention for enforcing awards).

Advantages of Arbitration under ICSID

There are several advantages to conducting investment dispute arbitrations under the ICSID Convention:

  • The arbitral awards issued under the ICSID Convention are binding and enforceable. All member states must enforce an ICSID award as if it were a final judgment of its national courts.
  • ICSID awards can only be challenged under the Convention's annulment procedure, which is a very limited review mechanism. National courts are not permitted to further review or set aside an ICSID award.
  • It provides institutional support to the parties, including lists of possible arbitrators, screening and registering arbitration requests, assisting in the constitution of arbitral tribunals and the conduct of proceedings.
  • Consent to ICSID arbitration cannot be unilaterally withdrawn by signatory states, and the investor can initiate the arbitration process so long as the host state of the investment is an ICSID member.
  • Mechanisms for avoiding frustration of proceedings are provided. For example, Art. 38 provides for the appointment of an arbitrator by the ICSID in case a party fails to do so, and Art. 45 assures that lack of cooperation by any party will not prevent the continuation of the proceedings.
  • Arbitration under ICSID is arguably less expensive because of the administrative support provided by the ICSID institution.

Finality and Enforceability

The fact that as of the end of 2012, approximately 60% of the 514 known investor-state treaty-based disputes were brought under this Convention bears witness to its considerable advantages over alternative processes.

The ICSID Convention is also more often than not used for resolving investment disputes arising out of investment contracts entered into by foreign investors with host states. For more information, read Osler Update, " Critical Elements for a Successful Global Investment Strategy: Advance Planning, Socially Responsible Behaviour, and Heeding Local and Community Interests."

Furthermore, the ICSID Convention's dispute resolution process is invoked by foreign investors in a wide variety of economic sectors that are dependent on stable foreign government economic policies and regulatory processes, including mining, oil and gas, electric power and other energy, banking and financial services, insurance, engineering and construction, broadcasting and communications, transportation, water delivery, sanitation and flood protection, agriculture, fishery and forestry, and tourism.

Among the above-enumerated advantages of using the ICSID Convention, its greatest advantages may likely be that it provides an institutional framework for the administration of international arbitrations (rather than the parties having to relying on an ad hoc process established by the chosen arbitrators), and that it leads to a much higher degree of finality and enforceability for the arbitration awards rendered.

The finality of the awards is achieved by requiring national courts of ICSID member countries to recognize them as final and binding on the issues disputed by the parties. This renders the awards immune from re-examination by any court or in any subsequent proceeding, except under the limited review process contemplated by the ICSID Convention.

Therefore, awards issued by tribunals constituted under the ICSID Convention cannot be vacated by national courts, unlike international commercial arbitration awards and investment-treaty-based arbitration awards issued by tribunals constituted under arbitration rules designed principally for commercial disputes and which can be judicially reviewed by national courts in the jurisdiction chosen by the parties as the "seat of arbitration" (albeit, on certain very limited grounds such as public policy or for grave procedural errors in the conduct of the arbitration). Instead, the national courts are bound by statutes incorporating the provisions of the Convention into local law to immediately enforce the awards as if they were final judgments of the particular country's courts. This immediate recognition of the award is accompanied by the court's assisting the successful party by having the assets of the losing party (including a country) attached if the monetary amount of the award is not paid.

The limited review process contemplated by the ICSID Convention is strictly prescribed and limited to interpretation, revision and annulment, and is done without the involvement of any national courts. Although the remedies for interpretation and revision can be considered by the same ICSID tribunal that issued the award, the annulment process – the most drastic of the procedures for review – requires the formation of a new ICSID tribunal to consider the prior issued award.

The annulment process is designed not to re-examine the merits of the award, but only to safeguard the integrity of the ICSID arbitration process. Therefore, a tribunal constituted to consider whether an award should be annulled can do so on extremely limited grounds, such as that the original tribunal was not properly constituted, the tribunal manifestly exceeded its powers, corruption by a tribunal member, serious departure from the fundamental procedural requirements or that the award failed to state the reasons on which it was based. As a result, only a handful of ICSID awards have been annulled in part or in whole.


Canada has been negotiating investment agreements with other countries vigorously over the last few years, especially following the implementation of the investment chapter within NAFTA. These investment agreements – known as Foreign Investment Promotion and Protection Agreements (FIPAs) – are bilateral investment treaties designed to promote and protect Canadian investments abroad.

They create the substantive legal rights and protections for Canadian investors in foreign countries, while also providing reciprocal rights for foreign investors investing in Canada. Generally, this means that Canadian investors investing in a foreign country that has signed a FIPA are accorded certain standards of treatment, including that they are to be treated by the host state no less favourably than domestic investors (known as national treatment) and foreign investors from other countries (most-favoured-nation treatment); they will not have their investments expropriated without adequate compensation; and they will not be subject to treatment lower than the international minimum standards.

Currently 24 Canadian FIPAs are in force. Canada has concluded negotiations with other countries for 13 other FIPAs that will come into effect as soon as they are signed and ratified, and continues to negotiate with additional countries to conclude 12 new FIPAs. Canada also provides for investment protection in many of its free trade agreements such as NAFTA and the recently concluded CETA (Comprehensive Economic and Trade Agreement, between Canada and the European Union). See the November 2013 Osler Corporate Review for more information.  

With the ratification of the ICSID Convention, Canada has added another level of protection for Canadian businesses investing overseas by ensuring that successful international arbitration awards are treated as final and are effectively enforced against unsuccessful host countries. The enforcement proceedings can take place in any of the currently 150 member countries of the ICSID Convention. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions