The Canadian Minister of International Trade and the Secretary
for Commerce and Economic Development of the Hong Kong Special
Administrative Region signed a Canada-Hong Kong foreign investment
promotion and protection agreement
(“FIPA”) on February 10, 2016. FIPA
sets out respective rights and reciprocal binding obligations for
Canada and Hong Kong, including non-discriminatory treatment,
minimum standard of treatment, commitments against unlawful
expropriation etc, and dispute resolutions rules. The objective of
FIPA is to provide a more transparent and predictable climate for
investors, ensure fair and equitable treatment, as well as promote
bilateral trade and investment between Canada and Hong Kong.
The negotiation of FIPA between Canada and Hong Kong began in
September 2014 and the conclusion of the negotiations was announced
on May 23, 2015. In fact, when compared to the negotiation of FIPA
between Canada and China, which lasted more than a decade (1994 -
2012), Canada and Hong Kong reached this agreement in a timely
manner. This promptness was undoubtedly due to their longstanding
relationship, their deep-rooted historical ties and the common
values they share, such as the respect of the rule of law and
individual freedom. In terms of trade, both Canada and Hong Kong
attach great importance to a free and open trade environment. Hong
Kong is also Canada's sixth largest export market and second
largest foreign direct investment destination in Asia.
The Canada-Hong Kong FIPA contains 37 articles and a number of
reservations and exceptions. The following are four of the key
obligations under the Canada-Hong Kong FIPA:
Investors from both Canada and Hong Kong must be treated no less
favourable than any other foreign country's investors, or any
domestic investors. Nevertheless, the expansion with respect to
certain sectors or industries from Hong Kong to Canada, or vice
versa, remains subject to a prior approval process or admission
requirements under applicable laws, such as, the Investment
Minimum standard of treatment; Both
Canada and Hong Kong must treat investors in accordance with the
customary international law minimum standard of treatment of
aliens, including fair and equitable treatment and full protection
Expropriations and Transfers; Neither
Canada nor Hong Kong may expropriate an investment, directly or
indirectly, except for a public purpose, in accordance with due
process of law, in a non-discriminatory manner and on payment of
full and prompt compensation. In addition, both Canada and Hong
Kong shall permit, in general, all transfers relating to an
investment, i.e. contributions to capital, to be made freely and
Dispute resolution; An investor may
submit a claim to arbitration, provided that the investor incurred
loss or damage by reason of the breach of a substantive obligation
by Canada or Hong Kong, and that the parties attempted to settle
the claim amicably through pre-arbitration consultations. The
arbitration will follow the United Nations Commission on
International Trade Law (UNCITRAL) rules.
Boost the Canada - Hong Kong
Bilateral Business Relationship
Canada and Hong Kong share longstanding political, commercial
and people-to-people ties, which facilitate and foster their
bilateral business relationship. In particular, Canada and Hong
Kong have both adopted the common law legal system and share a
similar business culture in terms of respect for contractual
obligations and intellectual property rights. In addition, both
Canada and Hong Kong attach great importance to judicial
independence, efficient public service and a free and open business
and trade environment.
The conclusion of the Canada-Hong Kong will benefit both
parties. On one hand, Canada's positive investment climate,
rich variety of natural resources, highly educated workforce, and
competitive fiscal regimes make it a dynamic and prosperous country
in which Hong Kong investors can invest, grow and expand their
businesses. On the other hand, Hong Kong is an ideal place for
Canadians to do business in Asia, because of its strategic
location, its combined advantages of the "one country, two
systems" arrangement, and its world-class business
infrastructure (logistics, communication etc.).
Although the Canada-Hong Kong FIPA has not yet entered into
force, its conclusion is a meaningful step forward in their
bilateral business relationship. With the reciprocal commitment to
provide most favorable, national, fair and equitable treatments to
investors, permit free transfers of funds, and to refrain from
unlawful expropriations, the Canada-Hong Kong FIPA will further
ensure certainty, the protection of investors, and ultimately
strengthen their robust bilateral trade and investment
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.
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