国际经济法学刊（第20卷第4期）（2013）
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国际投资法

Comments on the Canada-China Bilateral Investment Treaty

Gus Van Harten[1]

The Canada-China bilateral investment treaty （BIT）——also known as a Foreign Investment Protection and Promotion Agreement （FIPPA）——was signed by Canada and China in September 2012 and ratified by China in February 2013.[2]Canada's federal government reportedly intended to ratify the treaty in or around November 2012; for unknown reasons, Canada has not yet ratified the treaty thus precluding its entry into force.[3]It is argued in this article that the treaty warrants closer scrutiny in both Canada and China and should not be permitted to enter into force. Aspects of the argument for more scrutiny are also relevant to future investment treaties contemplated by Canada or China and to the review of existing investment treaties.

This article reproduces concerns expressed by the author about the Canada-China treaty to decision-makers in Canada from October 2012. At the invitation of Chinese academic colleagues, some additional comments on the treaty, directed at a Chinese audience, are also provided in this article. The main proposition is that Canada and China should forego or withdraw steps taken toward ratification until the treaty and its investor-state arbitration mechanism have been assessed by a wider range of actors who are potentially affected by the treaty. At root, the treaty marks a significant further step in propagating a model of international governance that is flawed in principle and that appears problematic in practice due to a lack of independence, openness, and fairness in the decision-making process.

The article begins with comments made originally to a Canadian audience. The comments raised concerns about various aspects of the treaty including its exceptional duration relative to other trade and investment agreements concluded by Canada; Canada's capital-importing position and relative assumption of risk and liability in comparison to other investment treaties concluded by Canada; provisions in the treaty that bar public access to documents and proceedings; the absence of NAFTA-style reservations for provincial and other sub-national performance measures; the uncertainty and potential expansiveness of substantive standards in the treaty, such as fair and equitable treatment and indirect expropriation, as interpreted by investment treaty arbitrators; the very poor record of Canadian investors as claimants and the mixed record of Canada as respondent in investment treaty arbitration; the transfer of adjudicative authority over matters of constitutional significance in Canada to international arbitrators; and the federal government's lack of commitment on the public record to assume fiscal risks arising from the treaty for governments in Canada. These comments are followed by additional comments oriented to a Chinese audience. The additional comments focus on risks and liabilities assumed by China under the treaty; the obscure manner in which the treaty's most-favoured-nation obligation undermines moderating language in the treaty; and broader concerns about investor-state arbitration based on recent research into the exercise of discretionary power by the arbitrators. The article's brief conclusion emphasizes the basic imbalance in investor-state arbitration as a further reason not to consolidate this particular model of international adjudication.

I. Original comments to a Canadian audience

The following comments were provided to federal and provincial decision-makers and to the public in Canada in October 2012. The concerns are reproduced here with minor modifications. Although directed at a Canadian audience, various comments on the investor-state arbitration mechanism in the Canada-China treaty are cross-cutting because the effect of that mechanism is to privilege Canadian asset owners in China and Chinese asset owners in Canada at the expense of governments in general and at the expense of other actors whose interests may be adverse to those of a foreign investor or to the respondent state's national government. All footnotes have been added for the purposes of this article.

The legal consequences of the treaty will be irreversible by any Canadian court, legislature, or other decision-maker for 31 years after the treaty is given effect. The treaty has a 15-year minimum term, requires one year's notice prior to termination, and adds another 15 years of treaty coverage for assets that are Chinese-owned at the time of termination.[4]By contrast, NAFTA for example can be terminated on six months' notice.[5]

Other investment treaties concluded by Canada have a similar duration and, in this respect, are exceptional among modern treaties.[6]Yet none put Canada primarily in the capital-importing position and apply to a substantial volume of inward investment.[7]As such, the Canada-China treaty effectively concedes legislative and judicial elements of Canadian sovereignty in a way that other FIPPAs do not. Chinese asset-owners in Canada will be able, at their option, to challenge Canadian legislative, executive, or judicial decisions outside of the Canadian legal system and Canadian courts. This impact-both as a cost and as a benefit-is de jure reciprocal in that Canadian asset-owners in China will be able to bring similar challenges against China.

To elaborate, the treaty will likely be largely de facto non-reciprocal due to anticipated in-flows of Chinese investment to Canada outstripping Canadian investment in China.[8]The deal gives Cadillac legal status to Canadian investors in China and vice versa. Yet Canada will in principle be more exposed to claims and corresponding constraints as a result of the de facto non-reciprocity. Two awards of a billion dollars-plus, and many over ＄100 million, have been issued against countries to date under these treaties with more likely on the way.[9]The awards are immune from judicial review, largely or entirely, and are often extra-territorial depending on how the investor's lawyers frame the claim.[10]

Usually, the capital-importing position under these treaties is occupied by a developing or transition economy. Under the Canada-China treaty it is occupied by Canada. This poses a serious fiscal risk to Canada as well as China. Notably, to sue under the treaty, a foreign company requires only a minority share in any domestic enterprise or other asset in the host country. Based on interpretations by arbitrators in numerous cases[11], a foreign investor could obtain, or may already have obtained, ownership in Canadian assets via a holding company in a secrecy jurisdiction such as the Cayman Islands without losing its right to sue under the Canada-China treaty. What steps has your government taken to ensure that there is not now and will not be in future foreign-ownership of assets of which the government is unaware?

In terms of the fiscal risk, the only comparator among treaties concluded by Canada is NAFTA. Canada has been sued about 35 times under NAFTA Chapter 11 although many cases were minor.[12]Canada has paid out around ＄160 million in compensation in four cases to date.[13]Other countries have been ordered to pay much more. Canada's biggest loss apparently came last May in a claim by Mobil Oil/ Murphy Oil involving R&D expenditure requirements in the Hibernia and Terra Nova projects.[14]To my knowledge, a damages award has not yet been issued in that case although Canada was found by the arbitrators to have violated NAFTA. The decision reportedly undermined Canada's standard approach to reservations in investment treaties with potential implications for the Canada-China treaty. It is not possible to confirm this because Canada's federal government has not released the Mobil/ Murphy award against Canada in spite of its commitment to openness in these arbitrations.[15]

This heightens my concern that the federal government has, in the Canada-China treaty, retained the right not to release documents filed in Chinese investor lawsuits against Canada under the treaty if the government deems it not “in the public interest” to do so.[16]This is not consistent with longstanding Canadian government policy to make such documents, and the arbitration hearings, public as a matter of course. If the government intends to release the documents in any event, then why did it retain the right not to do so in the treaty? Other Canadian FIPPAs state very clearly that all of the documents will be made public.[17]

In terms of the fiscal risks, the Canada-China treaty goes beyond NAFTA in important respects and probably increases Canada's exposure to lawsuits under NAFTA itself on a non-reciprocal basis. Under NAFTA, the fiscal risk is contained by carve-outs of existing U.S. state and Canadian provincial measures from various NAFTA disciplines. The Canada-China treaty goes beyond NAFTA by extending a ban on performance requirements to existing provincial measures, including legislation.[18]This ban will extend to Canadian provincial treatment of U.S.-owned, as well as Chinese-owned, assets due to the most-favoured-nation requirement under NAFTA. However, Canadian investors in the U.S. will not receive reciprocal treatment in relation to U.S. state measures. This will likely frustrate the ability of any federal or provincial government to ensure that value-added benefits of resource exploitation in Canada accrue reasonably to Canadians.[19]Have you analyzed the risk-benefit comprehensively in light of all existing provincial measures?

Other legal protections that will be extended to Chinese investors under the treaty involve topics of expropriation and fair and equitable treatment, among others.[20]These concepts sound straightforward but arbitrators in many cases have taken them in unanticipated and investor-friendly directions by requiring public compensation for foreign firms whose “legitimate expectations” were not met by a government or who were denied a “stable regulatory framework” over the lifespan of an investment.[21]These arbitrator-made disciplines are far-reaching because they may preclude any changes to legislation that affect negatively a Chinese investor, without taxpayer compensation to the investor for its business losses. The possibility of the arbitrators reading such requirements into the Canada-China treaty adds to the fiscal risk and illustrates the concession of sovereignty under the treaty. So-called “stabilization clauses” are usually found in investment contracts signed with governments in developing or transition countries not in treaties agreed by Canada.[22]

The arbitration process itself is a long story. Briefly, it does a lot for the lawyers and arbitrators in the field, for investors from major capital-exporters, and for major multinationals able to entangle governments in never-ending legal contests of attrition, especially in the resource sector.[23]Philip Morris, for example, has used these mechanisms to attack public health measures in Australia and Uruguay.[24]On the other hand, the arbitration process does little for, and may harm, anyone else. Above all, the process is not judicial in the manner of domestic or international courts and thus not reliably independent.[25]

Canadian investors have never won compensation in any of their 16 known lawsuits against the U.S. and other countries under NAFTA and FIPPAs.[26]I have not heard this mentioned by the Canadian lawyers and arbitrators who champion these treaties. It may be that Canadian companies have benefited by their ability to pressure governments to settle disputes in cases that are not public but, if so, this reaffirms the danger that foreign investors will pressure governments to back away from laws or regulations without public knowledge.

Because the arbitrators under the Canada-China treaty operate outside of the authority of the domestic legal system and domestic courts, the treaty appears to contravene the judicature provisions of the Constitution concerning the role of the superior courts.[27]In various historical cases, the Supreme Court of Canada struck down legislation that contained broad privative clauses precluding review of tribunal decisions by the superior courts.[28]The treaty's transfer of judicial authority to arbitrators is analogous and, arguably, more far-reaching. Notably, the arbitrators may make non-monetary orders against states as well as issue damages awards for potentially massive amounts.[29]

The treaty clearly engages provincial powers on natural resources, taxation, land and property rights, and other matters. It applies to provincial legislation, regulations, or court or tribunal decisions that affect Chinese-owned assets, with limited exceptions.[30]It does not contain a NAFTA-style carve-out for provincial performance requirements[31]or any carve-outs for provincial measures regarding the treaty's expropriation and fair and equitable treatment provisions. Thus, there is a real possibility that, over the lifespan of the treaty, Canada will face billion dollar-plus awards due to provincial decisions that are not reviewable in Canadian courts. Does your government intend to assume the fiscal risk and have you obtained formal provincial consent for the proposed ratification of the treaty in light of its constitutional implications?[32]

This quote by one of the arbitrators emphasizes the significance of a decision to ratify this treaty, including its arbitration mechanism[33]:“When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all... Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.”

This treaty will have major implications for core elements of Canadian legislative and judicial sovereignty. It will tie the hands of all levels and branches of government in Canada in relation to any Chinese-owned asset in ways that many governments in Canada, I suspect, have not considered closely. The implications will be legally irreversible by any Canadian court or other decision-maker for at least 31 years.

Based on the above comments, it was urged that the federal government reconsider the decision to proceed with ratification of the Canada-China treaty, without provincial consent or a serious public debate, on or about 31 October 2012.

II. Additional comments oriented at a Chinese audience

It is not the purpose of this article to provide a comprehensive analysis of the Canada-China treaty from a Chinese perspective or of China's broader position in relation to investor-state arbitration. Instead, some further comments are offered here that are specific to the Canada-China treaty, that elaborate on information about the Canadian federal government's approach to the treaty as garnered especially from litigation in Canada about the treaty, and that highlight recent research on investor-state arbitration. The comments focus on three points that may warrant further discussion in China about the treaty and the role of investor-state arbitration more broadly.

The first point is that the treaty raises significant risks and liabilities not only for Canada but also for China in relation to the activities of foreign asset owners and the privileged status granted to those actors under the treaty. The second point is that the risks and liabilities for China and Canada are not reliably moderated to the extent that is sometimes claimed by commentators-including Canadian trade officials-due to the treaty's so-called “sleight of hand” on most-favoured-nation treatment.[34]This undermines, in particular, the treaty's limiting language on various substantive standards and potentially its general exceptions for health, environmental, and conservation measures. The third point arises from recent research into how investment treaty arbitrators have used their discretionary power. On this point, although our understanding based on available data remains limited in important ways, there are troubling signs that the lack of institutional independence and fairness in investment treaty arbitration has been accompanied by yet further privileging of investors and of major Western economic powers relative to other actors or other states. This gives further cause for concern about the Canada-China treaty as well as other treaties that provide for investor-state arbitration.

A. Risks and Liabilities Assumed by China

The Canada-China treaty will apply to substantial inward investment for China and Canada. Canadian nationals reportedly owned about ＄4.2 billion in assets in China in 2012 although this amount can be anticipated to rise over the 15-year formal minimum term of the treaty.[35]That said, China has concluded numerous other muscular investment treaties with significant capital-exporting states including Belgium-Luxembourg, Finland, France, Germany, India, the Netherlands, Norway, Russia, South Korea, Spain, Sweden, and Switzerland.[36]Thus, the Canada-China treaty is for China only one of a variety of treaties concluded in the past decade or so that raise a serious prospect of claims against China for large amounts of compensation based on an aggressive model of investor protection and investor-state arbitration. Although the main purpose of investment treaties and the arbitration mechanism is to protect foreign investors, this benefit-in the context of substantial two-way investment flows-must be weighed against risks and liabilities assumed by more dispersed actors including governments at all levels, taxpayers, workers, and voters who will never own assets abroad and whose interests may be adverse to those of a foreign investor.

As indicated above, Canada will presumably be more exposed to claims and the corresponding fiscal risks under the treaty due to its position as the capital-importer under the treaty. Yet the inter-state economic relationship under the Canada-China treaty is not as lopsided as for other investment treaties concluded between, for example, a major capital-exporter and a developing state.[37]Also, there may be other factors, beyond the relative volume of investment flows to which the treaty applies, that accentuate the risks and liabilities assumed by China under the treaty. Various Canadian proponents of the treaty have argued that the treaty will protect Canadian investors by disciplining governments in China without raising similar risks and liabilities for Canada because, it is claimed, governments in Canada already deliver standards of treatment for foreign investors that accord with those demanded by the treaty.[38]As an aside, this gauging of the risks and liabilities undertaken by Canada appears sanguine when one considers the relative frequency with which Canada has been sued in investor-state arbitration.[39]It must also be taken with a grain of salt where, as has been common in Canadian debate over the treaty, a proponent of the treaty is a lawyer or arbitrator who is in a position to benefit economically from the treaty.[40]Yet this claim of Canadian proponents at least highlights that there are expectations in Canada that Canadian investors will be able to take advantage of the treaty in their relations with the Chinese government, presumably both in potential arbitrations and behind-the-scenes.

This leads to a more speculative comment. If the Canada-China treaty is thought to offer a model for how China should approach future investment treaties with major economies, especially the U.S. and Europe, then the risks and liabilities for China mentioned above may expand dramatically in future. Canada has since NAFTA largely followed the U.S. model of investment treaties. Therefore, the Canada-China treaty, to a greater degree than other investment treaties concluded by China, may highlight issues likely to arise in future negotiations with the U.S. In the Canada-China treaty, Canada has clearly moderated its usual demands on market access and, as such, the treaty appears likely to be approached as a minimum floor for expected concessions from China and, in turn, to provide a basis for pressuring China in areas not conceded in the Canada-China treaty. To illustrate this possibility, in reaction to proposals that the U.S. should modify its usual negotiating demands on market access in negotiations with China, a senior official in the U.S. Council for International Business objected strongly[41]:“［Y］ou do not get to the sort of comprehensive 21st century BIT both sides need by splitting the difference down the middle between an ambitious, market-opening text on the one hand and a text allowing for screening, government interventions, protected monopolies, and protected state-owned enterprises （SOEs） and national champions on the other hand....It is really up to China at this point. If China is prepared to work with the US and other partners to move forward to an open, competitive investment regime, with real transparency, real market access and real rule of law, then a real BIT negotiation is possible, and it deserves the top priority of each side to get it done. But if China still believes that investment-inward and outward FDI-needs to be limited, screened, restricted, and subjected to forced localization, then real BIT negotiations will, unfortunately, not succeed....”

This is not a statement by a U.S. government actor but, given the influence of business interests in past investment treaty negotiations, it should be taken at least as an indication of the negotiating pressures that China will face as it proceeds with an investment treaty program aimed at the Western capital-exporting core. China should therefore prepare for demands for, as Mr. Donnelly put it, “real transparency” （assumed by the present author to mean transparency on the part of governments when dealing with foreign firms as opposed to transparency on the part of foreign investors or in investor-state arbitration）, “real market access” in contradiction to Chinese development strategies that seek to support national champions including state-owned enterprises, and “real rule of law” meaning, it appears, the privileging of foreign investors over other actors in society and the economy by granting foreign investors special access to an arbitration mechanism that is biased structurally in their favour.[42]

These comments point to a more immediate question about the Canada-China treaty, which applies in the Chinese context as well as the Canadian. The question is whether governments at various levels have assessed properly the risks and liabilities posed by this treaty both for governments and for other actors whose interests may be adverse to those of a foreign asset owner. It appears that Canadian trade officials did few if any assessments of the Canada-China treaty from a range of perspectives, such as those of government at different levels, aboriginal peoples, or domestic business and workers. This is indicated by answers given by federal trade officials in parliamentary and judicial processes related to the Canada-China treaty.

First, in questions directed to trade officials in October 2012 by Liberal Party members of Canada's Parliament, it was confirmed that the federal government did not conduct a risk assessment of Canada's potential fiscal liability over the 31-year effective minimum duration of the treaty. The relevant questions put to trade officials by the Liberal Party were[43]:“Has the government assessed the fiscal liabilities associated with the special and extensive legal protections granted to Chinese investments under the treaty? What is the estimated fiscal liability of these legal protections for Canadian taxpayers and on what assumptions and analysis is it based?”

The complete answer provided by trade officials on these questions was as follows[44]:“Canada has not estimated a potential fiscal liability under the Agreement because it has no intention of violating the terms of this or any other International agreement to which it is a Party.”

This statement confirmed that the federal government did not conduct a fiscal risk assessment of the Canada-China treaty despite the treaty's obvious significance in the context of Canada's investment treaty program.

Incidentally, the explanation offered by officials-that the government need not conduct a risk assessment because it does not intend to violate the treaty-is also highly problematic. First, the substantive standards under the treaty and under other investment treaties are vague and allow for expansive approaches by the arbitrators, as in numerous cases under other investment treaties and, to a lesser extent, under NAFTA.[45]Second, under NAFTA, Canada has been found to have violated similar standards to those contained in the Canada-China treaty in several cases, including most recently Mobil/ Murphy Oil v. Canada, and Canada has settled other cases based presumably on an expectation that it would lose the case.[46]Third, there are various ongoing NAFTA claims against Canada in which the claimant is represented by credible law firms and in which one may assume, on this basis, that there is a reasonable prospect of claimant success in some form.[47]Fourth, the Canada-China treaty like other investment treaties may lead to investor claims that arise from decisions of any level of government as well as from legislative and judicial decision-makers[48]; it is therefore difficult to understand how the federal government alone can claim to speak for Canada on the issue of future compliance. Fifth, even at the federal level, it is difficult to understand how federal trade officials can speak for other federal departments or agencies or, indeed, for future federal governments over the treaty's 31-year lifespan.[49]Sixth, the lack of certainty arising from the treaty is exacerbated by the fact that investor claims could be brought not just by majority Chinese-owned （or Canadian-owned） companies but also by domestic companies with minority Chinese （or Canadian） ownership.[50]Seventh, the explanation offered by trade officials appears to deny outright any risk associated with the Canada-China treaty even though any treaty providing for investor-state arbitration-at the option of foreign firms which own major assets in the state-must be taken to carry a prospect of billion-dollar liability for the state.[51]That is, the explanation appears to contradict the very notion of risk assessment. One does not intend to slip on the street in winter, but one still checks for ice.

A further indication of the lack of proper assessment of the treaty by the federal government has emerged from ongoing litigation about the treaty's implications for constitutional aboriginal rights in Canada.[52]In the course of this litigation, it was confirmed that the federal government did not assess specifically how the treaty would affect either aboriginal rights and interests or local governments in Canada. According to the testimony under cross-examination of trade official Vernon MacKay[53]:

“Question: ［T］o your knowledge, was any consideration given to how the exercise of First Nations governance might be affected by the ratification of the Canada-China FIPA?

Answer: There was no specific analysis done on that question, nor was there specific analysis done on how, for example, the FIPA might affect municipalities. And the reason for that is that it did not depart from our FIPA model, and we are very comfortable with the impacts of that FIPA model on the various policy communities that are covered by this treaty.”

Thus, no special assessment of the treaty's impact on aboriginal peoples and on other policy communities was conducted because, according to Mr. MacKay's testimony, the Canada-China treaty tracks Canada's model bilateral investment treaty. This is in spite of the difference between the volume of investment flows covered by the Canada-China treaty in comparison to all other trade and investment agreements concluded by Canada except NAFTA.[54]More specifically, and focusing for a moment on the issue of aboriginal rights and interests, it was in spite of the fact that some land claims/ self-governance agreements between the federal government and aboriginal peoples provide that decisions made by aboriginal governments must comply with Canada's international legal obligations as interpreted by international tribunals.[55]Further, the Canada-China treaty, unlike NAFTA and other trade or investment treaties concluded by Canada, does not extend Canada's usual reservation for measures on aboriginal affairs-where such measures allow special privileges to aboriginal peoples-to the treaty's prohibition on performance requirements for foreign investors.[56]As a result, it appears reasonable to expect that the Canada-China treaty may preclude or hamper impact benefit agreements or socio-economic agreements, for example, that are concluded by aboriginal decision-makers with foreign investors in Canada as a precondition for a government license or permit and that require the foreign investor to use aboriginal goods, services, or labour.[57]For these reasons, the treaty appears exceptional in its impact on aboriginal peoples in Canada yet the implications of this extension of the treaty's prohibition on performance requirements to aboriginal affairs measures （and to provincial and local governments） were not assessed specifically by the federal government.

This evidence of insufficient assessment suggests that the federal government moved imprudently to finalize the Canada-China treaty and, perhaps, that it emphasized potential benefits of the treaty for Canadian investors in China at the expense of other constituencies in Canada that bear significant risks and liabilities associated with the treaty. A question in the Chinese context is whether proper examination of the implications of the Canada-China treaty, and of other treaties providing for investor-state arbitration, has taken place. Is there evidence that the government assessed specifically the risks and liabilities of the treaty for governments at various levels and for other actors in China? If the assessments were done, did they allow for input by a range of actors and can they be reviewed by outside experts and the public? If the answers to any of these questions is no, then it appears imprudent for China as much as Canada to proceed with ratification due to the treaty's long-term lock-in of the arbitrators' power over the budgets and policy space of governments.

B. The Treaty's Sleight-Of-Hand on Most-Favoured-Nation Treatment

A technical but troubling feature of the Canada-China treaty is its extension of the concept of most-favoured-nation （MFN） treatment beyond future treaties to include other treaties that have been concluded by Canada or China, respectively, since 1994. This reach-back on MFN treatment undermines moderating language that is more apparent on the face of the treaty and that has been referenced often by the treaty's proponents as a reassurance for governments.[58]On closer inspection of this reach-back on MFN treatment, the basis for this reassurance is qualified.

On its face, the language of the Canada-China treaty appears moderated in various ways. For example, the treaty includes limiting language for the minimum standard of treatment, which incorporates the often expansively-interpreted standards of fair and equitable treatment and full protection and security.[59]This limiting language reflects provisions that were introduced originally by Canada and the U.S. in their investment treaties as an apparent response to expansive interpretations by early NAFTA tribunals. As well, the Canada-China treaty incorporates limiting language on indirect expropriation which appears to respond to expansive interpretations by some tribunals.[60]Under NAFTA, limiting language of this sort has gone some way to reign in the arbitrators' approach to the NAFTA minimum standard of treatment, in particular, even if significant variation remains in interpretations by NAFTA tribunals and even if, outside NAFTA, tribunals typically have taken a highly expansive approach.[61]

Also, the Canada-China treaty contains important, if largely untested, exceptions for health, environmental, and conservation measures.[62]These exceptions promise protection for certain types of government measures in the face of investor claims. Even so, it is difficult to predict how arbitrators will apply conditional language associated with the exceptions, such as necessity requirements which have been approached strictly by investment treaty tribunals when relied on by the respondent state to justify emergency economic measures.[63]

The key for present purposes is that the limiting language and exceptions in the Canada-China treaty are undermined by the treaty's language on MFN treatment. As mentioned, the treaty's MFN obligation reaches back to any treaty concluded by Canada or China since 1994 instead of limiting the obligation to future treaties.[64]Both Canada and China have concluded investment treaties since 1994 that did not incorporate the limiting language or exceptions contained in the Canada-China treaty. As a result, both states run a substantial risk that they will not be able to rely on the limiting language or exceptions in the Canada-China treaty in the face of investor claims.[65]A foreign investor will be able to argue that it was entitled to no less favourable treatment than that enjoyed by investors under one of the post-1994 treaties of Canada or China in which fair and equitable treatment, for example, was not subject to the limiting language and general exceptions in the Canada-China treaty.[66]Further, the investor would have at least a reasonable prospect of success on this argument given that MFN treatment has been interpreted expansively by many tribunals which have extended the concept to provisions on dispute settlement in third-country treaties rather than simply provisions on substantive treatment of investors.[67]This widespread expansive approach to MFN treatment remains contested among tribunals. Yet, under the Canada-China treaty, even if a tribunal limited MFN treatment to provisions on substantive treatment, this would still allow the foreign investor to avoid （a） the treaty's limiting language on fair and equitable treatment, full protection and security, and indirect expropriation, in particular, and （although this is less clear） （b） the treaty's exceptions for health, environmental, and conservation measures, so long as the limiting language or general exceptions were characterized by a tribunal as providing less favourable substantive protection than that granted to third-country investors.[68]

These aspects of the reach-back on MFN treatment were canvassed in the ongoing litigation in Canada over the Canada-China treaty and aboriginal rights and interests.[69]In that context, it was confirmed that federal trade officials are aware of the risk for Canada （and for China） due to the treaty's approach on MFN treatment. When questioned about Canada's negotiating approach and the reach-back on MFN treatment, trade official Vernon MacKay explained[70]:

China has over a hundred of what we call bilateral investment treaties very similar to FIPPAs. Most of them we would not want access to because they're not high-ambition-what we would call a high-ambition treaty. But there were a few in the early 2000s with some European countries that are pretty high standard. They're not directly comparable, so it's hard to say, you know, just how much more advantageous they might be to an investor, but they were-they were ones that we were considering....

The fair and equitable standards of some of these treaties are very broadly worded, certainly worded in ways that we would not word ours, which could lend themselves to an expansive interpretation which our Canadian investors may take advantage of in a Chinese market situation....

［S］ome of these provisions were potentially more of a broader scope and could provide high-you know, more protection for a Canadian investor. So since-and just to clarify, the Canadian model, as we have included in here, does not include that reach-back to 1994, but it is-we have the policy flexibility, if I could say that, to modify that.... We use that 1994 reach-back as an incentive to get the other party to reach back as well.

Thus, Canada as a negotiating strategy appears to have taken a calculated risk that it may lose the benefit of the moderating language developed from the NAFTA experience and incorporated on the face of the Canada-China treaty. On the other hand, Canada would obtain the benefit for Canadian investors of allowing them potentially to avoid the same moderating language in their claims against China.

Whether the Chinese government also negotiated the treaty with this trade-off in mind is unknown. Yet it reveals-although not obvious on a casual reading of the treaty-one way in which the treaty was designed by Canadian negotiators to expand the benefits for foreign investors at the expense of states, as respondents, and other actors. Further, it should be taken with a grain of salt when proponents of the treaty rely baldly on its limiting language or general exceptions as a justification for the treaty's negotiation or ratification.[71]Anyone characterizing the treaty as moderated due to these features needs to account for the reach-back on MFN treatment.

C. The Need for Greater Caution about Investor-State Arbitration

The invocation of investment treaty arbitration by foreign investors is a recent phenomenon that continues to expand. Although the earliest known award under an investment treaty dates to 1990, treaty-based investor-state arbitration came into widespread use by foreign investors at most about fifteen years ago. It continues to evolve and expand, sometimes in dramatic ways, based on decisions of the arbitrators. For example, the largest known investment treaty award, for about US＄2.37 billion including pre-award interest, was issued in September 2012.[72]In another relatively recent case, a majority of the tribunal decided to import a mass claims mechanism into an investment treaty in the context of a sovereign bonds dispute.[73]Various ongoing cases, especially in the resource sector, involve disputes over assets valued in the tens of billions of dollars.[74]

The novelty and expansion of investment treaty arbitration is important to consider in Canada and China due to the long-term lock-in period of the Canada-China treaty. The treaty assigns to a small group of individuals immense power over the public purses of both states and, by the enforcement of awards, to each state's commercial assets abroad. The arbitrators' power extends from the characterization of their own role and jurisdiction to the interpretation of broadly-framed standards of investor protection, and issuance of highly potent remedies, with limited prospects for appeal or judicial review. This power is in various respects unprecedented in modern international adjudication.[75]Yet it has been concentrated among a core of perhaps a few dozen individuals. To illustrate, from a review of arbitrator resolutions of contested legal issues, it emerged that-of 247 individuals appointed as arbitrators in coded cases-the 24 most active arbitrators decided roughly half of the issues and tended much more heavily towards expansive approaches to their own authority and to prospects for investor compensation.[76]Other researchers have reported that 12 arbitrators were present on 60% of 263 ICSID tribunals and that 15 arbitrators were present on 55% of 247 investment treaty tribunals.[77]This is a high concentration of immense power in the hands of a small number of persons about whom, I expect, most decision-makers and the public know very little.

As such, there is a need for greater scrutiny of how the arbitrators have used their discretionary power. For example, it appears from recent research that the arbitrators' decisions have enhanced greatly the position of foreign investors beyond their already-privileged status under the treaties. For example, the arbitrators as a group have allowed foreign investors to challenge general measures including general laws on a very broad basis; to avoid deference shown typically by judges to legislative or executive decisions; to avoid explicit balancing of the investor's position against that of other actors or the public interest; to sidestep the investor's contractual commitments on dispute settlement; and to ratchet up the legal and financial constraints on states relative to domestic law and international custom.[78]Also, arbitrators as a group have tended to adopt an expansive approach to their own authority and to investor entitlements to compensation, evident for instance in their resolution of coded jurisdictional and substantive issues involving the multiplication of corporate nationality as a possible gaming strategy by claimants, the definition of what qualifies as a protected investment, the risk of parallel adjudicative proceedings, and the meaning of substantive standards such as fair and equitable treatment and indirect expropriation.[79]Also, the expansive tendencies in the arbitrators' approaches to contested issues of jurisdiction was found to have increased on a statistically significant basis where the claimant had the nationality of a major capital-exporting state, especially the U.S. or U.K.[80]

These benefits for investors go beyond the other advantages of the treaties for foreign investors relative to governments, domestic investors, and other foreign and domestic actors. Even without the arbitrators' favouring of claimants, foreign investors benefit from special access to the adjudicative forum, their ability to present facts and arguments in the absence of other parties whose rights and interests are affected, their exceptional role in determining the make-up of tribunals, their unparalleled ability to enforce awards against states as sovereigns, the removal of institutional safeguards of judicial independence that otherwise insulate adjudicators in asymmetrical adjudication from financial dependence on prospective claimants, and a suite of bargaining advantages that presumably follow from these benefits in foreign investors' relations with legislatures, governments, and courts.[81]

There are important limitations to these findings, which are based on limited data and particular methods of inquiry and which involve various assumptions about arbitrator behaviour.[82]Yet the key remains, based on recent research, that there is cause for concern and that it would be prudent for states to look more closely at the experience to date in investor-state arbitration before locking in the arbitrators' power long-term. Otherwise, states may inadvertently concede major policy space to a decision-making process that lacks institutional independence, openness, and fairness and that appears highly imbalanced in its design and implementation.[83]

Conclusion

The purpose of this article was to reproduce and elaborate on concerns about the Canada-China bilateral investment. The article provided a critique of aspects of the treaty largely in isolation of other investment treaties and investor-state arbitration as a whole. Yet the broader picture gives further reason for doubts about the treaty and about the way in which it propagates a mechanism of decision-making that is flawed in principle. Perhaps the most important reason to revisit the treaty is its reliance on an imbalanced model of governance that, by design, protects only foreign investor interests and does little if anything to ensure that foreign investors live up to their responsibilities when domestic processes do not provide this assurance to those affected by foreign investor activities. Indeed, all other actors and constituencies whose interests may be affected in investment treaty arbitration, or by state decision-making that is subject to review by the arbitrators, cannot obtain standing in the process and must rely instead on other state processes and institutions for the representation of their interests. Yet those other state processes and institutions are themselves subject to investor claims and to discipline by the arbitrators. While Canada and China have committed in past to investor-state arbitration in a variety of treaties, it is suggested that aspects of the Canada-China treaty and recent revelations about the arbitrators' use of their discretionary power should prompt systematic review and reconsideration.

In light of this general conclusion, I was asked by a Chinese colleague whether my view of the Canada-China treaty would be different if Canada were in the capital-exporting position under the treaty. I have asked myself the same question. The answer is no but the explanation is layered. My primary concern about investment treaties is the role of investor-state arbitration. Investor-state arbitration is a flawed model of decision-making at various levels and I would criticize any treaty that relied on this model regardless of Canada's economic position. I chose to criticize the Canada-China FIPA in particular because of its significance for Canada's entanglement in investor-state arbitration. Since the federal government's original mistake in accepting investor-state arbitration in NAFTA, Canada has agreed to investor-state arbitration only in treaties with relatively small economies. This is problematic but it would be difficult, I expect, to interest the public and media in Canada in those treaties. In recent years, however, the Conservative federal government in Canada has planned to conclude three new treaties that would provide for investor-state, on a long-term basis, with major economies （Europe, China, and the U.S. and Japan as part of the Trans-Pacific Partnership）. If concluded, these treaties would make Canada the most locked-in Western developed country in the world on investor-state arbitration. This is the major policy decision that motivated me to speak out. I began with the Canada-China treaty because it is the first （and only） of the three treaties for which a text has been released to the public in Canada.

Thus, even if Canada were in the capital-exporting position in relation to China under the treaty, my position and motivation in criticizing the treaty would remain the same because the treaty is so significant due to the total capital flows that it covers and as an entrenchment of the investor-state arbitration model. It is an important step, for Canada and for China, in establishing investor-state arbitration as a semi-permanent institution of global governance. In my view, Canada should not be associated with this model from whatever economic position and should instead champion an international investment court that is independent, open, and fair and that encompasses investors responsibilities as well as investors rights. Unfortunately, the current federal government in Canada appears heavily committed to investor-state arbitration for reasons that are not clear.

There are also unique aspects of the Canada-China treaty—such as its extension of performance requirements restrictions to the provinces and to aboriginal peoples in Canada-that I have highlighted as extending the investor-state model beyond their problematic origins in NAFTA. These comments are specific to the text of the Canada-China treaty. However, they point to a wider concern that the Canadian trade ministry is pursing the treaties in order to constrain other ministries or governments in Canada as part of a deregulation and liberalization mindset. This is a concern because of the lack of evidence that other ministries or governments have studied the implications for their decision-making. It may be that a similar dynamic is taking place in China in that some ministries may wish to use investment treaties as a means to force changes by other ministries responsible for national economic development, state-owned enterprises, environmental protection, and so on. If any ministries in China were approaching the Canada-China treaty with this aim, then their strategy carries great risks. To triumph in a domestic policy debate, the ministries would be transferring immense power to arbitrators who are not independent, open, or fair in the manner of a judicial process and who have made increasingly-adventurous decisions in recent years. Put differently, the ministries would be making a deal that undermined their internal adversaries but surrendered their country to a flawed and unpredictable external power.

（编辑：季烨）

[1] Gus Van Harten is an associate professor at Osgoode Hall Law School. He was a faculty member at the Law Department of the London School of Economics and Political Science. He is the author of Investment Treaty Arbitration and Public Law （Oxford University Press, 2007） and various articles on investment law and arbitration. Open access to his publications can be found at the Social Science Research Network and his research database on international investment arbitration and public policy can be found at IIAPP.

[2] Agreement Between the Government of Canada and the Government of the People's Republic of China for the Promotion and Reciprocal Protection of Investments, done at Vladivostok September 9, 2012, not yet in force ［the FIPPA］.

[3] See the head note of the FIPPA, supra note ①, which refers to a requirement that the FIPPA be tabled in Canada's Parliament for 21 sitting days before ratification and that the treaty will enter into force after an exchange of notes between Canada and China indicating that each Party has completed its domestic approval processes. Notably, UNCTAD listed the treaty as having entered into force on 7 February 2013 based on a report from China that the treaty entered into force on 7 February 2013. Given that Canada had not by that time ratified the treaty, it is assumed that the relevant date may refer to the date of ratification by China. UNCTAD, Full List of Bilateral Investment Agreements concluded ［by China］, at http://unctad.org/Sections/dite_pcbb/docs/bits_china.pdf, June 1, 2013, ［after the author's communications with UNCTAD on this issue, the UNCTAD document was revised and now indicates that the treaty is not yet in force］. For other coverage on the delayed ratification of the treaty, see e.g. S. McCarthy, Pressure Mounts with Tories Ready to Ratify China Trade Deal by Thursday, The Globe and Mail （30 October 2012）, at http://www.theglobeandmail.com/news/politics/pressure-mounts-with-tories-ready-to-ratify-china-trade-deal-by-thursday/article4783996/, Sept. 1, 2013; S. Mas, Delayed China Trade Deal Reflects Tory Dissent, NDP Says, CBC News （22 April 2013）, at http://www.cbc.ca/news/politics/story/2013/04/21/pol-fipa-with-china-ratification-delayed.html, Sept. 1, 2013.

[4] FIPPA, supra note ①, Article 35. The incorporation of a minimum term is not exceptional in investment treaties. However, for Canada, the incorporation of a minimum term is exceptional because Canada has not previously concluded any treaty that provides for investor-state arbitration, applies to substantial （say, more than ＄10 billion） in inward investment, and incorporates a minimum term.

[5] North American Free Trade Agreement （NAFTA） （December 17, 1992; 32 ILM 296 and 605; entered into force January 1, 1994）, Article 2205.

[6] All of the 24 bilateral investment treaties （i.e. FIPPAs） concluded by Canada and currently in force provide for the treaty's obligations to continue for existing investments, for periods of 10, 15, or 20 years, following termination of the treaty but these treaties typically allow for termination by either state party on one year's notice. Only three of Canada's FIPPAs currently in force （with Egypt, Hungary, and Poland） appear to be like the Canada-China FIPPA in that they provide also for an initial minimum term, for periods of 10 or 15 years, during which the treaty cannot be terminated. The texts of Canada's FIPPAs are available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/index.aspx?lang=eng, Sept. 1, 2013.

[7] For example, Canada has concluded a treaty that provides for investor-state arbitration with only one of the ten countries that had the highest volumes of inward investment in Canada in 2012. The one country is the United States, with which Canada has consented to investor-state arbitration under NAFTA. See Statistics Canada, Foreign Direct Investment （Stocks） in Canada, Table 376-0051 （May 2013）.

[8] According to Statistics Canada, in 2012 total inward investment from China to Canada was approximately ＄12 billion and total outward investment from Canada to China was approximately ＄4.2 billion; Statistics Canada, supra note ⑥, and Statistics Canada, Canadian Direct Investment Abroad, Table 376-0051 （May 2013）.

[9] e.g. Occidental Exploration and Production Company v. Republic of Ecuador （No 2） （Award, October 5, 2012） （award of about ＄2.37 billion including pre-award interest）; Ceskoslovenska Obchodni Banka v. Slovak Republic （Award, December 29, 2004） （in which the tribunal based its jurisdiction on the incorporation into a contract of the compulsory arbitration clause in a bilateral investment treaty that the claimant had not shown to be in force; as the origins of the respondent state's consent were connected to a bilateral investment treaty, the case has been characterized here as an investment treaty arbitration award）; Siemens AG v. Argentine Republic （Award, January 17, 2007） （about ＄277 million including pre-award interest）; Azurix Corp v. Argentine Republic （Award, July 14, 2006） （about ＄165 million plus pre-award interest）; Rumeli Telekom v. Kazakhstan （about ＄125 million plus pre-award interest）. All cited awards are available at www.italaw.com.

[10] Gus Van Harten, Investment Treaty Arbitration and Public Law, Oxford University Press, 2007, pp.154-158.

[11] e.g. PSEG Global Inc v. Republic of Turkey （Award, June 4, 2004）, para 192; GAMI Investments, Inc v. Government of the United Mexican States （Award, November 15, 2004）, paras. 26-35; International Thunderbird Gaming Corporation v. United Mexican States （Award, January 26, 2006）, paras. 97-110; AWG v. Argentina （Award, August 3, 2006）, paras 46-51; BG Group Plc v. Republic of Argentina （Award, December 24, 2007）, paras 114, 190, and 197-205; Yukos Universal Ltd （Isle of Man v. Russian Federation （Award, November 20, 2009）, paras. 432-442. All cited awards are available at www.italaw.com.

[12] This includes cases in which a notice of intent to bring a claim under NAFTA was filed as well as cases in which a notice of claim was filed. See the list of cases against Canada available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng, Sept. 1, 2013.

[13] Two cases were based on awards against Canada and two were based on settlements by Canada. Pope & Talbot Inc v. Government of Canada （Award, May 31, 2002）; SD Myers, Inc v. Government of Canada （Award, October 21, 2002）; AbitibiBowater Inc v. Government of Canada （Award, December 15, 2010）; Ethyl Corporation v. Government of Canada （Award, June 24, 1998）. All cited awards are available at www.italaw.com. On the settlement in Ethyl, see K Traynor, How Canada Became a Shill for Ethyl Corporation, Intervenor, Vol. 23 （3）, 1998, at http://www.cela.ca/article/international-trade-agreements-commentary/how-canada-became-shill-ethyl-corp, Sept. 1, 2013.

[14] Mobil Investments Canada Inc & Murphy Oil Corporation v. Canada （Award, May 22, 2012）, at www.italaw.com.

[15] Since this was written in October 2012 the award was released publicly by posting on a Government of Canada website. The award confirmed that a majority of the tribunal took an expansive claimant-friendly approach based on a strained interpretation of a requirement in Annex I, para 2（f）（ii））, of NAFTA, supra note ④, that a subordinate measure introduced pursuant to Canada's reservation of a piece of legislation had to be “consistent with the measure”. The tribunal's strained interpretation was that this provision required consistency not only with the legislation itself but also with previous subordinate measures introduced under the legislation. Mobil Investments Canada Inc & Murphy Oil Corporation v. Canada, supra note B13, paras 356-374; Mobil Investments Canada Inc & Murphy Oil Corporation v. Canada （Dissenting opinion, May 22, 2012）, paras 3 and 18-29. See N. Bankes, From Regulatory Chill to Regulatory Concussion: NAFTA's Prohibition on Domestic Performance Requirements and an Absurdly Narrow Interpretation of Country Specific Reservations, Case comment, May 6, 2013, at http://ablawg.ca/wp-content/uploads/2013/05/Blog_NB_Mobil_Investments_May20131.pdf, Sept. 1, 2013.

[16] FIPPA, supra note ①, Article 28（1）.

[17] e.g. Agreement Between Canada and the Hashemite Kingdom of Jordan for the Promotion and Protection of Investments （entered into force 14 December 2009）, Article 38（3）, and （4）; Agreement Between the Government of Canada and the Government of Romania for the Promotion and Reciprocal Protection of Investments （entered into force November 23, 2011）, Annex C, para. I（3） and （4）; Agreement Between the Government of Canada and the Government of the Republic of Latvia for the Promotion and Protection of Investments （entered into force November 24, 2011）, Annex C, para. I（3） and （4）. The texts of Canada's FIPPAs are available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/index.aspx?lang=eng, Sept. 1, 2013.

[18] FIPPA, supra note ①, Article 8（2）; compare Article 1108 （1） of NAFTA, supra note ④. The FIPPA also goes beyond NAFTA by extending its ban on performance requirements to measures that give preferences to aboriginal peoples. Compare Article 1108（3） of NAFTA （applying the referenced exceptions, including on aboriginal affairs, to Canada's obligations on performance requirements under Article 1106） to Annex B.8 （not applying the referenced exceptions, including on aboriginal affairs, to Canada's obligations on performance requirements under Article 9） of the FIPPA.

[19] G. Laxer and J. Dillon, Over a Barrel: Exiting from NAFTA's Proportionality Clause （Report for the Canadian Centre for Policy Alternatives）, May 2008, 37-39, at http://www.policyalternatives.ca/sites/default/files/uploads/publications/National_Office_Pubs/2008/Over_A_Barrel.pdf, Sept. 1, 2013.

[20] e.g. FIPPA, supra note ①, Articles 4 and 10.

[21] R. Klger, Fair and Equitable Treatment in International Investment Law, Oxford University Press, 2011, pp.116-119; M. Sornarajah, Evolution or Revolution in International Investment Arbitration? The Descent into Normlessness, in C. Brown and K. Miles （ed.）, Evolution in Investment Treaty Law and Arbitration, Oxford University Press, 2011, pp.650-652; S.W. Schill, Fair and Equitable Treatment, the Rule of Law, and Comparative Public Law, in S.W. Schill （ed.）, International Investment Law and Comparative Public Law, Oxford University Press, 2010, pp.159-170; A. Diehl, The Core Standard of International Investment Protection, Kluwer Law International, 2012, Ch. 6.

[22] Stabilization Clauses and Human Rights （Report for the IFC and the UN Special Representative of the Secretary-General on Business and Human Rights, May 27, 2009）, pp.4-5; L. Cotula, Regulatory Takings, Stabilization Clauses, and Sustainable Development, Paper for the OECD Global Forum on International Investment VII, Paris, March 27-28, 2008, pp.5-13.

[23] For a discussion the areas of state decision-making engaged by past investment treaty cases, see Gus Van Harten, Sovereign Choices and Sovereign Constraints, Oxford University Press, forthcoming 2013, Chapter 1. For an informative recent study on the role of law firms and arbitrators, see P. Eberhardt and C. Olivet, Profiting from Injustice （Report by Corporate Europe Observatory and the Transnational Institute, Brussels/ Amsterdam）, November 2012.

[24] Philip Morris Asia Limited v. Commonwealth of Australia （Notice of Arbitration, November 21, 2011）; Philip Morris Brand SARL et al v. Oriental Republic of Uruguay （Award, July 2, 2013）. All cited awards and other investment treaty arbitration materials are available at www.italaw.com.

[25] See e.g. Gus Van Harten, A Case for an International Investment Court, Paper for the Society for International Economic Law （SIEL） Inaugural Conference 2008, Barcelona, June 30, 2008.

[26] Since this was written in October 2012, Canadians investors have lost two additional cases under investment treaties, one under NAFTA and the other under the Canada-Venezuela FIPPA. Apotex Inc v. Government of the United States of America （Award, June 14, 2013）; Vannessa Ventures Ltd v. Bolivarian Republic of Venezuela （Award, January 16, 2013）. This brings to 18 the total number of losses in known claims brought by Canadian investors. See also International Thunderbird v. Mexico; ADF v. USA; Loewen v. USA; Methanex v. USA; Canfor v. USA; Mondev v. USA; Glamis Gold v. USA; CCFT v. USA; Tembec v. USA; Terminal v. USA; Anderson v. Costa Rica; Ulemek v. Croatia; Frontier Petroleum v. Czech Republic; Encana v. Ecuador; Mihaly v. Sri Lanka; and Nova Scotia Power v. Venezuela. Awards and other investment treaty arbitration materials for all cited cases are available at www.italaw.com.

[27] But see Council of Canadians v. Canada （Attorney General）, 2006 CanLII 40222 （ON CA）, in which the Ontario Court of Appeal dismissed a constitutional challenge to the investor-state arbitration mechanism of NAFTA, supra note ④, based on an argument citing the judicature provisions of the Constitution.

[28] e.g. Re Residential Tenancies Act, ［1981］ 1 SCR 714.

[29] e.g. Chevron v. Ecuador （No 2） （Award, 16 February 2012）; Burlington Resources v. Ecuador （Decision （procedure）, June 29, 2009）; Quiborax v. Bolivia （Decision （provisional measures）, February 26, 2010）. All cited awards and decisions are available at www.italaw.com.

[30] FIPPA, supra note ①, Articles 1 （definition of “measure”） and 2.

[31] Supra note B17.

[32] To the present author's knowledge, the federal government has never committed to paying awards that arise from provincial or other sub-national measures. After the federal government paid the settlement in AbitibiBowater v. Canada, supra note B12, Prime Minister Stephen Harper stated that the federal government would “create a mechanism so that it can reclaim monies” from provinces in circumstances where Canada's liability under NAFTA arose from a provincial decision; Provinces Should Pay for NAFTA Losses: PM, CBC News （August 26, 2010）.

[33] J. Fernández-Armesto, quoted in S. Perry, Stockholm: Arbitrator and council: the double-hat syndrome, Global Arbitration Review, Vol. 7 No. 2, March 15, 2012.

[34] H. Mann, The Canada-China Investment Treaty Sleight of Hand, Embassy News （January 8, 2013）.

[35] Supra note ⑦.

[36] UNCTAD, supra note ②. Other investment treaties concluded by China with major economies, especially Austria, Australia, Denmark, Italy, Japan, New Zealand, and the United Kingdom, date from the 1980s and thus would not reflect China's shift towards the more muscular regime of investment treaty arbitration since the early 2000s.

[37] Guzman, Why LDCs Sign Treaties That Hurt Them: Explaining the Popularity of Bilateral Investment Treaties, Virginia Journal of International Law, Vol. 38, 1998, p.639.

[38] M. Barutciski and M. Kronby, Investment agreement with China will benefit Canada, Globe and Mail, November 2, 2012; J. Manley, We need not fear the FIPA, Ottawa Citizen, November 9, 2012. Mr. Manley is the president and CEO of the Canadian Council of Chief Executives.

[39] UNCTAD reported in 2013 that Canada, as of 2012, had faced more known investment treaty claims （19） than any other country except Argentina, Venezuela, Ecuador, Mexico, and the Czech Republic; China had reportedly faced one known investment treaty claim. UNCTAD, Recent Developments in Investor-State Dispute Settlement, United Nations, May 2013.

[40] e.g. Barutciski and Kronby, supra note B37; M. Kronby, Canada-China Investment Treaty: Evidence Doesn't Support Doomsayers, Globe and Mail, October 26, 2012; D. Schneiderman and Gus Van Harten, Self-interested Lawyers and the Canada-China FIPA, Toronto Star, November 25, 2012.

[41] SE Donnelly, A Business Perspective on A China-US Bilateral Investment Treaty, Colombia FDI Perspective, No. 90, March 4, 2013. Mr. Donnelly is Vice President for Investment and Financial Services in the Washington office of the United States Council for International Business.

[42] See Gus Van Harten, TWAIL and the Dabhol Arbitration, Trade, Law & Development, Vol. 3, 2011, p.131.

[43] Questions Submitted through the Chair of the House of Commons Standing Committee on International Trade on behalf of the Liberal Party （October 18, 2012）, on file with author.

[44] Responses to Questions submitted through the Chair of the House of Commons Standing Committee on International Trade on behalf of the Liberal Party （undated, received by author on November 9, 2012）, on file with author.

[45] M. Mortimore and L. Stanley, Justice Denied: Dispute Settlement in Latin America's Trade and Investment Agreements （Working Group on Development and Environment in the Americas Discussion Paper No 27）, October 2009, pp.61-71; PM Blyschak, State Consent, Investor Interests and the Future of Investment Arbitration: Reanalyzing the Jurisdiction of Investor-State Tribunals in Hard Cases, Asper Review of International Business and Trade Law, Vol. 9, 2009, pp.117-120.

[46] Supra note B12.

[47] Eli Lilly and Company v. Government of Canada （Notice of Intent, June 13, 2013） （claimant represented by Gowling Lafleur Henderson LLP and Covington & Burling LLP）; Lone Pine Resources Inc v. Government of Canada （Notice of Intent, November 8, 2012） （Bennett Jones LLP）; Windstream Energy LLC v. Government of Canada （Notice of Arbitration, January 28, 2013） （Torys LLP）; Detroit International Bridge Company v. Government of Canada （Notice of Arbitration, April 29, 2011） （Debevoise & Plimpton LLP）; and Mercer International Inc v. Government of Canada （Notice of Arbitration, April 30, 2013） （Arnold & Porter LLP）. All cited materials are available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng, Sept. 1, 2013.

[48] Supra note B29.

[49] Supra note ③.

[50] This has been confirmed by the overwhelming majority of investment treaty awards in which the issue arose and was resolved expansively or restrictively. Gus Van Harten, Arbitrator Behaviour in Asymmetrical Adjudication: An Empirical Study of Investment Treaty Arbitration, Osgoode Hall Law Journal, 2012, pp.211, 227-228 and 238.

[51] Supra note ⑧.

[52] Hupacasath First Nation v. Minister of Foreign Affairs of Canada and Attorney General of Canada, Federal Court Case No T-153-13, Transcript of Proceedings （June 5-7, 2013）; Hupacasath First Nation v. Minister of Foreign Affairs of Canada and Attorney General of Canada, Federal Court Case No T-153-13, Cross-Examination on Affidavit of Vernon John MacKay （April 3, 2013）.

[53] Cross-Examination on Affidavit of Vernon John MacKay, supra note B51.

[54] Supra note ⑥.

[55] e.g. Yale First Nation Final Agreement （signed April 11, 2013）, Ch. 2.8, at http://www.bctreaty.net/nations/agreements/Yale-Final-Agreement_Feb10.pdf, Sept. 1, 2013.

[56] Of particular note to China, in light of the novelty of mixing WTO obligations and investor-state arbitration, the WTO TRIMS Agreement obligations of Canada and China will carry a more potent remedy under the Canada-China treaty than at the WTO. Unlike in state-state adjudication at the WTO, investment treaty arbitrators typically award compensation to foreign investors, upon finding a treaty violation, from the date at which the respondent state's legislative, executive, or judicial decision-maker engaged in conduct found to have violated the treaty. Thus, unlike at the WTO, the state does not have an opportunity to correct the illegality before being ordered to pay retrospective compensation. This raises the prospect of uncertain but potentially onerous fiscal liability for governments at the time of any decision that affects foreign-owned assets, especially in the case of major projects.

[57] I. Sosa and K. Keenan, “Impact Benefit Agreements between Aboriginal Communities and Mining Companies: Their Use in Canada” （October 2001）. Notably, although the Canada-China treaty's prohibition on performance requirements is limited to Canada's （and China's） obligations under the WTO TRIMs Agreement and thus does not contain as far-reaching restrictions on performance requirements as NAFTA, nevertheless the Canada-China treaty's prohibition would presumably extend-based on WTO panel decisions-to domestic content requirements that require investors to use domestic aboriginal content, for example, in connection with an investment. Indonesia-Certain Measures Affecting the Automobile Industry, Report of the Panel, WTO Doc No WT/DS54/R （July 2. 1998）, para 14.82; Canada-Certain Measures Affecting the Renewable Energy Generation Sector and Canada-Measures Relating to the Feed-In Tariff Program, Report of the Panels, WTO Doc No WT/DS412/R （December 19, 2012）, para 7.111.

[58] e.g. Cross-Examination on Affidavit of Vernon John MacKay, supra note B51.

[59] FIPPA, supra note ①, Article 4.

[60] FIPPA, supra note ①, Annex B.10.

[61] Supra note B20 and B44.

[62] FIPPA, supra note ①, Article 33（2）.

[63] e.g. CMS v. Argentina （Award, May 12, 2005）, paras. 316-317, 329 and 331; Enron v. Argentina （Award, May 22, 2007）, paras. 303-309, 311-313; Sempra v. Argentina （Award, September 28, 2007）, paras. 347-355, 373-374; National Grid v. Argentina （Award, November 3, 2008）, paras. 257-262; Suez & InterAgua v. Argentina （Award, July 30, 2010）, paras. 235-243; Total v. Argentina （Award, December 27, 2010） paras. 221-224, 345, 483-484; EDF v. Argentina （Award, June 11, 2012）, paras. 1171-1173; and, although the tribunal took a somewhat more flexible approach to necessity, El Paso v. Argentina （Award, October 31, 2011）, paras. 617-620, 624, 650, 656-665, and 670; Contrast LG&E v. Argentina （Award, October 3, 2006）, paras. 228-261; and Continental Casualty v. Argentina （Award, September 5, 2008）, paras. 173-181, 192-210, and 227-236. All cited awards are available online: ITALAW www.italaw.com.

[64] FIPPA, supra note ①, Articles 5 and 8（1）（b）.

[65] e.g. Agreement Between the Government of Canada and the Government of the Republic of Croatia for the Promotion and Protection of Investments （entered into force January 30, 2001）; Agreement on encouragement and reciprocal protection of investments between the Government of the People's Republic of China and the Government of the Kingdom of the Netherlands （entered into force August 1, 2004）. The texts of Canada's FIPPAs are available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/index.aspx?lang=eng. The texts of China's bilateral investment treaties are also available at http://www.unctadxi.org/templates/DocSearch_779.aspx.

[66] Chemtura v. Canada （Award, August 2, 2010）, paras 226 and 235.

[67] Gus Van Harten, supra note B49, pp.228 and 238.

[68] This is suggested based on, for example, Paushok v. Mongolia （Award, April 28, 2011）, paras 570-572, available at www.italaw.com, in which the tribunal interpreted a targeted most-favoured-nation treatment clause to allow the claimant to invoke a more favourable framing of fair and equitable treatment, as a substantive right of the investor, from a third-country treaty.

[69] Supra note B51.

[70] Supra note B51.

[71] This view is based partly on an expectation that Canada's position-which is that the substantive treatment provided under other investment treaties concluded by Canada for fair and equitable is the same as that provided under the Canada-China treaty regardless of the treaty's limiting language-is unduly sanguine in light of the expansive interpretations of most-favoured-nation treatment, fair and equitable treatment, full protection and security, and indirect expropriation adopted by many investment treaty tribunals in the absence of the limiting language in the Canada-China treaty.

[72] Occidental Exploration and Production Company, supra note ⑧.

[73] Abaclat v. Argentina （Award, August 4, 2011）, available online: ITALAW www.italaw.com.

[74] American Lawyer reported a total of 121 billion-dollar disputes that were active during 2011-2012. The American Lawyer's Arbitration Scorecard Profiles Secret Billion-Dollar Disputes, 274 International Arbitrations in all, ALM （June 26, 2013）, http://almlegalintel.com/Surveys/arbitrationscorecard, Sept. 1, 2013.

[75] Gus Van Harten, supra note ⑨, ch 5.

[76] This descriptive finding emerged from research reported in Van Harten, supra note B49; and Gus Van Harten, The （Lack of） Women Arbitrators in Investment Treaty Arbitration, Vale Columbia Centre on Sustainable International Investment, Columbia FDI Perspective, No. 59, February 6, 2012.

[77] JAF Costa, Comparing WTO Panelists and ICSID Arbitrators: The Creation of International Legal Fields, Oati Socio-Legal Series, Vol. 1（4）, 2011, p.11; Eberhardt and Olivet, supra note B22 and B38.

[78] Gus Van Harten, supra note B22, Ch.6.

[79] Gus Van Harten, supra note B49, pp.227-228 and 237-238.

[80] Gus Van Harten, supra note B49, pp.242-245.

[81] e.g. L. Cotula, Human Rights, Natural Resource and Investment Law in a Globalised World, London Routledge, 2012, pp.129-131; V. Vadi, Public Health in International Investment Arbitration, London Routledge, 2013, pp.54-55.

[82] Gus Van Harten, supra note B49, p.231; Gus Van Harten, supra note B22, preface.

[83] G. Kahale G. Kahale, Is Investor-State Arbitration Broken, Transnational Dispute Management, October 2012; Gus Van Harten, Investment Treaty Arbitration, Procedural Fairness, and the Rule of Law, in S. W. Schill （ed）, International Investment Law and Comparative Public Law, Oxford University Press, 2010.

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