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Columbia FDI Perspectives

Perspectives on topical foreign direct investment issues
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Abigail Greene ([log in to unmask])

The Columbia FDI Perspectives are a forum for public debate. The views expressed by the authors do not reflect the opinions of CCSI or our partners and supporters.

No. 337   August 8, 2022
A late bloomer in the international investment law regime, Canada signed its first Foreign Investment Promotion and Protection Agreement (FIPA) in 1989 with the Soviet Union. The first generation of FIPAs was soon replaced by a second one, modeled on the far more comprehensive Chapter 11 of NAFTA. Canada then reviewed its foreign investment policy, to strike a better balance between investors’ protection and host countries’ right to regulate for legitimate public policy objectives. This resulted in the 2004 Model FIPA, launching a third generation of agreements, and responding to many shortcomings revealed in arbitral cases. The new 2021 Model FIPA published by Canada is the latest iteration of this incremental process, purporting to achieve a new progressive agenda and integrating provisions already found in the investment chapters of its latest trade agreements. It offers few substantive or procedural innovations and mostly reflects those already found in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the EU-Canada Comprehensive Economic and the Trade Agreement (CETA) or the Canada-United States-Mexico Agreement (CUSMA).
The 2021 Model FIPA keeps the usual investor-state dispute-settlement (ISDS) arbitration regime instead of embracing the investment court system introduced by CETA. The most noteworthy addition is the expedited arbitration procedure, for claims not exceeding $CDN 10 million. It aims to facilitate access to ISDS for individuals and small and medium-size enterprises. This new procedure, together with the 2022 amended ICSID arbitration rules, is a first concrete step to address this issue. Regrettably, access to this expedited arbitration requires the ad hoc consent of the host country instead of being available at the choice of investors. More detailed provisions on consultations condition access to ISDS and enhance dispute prevention, while optional mediation remains open during all the proceedings. Preliminary rulings on objections to jurisdiction are now compulsory, while third-party funding must be disclosed, improving ISDS transparency and legitimacy. A new code of conduct responds to concerns regarding certain practices of arbitrators, prohibiting notably acting simultaneously as an arbitrator and as a counsel in different cases. It does not refer to the draft code currently discussed by ICSID and UNCITRAL, raising the possibility of future conflicting standards. The adoption of authoritative interpretation of the treaty by state parties is now curiously restricted to “serious concerns” concerning matters of interpretation, although this power was not problematic and has only been used once with NAFTA.
In addition to provisions already found in recent treaty practice to protect the right to regulate of the host country, the 2021 Model FIPA includes some innovations that are worth mentioning. The minimum standard of treatment clause combines the NAFTA approach of circumscribing it to international customary law, with that of CETA detailing fair and equitable treatment in an exhaustive list. This may raise the question of whether this codification leaves out existing or emerging aspects of the custom. Denial of benefits is now automatic for corporate investors not having substantial business activities in their home country. It takes a robust stance against treaty shopping, since this condition is now included in the definition of “enterprise of a Party” (like CETA), instead of being actionable at the will of the host country. However, no specific criteria are given to assess those activities. General exceptions inspired by Article XX of GATT 1994, on non-trade issues, are completely left out, as in CPTPP. While these exceptions have been a distinctive feature of the Canadian approach since the 1994 Canada-Ukraine FIPA, they were never applied in an actual case. Their abandonment should not have serious consequences for the right to regulate.
Finally, the 2021 Model FIPA laudably introduces a new section on investment promotion and facilitation. However, it misses the opportunity to address this emerging concern effectively, failing to reflect the WTO negotiations on investment facilitation. Surprisingly, the clauses on non-derogation to health or environmental measures, key personnel, transparency, and responsible business conduct (RBC) are all misplaced in the section on investment protection instead of in this new section. This odd structure is evidenced by the fact that none of those clauses are subjected to ISDS. Apart from a new reaffirmation of the duty to comply with the domestic laws of the host country, and to encourage dialogue with native peoples and local communities, the RBC clause remains aspirational and rather uninspired. In contrast, the Netherlands 2019 Model BIT addresses the important issue of jurisdiction of domestic courts for extraterritorial activities of corporations.
The new Canadian model investment treaty marks a quiet evolution, integrating useful innovations found in latest treaty practice, but proposing few original solutions. Future model treaties should deal with investment facilitation in one coherent section, together with international cooperation and technical assistance, reflecting the objective to prevent disputes. Acceptance by domestic courts of extraterritorial civil jurisdiction should be facilitated, by affirming for instance that it does not offend international comity between contracting states. Access to ISDS should be explicitly prevented in case investors breach domestic law when establishing their investments. Until a multilateral investment court or appellate review is established, the adoption of authoritative interpretation by state parties should be facilitated, as this could enhance the legitimacy of ISDS.

* Charles-Emmanuel Côté ([log in to unmask]) is Full Professor at the Faculty of Law of Laval University, Quebec City, Canada. The author wishes to thank Andrea Kay Bjorklund, Kabir Duggal and Catherine Titi for their helpful peer reviews.
The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Charles-Emmanuel Côté, ‘The new Canadian model investment treaty: A quiet evolution,’ Columbia FDI Perspectives No. 337, August 8, 2022. Reprinted with permission from the Columbia Center on Sustainable Investment (” A copy should kindly be sent to the Columbia Center on Sustainable Investment at [log in to unmask].
For further information, including information regarding submission to the Perspectives, please contact: Columbia Center on Sustainable Investment, Abigail Greene, [log in to unmask].  
Most recent Columbia FDI Perspectives   
  • No. 336, Phil Baumann “How host country governments can ensure competitive neutrality in cross-border M&As,” Columbia FDI Perspectives, July 25, 2022
  • No. 335, Karl P. Sauvant and Federico Ortino, “The WTO Investment Facilitation for Development Agreement needs a strong provision on responsible business conduct,” Columbia FDI Perspectives, July 11, 2022
  • No. 334, Emmanuel Kolawole Oke and Olufunmilola Olabode, “International investment law, intellectual property and development,” Columbia FDI Perspectives, June 27, 2022
All previous FDI Perspectives are available at

Other relevant CCSI news and announcements
  • Apply by August 15! CCSI will hold its 2022 Executive Training on Investment Treaties and Arbitration for Government Officials on October 3-7, 2022. The program, taking place online, is designed for public sector officials whose responsibilities relate to investment treaty negotiation or investor-state arbitration. There is a critical need for officials at all levels of government to stay up to date on new developments in investment treaty content and investor-state arbitration law and practice. Through an intensive course, government officials will increase their knowledge of crucial aspects of investment law with direct consequences for host-state liability and implications for myriad areas of law and policy. For more information, and to apply, visit our website.
  • CCSI, in partnership with E3G, an independent climate change think tank based in London, UK, is conducting a survey to better understand the economic, financial and regulatory factors that drive and/or limit the necessary domestic and foreign investments in renewable energy sectors. We hope to use the results of this survey combined with desk research to determine the fundamental determinants (and constraints) of renewable energy investments, and the corresponding ways in which economic, policy and regulatory frameworks can be strengthened to accelerate renewable energy investments. If you are in the renewable energy industry, and are interested in participating in this survey or would like to receive more information about this project, please contact Ladan.
Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
(212) 854-0689
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Karl P. Sauvant, PhD

Senior Fellow

Columbia Center on Sustainable Investment
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
p(212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | t: @CCSI_Columbia

"The WTO Investment Facilitation for Development Agreement Needs a Strong Provision on Responsible Business Conduct", Investment Facilitation for Development: A Toolkit for Policy Makers. Second Edition, "Agenda for Practice-oriented Research", "WTO Processes Would Benefit from the Input of Civil Society", "How Would a Future WTO Agreement on Investment Facilitation for Development Encourage Sustainable FDI Flows, and How Could it be Further Strengthened?”, "What Foreign Investors Want: Findings from an Investor Survey", "Incentivising Sustainable FDI", "Green FDI: Encouraging Carbon-neutral Investment", "Extending International Legal Aid from Trade to Investment: An Advisory Centre on International Investment Law", "More Attention to Policies! Improving the Distribution of FDI Benefits", "Facilitating Sustainable FDI in a WTO Investment Facilitation Framework: Four Concrete Proposals", "An Inventory of Concrete Measures to Facilitate the Flow of Sustainable FDI: What? Why? How?", are available at .

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