Gus Van Harten, Opinion, The Toronto Star:
The Harper government is very keen on Chinese investment. On this
there is little doubt, now that the Canada-China investment deal has
The deal will tie the hands of
Canadian governments, especially in the resource sector, once Chinese
firms buy Canadian assets. It allows Chinese companies to sue Canada
outside of Canadian courts. Remarkably, the lawsuits can proceed behind
closed doors. This shift to secrecy reverses a long-standing policy of
the Canadian government.
Under the deal, Chinese firms can sue
in special tribunals to protect themselves from Canadian government
decisions. Canadian companies can do the same against China. The
technical name for this is “investor-state arbitration.” In Canada, it
has been in operation since NAFTA.
In turn, any decision by any state
entity in Canada — from federal or provincial legislation to a Supreme
Court of Canada decision — can be challenged by a Chinese investor. The
arbitrators, if they conclude that the decision violates flexible
standards of investor protection, can issue orders and award damages
against a country.
On the other hand, no one in Canada
including the government will be able, under the deal, to sue a Chinese
investor for breaking any laws. The claims are one-way. Also, only the
federal government can participate in the arbitrations. Provincial
governments, Canadian companies and other constituencies have no right
of standing even if their interests are affected directly.
It is reasonable to expect that Chinese investors will use the
Canada-China deal to pressure governments in Canada, especially in the
resource sector. About one in five investor lawsuits involves a resource
dispute. At least nine of the U.S. lawsuits against Canada under NAFTA
have related to resources.
Most surprisingly, the Chinese
lawsuits can be kept secret. This is in stark contrast to other treaties
signed by Canada. Under NAFTA, since 2001, Canada and the U.S. have
ensured that investor-state arbitrations were open.
Under the Canada-China deal, the
arbitration hearings and all documents, except an actual award, can be
kept confidential at the discretion of the country that is sued. This
suggests that China objected to disclosure of Canadian lawsuits against
it. More importantly for Canadians, the Harper government did not insist
on disclosure when Canada is sued by the Chinese.
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