Posted by Woods LaFortune LLP on Jul 31, 2014

The Canadian business community has been handed new challenges and, more importantly, new opportunities as a result of two recent decisions by the Supreme Court of Canada. First Nations, governments and the private sector face a number of new realities, opportunities and challenges for conducting business on Aboriginal title land and Treaty territory in Canada. This major shift will require new, creative and flexible approaches on all sides, to ensure that Canada continues to strengthen its global competitiveness and to enhance its economic prosperity. First, in a landmark decision*1, the Supreme Court of Canada confirmed the Tsilhoqot’in people’s exclusive Aboriginal title to British Columbia Interior lands. The Court also outlined a legal test for other First Nations across Canada seeking recognition of their title rights.  Wherever a First Nation’s claim passes this test and Aboriginal title is recognized, underlying Crown Interest in the land is not retained. The Court has determined that First Nations able to  successfully establish themselves as Aboriginal land title holders will have the right to extensive possession in addition to ownership rights, including the right to decide the use of the land, the right to profit from economic development of the land, and the right to pro-actively use and manage the land. Those wishing to conduct business wherever Aboriginal title is demonstrated, or may potentially be shown to exist, will need to work with First Nations to negotiate the land title holder’s consent.  As we move forward, business decisions will need to be based on a good understanding of this new reality, including the legal rights, obligations and interests of all concerned. Second, in an equally-important case*2, the Supreme Court of Canada made a major decision on Aboriginal Treaty territory. Regarding the Treaty Number 3 Grassy Narrows First Nation challenge to the issuance of forestry licences, the Court ruled that a Canadian province (Ontario, in this case) has the authority to “take up” the lands in question, and that the federal government need not be involved in the province’s exercise of this authority. Citing its earlier Tsilhqot’in decision, the Court also reinforced its language on the requirement that governments “consult” and “accommodate” the affected First...

Posted by Woods LaFortune LLP on Jul 8, 2014

Article by Catherine Walsh*1 and Michael G. Woods Negotiations for a bilateral Foreign Investment Promotion and Protection Agreement [“FIPA”] between Canada and China have been ongoing for over a decade. An agreement was finally signed on September 9, 2012 during Prime Minster Harper’s visit to China. This agreement represents China’s 140th bilateral investment treaty and Canada’s 25th. Once ratified by both Govern¬ments, the Canada-China FIPA [“C-C FIPA” or the “Agreement”], will come into force, for a minimum period of 15 years. Part I in this series compared the substantive investor protections afforded under the C-C FIPA including national treatment, most-favoured-nation, minimum standard of treatment, performance requirements and expropriation with those provided under Canada’s Model FIPA [“Model”]. This second note will look at the C-C FIPA’s investor-state dispute settlement provisions through a similar lens, with a focus on the process of making a claim. CANADA’S MODEL FIPA Canada’s Model FIPA was designed to be used as a template in negotiations for bilateral investment rules, building on lessons learned from Chapter 11 of the North-American Free Trade Agreement [“NAFTA”]. The Model sets a base for Cana¬dian negotiators and fosters transparency and efficiency in the overall dispute settlement process.*3 It is useful to compare the C-C FIPA’s text with that of the Model to learn more about the Agreement and to identify areas of conten¬tion in the negotiations leading up to the Agreement. INVESTOR-STATE DISPUTE SETTLEMENT IN GENERAL Investment treaties have increasingly been including provi¬sions relating to investor-state dispute settlement [“ISDS”] mechanisms in their text. In general, the ISDS mechanisms found in investment treaties such as FIPAs or Bilateral Investment Treaties provide foreign investors the right to seek compensation for damages arising out of breaches of investment-related obligations by host state governments.*4 These provisions allow private investors of a contracting party to launch an action for compensation directly against a contracting state where that state implements or enforces measures that damage the foreign investor’s investment. Under the C-C FIPA, the ISDS mechanism gives an investor the option of pursuing its rights for damages before an impartial international tribunal. This is perhaps the most important development in international investment law – the provisions...

Posted by Woods LaFortune LLP on Jul 7, 2014

Article by Catherine Walsh and Michael G. Woods *1 Negotiations for a bilateral Foreign Investment Promotion and Protection Agreement [“FIPA”] between Canada and China have been ongoing for over a decade. They commenced in 1994, were interrupted pending China’s accession to the World Trade Organization [“WTO”], and resumed in September 2004. Final talks were held in January 2012 and a Declaration of Intent to conclude negotiations towards a FIPA2 was signed in February 2012 during Prime Minister Harper’s visit to China. The Canada-China FIPA [“C-C FIPA” or the “Agreement”] was signed on September 9, 2012 in Vladivostok, Russia, on the sidelines of the APEC Leaders’ Summit. This agreement represents China’s 140th bilateral investment treaty and Canada’s 25th. The C-C FIPA was tabled on September 21, 2012 for a 21-day sitting period which expired on November 1, 2012. The next step involves ratification of the Agreement by the Cabinet. Once China has ratified the agreement through its domestic legal procedures, the Agreement will come into force. Ratification of the Agreement by Canada has been delayed by a challenge brought forward by a First Nations group in British-Columbia (the Hupacasath Nation) for a failure to consult them prior to singing the treaty. The case was dismissed by the Federal Court in August 2013 and is currently being appealed. A decision in the appeal is anticipated for late 2014. A TOOL TO PROTECT INVESTORS’ RIGHTS The main purposes of a FIPA are to establish clear investment rules and measures to protect foreign investors against discriminatory or arbitrary government practices, to provide effective compensation in the event of an expropriation and to enhance the overall predictability of the policy framework governing foreign investments.*3 The existence of a FIPA has proven to be useful in terms of promoting the parties’ respective markets as a stable destination for investment with clearly defined and enforceable rules. Foreign investors often look to the existence of a strong investment protection agreement as a key consideration in their decision-making process. CHINA AND INVESTMENT China’s growth as an economic superpower is significant for global investment and holds particular importance for Canadians.*4 Foreign investment has become an essential corporate strategy for Canadian companies...