China-Canada Investment Agreement Locks Canada into Legally Binding Terms
Hupacasath First Nation Legal Challenge argues that the deal was unconstitutional but the judge failed to consider the impact on the whole Nation, ruling in favor of the government
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
On October 1, a new trade agreement between China and Canada goes into effect. The Foreign Investment Promotion and Protection Agreement, known as FIPA, was negotiated by Stephen Harper’s government and quietly ratified in September. The deal will give unprecedented powers to China’s state-owned enterprises that are now investing billions in Canada’s natural resources.
The only legal challenge to the agreement has been from Hupacasath First Nations on the west coast of Vancouver Island in British Columbia. They are a five-reserve, 300-member community. They have registered their resistance to the agreement by way of a federal court challenge to halt FIPA. But the federal court ruled against the First Nations challenge in favor of the government.
Another concern that Canadians have is the impact this agreement has on the Canadian environment and labor law.
Now to discuss the terms and the resistance to the agreement, we have two guests, Brenda Sayers and Gus Van-Harten.
Brenda Sayers is joining us from Port Alberni, Canada. She is portfolio holder for Canada-China FIPA court challenge. She’s a member of the Hupacasath First Nations.
Joining us also is Gus Van-Harten. Gus is a Canadian law professor at Osgood Law School at York University. He researches investment treaties and international investment law.
Thank you both for joining us.
BRENDA SAYERS, PORTFOLIO HOLDER FOR THE CANADA CHINA FIPA COURT CHALLENGE: Good to be here.
PROFESSOR, OSGOODE HALL LAW SCHOOL: Thanks for having me.
PERIES: Brenda, why did Hupacasath First Nations mount this court challenge? What are the implications it has for First Nations people and Canadians?
SAYERS: Well, when chief in council looked at it in September 2012, we realized a few things about it. For one, it’s for 31 years; has a 31-year life. And when we looked at our natural resources and our traditional territory, we looked forward at the implications it would have on our natural resources. We also looked at the future generations, 31 years down, and wanted to tell them that we stood up and said no on their behalf because we want them to have the same right to the wildlife, to clean water, clean air, and jobs to sustain their families.
PERIES: So how will this agreement affect the natural resources and conditions of your reserve?
SAYERS: Well, under the terms of FIPA, the investor-state arbitration clause will give China incredible powers. And that–one of the powers it will give is the right to sue Canada for any reason they see interferes with their ability to make a profit. So, for example, if First Nations anywhere in Canada said no to a natural resource development, that would trigger the investor-state arbitration. And we didn’t feel that our aboriginal rights and title should be a trigger. We feel that we have the right, we believe we have the right to manage our own natural resources, how fast they’re extracted, the process, the areas, and the implications it will have on wildlife and our salmon on the West Coast, which we highly revere.
PERIES: It affects your livelihood.
PERIES: Yeah. And, Gus, where is the court case at?
VAN-HARTEN: Brenda might know better than I the specifics of that, but I understood it was–an appeal of the first instance court decision was still pending at the time that the FIPA was ratified ratified by the federal government.
PERIES: And, Gus, recently–I guess two years ago, not recently–but in an open letter to Prime Minister Harper urging a full public review of FIPA, you said it has “profound implications” for Canadian labor law and the environmental regulations that govern democratic standards. Can you expand on that? What did you mean by that?
VAN-HARTEN: Well, I think the implication arises from the special rights that foreign investors obtain under the FIPA to challenge decisions of a legislature or government or court at any level in Canada, if we’re talking about Chinese investors. And those rights are subject to an international arbitration mechanism that is much more powerful than what is available internationally to anyone else who objects to what a country is doing. And among other things, it gives foreign investors the right to sue and to be awarded compensation by arbitrators that is calculated from the time a government or legislature or court made its original decision. And one of the dynamics of this means that governments can never really be sure whether they’ll be be found to have violated the treaty or not. And if it’s a big company, if there’s a lot at stake, they could be racking up very large amounts of public liabilities waiting for the arbitrators to decide. And if the arbitrators decide against them, there’s typically no opportunity for the government to kind of get out of that.
So my worry is that that creates a lot of bargaining power for foreign investors to pressure governments behind the scenes when the government is considering doing something that the foreign investor doesn’t like.
PERIES: And how does this play out, practically? I mean, who would bring about a charge? Where is it fought? For example, if Hupacasath First Nations, by way of protest, prevent the extraction or intervention in their reserve here, would a case be brought about against the Canadian government?
VAN-HARTEN: Well, perhaps the first thing that might happen is if there was an affected Chinese investor, its representatives might go to the Canadian government, Canadian authorities, and say, look, we’re not happy happy with the situation, we’d like you to do something to implement our rights under the FIPA. Those rights include rights to what’s called fair and equitable treatment, full protection and security. And they’re quite general concepts, but when you look at the awards arbitrators have issued, you see that the they can be turned into rights of a foreign investor to receive a stable regulatory framework that doesn’t change, or rights to receive police protection when there’s public opposition to their activities, say, a blockade or other kinds of protests. Foreign investors do have a certain right to expect police protection, given the circumstances under the FIPA itself, beyond domestic law.
Now, how is that all going to play out if the foreign investor is not happy with the outcome? Then it can bring a claim against Canada. The FIPA provides that the government can keep that claim confidential until an award is issued. It’s possible, therefore, that the government might change its decisions or pay out public money without public knowledge behind the scenes to settle with the foreign investor before an award is issued. So even before you get to an actual award that the public would automatically know about under the FIPA, there could be a lot going on behind the scenes that the public won’t see and that is hard to evaluate from the point of view of any outside observer.
PERIES: Brenda, where is the FIPA challenge at? And perhaps that should have been a question to you and not Gus. And can it still be stopped?
SAYERS: Well, right now it’s in front of the court of appeal. And on September 12, Prime Minister Harper used his royal prerogative to ratify the deal. And the diplomatic note from Canada has been delivered to China. It’s now a binding agreement between the two countries or the two states. And apparently there is no place that we can go with this legal challenge. It’s kind of a quandary to the courts, because this has never happened before–as far as we know, it’s unprecedented–where a prime minister would override a decision of the court. So Canada’s legal counsel, Hupacasath’s legal counsel, and the court of appeal are all in discussion what’s going to happen from here. So at this point we’re not sure how things will unfold.
PERIES: And, Gus, do Hupacasath First Nations have a challenge here? Can they do anything to stop the agreement?
VAN-HARTEN: Well, as a matter of international law, once a treaty’s finalized and ratified and it comes into effect, it’s like a deal between the two countries, and it can’t be changed. The deal can’t be changed by one country alone. So if a court in Canada were to conclude that the FIPA was somehow unlawful and so on, that can’t change the terms of the deal and the treaty as a matter of international law.
The treaty itself includes a 15-year minimum term. Canada would have to give one year’s notice to terminate the treaty after the first 15 years. And then the treaty would continue to apply to existing investments for another 15 years after termination. So the earliest date at which this treaty would cease to have any legal effect in Canada is–assuming there are Chinese investors here, which, of course, there are–is in 31 years. And that could potentially change if China agreed with Canada to change this. But it’s a long-term deal, and it can’t be changed now by any decision-maker in Canada acting without China’s consent.
PERIES: Even if Hupacasath First Nations managed to appeal and have their day in court and get heard, there’s no way to retract this deal for 15 years.
VAN-HARTEN: Not as a matter of international law. Of course, Canadian court could make decisions that would be very significant from the point of view of Canadian domestic law, maybe related to what level of government was responsible if arbitrators ordered large amounts of money to be paid by Canada. How is that sorted out as a matter of Canadian law? Is it the federal government, a provincial government? Is it First Nation? Who is responsible to pay? You know, that’s not something that’s going to be bound by the FIPA. That would be a matter of Canadian law.
But as for the FIPA itself, its obligations cannot be changed by one country’s courts, because, of course, then that would mean any agreement between countries could be invalidated by one country acting alone.
PERIES: Right. And, Gus, one more question to you. What implications does it have for Canadian labor?
VAN-HARTEN: It’s could have a wide range implications. For example, there are prohibitions in the FIPA on requirements for foreign investors to use domestic content. That would mean to be required to use domestic workforce or domestic suppliers as a condition of foreign investors. Those are called performance requirements. They’re prohibited in the FIPA and subject to these arbitration clauses, which makes them particularly powerful.
Likewise, there are these broad rights that arbitrators have concluded foreign investors have under these treaties to be protected from changes to the regulatory framework. And I think where that’s maybe most relevant is if Chinese investors invested in projects in Canada on an expectation they could bring in a Chinese workforce or some other foreign workforce. It would be difficult for a future government in Canada to change the rules to require these Canadian workers without running, I think, significant risks of being found down the road to be liable to pay very large amounts, potentially, to the Chinese investors.
And so it’s those uncertain but potentially very large liabilities future governments will have, what I think is the key to the constraints that a treaty like this puts on the democratic choices of legislatures, the regulatory choices of governments, the decisions even of courts themselves at the domestic level, at the level of Canada’s legal system.
PERIES: Brenda, let me give you the last word here. Any words of wisdom for us?
SAYERS: Well, Hupacasath First Nation hasn’t given up. We’re looking at alternatives on what we can do to change or minimize the impact on aboriginal race and title. We’re currently working with several organizations, and we’re continuing to fight the fight against FIPA.
And on behalf of Hupacasath First Nations, I would just like to thank people for supporting us over the last two years. We have raised enough money to get to the court of appeal. We’ve had a lot of support from organizations across Canada. And it’s been an honor to work on everyone’s behalf. And I look forward to doing more work with people. Thank you.
PERIES: And thank you both for joining us.
VAN-HARTEN: Thank you.
PERIES: Thank you for joining us on The Real News Network.
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