¹ Killmann, Bernd-Roland, “The Access of Individuals to International Trade Dispute Settlement” (1996) 13:3 Int’l Arbitration 143 at 144–7Google Scholar; Lauterpacht, Elihu, “International Law and Private Foreign Investment” (1997) 4 Ind. J. Global Legal Studies 259.Google Scholar

² Special tribunals have been established from time to time to adjudicate disputes between individuals or business enterprises and states arising out of particular situations. E.g., the Iran-United States Claims Tribunal was established by agreement between the United States and Iran to deal with complaints by American investors in connection with the revolution in Iran as a result of which the Shah’s regime was overthrown. See Brower, C. N., “The Iran-United States Claims Tribunal” (1990) 224 Recueil des Cours 123.Google Scholar See generally, Charney, J. I., “Third Party Dispute Setdement and International Law” (1997) 36 Col. J. Transnational L. 65.Google Scholar

³ Some states, including the United States and the European Union, have created procedures by which individuals and enterprises may make complaints about the behaviour of other states and under which states are obliged to consider bringing the complaints forward. Canada has no such procedure. See Thomas, J. C., “Advancement of Private Sector Commercial Interests through International Trade Dispute Settlement Procedures” (1996) 14th Int’l Trade Law Seminar (Department of Justice).Google Scholar

⁴ The lack of international consensus was evidenced most recently by the suspension of negotiations on the Multilateral Agreement on Investment (MAI) sponsored by the Organization for Economie Co-operation and Development in April 1998. See Multilateral Agreement on Investment, Consolidated Text and Commentary (Paris: OECD, 1997): Drohan, M., “Nations Set to Bury MAI,” Globe and Mail (Apr. 27, 1998) B-1.Google Scholar

⁵ Done Dec. 17, 1992, reprinted in (1993) 32 I.L.M. 605 [hereinafter NAFTA].

⁶ Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, Mar. 18, 1965, 575 UNTS 159, reprinted in 4 I.L.M. 532 (1965) [hereinafter ICSID Convention]. Canada is not a party to the ICSID Convention.

⁷ The mandate of ICSID is set out in Art. 1 (2) of the ICSID Convention: “The purpose of the Centre shall be to provide facilities for conciliation and arbitra-tion of investment disputes between Contracting States and nationals of other Contracting States in accordance with the provisions of this Convention.”

⁸ ICSID Convention, supra note 6, Art. 25.

⁹ Since coming into force in 1966, ICSID has been used for only 42 arbitrations, and most of the completed cases were setded before an award was rendered. It must be acknowledged that disputes may have been resolved, in part, because of the possibility of resort to the ICSID process.

¹⁰ International Center for the Settlement of Investment Disputes, Additional Facility for the Administration of Conciliation, Arbitration and Fact-Finding Proceedings, created by the Administrative Council of ICSID, Sept. 27, 1978, reprinted in Document ICSID/11 (June 1979) [hereinafter Additional Facility Rules].

¹¹ No final award has ever been made under the Additional Facility Rules, ibid.

¹² UN Centre for Transnational Corporations, Bilateral Investment Treaties in the Mid 1990s (forthcoming). This community of interest also made it easier for investors contracting with a state to include provisions requiring the state to submit to some form of arbitration should a dispute arise. It may yet facilitate the completion of the long-standing effort in the OECD to develop a MAI. As part of the Final Act embodying the Results of the Uruguay Round of Trade Negotiations in 1994 ((1994) 33 ILM 1), the contracting parties agreed to a very modest agreement dealing with some investment issues (the Agreement on Trade Related Investment Measures), and some parties made commitments regarding investment in the General Agreement on Trade in Services. At the Singapore Ministerial Meeting of the World Trade Organization in December 1996, a working group was set up to study trade and investment issues.

^is The U.S. is both the most significant destination for outward Canadian foreign investment and the origin of more foreign investment in Canada than any other source. An investor-state dispute settlement procedure on the NAFTA model was included in the recently concluded Canada-Chile Free Trade Agreement (Ch. G). See generally, J. Yrarrazavale, C, “Foreign Investment under NAFTA: Implications for Chile” (1994) 25 Rev. Gen. du Droit 455 at 462.Google Scholar

¹⁴ Arbitration Rules of the UN Commission on International Trade Law, approved by the UN General Assembly, Dec. 15, 1976, UN GAOR, 31st Sess., Supp. No. 17 at 46, Ch. V, Sec. C, U. Doc. A/31/17, 1976, reprinted in UNCITRAL Arbitration Rules (New York: UN, 1977) [hereinafter UNCITRAL Rules].

¹⁵ The ICSID Rules are contained in the ICSID Convention, supra note 6, and the following rules created under the Convention and published by ICSID in ICSID Basic Documents (Washington: ICSID, 1985): Administrative and Financial Regulations; Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings (Institution Rules); Rules of Procedure for Arbitration Proceedings (Arbitration Rules).

¹⁶ Additional Facility Rules, supra note 10.

¹⁷ Supra note 4. One important difference between NAFTA Chapter 11 and the draft MAI is that the latter also contemplates the option of arbitration under the rules of the International Chamber of Commerce (Draft MAI, supra note 4, Art. V.D.Z.C. iv.).

¹⁸ In OECD, “Financial Market Trends No. 67” (Paris: OECD, 1997), it is reported that foreign direct investment globally exceeded US $250 billion in 1996, following eight years of continuous growth.

¹⁹ NAFTA, supra note 5, Art. 1139. “[E]nterprise” is defined in Article 201 as “any entity constituted or organized under applicable law, whether or not for profit, and whether privately owned or governmentally owned, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association.”

²⁰ NAFTA Art. 1122.

²¹ NAFTA Art. 1113. In order to deny access on the second ground, notification to the NAFTA Party under whose laws the enterprise is constituted or organized is required in accordance with Art. 1803. The NAFTA Party so notified may request consultations under Art. 2 006. A NAFTA Party may deny all the benefits of Ch. 11 on the grounds described, not just access to dispute settlement.

²² Under NAFTA Art. 1113, a NAFTA Party may deny the benefits of Ch. 11 where ( 1 ) the NAFTA Party complained against does not maintain diplomatic rela-tions with the ultimate investor’s state; (2) the NAFTA Party complained against has put in place measures in relation to the ultimate investor’s state that prohibit transactions with the ultimate investors or that would be violated or circumvented if access to dispute settlement were given.

²³ NAFTA Art. 1106. See infra note 36 and accompanying text.

²⁴ NAFTA Art. 1114.2.

²⁵ NAFTA Art. 1139.

²⁶ Ibid.

²⁷ See Schreuer, C., “Commentary on the ICSID Convention: Art. 25” (1996) 11 ICSID Rev. Foreign Invt. L. J. 318 at 355–73.CrossRefGoogle Scholar

²⁸ Ibid., 372–73.

²⁹ Additional Facility Rules, supra note 10, Art. 4(3).

³⁰ Comment (iii) to Art. 4 of the Additional Facility Rules, ibid. See also Schreuer, supra note 27 at 367–70.

³¹ NAFTA Art. 1117.

³² Case Concerning Barcelona Traction, Light and Power Co. (Belgium v. Spain), [1970] I.C.J. Rep. 3 (Preliminary Objections). In a subsequent case, the ICJ was more receptive to the protection of such interests, though the case was decided based on the interpretation of a provision of a Treaty of Friendship, Commerce and Navigation rather than on general principles of international law (Case Concerning Elettronica Sicula Sp.A. (ELSI) (U.S. v. Italy), [1989] I.C.J. Rep. 15 (Judgment)).

³³ Measures of state and provincial governments may be complained about as well, except to the extent that reservations have been taken under NAFTA Art. 1108(a)(ii). All provinces and states have taken very broad reservations: Johnson, J., The North American Free Trade Agreement: A Comprehensive Guide 297–323 (Toronto: Canada Law Book, 1994).Google Scholar Also, the national treatment obligation in relation to a state or province is only to provide treatment no less favourable than the most favourable treatment accorded by that state or province to investors and investments of investors of the NAFTA Party of which it forms a part (Art. 1102.3).

³⁴ NAFTA Arts. 1502.3(a) and 1503.2.

³⁵ NAFTA Arts. 1116 (claim by a NAFTA Investor on its own behalf) and 1117 (claim by a NAFTA Investor on behalf of an enterprise).

³⁶ The substantive standards of behaviour set for governments are discussed in more detail in Price, D. M., “An Overview of the NAFTA Investment Chapter: Substantive Rules and Investor-State Dispute Settlement” (1993) 27 Int’l Lawyer 727Google Scholar; and Gantz, D. A., “Resolution of Investment Disputes under the North American Free Trade Agreement” (1993) 10 Arizona J. of Int’l and Comp. L. 335.Google Scholar

³⁷ See Johnson, supra note 33 at 297–323 and Horlick, G. N. and Marti, A. L., “NAFTA Chapter 11B — A Private Right of Action to Enforce Market Access through Investment” (1997) 14:1 J. Int’l Arbitration 43 at 50–2.Google Scholar

³⁸ This power is granted under the Exon-FIorio amendment (s. 5021 of the Omnibus Trade and Competitiveness Act, 1988 (Pub. Law 100-418)). See Johnson, supra note 33 at 302–3.

³⁹ NAFTA Art. 1401 does so by incorporating by reference Arts. 1109, 1110, 1111, and 1113-38 from Ch. 11.

⁴⁰ NAFTA Arts. 1116.1 and 1117.1.

⁴¹ See Dearden, R., “Arbitration of Expropriation Disputes between an Investor and the State under the North American Free Trade Agreement” (1994) J. World Trade 113 at 117–20.Google Scholar

⁴² An investor must wait until at least six months have expired following “the events giving rise to a claim” before initiating Ch. 11 proceedings: see infra note 48 and accompanying text

⁴³ Where a claim is made that relies on pre-legislation government action followed by legislation, one question that arises is whether a failure to wait six months from the date of enactment is simply a procedural irregularity or a defect in the jurisdiction of the arbitral panel.

⁴⁴ NAFTA Art. 1116.2 (claim by a NAFTA Investor on its own behalf) and Art-1117.2 (claim by a NAFTA Investor on behalf of an enterprise). None of the three sets of Arbitral Rules imposes a limitation period.

⁴⁵ A substantial body of literature describes each of the three sets of Arbitral Rules referred to in Ch. 11: e.g., J. Paulsson “ICSID Arbitration: The Host State’s Point of View” and W. Craig “ICSID Arbitration: The Foreign Investor’s Point of View,” chs. 14 and 15 in Problems and Solutions in International Business (Southwestern Legal Foundation, 1993); Brewer, Thomas, “International Investment Dispute Settlement Procedures: The Evolving Regime for Foreign Direct Investment,” (1995) 26 L. and Policy in Int’l Bus. 633.Google Scholar An excellent table comparing the three sets of rules and indicating the changes made by Ch. 11 is set out as an annex to Eklund, Cheri, “A Primer on the Arbitration of NAFTA Chapter Eleven Investor-State Disputes” (1994) 11:4 J. Int’l Arbitration 135 at 159–71.CrossRefGoogle Scholar

⁴⁶ As noted earlier, the MMT case is proceeding under the UNCITRAL Rules while the two cases by American investors against Mexico are being dealt with under the Additional Facility Rules. Who qualifies as an investor from one of the NAFTA Party states is discussed above, supra notes 19-32 and accompanying text

⁴⁷ NAFTA Art. 1118. There is no similar exhortation to negotiate in any of the Arbitral Rules.

⁴⁸ NAFTA Art. 1120. None of the three sets of Arbitral Rules contains such a condition.

⁴⁹ NAFTA Art. 1119. None of the three sets of Arbitral Rules contains such a condition.

⁵⁰ NAFTA Art. 1121.1.

⁵¹ NAFTA Art. 1121.2.

⁵² This observation was made by G. N. Horlick and A. L. Marti, supra note 37 at 47.

⁵³ NAFTAArt 1135.1. A tribunal may notaward punitive damages (Art. 1135.3).

⁵⁴ None of the Arbitral Rules contains restrictions on the remedies that may be granted: infra notes 72–77 and accompanying text.

⁵⁵ Art. 1122 provides that the consent satisfies the jurisdictional requirements of the ICSID Convention and the Additional Facility Rules. It is also sufficient for the purposes of UNCITRAL arbitration.

⁵⁶ NAFTA Art. 1123. In any event, this is essentially the same process as is contemplated in the Arbitral Rules: ICSID Rules, supra note 15, Art. 37(2); Additional Facility Rules, supra note 10, Art. 6; UNCITRAL Rules, supra note 14, Art 5.

⁵⁷ These requirements are discussed below, infra notes 59-62 and accompanying text.

⁵⁸ NAFTA Art. 1124. The provisions under the Arbitral Rules for appointment in default of an appointment by the parties that would apply in the absence of NAFTA, are similar. The ICSID Rules and the Additional Facility Rules allow 90 days, or such other period as the parties agree, before action by the appointing authority may be requested, and provide for appointments to be made by the Chairman of the Administrative Council of ICSID: ICSID Rules, supra note 15, Art. 38; Additional Facility Rules, supra note 10, Art. 6. In the case of ICSID arbitrations, all such appointments must be made from the ICSID Panel: ICSID Rules, supra note 15, Art. 40. Under the UNCITRAL Rules, only 30 days need to elapse before a party may request an appointing authority to appoint arbitrators: UNCITRAL Rules, supra note 14, Art. 7. If the parties have not agreed on an appointing authority, a party may request the secretary-general of the Permanent Court of Arbitration at The Hague to designate an appointing authority.

⁵⁹ ICSID Rules, supra note 15, Art. 14; Additional Facility Rules, supra note 10, Art. 9; UNCITRAL Rules, supra note 14, Arts 9–10.

⁶⁰ ICSID Rules, ibid., Art. 57, Rule 9; Additional Facility Rules, supra note 10, Art. 16; UNCITRAL Rules, supra note 14, Arts 10–12.

⁶¹ Code of Conduct for the Dispute Setdement Procedures under Chapters 19 and 20 of NAFTA, Canada Gazette Part I, Jan. 22, 1994 (Code of Conduct). The Code of Conduct is established under NAFTA Art. 1909.1 note that Ch. 11 proceedings are already referred to in the Code of Conduct, although the obligations in the Code do not apply to members of tribunals under Ch. 11. The ICSID Rules have been considered in several cases: See Parra, A. R., “The Rights and Duties of ICSID Arbitrators,” (1995) ICC Int’l. Arbitration Bulletin (Spec. Supp.) 50.Google Scholar

⁶² In one of only three Ch. 19 cases to go to an Extraordinary Challenge Committee, a challenge to the independence of the two Canadian members of the panel was a significant issue (Softwood Lumber, ECC-94-1904-O1USA). The challenge was unsuccessful.

⁶³ NAFTA Art. 1126. None of the Arbitral Rules contains a procedure for consolidation.

⁶⁴ Done at New York, June 10, 1958, UN Doc. No. E/Conf. 26/9 Rev. 1; 330 U.N.T.S. 3 [hereinafter New York Convention].

⁶⁵ NAFTA Art 1130. Under the UNCITRAL Rules, the parties may agree on the place of arbitration and, if they do not, the tribunal decides (UNCITRAL Rules, supra note 14, Art. 16). The ICSID Rules require the parties to agree if the arbitration is to be anywhere other than the ICSID Centre in Washington (ICSID Rules, supra note 15, Art. 63). Under the Additional Facility Rules, the place of arbitrations is determined by the tribunal in consultation with the parties, but must be held in a state party to the New York Convention (Additional Facility Rules, supra note to, Arts. 20–21).

⁶⁶ The Free Trade Commission is established under Art. 2001 of NAFTA and consists of cabinet-level representatives of the three NAFTA Parties or their designates. Under NAFTA Art. 2002.3(c), the Free Trade Commission may direct the Secretariat to support the work of other committees and groups established under NAFTA and otherwise facilitate the operation of NAFTA.

⁶⁷ NAFTA Art. 1127.

⁶⁸ NAFTA Art. 1129. Where a NAFTA Party receives such material it must treat it as if it were the Party complained against This means, in part, that the NAFTA Party must ensure that the material remains confidential.

⁶⁹ NAFTA Art 1128.

⁷⁰ NAFTA Art. 1131.

⁷¹ NAFTA Art. 1132. The basic rule under all three sets of Arbitral Rules for disputes not governed by NAFTA Ch. 11 is that the governing law is that agreed on by the parties. In default of agreement, the Additional Facility Rules and the UNCITRAL Rules provide that the tribunal shall determine the applicable law by using the conflict of laws rules that it considers appropriate: Additional Facility Rules, supra note 10, Art. 55; UNCITRAL Rules, supra note 14, Art. 33. Failing a designation by the parties, the Additional Facility Rules also provide for the application of international law rules that the tribunal decides are appropriate. Under the ICSID Rules, in default of agreement the law to be applied is the law of the state complained against and any applicable rules of international law: ICSID Rules, supra note 15, Art 42(1).

⁷² NAFTA Art. 1134.

⁷³ The Ch. 11 rules on interim relief vary the operation of the Arbitral Rules in several ways. Under the ICSID Rules and the Additional Facility Rules, interim relief may be limited or even excluded, if the parties agree. Such an agreement would now appear to be prevented by NAFTA. In the absence of an agreement under the ICSID Rules and the Additional Facilities Rules, the parties may request any type of interim relief from a tribunal. The same is true under the UNCITRAL Rules (supra note 14, Art. 36). Under NAFTA, however, relief cannot extend to suspending the measure complained about. Regarding interim relief from the courts, the ICSID Rules, the Additional Facility Rules, and the UNCITRAL Rules all expressly permit parties to seek interim relief from competent judicial authorities: (ICSID Rules, supra note 15, Art. 47, Rule 39(5); Additional Facility Rules, supra note 10, Art. 47; UNCITRAL Rules, supra note 14, Art. 26). In the case of the ICSID Rules, however, this is only permitted if the parties have provided for doing so in their consent to arbitration. Under NAFTA, the parties’ ability to resort to judicial authorities is limited to proceedings for injunctive, declaratory, and other extraordinary relief. This conclusion is based on the NAFTA provision on interim measures, Art. 1134, which does not refer to resort to judicial authorities, and the investor and investment consent requirements in Arts. 1121 and 1122, which do not require a waiver of the right to initiate proceedings for these types of relief.

⁷⁴ NAFTA ArL 1135.3. Where awards are made on the basis of claims on behalf of an investment, the award must go to the investment (Art 1135.2).

⁷⁵ ICSID Rules, supranoxe 15, Arts. 59-61, Rule 28; Additional Facility Rules, supra note 10, Art 59; UNCITRAL Rules, supra note 14, Arts. 38–40.

⁷⁶ This aspect of the Ch. 11 process was criticized in Horlick, Gary N. and DeBusk, F. Amanda, “Dispute Resolution under NAFTA: Building on the U.S.Canada FTA, GATT and ICSID” (1993) 10:1 J. of Int’l Arbitration 51 at 55,Google Scholar citing the expense of the ICSID process.

⁷⁷ NAFTA Art. 1137.3.

⁷⁸ Art. 1136 conditions the enforceability of awards under Ch. 11 on the completion of proceedings to revise, set aside, or annul an award: see infra notes 88-94 and accompanying text.

⁷⁹ ICSID Convention, supra note 6, Art. 53.

⁸⁰ Ibid., Art. 52.

⁸¹ E.g., Horlick and DeBusk, supra note 76 at 57, citing Amoco v. Republic of Indonesia, ARB/18/1 (Nov. 20, 1984) and Klockner v. Republic of Cameroon ARB/81/2 (May 17, 1990).

⁸² Additional Facility Rules, supra note 10, Schedule C, Arts. 56-58; UNCITRAL Rules, supra note 14, Arts. 35–7.

⁸³ Additional Facility Rules, ibid., Schedule A (Administrative and Financial), Art. 3.

⁸⁴ Additional Facility Rules, ibid., Art. 53; UNCITRAL Rules, supra note 14, Art 53(4).

⁸⁵ Commercial Arbitration Act, R.S.C. 1985, c. 17 (2nd Supp.), Art. 44. An example of provincial legislation is the International Commercial Arbitrations Act, R.S.O. 1990, c. I.9. These Acts implement the standards in the New York Convention.

⁸⁶ E.g. Quintette Coal Ltd. v. Nippon Steel Corp., (1991), 50 B.C.L.R. (2d) 207 (CA.), leave to appeal to the Supreme Court of Canada refused (1990), 50 B.C.L.R. (2d) xxvii; Schreterv. Gasmac Inc. (1992), 7 O.R. (3d) 608 (Gen. Div.), additional reasons (1992), 89 D.L.R. (4th) 380. Both the Additional Facility Rules and the UNCITRAL Rules provide for proceedings to correct or seek an interpretation of an award (Additional Facility Rules, supra note 10, Arts. 56, 57; UNCITRAL Rules, supra note 14, Arts. 35, 36).

⁸⁷ NAFTA Art. 1114.1 provides as follows: “Nothing in the Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.”

⁸⁸ In August 1998, it was disclosed that the Canadian government and the investor, Ethyl Corporation, had agreed to a settlement under which Canada would pay Ethyl US $13 million and would repeal the ban on MMT.

⁸⁹ NAFTA Art. 1136.1.

⁹⁰ NAFTA Art. 1136.3.

⁹¹ NAFTA Art. 1136.2.

⁹² NAFTA Art. 1136.4.

⁹³ Done at Panama, Jan. 30, 1975, O.A.S.T.S No. 42, reprinted 14 I.L.M. 336.

⁹⁴ New York Convention, supra note 64, Art V; Inter-American Convention on International Commercial Arbitration, ibid., Art. 5.

⁹⁵ NAFTA Art. 1136.5

⁹⁶ ICSID Rules, supra note 15, Rule 48(5); UNCITRAL Rules, supra note 14, Art. 32(5). The Additional Facility Rules do not address publication, but it has been suggested that agreement of the parties would be required: Eklund, supra note 45, at 157.

⁹⁷ NAFTA Annex 1137.4. The secrecy of the Chapter 11 process has drawn significant public criticism in the wake of the settlement of the MMT case.