No. They go to an arbitration. Three international lawyers hear the case, usually in a hotel room. There are no appeals. There is no access to a Canadian court before being thrust into arbitration.
While “international arbitration” may sound fair and neutral, the reality is different. A recent report, “Profiting from Injustice: How law firms, arbitrators and financiers are fuelling an investment arbitration boom,” (Corporate Europe Observatory, Transnational Institute, Brussels, Amsterdam, November 2012), provides some disturbing details of the world of global arbitration.
The report concluded that:
“Rather than acting as fair and neutral intermediaries, it has become clear that the arbitration industry has a vested interest in perpetuating an investment regime that prioritises the rights of investors at the expense of democratically elected national governments…”
Here are some of the report’s key findings:
- There is a huge increase in the number of such cases — from 38 cases in 1996, to 450 in 2011;
- The cost to a country of fighting an investor challenge is on average $8 million (US$), and rise to over $30 million (US$) in some cases;
- Elite arbitration lawyers charge as much as $1,000/hour;
- Poor countries have to spend scarce resources on lawyers to battle global multi-nationals. For example, the Philippines spent $58 million defending a claim by German airport operator Fraport. That amount of money could have paid the salaries of 12,500 school teachers for the year;
- A small group of elite international lawyers handle a large proportion of the cases. 15 lawyers alone decided 55% of all known investor-state disputes; and
- They are often associated with firms that advise governments to enter into such treaties.
After I read this report, I raised the issue on the floor of the House, suggesting international investment treaties put us in the hands of “global ambulance chasers.” I think most MPs simply do not understand what we are granting the People’s Republic of China in this investment treaty. But the decision to ratify will not be made by Parliament. The Prime Minister and his Cabinet can decide through an Order in Council.
“When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all […] Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.”
– Juan Fernandez-Armesto, arbitrator from Spain