Corporate Sovereignty Now So Toxic, For Once It Isn't Being Used Against Canada — Yet

from the off-the-media-radar dept

Corporate sovereignty was devised decades ago as a weapon for Western nations to wield on behalf of their investors against emerging nations who stepped out of line. However, its inclusion in NAFTA, the 1994 trade deal between the US, Canada and Mexico, changed the situation dramatically, and saw numerous investor-state dispute settlement (ISDS) suits being brought against Canada, rather than by it. As a 2015 report on ISDS cases under NAFTA from the Canadian Centre of Policy Alternatives noted:

Canada has been the target of over 70% of all NAFTA claims since 2005. Currently, Canada faces nine active claims challenging a wide range of government measures that allegedly interfere with the expected profitability of foreign investments. Foreign investors are seeking over $6 billion in damages from the Canadian government. These include challenges to a ban on fracking by the Quebec provincial government and a decision by a Canadian federal court to invalidate a pharmaceutical patent on the basis that it was not sufficiently innovative or useful.

Despite that painful track record, in 2014 Canada signed the Foreign Investor Protection Agreement (FIPA) with China, which not only included corporate sovereignty provisions, but guaranteed that they would take precedence over the Canadian constitution for 31 years. However, it seems that something — maybe the decision by TransCanada to sue the US for $15 billion because of President Obama’s rejection of the Keystone XL pipeline — has started to make people aware of ISDS’s dangers. That, at least, is what a blog post on the Canadian Dogwood Initiative suggests. It’s a story about a Chinese mining company filing a lawsuit against Canada’s provincial government in British Columbia (BC) over a land transfer. You can read the details on the blog, but what’s really interesting here is what the Chinese company is not doing:

The Chinese corporation’s allegations of expropriation and lack of consultation will be considered under established Canadian law by the Supreme Court of British Columbia. Generally speaking, weak corporate interests in land — such as mineral tenures — while entitled to “procedural fairness” are not entitled to “consultation.” Nor will the Chinese corporation be entitled to compensation if the court rules the province?s transfer was an “indirect expropriation.” Under Canada’s law, only direct expropriation is compensable.

In other words, this is not a case involving corporate sovereignty — well, not yet. As the Dogwood Initiative post points out, if the Chinese company loses its case in the Canadian court, it can simply invoke that FIPA deal and use ISDS to try again:

If China Metals goes this route, the secret trade panel would not be bound by Canadian law. As environmental lawyer David Boyd points out, unfortunately for the province, and taxpayers, “ISDS tribunals have repeatedly held that indirect expropriation [?] gives foreign investors the right to compensation.”

So, the obvious question is: why didn’t the Chinese company invoke FIPA immediately, and enjoy the huge advantages of corporate sovereignty? The blog post has a pretty plausible explanation:

Had China Metals launched a FIPA-based investor-state lawsuit right now, Canadians would have a tangible example of the corporate superpowers entrenched in these trade deals. That might spark a backlash against trade deals and could delay not only a [more extensive trade] deal with China, but the controversial Trans Pacific Partnership (TPP) as well. So for the time being this mining case is proceeding in BC Supreme Court, almost entirely off the media radar.

In other words, as in Europe, corporate sovereignty in Canada is becoming so toxic that companies are trying hard to avoid any association with it. Of course, if China Metals loses in the provincial court, it seems likely that it will then move on to using ISDS anyway. However, at least doing so will expose the vastly different legal standards of domestic courts and corporate sovereignty tribunals.

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Companies: china metals

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Comments on “Corporate Sovereignty Now So Toxic, For Once It Isn't Being Used Against Canada — Yet”

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Anonymous Coward says:

no wonder companies insist on this being included in all these ‘Trade Deals’! why dont governments refuse to recognise these deals in the first place, let alone sign to accept them? they should never be allowed to be started, let alone discussed! and as for letting them be negotiated behind a complete veil of secrecy, that’s preposterous! nothing good ever comes from secrecy!!

Anonymous Coward says:

A trade agreement overrides the constitution?!?

“Despite that painful track record, in 2014 Canada signed the Foreign Investor Protection Agreement (FIPA) with China, which not only included corporate sovereignty provisions, but guaranteed that they would take precedence over the Canadian constitution for 31 years.”

WTF! How is it even legal for a treaty to override your own constitution? The constitution is the supreme law of the land that must be amended to be changed.

Anonymous Coward says:

Re: A trade agreement overrides the constitution?!?

Where have you been?

Show me a group of people trying to put a stop to this short so shit that is not nearly universally reviled by both sides?

Let me assure you that people want it this way because they are either to damn ignorant to know any better or are afraid to ruin their public reputation by saying intelligent things.

Trust me, there are far… FAR more stupid ignorant mouth breathers out that will do nothing more than yell, scream, and whine the moment you say something their dogma does not agree with. Take a trip to an American University some time and try see how much people hate their liberties. Heck, just read the news!

Anonymous Coward says:

You mean then Prime Minister Stephen Harper signed the deal with China while keeping it a secret from most Canadians, and ignoring the fact it breaks several Canadian Laws protecting Canadian citizens. All for a significant personal gain to wannabe dictator harper.

Canada had nothing to do with signing that agreement just a corrupt politician pretending to act on behalf of Canada.

TheScamCalledTPP says:


if i were the govt id find a person to sue those places back usng the charter of rights and freedoms. WHILE courts for criminals have been able to get small time frames to go round it, you cant form outset with no crime gut the charter…..

THAT ITSELF IS A VIOLATION AND ILLEGAL TO DO…PERIOD….this s why corporate scam er sovereignty is all a scam.

Anonymous Coward says:

Re: @all

I don’t know about Canadian law but in the US it is legal to file a counter-suit. One can allege the original suit has no standing or merit, can claim the original suit is frivolous, can ask for double damages (and some jurisdictions allow more), and claim malpractice against the lawyer(s) that filed the original suit.

Adjudication, however, is another story. In the specific case in the article should the government be named as defendant what’s stopping the government from filing a counter-suit? Even if it never gets adjudicated – or the government loses – the case will likely be noticed thus calling attention to the situation.

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