Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada - India Foreign Investment Protection and Promotion Agreement Should Be Finalized Soon

MSN is reporting that Canada's Trade Minister, Peter Van Loan, has indicated that the Canada - India Foreign Investment Protection and Promotion Agreement (FIPPA) (Canada's bilateral investment treaty) should be finalized soon. See http://news.in.msn.com/international/article.aspx?cp-documentid=4383002

Canada and India announced the conclusion of negotiations of the FIPPA on June 16, 2007 during the visit to Ottawa of India’s then Minister of Commerce & Industry, Mr. Kamal Nath. Please see the Trade Lawyers Blog Article dated June 16, 2007 - http://tradelawyersblog.com/blog/archive/2007/june/article/canada-signs-fipa-with-india/?tx_ttnews[day]=16&cHash=60d796c5de

Canada and India have been "scrubbing" the concluded FIPPA since then; which means that the legal teams in both countries are adjusting the language to resolve some issues. During this process, in October 2009, India notified Canada that it had some concerns with the agreed text. The recent announcement suggests that resolutions to the issues have been negotiated.

FIPPAs are bilateral investment treaties. They set out the rights of investors from Country A who are engaging in investment activities in the jurisdiction of Country B. In other words, Country B cannot do certain things that would negatively affect the investor or investment. One of the key principles in non-discrimination - the Countries agree to not discriminate (MFN, national treatment, fair and equitable treatment, etc.) when it comes to an investor or investment of the other Party. Another important right is that the governments cannot expropriate (directly or indirectly) an investment of an investor of the other Country (e.g., Country A cannot nationalize a factory owned by an investor of Country B that is located in Country A (or a developed resource property, etc.) without paying compensation.

Many modern FIPPAs and BIT contain an investor-State dispute settlement mechanism (like NAFTA Chapter 11) that allows an investor to bring an arbitration against a Party to a FIPPA/BIT if they undertake an offending behaviour that negatively affects the investor's investment in the territory of the other Country.

Given the significant trade between Canada and India, the conclusion of the Canada-India FIPPA will be welcome news to Indo-Canadians and businesses who wish more legal certainty (less investment risk).

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