OTTAWA—Canadian investors disproportionately target environmental policy in developing nations when they file investor-state lawsuits outside North America, according to new analysis released today by the Canadian Centre for Policy Alternatives (CCPA). Environmental policy is the fastest growing trigger for such investor-state dispute settlement (ISDS) cases.
“Canadian multinational corporations, especially in the mining and energy sectors, are taking advantage of international arbitration to challenge the efforts of foreign governments to protect their citizens and environment,” says report co-author and CCPA researcher Hadrian Mertins-Kirkwood. “Canadian investors have already used ISDS to do serious damage to public interest regulations in many developing countries, but the risk that ISDS poses to global efforts to mitigate climate change is an especially serious concern moving forward.”
The report, Digging for Dividends, finds that since 1999, Canadian investors have initiated at least 43 ISDS claims against countries outside North America, whereas only one case has ever been brought against Canada by a country other than the U.S. or Mexico.
Third-party profiteering from the ISDS system, where financial speculators are increasingly engaging in for-profit financing of cases, is also a growing concern. “Shadowy third-party funding is being used to encourage and sustain ISDS cases that would not otherwise be viable,” adds Mertins-Kirkwood.
Among the study’s findings:
Canadian investors in the mining, oil and gas industries were behind 70 per cent of Canadian ISDS cases outside North America even though the extractive sector accounts for only 22 per cent of Canadian investment outside North America;
Canadian investors targeted developing countries in 86 per cent of Canadian ISDS cases outside North America, particularly in Latin America, while only 41 per cent of Canadian investment abroad is hosted by developing countries;
Resource management measures were challenged in 44 per cent of Canadian ISDS cases outside North America, and environmental protection measures were targeted in 23 per cent of cases; and
Total compensation awarded to Canadian firms in decided ISDS cases and related settlements is approximately US$4.4 billion (around $5.9 billion), with an additional US$6 billion claimed in ongoing cases.
The report recommends that the Canadian government remove ISDS from all existing trade and investment agreements, as it recently agreed to do in the Canada-United States-Mexico Agreement (or "New NAFTA"), and exclude such a system from future treaties.
The findings compliment a study to be released on May 2nd, 2019 by MiningWatch Canada, The Institute for Policy Studies and the Center for International Environmental Law, which highlighted the participation of Canadian mining companies in over half of the 38 suits that mining firms have brought against Latin American governments since 1998. In most of these cases, they observe mining companies taking particular aim at hard won measures that Indigenous peoples and other mining-affected communities have fought for to protect their land, water, fragile ecosystems and sacred places from mining and its harmful impacts.
Digging for Dividends: The use and abuse of investor-state dispute settlement by Canadian investors abroad, by co-authors Mertins-Kirkwood and Ben Smith, is available for download on the CCPA website. For more information or to arrange interviews contact: Alyssa O’Dell, CCPA Media and Public Relations Officer, at 613-563-1341 x 307, cell 343-998-7575 or [email protected].