More changes coming to Canada-Europe trade deal’s controversial investment court: Freeland

Canada and the EU are in talks to 'finalize the details' of the CETA’s investor-state dispute settlement system.

Trade Minister Chrystia Freeland touted the newly signed Canada-Europe trade deal to the press in the House of Commons foyer on Monday, flanked by her parliamentary secretary, David Lametti, left, special envoy for the deal Pierre Pettigrew, centre, and Steve Verheul, the Canada's chief negotiator for the CETA.The Hill Times photograph by Peter Mazereeuw

PUBLISHED :Monday, Oct. 31, 2016 3:17 PM

Canada and the European Union still have not finished crafting the controversial investor-state court system in the freshly signed trade deal between the two, according to the office of Trade Minister Chrystia Freeland.

The investment court, which would allow European businesses to sue Canada’s government if they felt they had been treated unfairly compared to Canadian companies, and vice-versa, had been perhaps the biggest target of opponents to the Comprehensive Economic and Trade Agreement between Canada and Europe, and one of several sore subjects in the agreement that nearly led Belgium’s Wallonia region to nix the whole thing.

Ms. Freeland (University-Rosedale, Ont.) stood firmly against any renegotiation of the CETA text during 11th-hour talks with the Walloons and Europeans last week, and the Belgians eventually agreed on a political document that mostly reaffirmed and clarified what was already in the deal, apart from a promise to ask the European Court of Justice to pass judgment on the constitutionality of the investment court.

Now that the CETA has been signed, Ms. Freeland’s spokesperson, Alex Lawrence, said the government is working with the EU on further refinement to the investment court system that has caused so much disruption to the trade talks.


“The system in CETA was negotiated to allow it to be further developed. It is something we are continuing to build with our European partners,” wrote Mr. Lawrence in an emailed statement Monday. Prime Minister Justin Trudeau (Papineau, Que.) flew to Brussels to sign the deal with EU leaders on Sunday.

Ms. Freeland herself told reporters Monday the investment court system had been “left very open” when the CETA was finalized, after she was asked whether she thought the investment court would ever be brought into force by EU member states.

“We knew that we were doing some new and important things in dispute settlement, introducing really a new, progressive way of doing it. And we were very aware that Canada and Europe would need to work together to finalize the details of that, to finalize how that would look. And that’s a process that we are now very much beginning to be engaged with Europe on,” she said.

The investment court system is one of the few areas of the CETA that will not come into force provisionally if the European Parliament approves the deal in a vote that will likely come in December. That means it will be left to the national, and some regional, governments of each member state in the EU to decide whether they approve of the investment court, and other parts of the deal that won’t come into effect provisionally.


Ms. Freeland said Monday that “98 per cent” of the deal, including “all the commercially relevant aspects of the agreement,” would come into force provisionally.

The Liberal government already reworked the investor-state dispute settlement system (ISDS) in the CETA once before, in February. Those changes included adopting an investment court system similar to one proposed by the EU last year, where tribunal members who decide on ISDS lawsuits are chosen at random from a list, are appointed by the EU and Canada, and cannot work as lawyers for claimants in ISDS cases. The new system would also include an appeal process for ISDS suits.

Under the ISDS system originally negotiated in the CETA, a panel of arbitrators would have been selected for each case with input from both the country and business involved in the suit. There would have been no mechanism to appeal decisions.

Opposition rose sharply to the CETA in Europe last year, much of it centred around ISDS provisions in the agreement. European businesses and countries have been involved in many ISDS suits in recent years, and social justice groups have raised alarm that a deal with Canada would pave the way for a similar trade agreement with the more litigious United States. The EU-U.S. negotiations, however, have since stalled.