Canada China Foreign Investment Protection Agreement


The Canada-China Agreement on the Promotion and Protection of Foreign Investment (known as FIPA) will enter into force on October 1, 2014, approximately 30 months after Prime Minister Stephen Harper first announced the treaty during his state visit to China in February 2012. The entry into force of the Canada-China FIPA was delayed by political controversies and a legal challenge by a B.C. First Nation. In the 2013 decision, Hupacasath First Nation v. Canada, the First Nation Band received no declaration that Canada must consult with them before ratifying FIPA. The Federal Court of Justice of Canada found that the negative effects of FIPA on first nation rights and title were minimal and speculative. The Court found that FIPA does not deal with certain countries or projects and is a broad national framework similar to that of the North American Free Trade Agreement. While the pending appeal of this decision has yet to be decided, the Ratification of FIPA by the Canadian Government shows that it is confident that this decision will be upheld. Protection and Procedures for the Investment Contract FIPA Canada-China protects Canadian investors in China and Chinese investors in Canada. The two host governments are required to comply with a number of obligations to the other party`s investors, including commitments: FIPA also provides that investors and their investments cannot be expropriated directly or may not be subject to expropriation measures – known as indirect expropriation – unless compensation reflecting fair value and expropriation meets certain requirements. It is intended for a public purpose; It complies with existing laws; And it is not discriminatory.

FIPA allows Canadian investors in China or Chinese investors in Canada to enforce their rights through international arbitration and not through the host government`s national judicial system. The fipa between Canada and China also has a pronounced “cooling” phase, during which a request relates to a measure taken by the Chinese government. A Canadian investor must not only negotiate before arbitration, but also follow China`s administrative audit procedures for at least four months, if available. All FiPA Canada-Chinese arbitration decisions will be public and protected by confidential information. Investors can therefore put their differences in the spotlight. The Canadian government has also stated that it will publish written submissions and, according to FIPA, Canada or China may publish documents if they consider it to be in the public interest.

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