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Securing International Law Protections Against Geopolitical Risks for Canadian Outbound Investments Through Investment Treaties

Securing International Law Protections Against Geopolitical Risks for Canadian Outbound Investments Through Investment Tre...
Canadian investors are investing significantly outside of Canada, particularly in the Americas and mineral-rich countries.

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Canadian Investors Increasingly Investing Outside of Canada, Particularly in Americas and Mineral-Rich Countries

Canadian investors are making significant foreign direct investments (FDI) outside of Canada, particularly in the Americas and mineral-rich countries. To protect these investments, Canada has ratified 36 bilateral investment treaties (BITs) and seven free trade agreements (FTAs) with other governments. These treaties protect foreign investors from unlawful actions taken by the host State of the investment, such as discriminatory treatment, unfair and inequitable treatment, and expropriation of the investment. Canadian investors face risks from host States changing laws or failing to uphold agreements, particularly in heavily regulated sectors such as energy and mining. However, Canadian investors have successfully held foreign governments accountable through private arbitrations initiated under these investment treaties when those governments have breached their obligations under international law vis-à-vis those investments. Canadian investors are also able to resort to multilateral instruments such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to bring claims against Mexico. Additionally, Canadian investors should consider structuring their investments through special purpose vehicles (SPVs) incorporated in jurisdictions that have executed investment treaties with the host States of the target investments where Canada does not have investment treaties in force directly with those specific States. Overall, Canadian investors should protect their outbound investments through BITs and FTAs to mitigate geopolitical risks and ensure the protection of their investments.

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