Canadian investors are investing significantly outside of Canada, particularly in the Americas and mineral-rich countries. Canada has ratified 36 bilateral investment treaties (“BITs”) and seven free trade agreements (“FTAs”) protecting foreign investments that are in force with other governments. BITs protect foreign investors from unlawful actions taken by the host State of the investment (the destination of the outbound FDI). Unlawful actions include discriminatory treatment; unfair and inequitable treatment of the foreign investor and/or its investments; and expropriation of the investment.
Critically, most BITs allow the foreign investor to arbitrate any disputes arising under the BIT directly against the host State government, taking the dispute out of the local courts that likely would play favorites in favor of the host State government. Canadian investors face risks from host States changing laws or failing to uphold agreements, particularly in heavily regulated sectors such as energy and mining.
