Investment Promotion and Protection in the Canada-UK Trade Relationship

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The promotion and the protection of investment have emerged as a crucial part of the future trade relationship between Canada and the United Kingdom (UK). While Brexit has paved the way for the elaboration of a new bilateral free trade agreement, the significance of foreign direct investment stock in these two countries - CAN$ 97.9 billion of Canadian direct investment in the UK and CAN$ 41.8 billion of direct investment from the UK in Canada in 2016 - makes the consideration of bilateral investment regulation essential. At the same time, the exact nature and content of international investment regulation between Canada and the UK remain highly uncertain. Investment protection has become subject to undeniable controversy. Several stakeholders criticize the lack of legitimacy of international investment arbitration, used in the majority of international investment agreements to settle disputes between foreign investors and states. Numerous calls for reform also demonstrate an increased interest in linking investment protection with issues of human rights, environmental protection, labour rights and the prohibition of corruption. Moreover, the UK has not had control over foreign direct investment since the Lisbon Treaty gave exclusive competence in the area to the European Union; what priorities the UK will set once it has retaken control is unknown. The uncertainty surrounding the nature and the content of an international investment agreement between Canada and the UK requires a deeper understanding of the range of possibilities at hand. This knowledge synthesis project seeks to identify and analyze provisions that could and should be included in any such international investment agreement. Relying on a content analysis of international investment agreements and propositions from experts in international investment law, the project addresses the various possibilities that will have to be considered by negotiators with respect to dispute settlement, the breadth of protections granted to foreign investors, and obligations imposed on these actors. Despite the numerous criticisms that have been formulated against the very nature of international investment law, explicitly engaging with these concerns is entirely feasible from a legal perspective. Synthesizing knowledge regarding these provisions will ensure that policy-makers approach these unique negotiations with the appropriate tools to maximize the benefits to both countries and contribute to building a more legitimate international investment regime.