It might not have packed quite the same visual punch as Prime Minister Justin Trudeau’s behaviour in the House of Commons on Wednesday, but the Saskatchewan government’s throne speech —  delivered just the day prior — may be remembered for being equally as bizarre.

Specifically, because of the implicit rejection of climate change science, which was described as “some misguided dogma that has no basis in reality.”

The throne speech, delivered by Lieutenant Governor Vaughn Solomon Schofield, pointed to “oil and gas, coal and uranium, livestock and grains” as allegedly victimized sectors.

“They look at those jobs like they are somehow harming the country and the world,” she read. “To those people, my government has a message. You are wrong. You could not be more wrong.”

Premier Wall Continues to Push Back Against National Climate Action

Such assertions fly in the face of climate change science, which overwhelmingly suggests that fossil fuel extraction, production and usage is at the heart of the ongoing increase in average global temperatures.

Making the throne speech even more peculiar was the fact the provincial government currently states on its website that it “acknowledges the science-based reality of climate change.”  

Premier Brad Wall hasn’t made that government position especially apparent in recent months, consistently opposing calls for provincial and national climate change action. Such hostility has become especially notable given Alberta — a province that has historically been rather resistant to meaningful environmental policies — implemented its own climate change action plan in November.

While Wall attended the Paris Climate Change Conference in November, he was notably absent from the widely circulated photo of the country’s premiers and prime minister. Wall said he attended the international climate gathering to promote clean coal and carbon capture and storage.

In March, Wall said in response to the idea of a national carbon tax: “We just don't think a tax right now when the national economy is facing challenges — a tax that would cost consumers more, cost more at the pumps, potentially cost jobs — is not the right thing, right now.”

Saskatchewan Government Dubs #Climate Change ‘Misguided Dogma’ in Throne Speech https://t.co/OukaVJAlcs pic.twitter.com/JirvqBlBlZ

— DeSmog Canada (@DeSmogCanada) May 19, 2016

Saskatchewan Has Highest Per-Capita Emissions Record in Canada

Saskatchewan sports the highest per-capita emissions of any province: at last count, the province accounts for 10.3 per cent of the country’s emissions despite only boasting three per cent of its people. Between 1990 and 2013, its total emissions increased by 66 per cent, compared to Alberta (the second highest in the category) which increased by 53 per cent.

The oil, gas and mining sector accounts for 34 per cent of the province’s emissions, with the electricity sector chipping in an additional 21 per cent (close to half of the province’s power is generated by burning coal).

This is all in spite of a 2020 target of cutting emissions by 20 per cent below 2006 levels as articulated in the unimplemented Management and Reduction of Greenhouse Gases Act of 2009.

There are plenty of opportunities for the province: agree to put a price on carbon, invest in renewables and public transit, limit the future growth of resource development. Instead, the government has put all its eggs in the carbon capture and storage (CCS) basket, specifically in the form of the maligned SaskPower Boundary Dam project.

In October 2015, it was reported that Boundary Dam features "serious design issues" and was performing well below expectations. Despite that, Wall has refused to critique the project and has continued to point to it as an example of Saskatchewan’s work on the climate change file.

Former Saskatoon Resident Starts Petition to Demand Wall ‘Stop Denying Climate Change’

Jason Mogus — principal strategist at Communicopia and digital director for the Tar Sands Solutions Network — started a petition on Lead Now in response to the climate change denial featured in the throne speech.

Born in Saskatoon, Mogus says he didn’t expect to hear that kind of rhetoric from the Saskatchewan government and that the divisive nature of it sets up “this great battle that they’re these victims of this global conspiracy to steal their jobs.”

“People from Saskatchewan understand the changes that are happening to the land,” he says. “They’re probably more connected to land than most Canadians are. They don’t all live in big cities. They understand the droughts, they understand the changes in winters, they understand fires and weather disasters. I know they’re better than this.”

Mogus suggests the open-ended nature of Trudeau’s climate change strategy — allowing each province to come up with their own version, whether it be a carbon tax, cap-and-trade or regulations — means that Wall has a lot of power to “hold back the entire nation, which is going to hold back the entire world.”

It appears to be true: Saskatchewan currently serves as the lone province with over one million residents to resist substantial climate change action.

Given the need to implement a national policy, such obstinance could result in watered down federal legislation or frameworks. But Mogus maintains optimism the tide can still turn despite the tone of the throne speech.

“I’m confident that people will rise above their personal issues and fears and concerns and smaller views. Saskatchewan brought us Medicare,” he says. “This is a community and caring issue. And I am confident that once they see beyond the rhetoric, Saskatchewan people will do the right thing, which is join with the rest of the world and to take climate action to save lives.”

Image: Brad Wall/Flickr

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With the federal government’s decision on Enbridge’s Northern Gateway oil tanker and pipeline proposal set to come in the next three weeks, the political hot potato is set to be launched back into B.C. Premier Christy Clark’s lap any day now.

Throughout 2012 and 2013, Clark doled out a lot of tough talk when it came to Northern Gateway, going so far as to tell The Globe and Mail that pushing ahead with the pipeline would spur a “national political crisis.”

“Whether or not people supported the pipeline, they would band together to fight the federal government if they decided to intrude into British Columbia without our consent,” she told the newspaper in October 2012.

“This project can only go ahead if it has the social licence to do so. It can only get the social licence from the citizens of British Columbia.”

Speaking to Calgary university students the same month, Clark pointed out the B.C. government could withhold 60 different permits or refuse to hook pumping stations up to the province’s electrical grid.

“The thing is if British Columbia doesn’t give its consent to this, there is no way the federal government or anyone else in the country is going to be able to force it through. It just won’t happen,” Clark said.

These statements don’t leave a whole lot of room for Clark to manoeuvre, especially considering the Globe recently reported that none of her five conditions for approving heavy oil pipelines have been met.

It’s a point that hasn’t been overlooked by B.C. environment and democracy campaigners. Earlier this month, Forest Ethics Advocacy launched a new campaign called Stand Strong Christy.

“Thousands of British Columbians from across the province are sending messages calling on Premier Clark to continue opposing Northern Gateway and standing up for our watersheds, coast and children’s future,” said Nikki Skuce, ForestEthics Advocacy senior energy campaigner.

“With Harper’s likely approval of the pipeline, we need our premier to stand with the majority of B.C. and push back on ever getting Northern Gateway built.”

Meanwhile, another B.C. group is organizing for a citizens’ initiative to put the Enbridge pipeline to an HST-style vote if Clark reverses her position on the project. Dogwood Initiative reports it has 75 local teams collecting petition signatures in advance of the federal government’s decision.

“For this pipeline to be built, First Nations along the route as well as a democratic majority of British Columbians would have to support the project. Neither appears likely,” said Kai Nagata, Dogwood’s energy and democracy director, in a press release.

And another campaign, led by LeadNow and ForestEthics Advocacy, is targeting the 21 Conservative MPs in British Columbia who could feel the electoral fall-out in the next election if the feds green-light Northern Gateway.

While the feds certainly deserve to feel some heat, it’s Clark who the spotlight is likely to shine brightest on in the short-term given her election promise to “put B.C. first” and “stand strong” on her five conditions.

When the Northern Gateway announcement comes down, British Columbians are going to look to Clark to put her money where her mouth is — and it’s hard to see how she’s going to hand off the hot potato this time around.

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Three weeks ago a call-out for a national day of action against pipelines, runaway climate change and reckless expansion of the oilsands drifted over the Rockies and spread north and east across Canada. The response from Canadians has been so overwhelming it now appears November 16th will see the biggest climate event in Canadian history. 

“There is a growing movement in Canada that wants climate put back on the national agenda,” says Logan McIntosh, a coordinator with the Vancouver-based democracy advocacy group LeadNow.

A staggering one hundred communities in nearly all provinces and territories have registered for the event known as Defend Our Climate. The local organizers vary from environmental groups, First Nations, and people organizing a rally for the first time. Participants will creatively demonstrate “a united wall of opposition” in their communities against the federal government’s resource extraction agenda.

“On November 16th we will see this movement is united from coast-to-coast-to-coast,” McIntosh told DeSmog Canada. McIntosh is one of the national organizers of Defend Our Climate.

“It’s easy to feel a sense of hopelessness given Canada’s current political and economic climate. But I fully reject the idea that we can’t turn this ship around,” says Katie Perfitt, organizer of the Defend Our Climate rally in Halifax, Nova Scotia.

Thousands Rallying for the Climate a Sign of the Times in Canada

Planning and promoting an event involving dozens of actions and rallies and thousands of participants across the country usually takes months to accomplish. Defend Our Climate has come together in mere weeks. This may be a sign of the times in Canadians find themselves in.

Defend Our Climate emerges at a time when the federal government is pushing aggressively for the approval of five controversial oilsands pipeline proposals, two of which – Northern Gateway and Line 9 – could have decisions by the New Year. It is hard to find a Canadian province that is not dealing with a pipeline proposal of this sort right now.

Canada heads to this year’s UN talks on the world’s collective response to climate change (UNFCCC) in Warsaw, Poland this week after revelations last October Canada is failing to meet its own greenhouse gas (GHG) emissions reduction targets. Canada also has developed a reputation of hindering the progress of UN climate talks.

“You can't keep expanding the tar sands and meet the reduction target," Mark Jaccard an energy economist at Simon Frasier University told DeSmog in a previous interview.

The oilsands (also called tar sands) of northern Alberta have become the poster child of the federal government's inaction on climate change. The energy intensive process required to turn oilsands bitumen into something similar to oil makes development in the area the fastest growing source of GHG emissions in Canada. And the industry plans on tripling production of this low-grade unconventional oil by 2030.

“Why is Canada moving backwards instead of forward? Why can't the government step in and invest in more sustainable technology instead of spending money harming the environment?” says Abby Locke, Defend Our Climate rally organizer in Oshawa, Ontario. Locke is a third year forensic psychology undergraduate at UOIT in Oshawa.

Participants Will Demonstrate a 'Wall of Opposition' in 100 Communities Across Canada

Locke and other participants will stand together arm-in-arm in front of federal MP Colin Carrie’s office in Oshawa and snap a quick photo of their ‘wall of opposition’, a theme that will play out in Canadian cities and towns from Repulse Bay, Nunavut to Baie-Comeau, Quebec on November 16th.

In Halifax, organizer Katie Perfitt says participants will also lock arms but with a touch of street theatre. Individuals in costumes representing pipelines and fossil fuels will be ‘blocked’ by another group representing alternative energy standing between the ‘pipelines/fossil fuels lobby’ and Nova Scotia’s provincial legislature.

“We need to keep pressuring the federal government and show them large numbers of Canadians are concerned about these issues. The more they are forced to listen, the more they have to do something about it,” Locke told DeSmog Canada. Oshawa is one of the many communities the Line 9 pipeline passes through in Ontario and Quebec.

A Community of Canadians Striving for A Sustainable Energy Future

For many Canadians it may be difficult to share the optimism of people like Perfitt, McIntosh or Locke that Canada can move towards taking adequate action on climate change and reduce the country’s growing carbon footprint. The next federal election will bring either a Liberal or Conservative government and both parties support the expansion of the tar sands and the construction of more pipelines despite the consequences for the climate.

Still, Perfitt finds inspiration in local success stories.

Nova Scotia has enacted legislation that limits the province’s GHG emissions from electrical production and lays out plans for renewable energy to supply 25% of the province’s electricity in two years. Nova Scotia, along with Quebec and Newfoundland, has a moratorium on ‘fracking’ for natural gas in the province.

“Being part of a coast-to-coast-to-coast community of Canadians who believe in a equitable, secure and sustainable energy future for all Canadians gives me hope,” says Perfitt, who is a graduate student in environmental studies.

In a way, Defend Our Climate is the day these Canadian success stories stand together along with the success stories in the making such as BC’s unwavering opposition to Northern Gateway and residents of New Brunswick digging in their heels in against fracking. These are stories that will shape the future of Canada and determine if the nation will join the world in tackling climate change before it is too late.

Image Credit: Defend Our Climate, CAN-RAC Canada, Powershift

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After public outcry was ignored and the NDP’s motion to reject the agreement dismissed, the Hupacasath First Nation is the only thing standing between the Harper government and the ratification of its Foreign Investment Protection and Promotion Act (FIPA) treaty with China.

The Hupacasath will be in court June 5-7 when the judge will hear final arguments from both sides. This is the last step in a nine-month long process to stop the Government of Canada from signing a treaty that would give Chinese companies the power to exploit First Nations’ territory without consulting First Nations people. A decision is expected no earlier than a month from the closing arguments.

With support from the Tsawwassen First Nation, the Union of British Columbia Indian Chiefs, the Serpent River First Nation in Ontario and the Chiefs of Ontario, Hupacasath spokesperson Brenda Sayers believes the case is strong.

“I’m feeling very positive that things will fall in our favour. We have a strong argument that we’ve put forth under section 35 of the constitution.”

The tiny nation from the Alberni Valley in BC, caught on to the agreement, signed in secret last September with the intention of ratifying it in November, and filed the court challenge that stalled the process. Last month, NDP MP Don Davies’ motion to refuse to ratify the agreement was voted down in House of Commons. The Hupacasath are now the last line of defence.

“This will affect our natural resources in our traditional territory to a great extent,” Sayers said. “China is the second largest economic power in the world, moving up to number one, and they have the power and the means to come in and buy Canadian companies and extract the resources from our traditional territory.” The terms of FIPA would mean that any attempt on the part of First Nations to protect their land could be seen as interfering with China’s right to profit, thereby triggering legal action against Canada.

The Hupacasath have also reached their goal of making the challenge publicly funded, raising more than $150,000 through a fundraising campaign supported by Leadnow and the Council of Canadians.

“The way that we’ve looked at this from the start is that it’s everybody’s court challenge. It’s everybody’s responsibility to support the work that’s been undertaken by the First Nations,” she said, adding that she’s disappointed that the provincial government still hasn’t stepped in to support its people.

One of the biggest challenges throughout the process has been getting the word out to Canadians and First Nations across the country. With little coverage from major media outlets, she said it has been difficult for the small nation—of less than 300—to reach a national audience.

“I said it from the beginning and I’ll continue saying it: we need the support. We can’t do it alone,” she said. “We need the support of Canada in a large way to end this thing. We need people to show that they’re not in favour of the Canada-China FIPA.”

The Hupacasath are calling for a Unity Gathering, a peaceful gathering of supporters outside the Vancouver Federal Courthouse on June 5, 6 and 7.

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This post is the first of a series on the Canada-China Investment "Straitjacket:" Exclusive Interview with Gus Van Harten. You can access Part 2 here and Part 3 here.

I recently picked up a copy of Francis Fukuyama's 2011 book, The Origins of Political Order. Sitting on the bedside table at the house I was staying at, the book made for some 'light' bedtime reading. I heaved the enormous tome onto my lap and, opening it to a random page, read this alarming passage: 

There is no rule of law in China today: the Chinese Communist Party does not accept the authority of any other institution in China as superior to it or able to overturn its decisions. Although the People's Republic of China has a constitution, the party makes the constitution rather than the reverse. If the current Chinese government wanted to nationalize all existing foreign investments, or renationalize the holdings of private individuals and return the country to Maoism, there is no legal framework preventing it from doing so.  (Pg 248)

My concerns with China's treatment of foreign investments arose in light of China's recent bid for Nexen, a Canadian company with large holdings in the Alberta tar sands. Since Canada is having trouble with the management of the tar sands now, what would it look like if we had Chinese state-owned enterprises like the Chinese National Offshore Oil Company (CNOOC) in the mix?

It turns out the problem is of magnitudes greater than I had originally conceived, and concerns not only Canada's management of its resources, but its sovereignty, its democracy, and the protection of the rights and values of its citizens.

Perhaps most strikingly, Canada is embracing this threat, showing telltale signs the real culprit in this dangerous deal isn't China at all.

In order to untangle the web of an international trade deal as complex as the China-Canada Investment Treaty, which establishes the terms of the Nexen deal – the biggest overseas takeover by a Chinese company –  I spoke with Professor Gus Van Harten of Osgoode Law School, an expert on foreign investment deals of this sort.

Below is Part 1 of our interview:

Carol Linnitt: Thanks for taking my call, and for making time for me to ask you some questions. I really appreciate that.

[view:in_this_series=block_1]

Gus Van Harten: No problem at all.

CL: I guess I’ll just jump right in. The first question I have regards Canada’s sovereignty over its resources when it engages in these kinds of transactions with state-owned enterprises. Could you talk about Canada’s ability to maintain its sovereignty over the tar sands with this potential Chinese acquisition of Nexen under the Canada-China investment deal?

GVH: Okay, so when we talk about sovereignty, the way a country exercises sovereignty over its territory is by being able to pass laws and enact regulations that apply to companies and anyone else operating in its territory. And if there are any disputes about the laws or the regulations, then those get decided in the courts of the country.

What’s really different about the China-Canada investment deal – although it tracks especially NAFTA in Canada's case, although NAFTA obviously relates to American investors – is that it allows disputes about how laws and regulations or even court decisions have been made, to be decided outside of the Canadian courts. So they’re decided by international arbitrators at the option of the investor…and the China-Canada investment deal and many of these other investment treaties … give the power, and quite immense power, to the investor to challenge any decision that Canada would make, whether by the Canadian Parliament, or a provincial legislature, by the Supreme Court of Canada or a lower court, or by Cabinet or some low-level government official. Anything can be challenged by skipping Canadian courts and going straight to these international arbitrators.

And the international arbitration process, for a number of reasons, is really, I would say, without wishing to make personal allegations about any of the arbitrators, objectively slanted in favour of the investors. That’s not unique to the China-Canada deal. But what is unique is that this is the first time since NAFTA that Canada is entering into a deal that allows for these kinds of lawsuits with a country that is likely to have investors that own a lot of assets in Canada. Okay? You get my drift?

CL: Yes.

GVH: So Canada has other investment deals with countries like Romania, but there are not a lot of Romanian investors in Canada. There are more Canadian investors in Romania. But in this case it seems very likely that there will be a lot more Chinese investment in Canada than Canadian investment in China, and that’s because the China-Canada investment deal has another element, which is that it does not require each country to open up its economy to investment from the other country. Now, Canada is already very open to foreign investment, including Chinese investment, whereas China is relatively closed.

So for that reason, going forward, we are likely to see major purchases of assets in the resource sector, especially the oil sands obviously, by Chinese companies, but I don’t think we’re likely to see anything like the same amount of investment by Canadian companies in China, because the Chinese government won’t allow it, it puts more restrictions on foreign investments. You have to do a joint venture, for example.

They just won’t allow their major companies to be bought up by foreigners in the way that Canada has in the last 10, 15 years. And Canada is increasingly open to having that done, because the Harper government has raised the threshold for the review of foreign takeovers of Canadian companies under the investment Canada Act from about 330 million now, it’s going to go up in about 5 years to 1 billion dollars, meaning the Chinese can buy any Canadian company worth less than a billion dollars without any government review, under the usual process, under the Investment Canada Act. So the Nexen takeover is subject to review because it’s worth more than a billion but there could be a lot of purchases by Chinese investors we won’t even hear about.

The point is, we’re open to foreign investment, and it’s only once the investment is allowed in that the rights of the foreign investors kick in under the deal. So it’s much more likely that Chinese investors will benefit from being able to sue any Canadian exercise of sovereignty than vice-versa.

CL: What kind of potential litigation do you see happening? What are the types of regulatory frameworks or legal frameworks that you could foresee being a problem, say in the development of the tar sands?

GVH: I’ve tracked all the known investment treaty lawsuits brought by companies, and most of these lawsuits are brought by American and Western European companies against developing countries. But there’s been a lot of lawsuits against Canada under NAFTA, and Canada’s been sued more than any other developed country. A Chinese company just launched its first lawsuit against Belgium for two or three billion dollars, which is a very large amount, involving the kind of winding-down or takeover of a Belgian bank, in which the Chinese invested before the last financial crisis. So it’s quite reasonable to expect Chinese investors will be in a position to sue Canada in the way that other companies have sued other countries under these treaties.

Now in tracking those cases to date, there are about 300 that have led to a known decision, not all of which you can really evaluate, so it’s maybe between 150 and 200 that can be evaluated on this point; that is, what kind of disputes do they relate to? There are four main areas:

1) One of the major areas is resource disputes. Resource disputes lead to a lot of investor lawsuits in cases to date.

2) Another area is environmental and health regulations, and I would say most of the lawsuits against Canada under NAFTA, there have been about 30, relate to one of those two areas, a significant majority. So we have a reasonable basis to expect that Chinese investors, where we make decisions in the resource sector and/or related to health and environmental regulations, that they will generate lawsuits under investment treaties.

3) The other two areas incidentally are privatisation, disputes arising from privatisation of major infrastructures, such as water systems or gas transmission lines, led to a lot of disputes. So if we’re talking about a privately owned pipeline, subject to regulation in Canada, then that is also an area that’s ripe for investor-state disputes that could be resolved by these arbitrators.

4) The fourth area is tax disputes and financial sector disputes, and those often link in to the resource sector too, because a government will, for example raise royalty rates on the basis that there has been a windfall profit. This has happened in the oil and gas sectors. Many countries have put new taxes on what they consider to be windfall profits by companies in the relevant sector, and those have generated disputes.

So I really can’t imagine any area of government decision making in Canada other than the resource sector specifically, with the huge money that’s going to be wrapped up in the oil sands, and on piping the oil out of the oil sands, that would be more likely to lead to disputes involving Canada.

When we open up other areas of the resource sector, like in the north, in northern Ontario, the Ring of Fire, those will also be ripe for disputes if there’s a significant foreign investment, which there almost certainly will be.

The biggest loss for Canada under NAFTA was a lawsuit brought by companies owned partly by Exxon against Canada, because of Canada and Newfoundland & Labrador’s process for putting research and development spending requirements on companies operating in the Hibernia, Terra Nova oil projects were objected to by the foreign Exxon-owned companies. The tribunal based that decision on a reading of Canada’s exceptions, Canada actually had exempted Hibernia and Terra nova from the NAFTA provisions, but the tribunal apparently adopted a, very unfriendly for us, interpretation of those exceptions, making them very narrow, and we lost on that basis. This is significant because we’re relying on the same types of exceptions in the Canada-China deal.

CL: So that means that not only can China, say for example, challenge the current regulatory framework, but they can also retroactively challenge pre-existing Canadian decisions about Canadian resources?

GVH: Yes, they can challenge existing decisions, and they can challenge existing legal frameworks, although there are grandfathering provisions with respect for some of the standards in the treaty. But it gets quite complicated as to which existing laws are exempted and which are not, and this goes back to the point about the case I just mentioned. It’s that the arbitrators may not consider Canada’s exceptions for its existing laws, including provincial laws, they may not consider them sufficient to avoid liability in the way that the Canadian government is telling us that they are. And incidentally I should add also, the case in which this was decided is called Mobil Oil and Murphy Oil versus Canada. The award in that case was issued in May of this year, and, despite Canada’s government stated policy to make all documents public, it is still sitting on that award and has not made it public. So we cannot see the basis on which the arbitrators in effect defeated our exceptions under NAFTA, reportedly, and we cannot evaluate the risks associated with using potentially the same exceptions under the Canada-China deal as well as other trade deals the government is negotiating.

CL: So there’s no way at this current stage that we could make an informed decision about whether the China Nexen deal would potentially be a good thing for Canada?

GVH: Well I’m not sure about that, but anyone outside the government is unable to evaluate whether or not the exceptions that the government is relying on to exempt certain existing laws are really reliable, or whether this decision actually frustrates our legal approach, or both.

[The exceptions Van Harten is referring to are stated clearly in this explanatory memorandum.]

This isn’t a central point, I should add, this is something of a more peripheral point to what we were speaking about earlier. The bigger point is that we’re essentially delegating a judicial component of Canadian sovereignty to international arbitrators. And the arbitrators, I should stress, are not subject to review in any court, whether a Canadian court, or an international court. And the arbitrators themselves aren’t judges. In this case the arbitrators are often corporate lawyers whose main career is to work for large companies and other foreign investors, or they’re moonlighting academics, or sometimes they’re members of corporate boards.

Put it this way, the process is not independent in the way that most Canadians would think of a judicial process. 

The other point that’s quite important is that it is very reasonable to expect that in relation to Canada’s resource sector, because of the amount of money at stake and the possibility that governments will try to take steps to ensure that Canadians and the Canadian economy benefit from the exploitation of our finite resource. This is something that all governments have an obligation to do, some do better than others. 

If a new government came in or if the circumstances change, say the price of oil in the international market goes up to $200 a barrel, we could quite likely see a government say, “Well, we’re going to raise the royalty rates”, or they’re going to say, “We’ve got enough, we don‘t need to attract as much foreign investment anymore, so we’re going to start demanding a bit more of a share from these projects.”

That is just a minefield under the Canada-China investment deal for lawsuits by China against Canada, and these would potentially be multi-billion dollar lawsuits. The largest lawsuit I’ve heard of is a lawsuit against Pakistan that involves claims in excess of 100 billion dollars, which is sort of hard to get your head around.

CL: Yes.

GVH: It's a massively important decision-making power that the arbitrators have.

CL: And when this sort of international arbitration occurs, is it usually for the purpose of an award, or can it also be for the purpose of re-establishing a legal framework in favour of the investors? Say the investor has a problem with the way that the local government wants to build a pipeline, or manage a certain resource, or deal with privatisation of resources. Can the decision of this international arbitrator actually end up instituting certain laws or changes in the legal framework?

GVH: Generally the arbitrators do not do that; they just award money. They require compensation of the foreign investor out of the public purse of the government. Now that in itself reflects a change in the government's decision, because the government will have taken a decision to pass a law, it will have said ‘we’re not going to compensate everyone in the world who is disadvantaged by this law.’ That’s not how parliaments work.

When Parliaments pass a general law, they don’t compensate all the businesses that now have lost profits they would otherwise have earned over the next ten or twenty years had the law not been passed. But the arbitrators do award that kind of compensation in some cases. They order, in effect, the state to pay compensation for legislation when parliament otherwise would not have, or when the Canadian courts would have ordered parliament not to have done it. So in that way they change decisions but the change is related to the monetary implications for taxpayers.

CL: Right.

GVH: Now the monetary implications in themselves can be huge and can actually exceed in their impact a non-monetary order. It’s actually easier sometimes for a government just to change a decision or tweak it than to have to pay a massive award for all the lost profits of the investors. The threat of a lawsuit, especially if it involves a lot of money, can be used in the early stages of a dispute to get a government to change decisions, or to deter it from making certain decisions. It’s not clear the extent to which this happens because it’s extremely difficult to research, because we never really hear about these cases, because they never lead to an award, they get settled even sometimes before the investor has brought a claim. You see what I mean?

CL: Yes, absolutely.

GVH: Threaten Canada with a lawsuit, and parliament changes its decision while it’s still in the committee stage. We could find out about that. Or for, for example, the federal government may lean on a provincial government to change its decision. We might never know. 

CL: So in effect, when these massive state-owned enterprises are purchasing large stakes in a resource, they’ve got big muscles to flex, basically, they have a lot of power to exercise in the way laws are managed and shaped.

GVH: These treaties are like a dream for the lawyers who work for big companies. It’s just a wonderful additional tool to use to threaten and intimidate and beat up on governments.

And I believe that lawyers in Canada, Canadian lawyers in law firms, may be quite keen on the China-Canada investment deal as they see work for themselves, representing Chinese investors and helping them understand how they can sue, or threaten to sue, governments in Canada. And in fact, it’s regularly the case that you have this section of the Canadian legal community that promotes actively the ability of foreign investors to sue or threaten to sue the Canadian government.

CL: My goodness, the more you talk about this, the more it sounds like absolute madness.

GVH: Yeah, I’ve hardly even gotten started.

[END OF INTERVIEW PART 1]

Gus Van Harten has written extensively on foreign investment deals. His research is freely available on the Social Science Research Network and the International Investment Arbitration and Public Policy website.

The Harper government has recently decided to extend the review period for the CNOOC purchase of Nexen for an additional 30 days until mid-November. The China-Canada Agreement, however, is slated to pass into legislation on October 31, 2012 without open parliamentary debate. 

Campaing organizations Leadnow.ca and SumofUs.org have launched an effort to stop this deal before it's even begun.

Stay tuned for Part 2 of this series based on my interviews with Gus Van Harten.

Images from "PM Visits China" Photo Gallery.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.