March 22, 2009

Canada's Hippocratic Oath And NAFTA

Canada claimed protectionism in the US stimulus bill. But Canada is a hypocrite when it comes to protectionism in their health care system. 

By Melvin J. Howard

Upon meeting with The Government of Canada Foreign Affairs and International Trade office. I have decided that we will proceed with the Arbitration process under NAFTA Chapter 11. There were a number of factors on why I chose to proceed not to mention that we have a strong case against the Canadian government. But I also want to expose the inside secrete barriers that Canada puts up for American health care providers. So knowing this I have made this trade dispute like a military operation where precision and timing are crucial. You have to know what motivates the other side. It would be inaccurate to say that the Government of Canada and its entities are not also motivated by financial objectives to some extent. But when a foreign state entity is involved in a dispute with a private commercial enterprise, commercial considerations typically are not its primary interest. Governments have no shareholders. Their actions are more often influenced by national public policies, economic development goals, political objectives, lobbyists, nongovernmental organizations, multilateral institutional lending requirements, world trade issues, regional public policy, media reaction inside and outside of the country, and other such factors. This must be understood when entering into talks so knowing all of this you begin to form your strategy. And if there is an election going on that was the case in Canada all of these issues are exacerbated.

Now given Canada has enormous power over the operations of foreign investments within their borders. To maximize the prospects for a successful negotiation of a dispute arising out of a foreign investment. I should be aware of the following, know thy enemy I am talking in military terminology of course. Non-the less you should have a very thorough understanding of the sector you are targeting. I have a wealth of knowledge of the Canadian health care system how it is financed and the politics involved.

It is also vital to understand the law governing the entity's activities. With this information, I can determine whether the entity is legally, financially, and logistically independent from the state. This means understanding the "supervisory" relationships between those who run the entity and those who run the state itself. In this regards I am talking about individual Canadian Health Authorities. If the contracting entity is not independent from the state, it may be more productive to negotiate directly with the people who run the state-i.e., the officials who are most likely have the final say on a possible settlement.

You must also understand the relationship between a host state and a private investor, from the host government's point of view, is not simply commercial. Now the Government of Canada has informed me that they will vigorously defend themselves against my claim. That is a standard reaction to most claims or lawsuits where the other party is the defendant you can’t blame them for using it. They also say things like this case has no merit is should be dismissed I never pay attention to those comments Instead I want to learn what makes the government of Canada tick. So I have acquired a sophisticated appreciation of the macro-political, economic and policy issues that are likely to condition the government's negotiating stance. I have to investigate the legislative, executive or other approvals that must be obtained for a settlement to take place.

After assessing that good faith negotiations will not be taking place as per Article 1118 of NAFTA. It is time to move to a formal arbitration as mentioned. Making the trip was against my better judgment but in the spirit of the Article 1118. I wanted to give the Government of Canada the benefit of the doubt now all bets are off. Based on the number of NAFTA cases that were ever settled per Article 1118 the answer is nil I knew this going in. In my opinion Article 1118 is of no value to the investor. You have your lawyer fly into the host country on your dime he would come back empty handed. Basically it’s a PR move for the host country. All it did was delay the inevitable arbitration.

Complaining to Canada’s local Provincial authorities can be like complaining to a self-regulating organization that can pass and amend its own enabling legislation and is run by the very entity that the complaint is about. But investors who have enough money to get the attention of a foreign country also have enough sense, generally, to anticipate these problems. Smart investors are reluctant to invest in capital importing countries, and, when they do, they expect a return commensurate with the risk. The problem is easily stated. The investor wants protection and the foreign government wants capital. The solution that has developed has two components, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "Convention") and a Bilateral Investment Treaty. Bilateral Investment Treaties ( BITs ) are intended to protect investments and to provide for arbitration in the event of an investment dispute. The Convention provides the mechanism for arbitration of investment disputes and the means of enforcing arbitral awards.

Canada for all its hoopla over protectionism in the US stimulus package. Have yet to  level the playing field when it comes to fair treatment for US investors in health care ventures. Canada needs to send a clear and positive message to US foreign investors in health care we are playing by signed trade agreements. They should clearly outline what is deemed an acceptable investment and under what criteria. Must move to address the uncertainty clouding the Canada Health Act, particularly with regard to foreign US investments. Not introduce any new walls or barriers to legitimate foreign investment in the health care sector. Canada needs uphold their commitments in word and in practice to

welcome market-driven foreign investment by not regulating in a manner that discriminates against or impedes US investments in health care as in our case.

Canada Ratify The ICSID Convention Already!

NAFTA included unprecedented guarantees to protect the value of investments and even the rights of corporations to earn profits in the future, arising out of changes in government regulations or policy. In particular, NAFTA created specific clauses that provide for compensation for lost investments and loss of future profits because of regulations that are “tantamount to expropriation.” NAFTA essentially represented an ironclad commitment on the part of the Mexican and Canadian governments to a development strategy hinging on attracting foreign investment by harmonizing investment deregulation with standards in the US. NAFTA Chapter 11 also gives investors the right to take investment disputes with NAFTA member states to arbitral tribunals rather than to domestic courts of law. The process it established was meant to be used; it was designed to give investors faster due process, As it often is with government--let alone multi-government--intentions, it hasn’t worked out that way. As I was so gently reminded by the head representative at my meeting with Canada’s foreign affairs office. This process can take an average, of almost three years from the beginning of the case to the Final Award on Merits. This is approximately three times longer than NAFTA timetables suggest and two to three times as long as the World Trade Organization (WTO) Understanding on the Rules and Procedures Governing the Settlement of Disputes.

NAFTA investor-state cases proceed very slowly and are very costly. They proceed much more slowly than NAFTA Binational Panel review under Chapter 19, than NAFTA state-to-state dispute settlement under Chapter 20 and state-to-state dispute settlement under the WTO. The main advantage of conducting arbitration under the ICSID Convention is that it contains its own review and enforcement mechanisms. Awards issued under the ICSID Convention are binding on the parties and not subject to review except as provided for under the ICSID Convention. Decisions rendered under an  ICSID arbitration are effectively final. An administrative “appeal” may be made to the ICSID Secretary-General for an annulment of award but only on one of five narrow enumerated grounds: that the tribunal wasn’t properly constituted; that the tribunal has manifestly exceeded its powers; that there was corruption on the part of a member of the tribunal; that there has been a serious departure from a fundamental rule of procedure; or that the award has failed to state the reasons on which it’s based.

 Awards can’t be challenged outside of ICSID, and national courts have no power to review an ICSID Convention award. Parties to the ICSID Convention are bound to recognize the award as binding and to enforce it as if it were a final judgment of a national court.

 It’s telling that the Canadian government hasn’t yet indicated a timetable for ratification of the treaty. Only four provinces and one territory have passed similar implementing legislation: Ontario, British Columbia, Newfoundland and Labrador, Saskatchewan and Nunavut. With its announcement of the passing of the act, the government issued an “invitation” to the provinces to adopt implementing legislation. What’s taking so long is Canada dragging its’ feet? Once Canada ratifies it, foreign investors in Canada will be able to use the dispute resolution mechanisms under the ICSID Convention via investment treaties or investment contracts. Jurisdiction of the ICSID Convention is limited to those instances where a foreign investor’s home state and the host state where the investment is made are both ICSID member countries.

The investment dispute settlement provisions of NAFTA Chapter 11 generally provide that disputes between investors and the host government may be resolved through arbitration under the ICSID Convention. But until Canada’s ratification, recourse must be made to the less defined, more-circuitous Additional Facility Rules of ICSID or the ad hoc United Nations Commission on International Trade Law Rules. Among the parties to NAFTA, only the US has ratified the ICSID Convention, meaning that, until Canada’s ultimate ratification, NAFTA Chapter 11 arbitration under the ICSID Convention remains unavailable to both Canadian investors in the US and American investors in Canada. I wonder why it is taking so long for Canada to get this ratified I do have my thoughts on that but I will not voice them here. Just read between the lines and you can get a sense on where my thoughts are about that. As of now, I am as well as other  US investors left with a time-consuming process. Any investor would readily admit that time is money, and the Government of Canada recognizes this. As was mentioned a number of times in my meeting as to say. Wow this is really going to take a long time you should just give up and quit. Like Beyounce says you must don’t know about me. I am in this for the long haul. 

I am pursuing this case not only to establish precedent I want to collect damages owed as a result of Canada’s alleged breach, damages that could approach USD 160 Million Dollars plus. I am sure the Government of Canada is likely to rely on this imbalance to prolong the process, increase costs so they can thwart justice.

In the hopes as a business decision, I will simply give up in the face of unending delays and mounting expenses. Hello Canada it’s not going to happen. This is why the Government of Canada is so in a hurry for me to appoint legal counsel so I can start racking up costs and start the delaying process. I know that game and decided not to play it. No doubt I will be appointing legal counsel but their job is going to be collecting the money that’s owed to me. To be sure I have just added clauses to my Trusts that if I become incapacitated for whatever reason. The estate is to proceed with these NAFTA proceedings. In essence I have now made it a responsibility of the insurance companies to collect damages. In addition I have invited all independent US surgical facilities to join in my NAFTA claim. Of which several have already signed on. It is clear Canada has a private health care sector they cannot claim otherwise here is a partial list:


Canada Diagnostic Centres, Vancouver (MRI, CT)

Canadian Health Scan, Abbotsford (CT)

CML Healthcare, Burnaby (MRI)

CML Healthcare, Victoria (MRI)

Comox Valley MRI, Courtenay

Fraser Valley MRI Clinic, Abbotsford

Image One MRI Clinic, Kelowna

Okanagan Health MRI Clinic, Kelowna

Specialty MRI Clinics, Vancouver

Vancouver PETscan Centre

Private surgery centres (excluding cosmetic)

Ambulatory Surgical Centre Vancouver

Cambie Surgery Centre, Vancouver

Comox Valley Surgical Centre, Cumberland

Delbrook Surgical Centre, North Vancouver

False Creek Surgical Centre, Vancouver

Kamloops Surgical Centre, Kamloops

McCallum Surgical Centre,Langley

New Westminster Surgical Centre, New Westminster

Okanagan Health Surgical Centre, Kelowna

American providers want equal access like Canadian providers have already in the US without barriers. I will advocate and call on US representatives to bring this issue to the forefront.


The UNCITRAL Arbitration Rules were adopted in 1976 by the United Nations Commission on International Trade Law (UNCITRAL). They were adopted by the United Nations General Assembly on December 15, 1976. Unlike the ICSID, the UNCITRAL is not an arbitral institution; the UNCITRAL Rules are used in ad hoc arbitrations.

What I think is so ironic is that the Administrative Council of the International Centre for Settlement of Investment Disputes (ICSID) elected Ms. Meg Kinnear, a Canadian national, as the new Secretary-General of ICSID. Ms. Kinnear had been General Counsel (Senior General Counsel from 2006) and Director General of the Trade Law Bureau of Canada, a joint legal unit of the Departments of Justice and of Foreign Affairs and International Trade of Canada. She was the lawyer representing Canada in my trade dispute before she left for that post. Canada is the only OECD country that has not yet signed the ICSID Convention 143 States have ratified the Convention.

These arbitrations are subject to the same review and enforcement procedures as ordinary international commercial arbitrations under the New York Convention.  However, even contract clauses containing a submission to the ICSID (Additional Facility) must be treated with special care. Canada goes on to compare the ad hoc nature of the tribunals to the standing dispute resolution system of the WTO. Canada argues that the arbitration be given a low level of deference using the 'pragmatic and functional approach and the court should review awards on the 'correctness' standard. The tribunals are set up for commercial arbitrations not for treaty interpretation. I find this so hypocritical since Canada signed NAFTA knowing that disputes would be resolved through international commercial arbitration panels. But hypocritical has been one of my main focal points of our claim so I am not surprised.