Dr. Oisin Suttle:

Dr. Ankersmit has given a lot of compelling examples of chilling effect. I refer the committee to the Moehlecke paper linked to my submission, which identifies 17 countries where the plain packaging litigation against Australia and Uruguay led to delays or non-introduction of that specific policy. I said earlier that these sort of studies are necessarily hypothetical. They are hypothetical in the sense that one is trying to work out whether the risk of litigation is the reason legislation was not adopted. As researchers and human beings, what we can do is look at countries and point to a proposal for legislation, a number of relevant interest groups and a number of relevant political groups expressing their preference as regards what to do, and to where legislation is being introduced or not being introduced. It is the nature of things that there is always a black box in the middle, which is where Government and Parliament decide whether to proceed with the legislation or not. It is always very difficult to say what exactly was the reason to proceed one way or the other.

I will give another powerful example. Dr. Ankersmit mentioned the claims against the Netherlands in regard to the winding down of coal. Ten years ago, Germany faced claims when it decided to phase out nuclear power after the Fukushima disaster. Vattenfall, the Swedish power generator, brought a claim against the German Government essential saying that its rights as the operator of nuclear power plants in Germany had been unfairly impacted by that decision.

That case is ongoing but it is probably significant that when Germany subsequently decided that it was going to start winding down its coal plants, it took a different route to that which the Netherlands took. It effectively decided to buy out and pay off the operators of coal plants rather than simply regulating them out of existence. Can I say that the reason for that is Germany's experience with the claims on nuclear energy? I cannot say so for certain but these moves are strongly suggestive of ISDS claims having an impact on the ways particular countries choose to regulate in subsequent cases.

There is an example of a French climate change law from three years ago where it is prominently put forward that the original law and the law that was ultimately adopted has significantly more leeway for existing fossil fuel extractors. Why is that so? Part of the story we see is that there were threats of ISDS claims if the law was implemented in its original form. Can I say the threat of the ISDS claims was definitely the reason the change happened? I cannot say so. A bunch of political processes happened in between but if one wants evidence, this evidence is about as compelling as one will find of why any factor, ISDS or otherwise, caused legislation to change. This is about as good evidence as one can expect to find.

Deputy Richmond asked how many of these things there are. There are going on for 3,000 of them and they are mostly bilateral treaties between pairs of countries. This is a regime that is different from, for example, the WTO regime, where we have a single set of treaties that everyone signs up to. In the investor regime, we generally have pairs of countries signing up to treaties which have broadly the same shape but which may vary in their particular details.

There are a little over 1,000 cases that we know about. Historically, ISDS claims do not need to be made public. One of the unique selling points of arbitration historically has been that arbitration can be confidential and secret. Not only do we not know the details of what is happening in these cases but in many cases we may not know that the cases are happening at all. I can give the committee a minimum number but this is the tip of iceberg and we are guessing at what is going below that. Even broader than the unknown claims, there is the question of how many ISDS claims never make it to being a formal dispute because they take the form of a sternly worded letter, a conversation, a revised policy or even the writing of a cheque. As with any litigation, the number of cases that end up in the Supreme Court represent a tiny subset of the number of disputes that are resolved on the basis of a particular legal machine.

The third question was around non-ratification and if this thing will go away if it is not ratified. There are a couple of answers to that. The first answer is that this is mostly a political question. The law puts some limited bars around that. With the exception of its investments chapters, CETA is being provisionally applied. That means the European Union and Canada are proceeding on the basis that the treaty is enforced and giving legal effect to it , pending ratification. There is no limit in international law on how long a treaty can provisionally be applied for. There is no hard constraint on that. The Vienna Convention on the Law of Treaties states that in the event that one of the parties communicates to the other party its intention not to ratify a treaty, provisional applications should cease. That would be a communication from the European Union to Canada saying that it is done with CETA. It is a formal step and there is no particular requirement to take that step.

The more realistic answer will come if this hits a hard roadblock in any particular jurisdiction, whether here or in the Netherlands for example, as Dr. Ankersmit was saying that the Netherlands is looking like a hard case. In Germany, this is still going to go back to the German constitutional court for its view on it. There may be many places where this boat might strike a hole, therefore. I am a lawyer offering a political opinion but the most likely outcome of that is a relatively minor renegotiation. The negotiation would be relatively minor in the sense that the rest of the treaty is already in place, working and having economic effects. What does that mean?

It means those who will suffer as a result of more imports in their area have already suffered that pain and those who will benefit are already getting the benefits. Once this happens and those facts are on the ground, it is very hard to turn around and simply shut the thing down. If this thing cannot be ratified at a national level, it will be in everybody's interests to say "okay, well then we can just excise this chapter" and try to keep all the good things we can get elsewhere in the agreement.

The other reason I think that is probably the most likely outcome politically is because trade agreements are tools that allow politicians to build political coalitions. There are some interest groups that are pro-trade and want to export while there are others that are anti-trade because they see risks of competition from foreign producers. The job of politicians is to try to put together good public policy and sometimes that involves telling some interest groups "sorry guys, it's not your day". Trade agreements are a way to bundle together all the benefits the exporters will get and all the costs the importers will suffer so that politicians are in a position to say there are some winners and some losers and some wins and some losses but overall this thing is worth doing and they can survive politically in doing that. All those sorts of trade-offs and log-rolling are happening elsewhere in the agreement. There is no reason to think that taking out investment protection would lead to any group benefiting from this agreement suddenly saying "we're no longer benefiting and we're out" or any group suffering from the agreement saying "well I was prepared to live with the agreement because it had investment protection but now that I'm not, suddenly you're..." so in terms of that sort of dynamic of political coalitions and facts that have already been created on the ground, it is highly unlikely that non-ratification at a national level will be the end of this deal. It is much more likely that it will be a case of what tweaks we can make to make this thing acceptable to the relevant groups.