Mr. Colin Brown:

I will try to reply to some of the points which Senator Higgins has raised. She is correct in that the remedy remains the possibility of compensation being paid. That applies to different actions taken by governments but, as we have explained and in the view to which the Court of Justice has definitively come, the system in place, which was designed by the EU and Canada, ensures the ability to regulate is respected so regulation expressing the democratic will of governments is not likely to be subject to a successful claim for compensation.

Senator Higgins has cited some examples of cases that have been brought, but if we look at the cases that have been decided, we get a very different story. I suggest that the committee would also look at these as well. I will give two examples. One is a case against California by a company called Methanex. It concerned a chemical that was regarded as potentially carcinogenic. The state of California decided to prohibit the production of the chemical. The company brought a claim and it was dismissed in its entirety on the grounds that a state, in this case California, should be free to regulate to protect its citizens as necessary.

The other example I want to give is even more telling. That is the case Philip Morris brought against Uruguay. We hear frequently about the case taken against Australia. The case against Australia was dismissed on a procedural premise but the case against Uruguay went all of the way. There is a decision made on the merits of the case. The tribunal dealing with the case dismissed the claim brought against Uruguay, which was introducing plain packaging of cigarettes. The important part is that among other things it relied on the text of CETA, and explicitly quoted it, to show that the international customary rule-of-law approach, which again is something that is referred to in the Irish Constitution in Article 29, is evolving and states clearly have regulatory space to act to protect the health of their citizens, the environment or whatever it might be. These cases, which are decided rather than expectant, speak importantly about the impact of the system. I emphasise that these cases take place in the old system not in the reformed system provided in CETA.

I will briefly touch on one or two other points. Mr. Schlegelmilch has already spoken about what is being done to help SMEs to have access. The committee may be aware that Canada and the EU reached an agreement last year. This is available and we can share it with the committee if it does not already have it. We completed the work on CETA, in the sense that we completed the work on the appeal mechanism, mediation and a code of conduct. All of these are further elements that go beyond what was agreed in the treaty to ensure that the system works properly and cannot be brought into question.

Senator Higgins mentioned the question of per diempayments. The problem in the current system is that the per diempayments are linked to persons who are appointed by one or other party in the dispute. If I appoint Senator Higgins as an arbitrator in my dispute, which I am free to do, and I am paying her the per diem, there is a perception at least that she is likely to rule in my favour. In the system that we have, we break that link so the disputing parties cannot choose their arbitrator. They have no ability to appoint their arbitrator so the perceived risk that arises from that link is gone. That is important.

On the USMCA, which is the new agreement between the United States, Canada and Mexico, it is important to keep in mind that the United States kept investor-state dispute settlement for the big oil energy projects its companies have in Mexico. These are subject to a possibility of a contractual dispute but also subject to investor-state dispute settlement. As I mentioned earlier, Canada and Mexico have investor-state dispute settlement via the other route of the CPTPP.

On taking contracts back into public operation, one thing that we need to be careful in distinguishing here is what exactly is being done. If the state, whether in Ireland or in any other EU country, is contracting and using public procurement procedures to have a private operator provide some type of service, and the contract that is awarded under the public procurement comes to an end, no compensation is available. The private entity that might have performed the contract has no right under the investment court system under CETA to claim a continuation of the contract. If a government breaches the contract or stops it halfway or three quarters of the way through, as one can imagine, that may lead to an issue, but that would lead to an issue under Irish law and European law so it should not be surprising. It becomes different if the ownership of some type of public entity is transferred to a private company and then if it is taken back, of course compensation would be payable, but that is the same as would happen under Irish law and under the Irish Constitution. If the Government decided to grant public property to a private operator and then decided later that it wanted to bring it back into public ownership, compensation would be required. With respect, we think that the rules which are here are rules that are found in many other systems and we think that with the reforms we have made we have ensured they will not be abused in a manner which would be unsatisfactory for governments regulating. I apologise for speaking for a little bit long, but I hope it was useful.