What Rights Does the MAI Protect?
Here is a very brief summary of the key investor rights protected by the MAI.
National treatment is fundamentally about preventing discrimination against foreign
investors and their investments. However, it broadly restricts how governments may
participate in the economy. For example, differential fees based on the location of the
investment likely violate this obligation. The MAI's national treatment obligation
provides foreign investors with the best treatment received by any investment in any part
of the country. This means that an investor can challenge local government actions that
are more burdensome than those imposed in other provinces.
Minimum Standards of Treatment
The MAI governments must provide the minimum standard of treatment as established by
international law to the nationals and investments of other Parties.
The ability of governments to impose a wide variety of restrictions on business practices
is limited. MAI governments are prohibited from requiring the purchase of local goods and
services or from forcing investors to export a certain level of locally produced goods or
services. Governments cannot regulate the distribution of services within their borders or
restrict sales based on the volume or value of exports. Government benefits made in
connection with an investment in its territory cannot be based on the use of local goods
or services. Thus a government cannot require, or encourage, a business to purchase
locally produced equipment and supplies.
The MAI forces governments to pay compensation whenever there is an expropriation or a
measure equivalent to an expropriation. Under international law, the term expropriation is
very broadly applied and applies to any act when governmental authority denies some
benefit of property. The government does not need to take title to the property; all it
has to do is deny the benefit of the investment to the investor. The MAI is a very
generous treaty as it provides that investors receive the fair market value of the
investment (this can exceed compensation levels established under Canadian domestic law).
©Appleton & Associates, 1997,all rights reserved