What Rights Does the MAI Protect?

Here is a very brief summary of the key investor rights protected by the MAI.

National Treatment

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.

Performance Requirements

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.

Expropriation

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).


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