Comments on Article 1.9 of CETA

Gus Van Harten
Professor, Osgoode Hall Law School

The last clause of article 1.9 in the CETA is very clear that the Agreement applies to water where put into commercial use. In turn, the investment chapter and ISDS (investor-state dispute settlement, renamed ICS in the final version of CETA) would apply to such situations.

In this framework, one can speculate reasonably about areas of regulation involving water that would by implication subject to the public financial risks and regulatory chill pressures created by the availability of ISDS to foreign owners of water-related assets.

However, it would also be possible to identify existing ISDS cases that related to water such as (a) the regulation, ownership, or operation of public water supplies, especially in circumstances of privatized ownership or operation, and (b) the regulation of water subject to a commercial agreement with a foreign investor. I can think of various cases involving (a) and one involving (b).

There are also many ISDS cases involving resource conflicts that affect water, such as where mining activities are restricted due to potential contamination of water. These are known ISDS cases. Of course we can reasonably estimate that there are many more unknown cases in which the threat of ISDS behind the scenes affects decision-making or leads to settlements with the state.

Indeed I am aware of one case in Ontario, based on interviews with current or former government officials, in which proposals for water charges for takings of groundwater (mainly by large bottling companies) was subject to time-consuming internal government analysis of ISDS risks under NAFTA; the proposals went ahead in part because the charges were so miniscule as to make the ISDS risks very low. Yet a more serious charge on water takings may therefore have been deterred because of ISDS.

A brief way of stating the overall situation is that article 1.9 makes very clear that water that is sufficiently connected to commercial activities, in the view of ISDS tribunals – which have tended to favour the perspective of claimant investors when interpreting ambiguity in the treaty language – can be considered an "asset" or "investment" triggering the suite of foreign investor rights and protections from regulatory activity that are available through ISDS.