Archive for December, 2013

Canada Now Part of ICSID

Monday, December 2nd, 2013

Yesterday, December 1, 2013, marked the first day that Canada was part of ICSID.  That’s great!  What the heck is ICSID?  It is the acronym for the Convention on the Settlement of Investment Disputes between States and Nationals of other States.  OK, so what does this mean for small businesses?  Well, it depends.  On the passive side, it should increase Canada’s attractiveness to foreign investors which can mean either more investment directly in your business (possibly, but not likely) or else more investment funds flowing into Canada which could result in more financial institutions here having the funds (and the desire) to invest in smaller businesses (because of more competition for the “big” investments).  On the active side, it also gives some increased ability for Canadian businesses to invest in foreign countries that are also members of the Convention.  So, for example, a small software company in Canada may want to do business in Africa or Asia or Eastern Europe and it seizes the opportunity.  The business starts to develop very well and the government decides that it would be best to expropriate the business for whatever reason.  Now, the Canadian company has the ability to go through the ICSID arbitration process instead of having to sue in the country’s national courts and hope (perhaps impossibly dream) that it will be given a fair shake in the lawsuit.

Will the ratification of the Convention and Canada becoming a player in the ICSID realm affect your business?  9 times out of 10, probably not.  But as the marketplace becomes more global, the chances that resort to the Convention may become necessary also grows.

Something to think about.