investment provisions of Chapter 11 represent a very significant innovation in the sphere of international trade agreements and many of the terms and concepts engendered by the provisions of this Chapter are entirely untested by trade dispute of judicial determination. Making predictions about the likely outcome of prospective litigation arising under these rules is a highly uncertain enterprise. It our view however, it would not be prudent to discount the possibility that tribunals convened to determine investor state suits will adopt a liberal interpretation of the provisions of this Chapter. In a contest between free trade and investment policies on the one hand, and the regulatory authority of governments on the other, trade panels have consistently demonstrated a decided preference for the former. NAFTA Article 1110: Expropriation and Compensation: Another potential ground for an investor claim under Chapter 11 can be found in the provisions of Article 1110: Expropriation and Compensation. A Contracting Party shall not expropriate or nationalize directly or indirectly an investment in its territory of an investor of another Contracting Party or take any measure or measures having equivalent effect (hereinafter referred to as "expropriation") except…. accompanied by payment of prompt, adequate and effective compensation …. equivalent to the fair market value of the expropriated investment …. [Emphasis added]The wording of this Article is obviously very expansive and has already given rise to a wide variety of claims for compensation by both U.S. and Canadian based investors. Article 1110 has no parallel under the WTO. Quite apart from the Sun Belt case, it is reasonable, in our opinion, to anticipate that this prohibition against expropriation may give rise to claims arising in response to Canadian water export controls. Once again making confident predictions about the likely resolution of such claims should the...
