{"id":6568,"date":"2023-02-01T18:19:00","date_gmt":"2023-02-01T18:19:00","guid":{"rendered":"https:\/\/www.dinsmore.com\/?post_type=publications&p=6568"},"modified":"2025-11-24T20:40:54","modified_gmt":"2025-11-24T20:40:54","slug":"time-is-running-out-to-file-an-international-investment-arbitration-claim-under-nafta","status":"publish","type":"publications","link":"https:\/\/www.dinsmore.com\/publications\/time-is-running-out-to-file-an-international-investment-arbitration-claim-under-nafta\/","title":{"rendered":"Time is Running Out to File an International Investment Arbitration Claim Under NAFTA"},"content":{"rendered":"\n
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The United States-Mexico-Canada Agreement (USMCA) entered into force on July 1, 2020 replacing the North American Free Trade Agreement (NAFTA) that has been in force since 1994. The USMCA has a sunset provision providing that investors may continue using NAFTA\u2019s dispute resolution mechanism for NAFTA legacy investments for up to three years after NAFTA\u2019s termination, i.e., until June 30, 2023.[1]<\/a><\/p>\n\n\n\n

Although the three-year sunset period ends on June 30, 2023, as a practical matter, the deadline is actually March 31, 2023<\/strong> because NAFTA Article 1119 requires an investor to file a \u201cNotice of Intent\u201d 90 days before filing an Investor-State arbitration claim.[2]<\/a><\/p>\n\n\n\n

US, Canadian, and Mexican investors with investment claims need to assess their situation and decide whether to file a NAFTA arbitration claim by this deadline.  Investors with NAFTA legacy investments need to be cognizant of how investment arbitration under the USMCA is less favorable in certain respects than investment arbitration under NAFTA.  Thus, filing a NAFTA investment arbitration by the deadline could represent a better opportunity to protect and recover damages with respect to a harmed investment.<\/p>\n\n\n\n

The main differences regarding Investor-State arbitration between the two treaties are as follows:<\/p>\n\n\n\n

       (1) Canada is not a part of the USMCA Investor-State dispute resolution mechanism. Thus, Canadian investors are not able to bring a USMCA investment arbitration claim against Mexico or the US, and Mexican and US investors will not be able to bring a USMCA investment arbitration claim against Canada.  In other words, investment arbitrations between the US and Canada will no longer be possible under the USMCA. The only way American and Canadian investors will be able to resolve investment disputes in the respective countries, will be in domestic courts.  Investments arbitrations between the Canada and Mexico will be possible, however, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).<\/p>\n\n\n\n

      (2) Under the USMCA, only certain investment claims will be able to proceed directly to Investor-State arbitration.  Foreign investors need to be parties to a \u201ccovered government contract\u201d and their investments need to be \u201cprivileged investments\u201d defined as investment in certain \u201ccovered sectors\u201d:<\/p>\n\n\n\n