Category: Global

Canada’s Competition Bureau Seeks Feedback on Proposed Environmental Claims Guidelines

Competition Bureau Canada (the Bureau) announced just before Christmas that it is seeking public comments on draft guidelines (the Guidelines) for assessing environmental claims for compliance with Canada’s Competition Act (the Act). The Act was amended in June 2024 by adding two specific provisions to existing general prohibitions for false and misleading representations and unsupported performance claims to address environmental claims. Under the recent amendments, marketing claims about the environmental benefits of a product must be based on “adequate and proper testing” conducted before the claim is made, and claims about the environmental benefits of a business or business activity must “be based on adequate and proper substantiation in accordance with an internationally recognized methodology.”
The proposed Guidelines are based on six high-level principles, aimed at ensuring that environmental claims comply with all of the Act’s provisions, including the recent amendments:
• Environmental claims should be truthful, and not false or misleading.• Environmental benefit of a product and performance claims should be adequately and properly tested.• Comparative environmental claims should be specific about what is being compared.• Environmental claims should avoid exaggeration.• Environmental claims should be clear and specific, not vague.• Environmental claims about the future should be supported by substantiation and a clear plan.
The principles outlined by the Bureau are consistent with generally accepted global principles for advertising, such as those reflected in the International Chamber of Commerce (ICC) Marketing and Advertising Commission’s Advertising and Marketing Communications Code (available at The ICC Advertising and Marketing Communications Code – ICC – International Chamber of Commerce). The Federal Trade Commission’s (FTC) Guides for the Use of Environmental Marketing Claims (the FTC Green Guides) reflect these same general principles. Similar to the FTC Green Guides, the Bureau’s proposed Guidelines are not enforceable regulatory provisions, but are intended to help businesses understand how the Bureau is likely to apply the Act to green claims. 
However, the Bureau’s proposed Guidelines are more general than the FTC Green Guides and do not address specific green claims, such as “recyclable,” “compostable,” and the like. Illustrative examples in the Guidelines appear to focus on general substantiation principles (e.g., is substantiation suitable, appropriate, and relevant to a marketing claim) rather than specific thresholds (e.g., a “substantial majority” threshold (60%) for unqualified “recyclable” claims as in the FTC Green Guides). Unlike the EU directive on green claims adopted last spring (EU 2024/825), which prohibits certain “generic environmental benefit claims” (e.g., “green,” “eco-friendly,” “biodegradable”), neither the Guidelines nor the Act’s provisions bar specific claims or mandate independent certification of claims. And finally, like the FTC Green Guides, the Guidelines are intended to promote truthful advertising to foster a fair and competitive marketplace, not to advance environmental policy.
Importantly, the Guidelines are geared to promotional and marketing representations made to the public, not representations made exclusively for another purpose, such as representations to investors or shareholders. Where the same representations are made to the public and to investors or shareholders in Canada, however, the business must be mindful of the principles of the Guidelines. Businesses interested in sharing information to Canadians about the environmental benefits of their products, services, processes, and operations should be mindful of the Guidelines. For those who wish to weigh in on the draft Guidelines, the deadline for comments is February 28, 2025.

Navigating the UTPR and ISDS: Implications in the EU

Overview

The global tax landscape is experiencing a profound transformation as the OECD/G20’s Pillar Two rules are adopted. Among these, the Undertaxed Profits Rule (UTPR) has emerged as a pivotal mechanism designed to ensure that multinational enterprises are subject to a minimum effective tax rate of 15% on their global profits. For those companies operating within the European Union, the implementation of the UTPR presents both a significant compliance challenge and a strategic risk.
In this client alert, we offer an analysis of the operational framework of the UTPR, examine its potential ramifications for businesses within the EU, and explain how Investor-State Dispute Settlement (ISDS) mechanisms can play a pivotal role in resolving disputes arising from this innovative tax measure for States and multinational enterprises.

In Depth

WHAT IS THE UTPR?
The Undertaxed Profits Rules, integral to the broader Pillar Two framework, complements the Income Inclusion Rule (IIR) by addressing low-taxed profits that are otherwise not subject to taxation under the IIR. Its primary objective is to bridge gaps in the taxation of multinational enterprises, ensuring that all group entities contribute a minimum level of tax.
Under the UTPR, jurisdictions may levy top-up taxes on low-taxed income that is not otherwise captured by the IIR. This mechanism functions by reallocating taxing rights among jurisdictions, effectively serving as a safeguard against base erosion and profit shifting.
In the EU, the UTPR has been codified through the Directive on Global Minimum Taxation, which was adopted in December 2022. Member States were required to implement the directive into domestic law by December 31, 2023, with UTPR application commencing in 2025.
THE ROLE OF INVESTOR-STATE DISPUTE SETTLEMENT (ISDS)
The implementation of the UTPR raises critical questions regarding its interplay with international investment law, particularly within the framework of bilateral investment treaties (BITs), multilateral investment treaties (such as the Comprehensive Economic and Trade Agreement), and other investment agreements.
1. Understanding ISDS Protections
Tax disputes have been a longstanding component of ISDS. According to the United Nations Conference on Trade and Development, from 1987 to 2021 more than 150 ISDS cases were initiated to challenge tax measures. During this period, the proportion of ISDS cases involving tax measures doubled. Additionally, some of the most substantial ISDS awards to date, notably those stemming from the Yukos saga, have originated from investors contesting taxation measures.
ISDS mechanisms are designed to safeguard foreign investors from adverse actions by host states. They offer recourse to arbitration for claims arising from alleged breaches of investment treaty obligations, such as:

Fair and Equitable Treatment (FET): Investors might be able to challenge allegedly arbitrary or inconsistent enforcement of the UTPR as a violation of the FET standard.
Expropriation: Purportedly excessive taxation under the UTPR might be argued to constitute indirect expropriation of an investor’s assets.
Non-Discrimination: Investors might be able to allege breaches of non-discrimination clauses if the UTPR disproportionately impacts foreign entities compared to domestic businesses.

Additionally, foreign investors may seek provisional measures designed to safeguard the parties’ rights pending a definitive resolution on the merits. For instance, Article 47 of the ICSID Convention provides that “the Tribunal may […] recommend any provisional measures which should be taken to preserve the respective rights of either party.” A comparable provision exists under the UNCITRAL Arbitration Rules as well.
2. Potential Hurdles 
Investors bringing claims based on the UTPR may encounter several potential hurdles.
First, the availability of a suitable treaty protecting foreign investments is not guaranteed. Despite the existence of thousands of BITs and other multilateral agreements globally, foreign investors from a particular country of origin may not enjoy protection in every jurisdiction in which they choose to invest. And even where a treaty exists, they are not all the same (as explained in more detail below) and, therefore, even where a treaty is otherwise available, it may not provide coverage. This lack of universal coverage can expose investors to significant risks, as they may find themselves without recourse to the protections typically afforded by such treaties. As a result, investors must conduct thorough due diligence to determine the existence and applicability of investment treaties in their target jurisdiction(s) to mitigate potential vulnerabilities and ensure that their investments are protected. Similarly, host States may be able to take measures to proactively address and resolve these disputes at an early stage.
Second, certain BITs incorporate a tax carve-out, thereby excluding specific protections for tax matters under the relevant treaty. While older-generation investment treaties typically lack such provisions, contemporary BITs increasingly include them. Nevertheless, even with a tax carve-out, the precise wording of these provisions, alongside the factual circumstances triggering the dispute, remains crucial. Additionally, several tribunals have adjudicated that tax carve-outs may only pertain to “bona fide taxation actions,” which adds an additional layer of complexity.
Third, BITs may impose procedural prerequisites on investors. For instance, some treaties feature a “fork-in-the-road” clause, permitting an investor to pursue claims either in domestic courts or through investment arbitration, but not both. Consequently, under certain conditions and depending on the exact language of the BIT, an investor might be precluded from initiating an ISDS claim if a domestic claim against the same tax measure has already been pursued. Conversely, other BITs mandate the exhaustion of local remedies prior to commencing arbitration.
Fourth, investors might be able to lodge ISDS claims contingent upon the specific factual matrix involved. The success of such claims will hinge on how Pillar Two and the UTPR have been implemented by a particular State and the resultant impact on foreign investors. Similarly, the specific implementation of the UTPR by States in the coming years will also be a critical factor in determining the viability of an ISDS claim. Investors may also have a viable case if the implementation of Pillar Two contravenes their legitimate expectations regarding the applicable fiscal framework and its duration. However, States may present robust defenses. BITs not only may include a tax carve-out but also might intersect with other international agreements, such as double taxation treaties. A State confronted with an ISDS claim on these grounds will likely invoke its regulatory authority, which, although not absolute, may encompass the introduction of new, good-faith tax measures. All the above are also issues for States to consider in the implementation of their UTPR-related taxation measures.
CONCLUSION
The UTPR represents a paradigm shift in international taxation, with profound implications for multinational enterprises operating in the EU and States alike. As States advance with their implementation of the UTPR, businesses and States must navigate a complex and evolving landscape of compliance obligations, risks, and opportunities.
Simultaneously, the intersection of the UTPR with international investment law underscores the critical importance of leveraging ISDS mechanisms for foreign investors to protect against the unfair or discriminatory application of these rules, and for host States to defend against such claims. By adopting proactive measures and seeking advice from counsel multinational enterprises can mitigate risks, safeguard their investments, and position themselves for long-term success in a rapidly changing tax environment. Similarly, host States can anticipate potential treaty claims raised by foreign investors and proactively address these disputes at an early stage.