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Drilling for oil in Venezuela. restricts foreign lawyers to the practice of international law, led to Macleod Dixon's association with Veirano Ad- vogados, one of Brazil's biggest law firms. "It enables us to deliver an integrated package of domestic and foreign services for mostly foreign clients," says Faass, who is still the managing partner of the Rio office, and who was, until last year, a member of the firm's global executive committee. "Finding the right domestic partners is the key to doing business in South America." However, even the best-laid plans can be bedevilled by quick economic downturns and sudden shifts in policies, not to men- tion the unexpected failure of culture-shocked North American lawyers who perform well at home but fail to adapt to changes in their work and living environments. "You can't assume that someone who's highly skilled and highly motivated in Canada will make a smooth transi- tion," says Faass. To help lawyers prepare to live and work in the region — and to better represent their clients — Don Coxe recommends reading novels like Death in the Andes, a whodunit by former Peruvian president and free mar- ket economist Mario Vargas Llosa. A Washington Post journalist called the work "a well-knit social criticism as trenchant as any by Balzac or Flaubert — an inge- nious patchwork of the conflicting mythologies that have shaped the New World psyche since the big bang of Columbus's first step on shore. In short, this is a novel that plumbs the heart of the Americas." Fiction is the best way to learn about a place, says Coxe, who served as general manager for the Ontario Federation of Agricul- ture and general counsel for the Canadian Federation of Agriculture in the 1970s before leaving law to enter the investment business. "And when you've got a billion dol- lars invested in a country, it's worth it to read a book." In addition to huge economic opportunities, Faass says South America's vibrant and intriguing culture — everything from music, art, and language to the impor- tance of family and friends and people's exuberant driv- ing habits — make it both a fun and fascinating place to work, even when it involves jobs any seasoned corpo- rate lawyer can do with his or her eyes closed. "You see something different — even unbelievable — every day there," he says. "And building something out of nothing is very rewarding." To hear John Boscariol and Orlando Silva tell it, the spate of bilateral trade agreements that Canada has signed recently with several South American countries is proof that we have finally smelled the coffee in regards to the changing trade winds now blowing through the resource- rich region. Along with them, many unique chal- lenges and opportunities for lawyers here are be- ing created as a result. "Multilateral agreements like [NAFTA] have stalled [and] countries are going more for bilateral or regional agreements like [MERCOSUR]," says Boscariol, a partner at Mc- Carthy Tétrault LLP who heads the firm's interna- tional trade and investment law group. "Canada has woken up to that reality." Canada has signed a series of free trade agree- ments in the region: Peru on May 29 was the sec- ond FTA this year and fourth in the Americas — after NAFTA in 1994, Chile in 1997, and Costa Rica in 2001 — with a fifth with Columbia still being legally scrubbed, after being agreed to by both countries in June. In addition to the FTAs, Canada has also inked bilateral investment treaties — or BITs — with several South American countries, including Argentina and Venezuela. Unlike FTAs, which are comprehensive deals, similar in scope to NAFTA, with side agreements on labour and the envi- ronment, BITs provide binding obligations on host gov- ernments in regards to their treatment of foreign inves- tors and investments. According to Spanish-speaking Silva, who is also a part- ner and a member of the firm's Latin American practice group, BITs are particularly attractive to investors because they provide a mechanism to pursue damage claims di- rectly against host states through international arbitration. "[BITs] are really a third way that allow us to sidestep the court system in those counties [and] avoid the use of di- plomacy to [resolve conflicts]," he says. There are more than 2,500 BIT agreements in existence in the world today — Canada has 23, including eight in Latin America. Silva credits those agreements with help- ing 73 companies recover more than $600 million of the $1.8 billion claimed in damages in 2007 alone — a huge improvement over previous years. While the complexity and intricacies of these agree- ments have added to the burden of international trade lawyers, they have also opened up new prospects for practice. "This a significant and growing area for us," says Silva. He worked on a groundbreaking BIT-related case in- volving EnCana Corp., which won — as a result of an inter- national arbitration tribunal hearing in London, England in 2004 — a dispute related to the entitlement of its sub- sidiaries in Ecuador to credits and refunds for value-add- ed tax paid in respect of goods and services used in the production of oil for export. "Because we handled the first case, we are advising clients on both sides of the border. There's a lot of interest about their rights under [BITs]." — MC www. C ANADIAN Law ye rmag.com OC T OBER 2008 37 Trade and investment treaties