Investment Arbitration in Asia

Despite the recent rhetoric and negative publicity surrounding the alleged problems with investment treaty arbitrations,  and the political backlash that followed,  Asia-Pacific states continue to enter into new treaties that include investor-state dispute settlement provisions (ISDS), and arbitration remains the preferred mechanism for resolving disputes between investors and states.

Investment treaty arbitration and Asian giants

In the Asia-Pacific region, some of the notable claims include the trinity of claims being threatened or advanced against India arising from the 2012 Income Tax Amendment Act (ITAA). This piece of legislation levied a hefty retroactive capital gains tax on any overseas merger or acquisition dating back to 1962 in which an underlying asset located in India was transferred.1Vodafone Group, Nokia Corp and Cairn Energy have each threatened or commenced investment treaty claims against India for alleged breaches of the BITs between India and the Netherlands, Finland and the UK respectively. Although India is not party to the ICSID Convention, the investors have recourse to bring claims against India under the UNCITRAL Arbitration Rules.

2014 also saw the People’s Republic of China facing a second investment arbitration claim brought under ICSID.2 The claimant, a South Korean firm, Ansung Housing Co Ltd (Ansung), commenced proceedings in respect to a 2006 investment in a development project for a golf country club and condominium in Sheyang-Xian, Jiangsu Province. The claim was brought pursuant to the China–Republic of Korea BIT. In the claim, Ansung has alleged that due to various alleged arbitrary and illegal actions and omissions of the Shenyang-Xian government, Ansung has been deprived of the use and enjoyment of its investment and its investment plans have been frustrated. As a result of these alleged illegal acts and omissions, Ansung claims that it was forced to dispose of its entire investment to a Chinese purchaser at a price significantly lower than the amount Ansung had invested toward the project. Ansung claimed to have suffered losses of more than 100 million renminbi and sought an award of damages.3

Interestingly, 2014 also saw at least one PRC investor launching an investment claim against another state. Beijing Urban Construction Investment Development (Beijing Urban) commenced investment arbitration proceedings against Yemen on 3 December 2014. Beijing Urban had signed a US$114 million contract with the Yemeni civil aviation and meteorology authority to build an international airport in Sana’a, with work beginning in 2006. The project was to be completed two years later but suffered substantial delays. The basis on which the claim is being brought is unclear but it is believed that the claim is founded on the China–Yemen BIT signed in 1998.

Developments elsewhere in the region

Besides the China and Indian cases, the rest of the region has also seen developments in investment treaty disputes.

In Indonesia, two separate decisions on jurisdiction were issued in a consolidated ICSID case involving the issue of Indonesia’s consent to ICSID arbitration under its BITs with Australia and the UK.  The two claimants involved are Churchill Mining PLC, a UK company, and its wholly-owned Australian subsidiary, Planet Mining Pty Ltd. The dispute concerned the validity of certain mining licences purportedly obtained by the claimants through a group of local companies as well as the validity of the revocation of these licenses by the Indonesian authorities. ICSID arbitration proceedings were commenced against the Republic of Indonesia, on the basis that Indonesia had breached various obligations under the UK–Indonesia BIT4 and the Australia–Indonesia BIT.5 At the jurisdictional phase of the proceedings, Indonesia objected to each claim on the ground that it had not consented to arbitrate either claim, which the ICSID tribunal rejected.

The ICSID tribunal’s dismissal of Indonesia’s jurisdictional challenges, which permitted the claimants to proceed with claims for damages that potentially exceed US$1 billion, has generated a great deal of controversy. It came to light in March 2014 that Indonesia commenced a review of its existing treaties that govern foreign direct investment. A statement from the Netherlands embassy in Jakarta on 21 March 2014 announced that Indonesia had decided to terminate the bilateral investment treaty between the two nations from 1 July 2015.6

While some have characterised Indonesia’s actions as a reaction to the tribunal’s decisions in Churchill Mining v Indonesia and Planet Mining v Indonesia, there is a general reluctance to draw a clear link between the two events. For instance, it has been suggested that the term ‘terminate’ fails to adequately capture ‘the nuanced process that Indonesia is going through to review its BITs by letting the old ones lapse so that new and better ones can be renegotiated’.7 Specifically, it appears that the state’s aim in its review of its BIT commitments was primarily to ensure that there was ‘consistency between local and international laws and regulations’.8

Elsewhere in the region, the Singapore High Court in Government of the Lao People’s Democratic Republic v Sanum Investments Ltd [2015] SGHC 15 pronounced on the scope as well as justiciability of foreign BITs. This is the first time a Singapore court has undertaken such an exercise. The case concerned a dispute between Laos and Sanum Investments Limited (Sanum), a company incorporated in Macao. Sanum had commenced UNCITRAL arbitration proceedings against Laos for, among others, expropriation under article 8(3) of the PRC–Laos BIT.

In its award on jurisdiction dated 13 December 2013, the tribunal found that the treaty extended to Macao. This led Laos to seek a review by the Singapore High Court under section 10 of the International Arbitration Act of the tribunal’s ruling on jurisdiction. Two substantive issues were put before the court: first, whether the PRC–Laos BIT applied to Macao, and second, if it did, whether Sanum’s expropriation claims fell outside of the scope of article 8(3) of the BIT. The court ultimately held that the parties to the treaty never intended for it to cover Macao.

The court went further and expressed its views on article 8(3) of the BIT. The crux of the second substantive issue centred on the meaning of the word ‘involving’ under article 8(3) of the PRC–Laos BIT. Essentially the issue turned on whether the interpretation of article 8(3) allowed for a determination as to whether there was an expropriation or whether it was limited to the determination of the compensation amount only. The judge endorsed the latter interpretation.

It would not be a stretch to say that the decision caused quite a stir. Just weeks after the High Court decision was handed down in Singapore, the government of Peru sought to rely on the Singapore High Court decision to annul an award on jurisdiction issued by the ICSID tribunal in Tza Yap Shum v Peru. Presumably, this was because the Singapore High Court had expressly referred to and disagreed with the tribunal’s decision on the question of jurisdiction.9 Eventually, the ad hoc committee dismissed Peru’s application.10

While critics of the Singapore High Court’s decision have expressed concerns as to its implications and how it may project Singapore as a less attractive venue both by tribunals and parties themselves, who may choose to seat their arbitrations elsewhere,11 it does show that the Singapore court is not afraid to take a stand on issues of public international law. This can only bode well for its continued development and growth in the region.

In its decision, the Singapore High Court also commented that it was necessary to understand that communist regimes at that time possessed ‘a certain degree of distrust regarding investment or private capital and [...] the decisions of international tribunals on matters over which they have no control’.12 This context, according to the court, was significant in respect to how article 8(3) of the treaty had to be interpreted.

Some commentators have suggested that ‘the distrust communist states may have towards bilateral investment treaties may be seen as being indicative of a growing sentiment that is not peculiar to these states’13 because these states perceive that the decision-making processes in investment treaty arbitration ‘may not adequately account for public policy concerns and may favour the investor over the state’.14 Such postulations, however, do not appear to be fully reflective of current times. While the scope of disputes that could be subjected to arbitration in treaties with communist regimes may have been restrictive in the 1960s, this is not the case now.

In the last decade, communist regimes in the region – like China, Laos and Vietnam – have entered into treaties that demonstrate a willingness to have all types of disputes (and not exclusively on the question of compensation for expropriation) resolved by investment treaty tribunals. For instance, the China–Japan–Korea trilateral investment agreement (2012)15 and the China–Canada BIT (2012)16 utilise broad wording to encompass practically any and all disputes arising from or by reason of the agreement.17 The India–Laos BIT (2000)18 and Denmark–Laos BIT (1998)19 also do not restrict the types of disputes that may ultimately be submitted to arbitration. The same may be said of the recent Vietnam–Morocco BIT (2012),20 which enabled the submission of any and all legal disputes to arbitration arising directly out of investments under the treaty. These relatively recent treaties involving communist regimes suggests that there is an appetite to have arbitral tribunals resolve a broader class of disputes, which must mean that any concerns that investment treaty arbitration for these states do not ‘adequately account for public policy concerns’ are tenuous at best.

International investment agreements and ISDS

The new treaties signed by Asia-Pacific states also indicate that investor–state arbitration remains the preferred mechanism to resolve disputes. The United Nations Conference on Trade and Development (UNCTAD) found that in 2014, 27 international investment agreements (IIA) were concluded (14 BITs and 13 ‘other IIAs’ )21 globally. That is one every other week.22 10 of the IIAs signed that year involved at least one state located in the Asia-Pacific region.23 Of those 10 treaties, six contain an ISDS provision. A full breakdown of the treaties is provided in the table below.

TitleType of IIADate of SignatureDate of entry into forceText publicly available?ISDS Provision?
Japan–Kazakhstan BIT (2014)Bilateral investment treaty23/10/2014

N/A

Yes

Yes

Israel–Myanmar (2014)Bilateral investment treaty05/10/2014

N/A

Yes

Yes

Canada–Republic of Korea Free Trade Agreement (2014)Other investment instrument agreement22/09/2014

N/A

Yes

Yes

ASEAN–India Services and Investment Agreement (2014)Other investment instrument agreement08/09/2014

N/A

No

 

Burkina Faso–Singapore BIT (2014)Bilateral investment treaty27/08/2014

N/A

No

Yes24

Côte d'Ivoire–Singapore BIT (2014)Bilateral investment treaty27/08/2014

No

No

Yes25

Japan–Mongolia EPA (2014)Other investment instrument agreement22/07/2014

N/A

No

 

Australia–Japan EPA (2014)Other investment instrument agreement08/07/2014

N/A

Yes

No26

Malaysia–Turkey FTA (2014)Other investment instrument agreement17/04/2014

N/A

Yes

No

Australia–Republic of Korea FTA (2014)Other investment instrument agreement08/04/2014

N/A

Yes

Yes

Investors commenced 42 known ISDS cases pursuant to IIAs in 2014 globally.27 This is lower than the number in 2013, which saw 59 new cases. Of the 42 known ISDS cases commenced in 2014, two claims were commenced against India,28 one against China29 and Indonesia30each.31In 2013, two claims were commenced against India,32 one against Pakistan33and Vietnam34 each.35

Interestingly, in 2014 at least two of the 42 new claims commenced were brought by investors whose home state is located in the Asia-Pacific region – China and Republic of Korea.36 There were no publically reported claims filed by investors whose home state is located in the Asia-Pacific region in 2013.

No hard conclusions may be drawn from the above statistics ‘[a]s most IIAs allow for fully confidential arbitration’37 and the actual number of cases may be higher.38 At most, it can be observed that investment treaty arbitration continues to feature in the Asia-Pacific region. The fact that investors from the Republic of Korea and China utilised ISDS in 2014 is a testament of its legitimacy and attraction. It may be the start of several more to come in this region.39

The Trans-Pacific Partnership Agreement (TPPA) – looking ahead

A hint as to how Asia-Pacific investment treaty arbitration and foreign investment will look in the future may be found in the TPPA. The TPPA is a multilateral free-trade agreement currently being negotiated by an array of economies in the Asia-Pacific region, North America and South America.40The TPPA is estimated to potentially account for approximately 39 per cent of the world’s GDP.41 It will impact all aspects of commerce and trade between these regional economies and, once in force, will arguably pave the way for a new generation of legal experts with plentitude of skills. The TPPA has its supporters and critics – from pundits, politicians and interest groups – and has been subject to significant media coverage and controversial leaks. The role ISDS plays in the TPPA in this regard will be significant for businesses and the arbitral community alike.

The receptiveness towards ISDS is not necessarily homo­genous across each state party. Australia is currently facing a claim by Philip Morris Asia Limited (a Hong Kong entity acquired by Philip Morris Australia) pursuant to the Hong Kong–Australia BIT under the auspices of the 2010 UNCITRAL Arbitration Rules. The case arose from the enactment of the Tobacco Plain Packaging Act 2011 (Cth) which required all tobacco products to use plain packaging in Australia. Philip Morris maintains that the measure has led to the depreciation of the value of its intellectual property rights.42 One author believes that the ongoing dispute has placed the future of ISDS for Australia in question.43

Irrespective of the reaction towards the ongoing dispute, there is no clear indication that ISDS under the TPPA is off the table insofar as Australia is concerned. In fact, according to the official government website, ISDS still has a role to play.44

In the US, Senator Elizabeth Warren wrote a fierce article for The Washington Post criticising the inclusion of an ISDS provision in the TPPA. She noted that ‘[a]greeing to ISDS in this enormous new treaty would tilt the playing field in the United States further in favor of big multinational corporations. Worse, it would undermine US sovereignty.’45 A group of Democrats also submitted an anti-ISDS Bill in the House of Representatives in February 2015 calling for the prohibition of any ISDS provision in any free trade agreement or investment treaty.46 The incumbent administration, however, has recanted by quelling misconceived notions of ISDS provisions.47

Senator Warren’s article has led politicians overseas to challenge the inclusion of an ISDS provision in the TPPA. At the time of writing, Mr Fletcher Tabuteau, New Zealand First Spokesperson for Commerce and Trade, introduced the ‘Fighting Foreign Corporate Control Bill’ which seeks to similarly prohibit the government from signing any treaty that would give ‘foreign corporates the right to seek compensation if they believe our [New Zealand] laws affect their business.’48

While there is much political rhetoric against the inclusion of an ISDS provision, the legal implications of a potential ‘carve-out’ for opposing states are less considered. Professor Mark Feldman argues that in the event a state party refuses to assent to the ISDS provision under the TPPA, it could create issues in respect of provisions ‘of any joint interpretation mechanisms provision that may be included within [the TPPA]’.49 This mechanism essentially permits a tribunal to request a joint interpretation by the contracting parties to the treaty of a particular provision which is binding. Should a state party not consent to the ISDS provision then it may ‘undermine [...] the proper operation of joint interpretation mechanisms contained within the treaty’.

For instance, it is unclear whether a state party ‘would have authority to participate in the joint interpretation of provisions contained within the dispute settlement section of a TPP[A] investment chapter.’ It is likely that such authority would be challenged on the ground that the state party in question would be interpreting provisions to which it has not agreed to. Also, it is unclear whether the tribunal would have authority to request for a joint interpretation when that provision has not been agreed by all contracting parties. Professor Feldman recommends that these issues (and others) should be dealt with through careful drafting by the contracting parties in the event one state party refuses to assent to the ISDS provision.

While a draft text is not officially available, a working draft of the 20 January 2015 Investment Chapter for the TPPA has been released50 (2015 TPPA Draft), which shows that ISDS is included. That said, this is by no means representative of the final version and it remains to be seen whether an ISDS provision will feature in the TPPA and, if so, in what form and shape.

Some notable features of the ISDS provision under the 2015 TPPA Draft are worth highlighting. First, for the moment the 2015 TPPA Draft indicates that ISDS does not apply to Australia.51 Second, should a disputing party request, the 2015 TPPA Draft requires the arbitral tribunal to transmit its proposed decision or award on liability to the disputing parties for commentary. The parties will have 60 days to provide their comments which the tribunal shall consider and issue its decision or award not later than 45 days after the expiration of the 60 days.52 Third, the 2015 TPPA Draft leaves open the possibility of the creation of an appellate body to review awards rendered by investor-state dispute settlement tribunals.53 Fourth, the Draft permits the respondent state to request, within 45 days after the tribunal is constituted, the tribunal to decide any objection (relating to jurisdiction, competence or otherwise) on an expedited basis.54 Presumably, this is based on article 28(5) of the 2004 US Model BIT which also provides for preliminary objections to be resolved through an expedited procedure. This provision is retained in the most recent 2012 US Model BIT. To avoid a frivolous use of this mechanism, the tribunal may award the winning party reasonable costs and attorney’s fees in submitting or opposing the objection.

The 2015 TPPA Draft suggests that as of January 2015 the Contracting Parties (save for Australia) support the inclusion of an ISDS provision under the TPPA. This may very well change, but at the time of writing, there is every expectation that ISDS will be included and play a role in the Asia-Pacific region.

Conclusion

The new treaties signed by Asia-Pacific states outlined above and the likely inclusion of an ISDS provision in the TPPA suggest that investor-state arbitration is here to stay. This is compounded by the continued use of investor–state arbitration against Asia-Pacific states and by claimants from Asia-Pacific states. The TPPA will be instrumental in shaping the next generation of arbitration practitioners and should be closely studied and critiqued.

Notes

  1. See sections 9 and 195 of the Income Tax Act (5th Edition 2012) (http://saarc-sec.org/uploads/document/India%20-%20Income%20Tax%20Act%202012%20%2821%20May%202012%29_20130521053032.pdf).
  2. The first investment-treaty arbitration case under ICSID against China was Ekran Berhad v People’s Republic of China (ICSID Case No. ARB/11/15). The case was suspended pursuant to parties’ agreement and ultimately discontinued.
  3. Luke Eric Peterson, ‘China is hit with second ICSID claim, as Korean investor lodges arbitration’ 5 November 2014. www.iareporter.com/articles/20141106.
  4. Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Indonesia for the Promotion and Protection of Investments dated 27 April 1976. The obligations alleged to have been breached were articles 3 (promotion and protection of investment) and 5 (expropriation).
  5. Agreement between the Government of Australia and the Government of the Republic of Indonesia concerning the Promotion and Protection of Investments dated 17 November 1992. The obligations alleged to have been breached were articles II(ii) (fair and equitable treatment), II(iii) (protection and security), IV (most favoured nation) and V (compensation for loss).
  6. Netherlands Embassy in Jakarta, Indonesia. ‘Termination Bilateral Investment Treaty’ http://indonesia.nlembassy.org/organization/departments/economic-affairs/termination-bilateral-investment-treaty.html.
  7. Michael Ewing-Chow and Junianto James Losari. ‘Indonesia should not withdraw from the ICSID’, The Jakarta Post, 24 April 2014, www.thejakartapost.com/news/2014/04/24/indonesia-should-not-withdraw-icsid.html.
  8. Ben Bland and Shawn Donnan. ‘Indonesia to terminate more than 60 bilateral investment treaties’, The Financial Times, 26 March 2014, www.ft.com/intl/cms/s/0/3755c1b2-b4e2-11e3-af92-00144feabdc0.html#axzz3Ur1ZNlVS.
  9. Kyriaki Karadelis. ‘Peru fails to annul Chinese treaty award’, Global Arbitration Review, 4 March 2015. https://globalarbitrationreview.com/news/article/33600/peru-fails-annul-chinese-treaty-award/.
  10. Ibid.
  11. Todd Weiler and Tai-Heng Cheng, ‘The virtue of judicial restraint: two comments on Laos v Sanum’, Global Arbitration Review, 12 March 2015. https://globalarbitrationreview.com/journal/article/33620/.
  12. [2015] SGHC 15, at [123].
  13. Mahdev Mohan and Jaya Anil Kumar, ‘Bilateral Investment Treaty Interpretation: An “Internationalist Spirit” tempered by Context’, SLW Commentary, Issue 3/March 2015. www.singaporelawwatch.sg/slw/component/cck/?task=download&file=attached_document&id=58317.
  14. Ibid.
  15. Article 15: ‘An investment dispute is a dispute between a contracting party and an investor of another contracting party that has incurred loss or damage by reason of, or arising out of, an alleged breach of an obligation of the former Contracting Party under this Agreement with respect to the investor or its investments in the territory of the former Contracting Party.’
  16. Article 20(1):
     ‘An investor of a Contracting Party may submit to arbitration under this Part a claim that the other Contracting Party has breached an obligation:
       (a)   Under Articles 2 to 7(2), 9, 10 to 13, 14(4), or 16, if the breach is with respect to investors or covered investments of investors to which sub-paragraph (b) does not apply, or
     
      (b)   Under Article 10 or 12 if the breach is with respect to investors of a Contracting Party in financial institutions in the other Contracting Party’s territory or covered investments of such investors in financial institutions in the other Contracting Party’s territory or covered investments of such investors in financial institutions in the other Contracting Party’s territory,      
    And that the investor or a covered investment of the investor has incurred loss or damage by reason of, or arising out of, that breach’.
  17. Wenhua Shan. ‘China and International Investment Law’, Regionalism in International Investment Law, Ed Leon E Trakman and Nicola W Ranieri, Oxford: Oxford University Press, 2013, p246.
  18. Article 9(1) to (3):
     ‘(1)  Any dispute between an investor of one Contracting Party and the other Contracting Party in relation to an investment of the former under this Agreement shall, as far as possible, be settled amicably through negotiations between the parties to the dispute.
     
    (2)   Any such dispute which has not been amicably settled within a period of six months may, if both Parties agree, be submitted:
            
    (a)  for resolution, in accordance with the law of the Contracting Party which has admitted the investment to that Contracting Party’s competent judicial, arbitral or administrative bodies; or
            
    (b)  to the International conciliation under the Conciliation Rules of the United Nations Commission on International Trade Law.
     
    (3)   Should the Parties fail to agree on a dispute settlement procedure provided under paragraph (2) of this Article or where a dispute is referred to conciliation but conciliation proceedings are terminated other than by signing of a settlement agreement, the dispute may be referred to Arbitration. The Arbitration procedure shall be as follows:
     
    (a)   If the Contracting Party of the Investor and the other Contracting Party are both parties to the convention on the Settlement of Investment Disputes between States and nationals of other States, 1965 and the investor consents in writing to submit the dispute to the International Centre for the Settlement of Investment Disputes such a dispute shall be referred to the Centre; or
     
    (b)   to an ad hoc arbitral tribunal by either party to the dispute in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law, 1976.’
  19. Article 9(1) to (2):
    ‘(1)  Any dispute which may arise between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of that other Contracting Party shall, as far as possible, be settled amicably.
     (2)   If such dispute between an investor of one Contracting Party and the other Contracting Party continues to exist after a period of three months, investor shall be entitled to submit the case either to:
     (a)   international arbitration of the International Centre for Settlement of Investment Disputes established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington D.C. on 18 March 1965 (ICSID Convention), or  
                (b)   an arbitrator or international ad hoc arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law.’
  20. Article 9: ‘a legal dispute under the provisions of this Agreement arising directly out of an investment, between one Contracting party (disputing party) and an investor of the other Contracting Party (disputing investor) [...]’.
  21. UNCTAD. ‘Recent Trends in IIAs and ISDS’, IIA Issue Note, No. 1, 2015, 19 February 2015, http://unctad.org/en/PublicationsLibrary/webdiaepcb2015d1_en.pdf. See footnote 2: ‘Other IIAs’ refers to economic agreements other than BITs that include investment-related provisions (eg, investment chapters in economic partnership agreements (EPAs) and free trade agreements (FTAs), regional economic integration agreements and framework agreements on economic cooperation).
  22. Ibid, p1.
  23. This includes: Australia, Brunei Darussalam, Japan, Malaysia, New Zealand, Singapore, Vietnam, Myanmar, Samoa, Republic of Korea, India, Bangladesh, Cambodia, China, Hong Kong, Pakistan, Indonesia, Democratic People’s Republic of Korea, Lao People’s Democratic Republic, Macao, Mongolia, Papa New Guinea, Philippines, Taiwan, Thailand and Timor-Leste.
    The 10 IIAs signed from the above lists were the Japan-Kazakhstan BIT, Israel-Myanmar BIT, Canada-Republic of Korea FTA, ASEAN-India Services and Investment Agreement, Burkina Faso-Singapore BIT, Côte d’Ivoire – Singapore BIT, Japan-Mongolia EPA, Australia-Japan EPA, Malaysia-Turkey FTA and Australia-Republic of Korea FTA.  
    The above research is based on the investmentpolicyhub.unctad.org website, accessed 25 March 2015.
  24. While the full text of the BIT is not publicly available, the Singapore Ministry of Trade and Ministry has confirmed in a press release that the BIT “[o]ff[ers] international arbitration as an avenue for … investors to resolve investment disputes.”  
    Singapore Ministry of Trade and Industry, ‘Singapore Signs Bilateral Investment Treaty With Burkina Faso And Ivory Coast To Promote Greater Investment Flows’. www.mti.org.sg. N.p., 27 August 2014, www.mti.gov.sg/NewsRoom/SiteAssets/Pages/Singapore-Signs-Bilateral-Investment-Treaty-With-Burkina-Faso-And-Ivory-Coast-To-Promote-Greater-Investment-Flows/SINGAPORE%20SIGNS%20BILATERAL%20INVESTMENT%20TREATY%20WITH%20BURKINA%20FASO%20AND%20IVORY%20COAST.pdf.
  25. Ibid.
  26. Interestingly, Article 14.19 of the ‘Agreement Between Australia and Japan for an Economic Partnership’ and accompanying Investment Chapter leaves open the possibility of an ISDS provision being included in the future:
    Article 14.19 - Review
     
    1.  Unless the Parties otherwise agree, the Parties shall conduct a review of this Chapter with a view to the possible improvement of the investment environment through, for example, the establishment of a mechanism for the settlement of an investment dispute between a Party and an investor of the other Party. Such review shall commence in the fifth year following the date of entry into force of this Agreement or a year on which the Parties otherwise agree, whichever comes first.
     
    2.  The Parties shall also conduct such a review if, following the entry into force of this Agreement, Australia enters into any multilateral or bilateral international agreement providing for a mechanism for the settlement of an investment dispute between Australia and an investor of another or the other party to that agreement, with a view to establishing an equivalent mechanism under this Agreement. The Parties shall commence such review within three months following the date on which that international agreement entered into force and will conduct the review with the aim of concluding it within six months following the same date.
     
    3.  At any time after the first year following the entry into force of this Agreement, either Party may request the other Party to agree to commence the review provided for in paragraph 1.
  27. UNCTAD (Note 21, above), p5.
  28. Louis Dreyfus Armateurs v India (UNCITRAL) and Vodafone International Holdings BV v India (UNCITRAL).
  29. Ansung Housing Co., Ltd. v People’s Republic of China (ICSID Case No. ARB/14/25).
  30. Nusa Tenggara Partnership B.V. and PT Newmont Nusa Tenggara v Republic of Indonesia (ICSID Case No. ARB/14/15).
  31. UNCTAD (Note 21, above), p13-14.
  32. Deutsche Telekom v India and Khaitan Holdings Mauritius v India (UNCITRAL).
  33. Karkey Karadeniz Elektrik Uretim A.S. v Islamic Republic of Pakistan (ICSID Case No. ARB/13/1).
  34. RECOFI v Vietnam (UNCITRAL).
  35. UNCTAD (Note 21, above), p25-26.
  36. Ibid, p13. The two known cases are Bejing Urban Construction Group Co. Ltd. v Republic of Yemen (ICSID Case No. ARB/14/30) which involves a Chinese investor and Ansung Housing Co., Ltd. v People’s Republic of China (ICSID Case No. ARB/14/25) which involves a South Korean investor. Two claims were filed by investors whose home state was unknown.
  37. UNCTAD (Note 21, above), p5.
  38. For a critical study of the recent UNCTAD report see Esme Shirlow’s article on ‘Looking behind the Statistics for Investment Arbitration’. Kluwer Arbitration Blog. 24 Feb. 2015. http://kluwerarbitrationblog.com/blog/2015/02/24/looking-behind-the-statistics-for-investment-arbitration/.
  39. 2015 also saw two new bilateral investment treaties signed between Japan and Ukraine (05/02/2015) and Japan and Uruguay (26/01/2015). Neither have entered into force and both are publicly available. Both have an ISDS provision.
  40. Currently including Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam
  41. Beth Cubitt. ‘Potential Investor-State Dispute Settlement Provisions in Trans-Pacific Partnership Agreement – A Change in Policy for Australia?’ Kluwer Arbitration Blog, 14 February 2014, http://kluwerarbitrationblog.com/blog/2014/02/14/potential-investor-state-dispute-settlement-provisions-in-trans-pacific-partnership-agreement-a-change-in-policy-for-australia/.
  42. Beth Cubitt. ‘Potential Investor-State Dispute Settlement Provisions in Trans-Pacific Partnership Agreement – A Change in Policy for Australia?’ Kluwer Arbitration Blog. 14 Feb. 2014. http://kluwerarbitrationblog.com/blog/2014/02/14/potential-investor-state-dispute-settlement-provisions-in-trans-pacific-partnership-agreement-a-change-in-policy-for-australia/.
  43. Ibid. ‘Whereas the inclusion of ISDS provisions in investment treaties was an uncontroversial political issue in the past, the Philip Morris arbitration and the inevitable conception of the TPPA has created significant debate in Australia and forced a divide between the Labour and Coalition Governments’ approach to the issue.’
  44. Australian Government – Department of Foreign Affairs and Trade. Trade and investment topics:
     ‘The Government will consider ISDS provisions in FTAs on a case-by-case basis.
     
    The Australian Government is opposed to signing up to international agreements that would restrict Australia’s capacity to govern in the public interest – including in areas such as public health, the environment or any other area of the economy.’ (www.dfat.gov.au/trade/topics/pages/isds.aspx).
  45. Sen. Elizabeth Warren. ‘The Trans-Pacific Partnership Clause Everyone Should Oppose’. The Washington Post, 25 February 2015. www.washingtonpost.com/opinions/kill-the-dispute-settlement-language-in-the-trans-pacific-partnership/2015/02/25/ec7705a2-bd1e-11e4-b274-e5209a3bc9a9_story.html.
  46. ‘Protecting America’s Sovereignty Act’. H.R.967.IH. 114th Congress, 1st Session. www.gpo.gov/fdsys/pkg/BILLS-114hr967ih/pdf/BILLS-114hr967ih.pdf.
  47. Jeffrey Zients. ‘Investor-State Dispute Settlement (ISDS) Questions and Answers’. The White House Blog. 26 February 2015: ‘The reality is that ISDS does not and cannot require countries to change any law or regulation. Looking more broadly, TPP will result in higher levels of labor and environmental protections in most TPP countries than they have today. If TPP is passed by Congress, it will also create strong, enforceable new labor protections that would allow the United States to take action – on its own, or on the basis of a petition from labor unions or other interested parties – against TPP[A] governments that don’t honor their labor commitments. The same is true for enforcing environmental commitments.’ https://www.whitehouse.gov/blog/2015/02/26/investor-state-dispute-settlement-isds-questions-and-answers.
  48. New Zealand First Party. ‘NZ First Fighting TPPA with New Bill’, Scoop, 19 March 2015. www.scoop.co.nz/stories/PA1503/S00300/nz-first-fighting-tppa-with-new-bill.htm.
  49. Mark Feldman. ‘Joint Interpretations, a TPP Investment Chapter, and Australia.’ Kluwer Arbitration Blog, 15 August 2013, http://kluwerarbitrationblog.com/blog/2013/08/15/joint-interpretations-a-tpp-investment-chapter-and-australia/.
  50. Trans-Pacific Partnership Agreement (TPP) – Investment chapter – version 20 January 2015. Transnational Dispute Management. www.transnational-dispute-management.com/legal-and-regulatory-detail.asp?key=13913.
  51. Ibid, Note 29.
  52. Ibid, section B, article II.22(9).
  53. Ibid, section B, article II.22(10): ‘10. In the event that an appellate mechanism for reviewing awards rendered by investor–state dispute settlement tribunals is developed in the future under other institutional arrangements, the Parties shall consider whether awards rendered under Article II.28 should be subject to that appellate mechanism. The Parties shall strive to ensure that any such appellate mechanism they consider adopting provides for transparency of proceedings similar to the transparency provisions established in Article II.23.’
  54. Ibid, article II.22(5): ‘In the event that the respondent so requests within 45 days after the tribunal is constituted, the tribunal shall decide on an expedited basis an objection under paragraph 4 or any objection that the dispute is not within the tribunal’s competence, including an objection that the dispute is not within the tribunal’s jurisdiction. The tribunal shall suspend any proceedings on the merits and issue a decision or award on the objection(s), stating the grounds therefor, no later than 150 days after the date of the request. However, if a disputing party requests a hearing, the tribunal may take an additional 30 days to issue the decision or award. Regardless of whether a hearing is requested, a tribunal may, on a showing of extraordinary cause, delay issuing its decision or award by an additional brief period, which may not exceed 30 days.’

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