https://brill.com/abstract/title/36129Guest blog written by: Nobumichi Teramura (UNSW PhD in Law candidate)
Ongoing dramatic geopolitical transitions in the world have inevitably impacted on the international business environment of the Asia-Pacific region. This requires Australia and other countries in the region to re-examine their legal infrastructure for transnational business disputes. Convergence and divergence of legal systems of competing and sometimes cooperating states in the Asia-Pacific require the Australian government and other stakeholders to address unprecedented legal complexities in private to private, private to public, and public to public commercial dispute resolution.
On 19 April 2018, the Sydney Centre for International Law (SCIL) at the University of Sydney Law School organised a post-ICCA symposium: “International Commercial Dispute Resolution for the 21st Century: Australian Perspectives”. The symposium, the second recently with the University of Western Australia (UWA) Law School and also supported by Transnational Dispute Management (TDM), brought together leading experts in international arbitration, investment law and international business law from all over the world. They examined broad and perhaps increasingly overlapping fields such as investor-state dispute settlement (ISDS) in a changing legal and political environment, cross-border litigation in the Asian region, other international commercial dispute resolution mechanisms (arbitration and mediation), and inter-state dispute settlement.
Category: Corporate governance and FDI
The TPP is Back: Submission to Australian Parliamentary Inquiries
[Update of 22 August 2018: the JSCOT Report No 181 recommending CPTPP ratification is now available. It refers to this Submission, my oral evidence given at hearings in Sydney (transcribed here), and further statistical information jointly with PhD student Ana Ubilava (incorporated also into an article for the Sept 2018 issue of the Intl Arb L Rev).]
The Trans-Pacific Partnership was signed in February 2016 by Australia, Japan, the US and 9 other Asia-Pacific countries, but the new Trump Administration withdrew signature in January 2017, so the remaining 11 re-signed a variant (TPP11 or CPTPP) in March 2018. Inquiries into ratification are now being conducted by the the Australian Parliament’s Joint Standing Committee on Treaties (JSCOT, where the Government always had a majority of members, so will almost certainly recommend ratification) and the Foreign Affairs, Defence and Trade Committee in the Senate (where the Government lacks a majority overall). The Inquiry reports do not bind the Government anyway, so the big question remains: will the opposition Labour Party subsequently vote with the Government to enact tariff reductions consistently with this treaty, to allow the Government then to ratify the treaty so it can come into force?
A particular stumbling block will remain the TPP11’s investor-state dispute settlement (ISDS) provisions, given as an option additional to inter-state arbitration for investors directly to enforce substantive commitments offered by host states to protect foreign investment, given that the Labour Party’s policy remains opposed to including ISDS in treaties. Despite that policy position, going back to the the Gillard Government Trade Policy Statement in 2011 (in force until Labour lost power in 2013), the Labour Opposition nonetheless voted pragmatically with the Government to allow FTAs containing ISDS to come into force with Korea and China.
Below is my Submission to both Parliamentary Committees, focusing on the investment chapter and supporting ratification of the TPP11. It is based in part on my latest paper with A/Prof Amokura Kawharu focusing on recent ISDS cases and investment treaties (re)negotiated by Australia, and New Zealand where a new Labour Government has also renounced ISDS for future treaties, but pragmatically agreed to rather minimal changes to ISDS and the investment chapter overall in TPP11. The footnoted original versions of the Submission, available by the Committee websites, refer to some of my other recent writings concluding a 4-year ARC cross-institutional research project on international investment dispute management. One is a 21-chapter book on ‘International Investment Treaties and Arbitration Across Asia‘, launched by former Chief Justice Robert French on Thursday 13 April as part of a SCIL-supported symposium on international commercial dispute resolution, including Australian perspectives.
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NZ renounces ISDS: Deja vu?
we have written to leaders in both New Zealand and Australia recommending a shift towards introducing an EU-style two-tier investment court model in lieu of traditional ISDS, as a compromise way forward
The new Labour-led coalition government in New Zealand announced this month that it would resist investor-state dispute settlement (ISDS) provisions in future Free Trade Agreements or investment treaties.
This outcome and local political circumstances bear some remarkable parallels with the situation in Australia over 2011-2013, when the centre-left Gillard Labor coalition government adopted a similar stance until the new centre-right government resumed the policy including ISDS on a case-by-case assessment. Australia was then able to agree to major bilateral FTAs with China and Korea, as well as to the Trans-Pacific Partnership Agreement.
The [unfootnoted] posting below with Amokura Kawharu from UAuckland, a version of which will be published in the Kluwer Arbitration Blog, elaborates on these developments. We note how New Zealand nonetheless subsequently reached agreement in principle on a revised TPP, but will face challenges maintaining a wholly anti-ISDS stance in the ongoing (ASEAN+6) Regional Comprehensive Economic Partnership negotiations. As a compromise way forward, we have written letters to leaders in New Zealand and Australia suggesting the substitution of an EU-style investment court mechanism.
For more background and our main paper referred to below, please see:
Kawharu, Amokura and Nottage, Luke R., Models for Investment Treaties in the Asian Region: An Underview (February 21, 2017). Arizona Journal of International and Comparative Law, 2017 Forthcoming; Sydney Law School Research Paper No. 16/87. Available at SSRN: https://ssrn.com/abstract=2845088
“International Investment Treaties and Arbitration Across Asia” – Julien Chaisse & Luke Nottage (eds)
[Updated: 25 July 2017]
The future of investment treaties, especially as part of “mega-regional” free trade agreements like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), has become very uncertain given the isolationist volte-face of the Trump Administration. This project explores the historical and likely future trajectory of investment treaties, including the sometimes politically controversial Investor-State Dispute Settlement (ISDS) procedure, especially in the rapidly growing and diverse Asia-Pacific region. The book focuses on the extent to which Asia-Pacific economies (individually and/or through sub-regional groupings like ASEAN, the Association of Southeast Asian Nations) have been or are more likely to become “rule makers” rather than “rule takers” in international investment law, and in what sense.
The following book proposal, accepted in July 2017 by Brill for publication in its Nijhoff International Investment Law Series, is based mainly on papers presented at conferences comparing contract- and treaty-based arbitration of investment disputes in ASEAN member states (held in Bangkok in July 2016) and across the wider Asian region (held at USydney in February 2017, with a summary by Ana Ubilava available via Kluwer Arbitration Blog) and reproduced (without hyperlinks) on this Blog.
International Investment Arbitration Across Asia: A Symposium
By: Ana Ubilava (PhD in Law student, University of Sydney)
[This is a non-hyperlinked version of the posting at http://kluwerarbitrationblog.com/2017/03/01/international-investment-arbitration-across-asia-symposium/]
On 16 February 2017, the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS) and the Sydney Centre for International Law (SCIL) co-hosted a symposium on the theme: “International Investment Arbitration Across Asia”. The symposium, sponsored also by the Sydney Southeast Asia Centre and Herbert Smith Freehills, brought together leading experts of international investment law from Southeast Asia, North Asia, India and Oceania. The symposium re-examined the historical development of international investment treaties in the Asian region, focusing on whether and how the countries may be shifting from rule takers to rule makers. A focus was on the ASEAN(+) treaties, including the (ASEAN+6) Regional Comprehensive Economic Partnership (RCEP) at an advanced stage of negotiations, and the Trans-Pacific Partnership (TPP) Agreement, which was discussed more broadly as an urgent topic in the wake of the change of direction by the US under President Donald Trump’s administration. Participants at the symposium also elaborated on the experiences of Asian countries with ISDS mechanisms, and the attitude towards ISDS before and after first major investor-state arbitration (ISA) cases in the region. The many speakers and discussants for the event further explored possible future trajectories of international investment treaty policymaking of Asia-Pacific countries, especially China, Japan, Korea, India, Australia and New Zealand.
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Are US Investors Exceptionally Litigious with ISDS Claims?
[A version of this posting appears on Kluwer Arbitration Blog on 14 November 2016.]
Critics of the Trans-Pacific Partnership (TPP) free trade agreement, and investor-state dispute settlement (ISDS) protections more generally, have often argued that a particular concern is that the US is not only a large source of FDI, but that it is ‘the nation whose corporations use ISDS the most’ (referring to ANU’s Professor Thomas Faunce). A recent paper by ANU’s Dr Kyla Tienhaara for the ‘GetUp’ campaign in Australia, in the context of ongoing parliamentary inquiries into ratifying the TPP, contends that Australia is at risk because US investors have brought multiple claims against Canada. (By contrast, Charles-Emmanuel Cote points out that ‘damages effectively awarded or agreed to in settlement so far [amount to] US$147.5 million, or a mere 0.05 percent of all US investment’ into Canada.) More generally, Tienhaara argues :
The biggest users of ISDS are US multinational corporations. This means that entering into a trade deal with the US that includes ISDS provisions – such as the TPP – places a country at high risk of ISDS suits.
The inference is that Americans are particularly ‘litigious’ in the field of investment treaty claims – perhaps like they are purported to be in civil litigation in their home courts. In fact, empirical research into comparative civil dispute resolution patterns had long pointed out that a representative state within the US (in terms of urban/rural population mix, such as Arizona) has fewer filings per capita than countries such as Israel and Germany [Nottage & Wollschlaeger ‘What Do Courts Do?’ [1996] NZLJ 369].
Table A and Figure A-1 in the attached version of this posting confirm that investors from the US had indeed lodged the most ISDS claims by end-2015 (138). Yet, on a per capita basis (per 100,000 people in the home state), US investors are historically less litigious compared to investors from eleven other countries whose investors have filed considerable numbers of ISDS claims. Those states are all in the EU (including Belgium and Luxembourg, which generally conclude investment treaties collectively and whose investors have filed the most claims per capita), except for Switzerland (whose investors become the fourth most litigious) and Canada (the fifth most litigious home state). As further indicated in Table A and Figure A-2, if we group together most of these EU states their investors’ per capita ISDS claim rate is also higher than that for US investors.
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“International Investment Arbitration Across Asia”: USydney, 16 February 2017
Treaty-based investor-state arbitration (or ISDS more generally) is an increasingly topical issue, as FDI flows continue to grow, especially across Southeast Asia and the rest of the Asian region, and host states have begun to experience some claims brought by disgruntled foreign investors.
This conference organised for Thursday 16 February 2017 by the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS) and the Sydney Centre for International Law (SCIL), with sponsorship from Herbert Smith Freehills, builds on the lively and timely conference funded by Chulalongkorn University’s ASEAN Studies Centre in Bangkok on 18 July 2016, which compared the experiences and policy debates in each of the ten ASEAN member states. Those country reports are now being revised for review and eventual publication in a leading journal, with versions then being combined with papers on pan-Asian investment treaties and arbitration to be presented on 16 February 2017, for a co-edited book published by the same legal publisher.
This upcoming conference will bring together leading experts from Southeast Asia, North Asia, India and Oceania, including several from institutional partners of USydney. It will help round off a major cross-institutional and interdisciplinary research project into international investment dispute management more generally, funded by the Australian Research Council since 2014. The annual SCIL “International Law – Year in Review” symposium will also take place the next day, on Friday 17 February 2017.
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Independent Directors in Asia – and Industry Superannuation Funds in Australia?
The manuscript is in press for “Independent Directors in Asia”, co-edited for Cambridge University Press with ANJeL stalwarts Profs Harald Baum (MPI Hamburg), Souichirou Kozuka (Gakushuin, Tokyo) and Dan Puchniak (NUS). As previously mentioned on this Blog, contributions have been extensively workshopped at major conferences in Berlin and then Singapore, as well as by individual authors in other forums.
A longer version of the chapter comparing Australia, which I co-authored with Fady Aoun, has also been published in June 2016 by the University of Miami International and Comparative Law Review. Our summary of some trends revealed by the broader comparative analysis in the CUP book is forthcoming by November from the Company and Securities Law Journal. As we conclude briefly in that Note, a comparative perspective on the complex diffusion of independent director requirements across Asia makes us wary about simply extending the requirements for listed companies to industry-based superannuation funds in Australia, as proposed in a failed Bill last year but still being developed through self-regulation.
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US vs EU vs Other Models for Investment Treaties in the Asian Region
[A shorter version of this posting was published on 1 July 2016 on the East Asia Forum blog.]
International investment treaties and investor-state dispute settlement (ISDS) are in the news again, notably in Australia and India, which are negotiating a bilateral Free Trade Agreement (FTA) as well as the Regional Comprehensive Economic Partnership (RCEP or “ASEAN+6” FTA). The possibility is emerging of a shift from US-style to contemporary EU-style treaty drafting in the broader Asian region, as a new compromise between the interests of foreign investors and host states.
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The TPP Investment Chapter and Investor-State Arbitration in Asia and Oceania
The Trans-Pacific Partnership (TPP) Agreement was signed in February 2016 by 12 Asia-Pacific economies that already account for 40% of world GDP, including the United States, Japan and Australia. If ratified, economists model significant economic growth prospects, especially for smaller and/or less developed member states, with a considerable impetus coming from greater cross-border investment. Further economic benefits are expected if others join the existing signatories, with expressions of interest already coming from leaders in several Asian states.
However, whether the treaty will be ratified and come into force remains unclear, partly because of some ongoing opposition to the TPP’s investment chapter provisions even within existing signatories, for example from some quarters within Australia (and, to a lesser extent, Japan). One focus of criticism is the extra option of investor-state dispute settlement (ISDS), aimed at more credibly enforcing the substantive protections and liberalisation commitments of host states. My paper for a conference on FTAs in Melbourne on 19 May 2016, (at http://ssrn.com/abstract=2767996 and outlined below) assesses such concerns.
A version will also be presented at the Institute for Southeast Asian Studies in Singapore on 5 August, for their interdisciplinary project on the impact of the TPP in the region. In addition, on 4 August I will present a broader paper on “Rebalancing Investment Treaties and Investor-State Arbitration in Asia and Australia” at the SMU workshop on “Regulation and Investment Disputes: Asian Perspectives”.
The pros and cons of ISDS nowadays will be further addressed in another joint research conference and book project with Chulalongkorn University, funded by its ASEAN Studies Centre, at a conference in Bangkok on 18 July that compares the experiences and debates over treaty-based ISDS as well as contract-based investment arbitration across all ten ASEAN member states (including current TPP signatories, and potential additional ones like Thailand, Indonesia and the Philippines). The final program and speakers are listed below.
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