Asia

Asian countries have signed almost 2000 international investment agreements, most of which include the investor-state dispute settlement (ISDS) mechanism that gives foreign investors the right to bypass national courts and resort to a parallel system of justice specifically made for them.

The Association of South-East Asian Nations or ASEAN (formed of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam) also provides investor protection under the ASEAN Comprehensive Investment Agreement which was adopted in 2009.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP for short) includes ISDS provisions with a carve-out for tobacco control measures.
TPP was signed on 7 March 2018 between 11 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It went into force on 30 December 2018 among the members who have ratified it. The US withdrew from it in January 2017.

The Regional Comprehensive Economic Partnership (RCEP) is a proposed mega regional trade deal. It is currently being negotiated between the Asian states of Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, the Philippines, Singapore, South Korea, Thailand and Vietnam with Australia and New Zealand. India pulled out of RCEP in December 2019.

RCEP originally included ISDS, but following opposition from civil society groups and some governments, negotiators agreed to exclude it in September 2019. However the negotiating states said they will look into it again at a later stage and assess whether or not to include it.

India has been the most targeted country in the region, with 25 known disputes - the majority of which were initiated by West European countries. Turkey has been the most frequent home state for investors, with 35 cases.

In July 2019, Pakistan was ordered to pay over US$5 billion to Chilean and Canadian investors (Antofagasta and Barrick) which had brought an ISDS claim against the country using the Australia-Pakistan bilateral investment treaty. The case involved a gold and copper mine, for which an exploration permit had been denied. The mining companies had only invested about US$200 million.

Several governments in the region have said they would reform the mechanism. At the end of 2014, Sri Lanka announced its intention to move away from traditional models of BIT. It cited the thin relationship between BITs and foreign direct investment, past ISDS disputes and the tendency for BITs to constrain domestic policy space as reasons. Sri Lanka favours the enactment of appropriate domestic legislation to protect foreign investment.

In early 2014, Indonesia announced that it would terminate 67 of its BITs. Former president Yudhoyono argued that he did not want multinational companies to pressure developing countries. 21 BITs were terminated in 2015. Indonesia has drafted a new model of BIT, but it hasn’t been adopted yet.

In December 2015, India released a revised model BIT which, for instance, requires investors to exhaust domestic remedies (Indian courts) before turning to international arbitration and leaves out “fair and equitable treatment” provisions. Consequently India sent notices to 58 countries terminating or not renewing BITs that had expired. In January 2020, it signed a BIT with Brazil that excludes ISDS and favours dispute prevention as well as state-to-state dispute settlement.

(April 2020)

The Business Times | 8-Jul-2020
The current pandemic, and the treaty claims which are likely to stem from it, are a reminder of the importance for ASEAN to be engaged in ongoing discussions at the United Nations of possible reform of the system of investment treaty arbitration.
Financial Express Bangladesh | 7-Jul-2020
Amidst the global risk of ISDS claims, it is incumbent to shed light on Bangladesh’s BIT structure and its feasibility to confront ISDS claims in the backdrop of Covid-19 regulatory space.
Hankyoreh | 7-Jul-2020
Berjaya is to receive US$104.3 million and to withdraw the notice of intent that it submitted to seek investor-state dispute settlement arbitration for a sum of US$3.42 billion.
The Print | 6-Jul-2020
India has a Bilateral Investment Treaty with China since 2007. The treaty provides foreign investors the right to fair and equitable treatment.
Korea Times | 24-Jun-2020
The government is apparently baffled by Lone Star Fund’s attempts to use Korean news outlets as a means of putting itself in a dominant position in its $4.68 billion legal battle against Seoul.
The Express Tribune | 15-Jun-2020
Pakistan’s chances of having its $6 billion penalty in the Reko Diq case annulled have received a boost with a committee of the International Centre for Settlement of Investment Disputes (ICSID).
Lexology | 10-Jun-2020
On 5 February 2020, Australia and Indonesia signed an exchange of letters agreeing to the termination of the Aus-Indo BIT and its sunset clause.
Geopolitical Monitor | 5-Jun-2020
Ecuagoldmining’s estimated $20 million investment so far could turn into a $469 million award, should it emerge victorious in an arbitration proceeding.
Pulse | 5-Jun-2020
US private equity firm Lone Star Funds suggested it was open to “amicable and sensible” out-of-court option to settle the longstanding dispute with the Korean government.
Kluwer Arbitration Blog | 4-Jun-2020
A number of noteworthy decisions by the Paris Court of Appeal and French Supreme Court have come to refine on the now well-established French case law on international arbitration.

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