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)

Reuters | 28-Jun-2023
Britain’s investment minister said he would like to see strong investment protections in any future trade deal with India, and that the two countries could work more closely together on financial services even without a trade pact.
Korea Tech Today | 26-Jun-2023
South Korea has been ordered by the International Centre for Settlement of Investment Disputes to compensate hedge fund Elliott approximately $108.5 million concerning the 2015 merger of two Samsung subsidiaries.
TNI | 22-Jun-2023
In the era of the energy transition, questions of state control and power are back on the agenda in a big way.
The Korea Times | 22-Jun-2023
10 ISDS (investor-state dispute settlement) cases were filed against the Korean government and five of them are currently pending.
The Kathmandu Post | 13-Jun-2023
The Axiata Group had filed a case at the International Centre for Settlement of Investment Disputes in May 2019, claiming damages worth around Rs66 billion.
McCarthy Tétrault | 31-May-2023
Direct remedies may be available to Canadian miners under the CPTPP in relation to the changes to Mexico’s mining laws.
The Guardian | 12-May-2023
Palmer’s Zeph Investments could receive compensation if successful in second and potential third dispute beyond existing $296bn case.
Nikkei Asia | 11-May-2023
Japanese investors will soon file a request for arbitration regarding Credit Suisse’s Additional Tier 1 bonds, under the economic partnership agreement between Japan and Switzerland.
Yonhap | 9-May-2023
An international tribunal has accepted the South Korean government’s request and reduced the damages it has to pay to the U.S. private equity firm Lone Star Funds by about US$450 million, the justice ministry said
Clyde & Co | 24-Apr-2023
The decision recognised and enforced an ICSID arbitration award obtained by a renewable energy investor against the Spanish Government for €101 million.