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)

AFTINET | 21-Oct-2019
Organisations representing millions of Australians wrote to Labor MPs last week asking them to implement their policies against harmful proposals including special rights for foreign investors to sue governments for millions over domestic laws.
Business Recorder | 16-Oct-2019
The Adviser to Prime Minister on Finance and the Attorney General for Pakistan are meeting with the company’s board.
IGJ | 15-Oct-2019
The book aims to provide an understanding to the public about ISDS mechanism, by providing a clear description of real impact caused by ISDS lawsuit faced by Indonesia.
The Economic Times | 2-Oct-2019
India may cut or eliminate tariffs on 80% of products imported from China under a 16-country free trade agreement, the last round of negotiations for which is underway in Vietnam.
Yonhap | 1-Oct-2019
The South Korean government has won an international arbitration in a suit a Korean-American individual filed over expropriation of land in a redevelopment project.
AFTINET | 1-Oct-2019
Their submissions conclude that the system is detrimental to public budgets, regulations in the public interest, democracy and the rule of law.
AFTINET | 1-Oct-2019
After seven years of tireless campaigning in Australia and across the region, the Malaysian Trade Minister announced that foreign investor rights to sue governments (ISDS) has been dropped from the RCEP agreement negotiations.
Business Recorder | 27-Sep-2019
Pakistan has paid over $100 million to Turkish rental power company Karkey as a penalty out of $800 million, Senator Sherry Rehman has said.
The Straits Times | 25-Sep-2019
The Bilateral Investment Treaty on the Promotion and Protection of Investments between Singapore and Myanmar aims to promote greater investment flows between the two countries.
Reuters | 18-Sep-2019
An international arbitration panel will hold hearings next month in the United States in a case filed by two New York-based hedge funds against the South Korean government over a 2015 Samsung merger.