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)

Live Mint | 10-Feb-2020
Vodafone’s dispute relates to its $11 billion acquisition of a 67% stake in the mobile-phone business owned by Hutchison Whampoa. Cairn Energy is contesting a big tax bill that Indian government raised for a 2006 transaction.
Geo TV | 31-Jan-2020
The World Bank’s International Center for Settlement of Investment Disputes has approved Pakistan’s petition for a review in the Reko Diq case in which the country was slapped with a $6 billion fine.
Business Recorder | 31-Jan-2020
Pakistan’s team exchanged its draft agreement with Turkish team’s draft and prepared a consensus document which will again be shared with the federal cabinet for approval before presenting it to the ICSID.
Business Recorder | 30-Jan-2020
Pakistan approved waiving off all port dues/charges amounting to Rs194,951,059 on 31-1-2020 or till the vessels leave the port accruing against Karkey.
Deccan Herald | 27-Jan-2020
India inked an Investment Cooperation and Facilitation Treaty with Brazil – the first one after Prime Minister Narendra Modi’s Government in December 2015 approved a new template for such bilateral pacts.
Finance Uncovered | 27-Jan-2020
When Vietnam signalled it would claim the tax due, oil giant ConocoPhillips issued a pre-emptive legal strike using an arbitration process under the UK-Vietnam bilateral investment treaty.
El Universal | 24-Jan-2020
El Acuerdo para la Promoción y Protección Recíproca de las Inversiones permite la transferencia libre de capitales y acceso al arbitraje internacional para la solución de controversias.
Kluwer Arbitration Blog | 20-Jan-2020
Despite debates about crisis in investment treaty arbitration, most emerging market economies are concluding BITs that provide for ISDS and emerging market multinational companies appear to welcome ISDS.
The Economic Times | 20-Jan-2020
India has a faced a number of claims from foreign investors over the years under the BIT regime. It is presently engaged in over 20 investor-State disputes, with a number of them revolving around retrospective tax claims.
Dhaka Tribune | 17-Jan-2020
Now that the February 23 deadline for the court directive to pay Tk2,000 crore audit dues to the telecom regulator looms, Telenor hopes that the ongoing audit dispute can be settled without resorting to international arbitration.

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