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)

Dawn | 2-Mar-2015
Pakistan’s Board of Investment is working on Pakistan’s own template of a bilateral investment treaty, which will replace previous treaties and serve as basis for new ones.
IGJ | 26-Feb-2015
Indonesia for Global Justice together with Indonesian civil society networks met with the Director of Bilateral Cooperation of Investment Coordinating Board, Fritz Horas Silalahi, in Jakarta to discuss the review of Indonesia Bilateral Investment Treaties (BITS).
ViEUws | 26-Feb-2015
David Martin MEP (S&D, UK), the European Parliament’s rapporteur on the EU-Singapore trade deal, criticises the infamous ISDS (investor-to-state dispute settlement) part of the agreement.
The News | 16-Feb-2015
Pakistan Finance minister says the government will review its existing bilateral investment treaties and develop a template for future ones.
Columbia Center on Sustainable Investment | 6-Feb-2015
Advocates of a transatlantic investment treaty should be careful not to overstate their case and play the “China-card” as a core argument for allowing US investors to side-track EU courts.
Beyond Brics | 21-Jan-2015
Instead of relying only on a treaty-based approach, India should initiate domestic policy reforms to attract and protect foreign investments, argues Kavaljit Singh
Financial Express | 25-Dec-2014
The definition of investment that the govt of India had agreed to while entering into BIPPAs is particularly problematic, writes Biswajit Dhar
| 18-Dec-2014
The Nawaz Sharif government is in an unnecessary haste to settle and pay millions, possibly billions, of dollars as compensation for the Reko Diq gold and copper mines to a discredited and ousted Canadian-Chilean mining consortium, a decision if made may resemble the infamous circular debt payment of Rs500 billion in the early days of the PML-N government.
Economic Times | 17-Dec-2014
Bilateral investment treaties that the government of India will enter into from now on will have a provision preventing foreign investors to drag India to arbitration on any issues that have been settled by a judicial authority.
FFII | 7-Dec-2014
Lock-in, no institutional safeguards for independence, perverse incentives, no separation of powers, automatic consent, ripe for exploitation, sovereign debt instruments included, open to the world, and a strategic mistake. Former trade commissioner De Gucht left us a Gordian Knot, writes Ante Wessels.

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