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)

Express Tribune | 25-Jul-2019
The question for Pakistan now is what lesson can be learned from events that led to the ICSID Tribunal making a $5.9 billion award against the Government of Pakistan.
Daily Times | 25-Jul-2019
Pakistan has suffered at the hands of an unaccountable and defective dispute resolution mechanism at the hands of the ICSID, and following the examples of India, South Africa and Brazil, should never have become a part of the ICSID.
The Conversation | 23-Jul-2019
Abolishing ISDS won’t solve all of the problems of global economic governance. But it seems a very good place to start.
ESSF | 23-Jul-2019
This is a story of the dodgy deal by a multi national company and then earning massive amount of money through a World Bank institution acting against developing countries.
AFTINET | 22-Jul-2019
Media reports from South Korea have suggested that South Korean Prime Minister Mr. Lee Nak-Yeon is considering abolishing ISDS from Korean Trade agreements.
Express Tribune | 19-Jul-2019
In the Reko Diq case registered by Tethyan Copper Company, the dollar-starved Pakistan has been slapped a penalty way beyond its reach by the World Bank-sponsored ICSID.
Amigos de la Tierra | 18-Jul-2019
El acuerdo de Asociación Económica Integral Regional socavaría las normas de protección del medioambiente en Asia.
Express Tribune | 17-Jul-2019
The International Centre for Settlement of Investment Disputes (ICSID) has declared that the Supreme Court of Pakistan’s judgment in the rental power projects case is ‘arbitrary’.
CNN Chile | 16-Jul-2019
El CIADI del Banco Mundial determinó que el país islámico deberá desembolsar 5.840 millones de dólares tras denegar ilegalmente la licencia minera para el proyecto Reko Diq.

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