Pacific states have signed about 65 trade and investment agreements, 40 of which have been concluded by Australia alone.
Most of Australia’s trade deals specify investor-state dispute settlement (ISDS) provisions, including those with China (ChAFTA, in the final stage of being ratified), India, Korea, Mexico or Turkey.
Following a dispute with Philip Morris over an anti-tobacco law, Australia claimed it would refrain from engaging into new investment agreements with ISDS.
However Australia has signed ChAFTA and the Trans-Pacific Partnership (TPP) whose investment chapter has revealed the inclusion of an ISDS mechanism that would undermine public health, the environment and other public-interest ‘safeguards’.
The Philip Morris vs. Australia case is the most well-known dispute to date. When Australia voted an anti-tobacco law forcing tobacco companies to use plain packaging, US company Philip Morris initiated an ISDS dispute through its Hong Kong-based subsidiary. It invoked the Australia-Hong Kong bilateral investment treaty (BIT) due to the non-inclusion of ISDS provisions in the Australia-US BIT. The case has been eventually dismissed on procedural grounds. More than US$35 million of taxpayer money was reported to have gone up in smoke in legal fees only.
The Pacific has been the least targeted region. Only Australian investors have initiated disputes on two registered occasions.