Investment Treaty Arbitration 'Down Under': Policy and Politics in Australia

Abstract

Disaffection regarding treaty-based investor–State dispute settlement (ISDS), especially binding arbitration, is slowly spreading from a few, mostly leftist regimes in South America,3 to middle-income and developed countries in other parts of the world. In particular, now that the European Union (EU) has exclusive competence to conclude treaties relating to foreign direct investment (FDI),4 tension has emerged between the European Commission and the European Parliament, particularly in the context of the Trans-Atlantic Trade and Investment Partnership (TTIP),5 given the potential economic impact of such a free trade agreement (FTA) still being negotiated between the EU and the USA. However, there has also been some debate over the advisability of having included ISDS in the FTAs recently concluded with Canada6 and even Singapore.7 The reverberations are now being felt in the rapidly growing Asian region.8 Asian States have gradually come to accept extensive ISDS provisions not only in their bilateral investment treaties (BITs) and FTA investment chapters, but also in their existing regional agreements, notably the Association of Southeast Asian Nations (ASEAN) Comprehensive Investment Agreement and the ‘ASEAN+’ agreements with Australia and New Zealand (AANZFTA), China, Korea9 and India (signed in September 2014).10 Yet the path has been a winding one, with a few dead ends. For example, an investment chapter was omitted altogether from the ASEAN–Japan FTA. Although Japan has FTAs and/or BITs with all ASEAN Member States, including Myanmar (signed in December 2013),11 which all incorporate ISDS provisions, it agreed to a request from the Philippines to omit ISDS from its bilateral FTA.12 Neither Vietnam, Laos, Myanmar, Thailand or India are State parties to the 1965 ICSID Convention.13 More generally, it has been suggested that a ‘combination of a historical sense of hostility, nationalism that continues to dictate events, pragmatism and competition among themselves to attract foreign investment underlies the different policies of the Asian states’ towards FDI.14