New Approaches to the Balance between Investor Protection and the Right to Regulate within Mega-regional Agreements

Abstract

INTRODUCTION. In 2015 UNCTAD elaborated a roadmap for international investment agreements reform, aimed at bringing the terms of such agreements in line with modern sustainable development imperatives. For a long time the question of the balance between investor protection in the territory of the host state and the right of this state to regulate within international investment and trade agreements has caused controversy among international law scholars. In particular, very often international agreements endow foreign investors with greater rights thereby limiting sovereign rights of the host state. The present article provides a comparative analysis of the investment protection and promotion provisions under the Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11). Also, for the first time among Russian scholars, the authors give an analysis of the changes that occurred during the signature of the CPTPP Agreement on March 8, 2018 after the US withdrawal at the beginning of 2017. MATERIALS AND METHODS. The research in the article is based on the provisions of the CPTPP and CETA that regulate foreign investments as well as the works of Russian and foreign international investment law scholars. It is necessary to mention the significant role of the World Investment Reports, published by UNCTAD in 2016 and 2017, in making a comparison of provisions dedicated to investment protection and the right to regulate, contained in different international investment agreements and bilateral investment treaties. RESEARCH RESULTS. In-depth analysis of CPTPP and CETA provisions that regulate foreign investments showed that these agreements contain unique and innovative provisions that could rarely be found in contemporary international investment agreements. These provisions not only clarify the foreign investor rights when carrying out activities on the territory of the host state, giving more detailed description of the states obligations and the guarantees provided, but also specify rules for the investorstate disputes settlement. DISCUSSION AND CONCLUSIONS. Both megaregional agreements, analyzed in the present article, contain extensive chapters devoted to achievement of maximum transparency in dispute settlement, while CETA introduces its own Investment Court System which includes a permanent appellate body. At the same time, the CPTPP Agreement for the first time, compared with already existent investment agreements, carves out a specific product – tobacco – from protection when settling investor-state disputes. Although neither CETA, nor CPTPP have yet been ratified by the parties, it is important to consider how these provisions on investment regulation would shape future international investment agreements and bilateral investment treaties.