The Urgency of Non-Precluded Measures Clause in Indonesian Bilateral Investment Treaty

Abstract

The legitimacy crisis of the Bilateral Investment Treaty (BIT) within the international community was caused by the increasing regulatory disputes before the Investor-State Dispute Settlement (ISDS) forum. It encourages Indonesia to discontinue several BITs, to review and to make new BIT models for Indonesia. This article aims to analyze the urgency of the non-precluding measures (NPM) clause in the new BIT Model of Indonesia to balance the interests of investors and the interests of Indonesia as the host state, considering that to date the existing BIT content is not balanced. The BIT provides so much protection to investors and, vice versa, weighty obligations to the host country. This study employed descriptive analytical method. The study concludes that the NPM Clause is very important in the new Indonesian BIT Model. At least, can be based on five arguments. First, the NPM clause will transfer risk from the country to foreign investors in situations of extraordinary threats. Second, the NPM clause will limit investor protection in certain situations. Third, the NPM clause will provide greater flexibility to Indonesia as the host to regulate its investment policy to achieve sustainable development to realize the people’s welfare, labor rights, public health, safety environment, public morals, and order. Fourth, the NPM clause is important for self-recovery during international financial crisis. Fifth, lastly, the NPM clause will balance the protection of both investors and Indonesia as the host state.