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)

OHCHR | 3-Jun-2015
A group of UN experts have issued the following statement to express concern about the secret nature of drawing up and negotiating many of these free trade and investment agreements, such as TPP and TTIP, and the potential adverse impact of these agreements on human rights.
Congressional Research Service | 28-May-2015
This report for US Congress answers frequently asked questions about US international investment agreements including provisions for investor-state dispute settlement.
Korea Herald | 25-May-2015
While the South Korean government is facing its second international arbitration under the investor-state dispute settlement system, civic groups are demanding that the details should be made public as they could cost several billion dollars of taxpayers’ money.
Jakarta Post | 18-May-2015
Apart from its network of BITs, Indonesia is also a party to a number of multilateral and regional investment agreements such as the ASEAN Comprehensive Investment Agreement which also contain an ISDS clause, including recourse to ICSID arbitration.
Huffington Post | 17-May-2015
Last week, Canadian Finance Minister Joe Oliver gave a speech in New York arguing that the Volcker Rule — a key tenet of the US’ 2010 banking law — violates the North American Free Trade Agreement. This underscores Senator Warren’s warning that such deals, including the Trans-Pacific Partnership that Obama is currently negotiating, jeopardize financial reform.
| 15-May-2015
Labor has called on the federal government to follow the example of the Howard years and oppose the inclusion of a controversial dispute-settlement provision in trade talks with the US.
| 15-May-2015
The International Centre for Settlement of Investment Disputes hears its first case outside of US, France
| 15-May-2015
An international tribunal began hearing a multi-billion dollar case Friday that the US private equity firm Lone Star filed against South Korea’s government over tax and other disputes surrounding its asset sell-offs in Korea.
Jacobin Magazine | 15-May-2015
Opponents of the trade deal being secretly negotiated between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam have moved the discussion beyond its putative impact on jobs and growth and closer to the agreement’s broader ramifications, writes the IUF’s Peter Rossman.
Yonhap | 14-May-2015
An international tribunal will begin hearing a multi-billion dollar case this week that the US private equity firm Lone Star filed against South Korea’s government over tax and other disputes surrounding its asset sell-offs in Korea.