The Prospect of the Trade and Investment Disputes Settlement Mechanisms in ASEAN Huala Adolf (ALA Member - Indonesia)

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1 The Prospect of the Trade and Investment Disputes Settlement Mechanisms in ASEAN Huala Adolf (ALA Member - Indonesia) February APPRECIATION FOR THE TOPIC The ASEAN has been taking active step in reaching a stronger regional organization. The establishment of ASEAN Economic Community in 2015 The closer economic cooperation may lead to the dispute The significant role of dispute settlement -> Peaceful Resolution of Dispute. 2 1

2 STRONGER ASEAN AS A COMMUNITY 1.The Political and Security, Economic and Socio-Cultural Communities. 2.ASEAN would be rule-based society (Preamble of the Charter of the 2007 ASEAN). 3 ROLE OF DSM The existence of the dispute settlement mechanisms in the region would be crucial for ASEAN. The dispute on trade and investment would be solved effectively when there is an effective, strong and reliable dispute settlement mechanism. 4 2

3 ACIA DSM MECHANISM TheASEAN Comprehensive Investment Agreement (ACIA). ACIA regulates two kinds of disputes: (1) the dispute between Members -> The ASEAN Protocolfor Enhanced Dispute Settlement Mechanism(EDSM). (2) the dispute between Member and investors. 5 EDSM MECHANISM 1. The rules and procedures of this Protocol shall apply to disputes brought pursuant to the consultation and dispute settlement provisions of the Agreement as well as the agreements listed in Appendix I and future ASEAN economic agreements (the "covered agreements"). 2. The rules and procedures of this Protocol shall apply subject to such special or additional rules and procedures on dispute settlement contained in the covered agreements. To the extent that there is a difference between the rules and procedures of this Protocol and the special or additional rules and procedures in the covered agreements, the special or additional rules and procedures shall prevail. (Emphasis added). (Article 1 paras. 1 and 2 EDSM). 6 3

4 EDSM MECHANISM IN ASEAN CHARTER 3. Where not otherwise specifically provided, disputes which concern the interpretation or application of ASEAN economic agreements shall be settled in accordance with the ASEAN Protocol on Enhanced Dispute Settlement Mechanism. (Article 24 para. 3 of theasean Charter). 7 EDSM MECHANISM Between Investors 1.When a dispute arises, the parties shall first of all settle their dispute by consultation or negotiation (Article 3). 2.If it fails, the parties may settle the dispute by good offices, mediation or conciliation (Article 4). 3.If these means of settlement fail, the parties may submit the dispute to a panel or the appellate body(article 5). 8 4

5 EDSM MECHANISM Members v. Investors (1) Conciliation (Article 30); (2) Consultation (Article 31); and (3) Arbitration (Article 33 para. 2). 9 CHALLENGE FOR EDSM MECHANISM Indicators 1) Whether the traders and investors would use confidently the mechanism; and 2) Whether parties respect the decisions, recommendations or awards issued under the mechanism and whether the national courts enforce them. 10 5

6 CHALLENGE FOR EDSM MECHANISM Arbitration EDSM ACIA emphasises the settlement by consultation, conciliation and arbitration. Arbitration... the most effective solution of commercial disputes-> New York Convention of The New York convention requiresits members to recognize the arbitration agreement and arbitration awards in their national territory. 11 CHALLENGE FOR EDSM MECHANISM Arbitration No ASEAN commercial arbitration institution. The freedom and the agreement of the parties to choose their means of settlement must be protected and honoured. 12 6

7 CHALLENGE FOR EDSM MECHANISM ASEAN Arbitration? It is not easy to set up ASEAN arbitration institution: Firstly, is the level of regional economic integration of ASEAN. Secondly, huge work ahead. Thirdly, ASEAN Arbitration would raise the issue of independency or neutrality. -> Arbitration in ASEAN Members: eg.: KLRAC, SIAC, BANI, etc. 13 EDSM MECHANISM Challenge Ahead 1. Socialize the EDSM 2.Members National Legal System 3.Political position of the Members. 14 7

8 Thank You. 8