ASEAN Law Association 12 th General Assembly Workshop Trade and Investment Dispute Settlement Mechanisms in ASEAN The Evolving Landscape and Major Developments 25-28 February 2015 Locknie Hsu Professor of Law School of Law Singapore Management University Overview Investment law landscape Major sources of ASEAN s trade and investment law obligations ASEAN experiences in WTO dispute settlement ASEAN experiences in investor-state arbitration Issues facing policy-makers, investment lawyers and arbitrators Conclusion 2 1
Investment law landscape Major sources of investment law provisions Bilateral investment treaties ( BITs ) Free trade agreements ( FTAs ) investment chapters 3 ASEAN Trade and Investment Law Landscape Rise in number of FTAs signed by ASEAN states in recent years Intra-ASEAN legal commitments e.g. ATIGA, ACIA AEC 2015 roadmap ASEAN + partner FTAs RCEP Some ASEAN members are negotiating the TPP Agreement 4 2
ASEAN Trade and Investment Law Landscape Examples of new dispute settlement structures within ASEAN members: Singapore International Commercial Court (SICC) Singapore International Mediation Centre (SIMC) Example of new dispute settlement rules to note: UNCITRAL Rules on Transparency in Treaty-based Investor- State Arbitration (2014) 5 ASEAN and WTO Obligations All ten ASEAN members are now WTO members Obligations under the various multilateral WTO agreements Dispute settlement in the DSU: ASEAN members as complainants, respondents, third parties Consultation process before a panel is formed Appellate Body hears appeals from panel rulings 6 3
The ASEAN Comprehensive Investment Agreement (ACIA) Objectives and principles Meaning of investors and investments Treatment of investors e.g. National treatment, MFN treatment, fair and equitable treatment, full protection and security, transparency, etc Options for investment claimants in dispute settlement 7 The ASEAN Comprehensive Investment Agreement (ACIA) Article 33 ACIA permits resort to: National courts or administrative tribunals ICSID arbitration UNCITRAL arbitration Regional Centre for Arbitration of Kuala Lumpur Any other arbitration institution agreed by the disputing parties 8 4
Legal issues arising from recent investment disputes 1. No formal system of precedents in international investment disputes system implications ICSID arbitrations Ad hoc arbitrations Other systems No final appeal court for investment arbitrations (although ICSID has an annulment procedure) 9 Legal issues arising from recent investment disputes 2. Evolving interpretations on some common provisions E.g. fair and equitable treatment 10 5
Examples ASEAN-Korea Investment Agreement (June 2009) Art. 5: General Treatment of Investment Customary international law standard, no additional substantive rights created ACIA: Art. 11(2) 11 Legal issues arising from recent investment disputes 3. Some areas showing a sharp divergence of views Examples: Scope and function of ICSID tribunals effect on interpretations of investor and investments Umbrella clauses MFN and dispute settlement Necessity defence (e.g. arose in arbitrations against Argentina) 12 6
Recent investor claims facing ASEAN members Among CLMV: Cambodia e.g. Cambodia Power Co v Kingdom of Cambodia Lao PDR e.g. Thai-Lignite v Lao PDR, Sanum Investments v Lao PDR Size of Claim (approximate) US$300m US$57m US$235m Vietnam: e.g. Trinh Vinh Binh v Vietnam, Michael L McKenzie v Vietnam (Myanmar: one claim under ASEAN mechanism) Other ASEAN members: Indonesia e.g. Churchill Mining v Indonesia Malaysia e.g. Malaysian Historical Salvors v Malaysia The Philippines e.g. Fraport v Philippines Thailand e.g. Walter Bau (in liquidation) v Thailand US$425m 30 million 13 Issues for policy-makers and lawyers Drafting and interpretation of obligations Review of BITs Treaty-making Dispute settlement concerns Example: Australian investor brought arbitration against India failure to provide an effective means of dispute settlement in Indian judicial system (White Industries Australia Ltd v India) MFN clause in Australia-India BIT Borrowed the effective means clause appearing in Kuwait-India BIT Example: recent ICSID arbitration initiated by tobacco corporation against Uruguay 14 7
Issues for policy-makers and lawyers Improvement of clarity and transparency in ASEAN investment laws and policies - Investment approval clarity in processes and approval agencies - Singapore s experience: using laws, policies and agencies to help attract FDI Continual improvement of infrastructure, human development and rule of law 15 Issues for policy-makers and lawyers Some recent reactions Indonesia: termination of BITs India: review of BIPAs Drastic: denunciation of ICSID participation e.g. Bolivia, Ecuador, Venezuela Australia: case-by-case approach to investor-state dispute provisions in treaties EU s negotiations with the US for the TTIP: reactions in particular of France and Germany 16 8
Issues for policy-makers and lawyers Investment screening laws Some countries that have taken action to tighten investment entry laws to take into account national security concerns US (2007) Canada (2009) Germany (2009) 17 Conclusion Evolving legal landscape increased commitments and legal obligations Untested provisions Dispute settlement issues Interpretations Concerns over process 18 9
Thank you for your attention. 19 10