Japan's Ambitious International Investment Agreement Policy - Laying the Groundwork for Future Disputes?
Published 24 October 2014
Abstract
Japan remains a global leader in international investment, and the Government of Japan recently has undertaken an increasingly ambitious approach to its international investment agreement (IIA) policy to safeguard its companies' overseas investments. This policy began with the signing and ratification of the Japan-Singapore Economic Partnership Agreement (EPA) in 2002 and is still today a core element of Japan's economic strategy, as most recently reaffirmed in Prime Minister Abe's 2013-2014 "Revitalization Strategy" for economic growth. What remains unclear, however, is whether this new policy - built around a global series of intensive IIA negotiations involving States particularly in Africa and the Asia-Pacific region - is a harbinger of future international investment disputes. The dramatic increase in Japan's IIAs - whether through EPAs such as the Japan-India EPA and the ongoing negotiation of the Trans-Pacific Partnership (TPP); or as stand-alone Bilateral Investment Treaties (BITs) such as the recently-concluded BIT with Myanmar - would seem likely to portend a rise in investor-State claims against the Government of Japan or the countries with which Japan has negotiated these new agreements. Japan's history with IIAs, however, suggests that although such an outcome may not be imminent, it would be prudent for Japanese firms to assess and examine the evolving body of international investment arbitration law and to determine when investor-State dispute settlement (ISDS) may be a viable option, subject to business considerations.
This paper analyzes the historical and current developments in Japanese IIA policy and the lack of investor-State jurisprudence under previously entered-into-force Japanese IIAs. This paper suggests that Japanese firms are well-positioned to initiate ISDS against States in which the firms have made significant investments and where Japanese IIAs are in force. This is primarily due to the ability of the Government of Japan to negotiate strong investor protections and advanced ISDS provisions in its IIAs with economically important and attractive markets for Japanese investment. On the other hand, we do not expect a significant uptick in investor-State disputes against Japan - and, the Government of Japan has not to date been the subject of claims pursuant to ISDS -due to a number of economic, judicial, and political factors.
This paper will be part of the TDM special "The Pacific Rim and International Economic Law: Opportunities and Risks of the Pacific Century" - www.transnational-dispute-management.com/news.asp?key=510