Published 15 April 2019
The inclusion of investor-state dispute settlement (ISDS) provisions in international investment agreements has become contentious around the world. In Australia, the concern intensified after Philip Morris Asia sued the Australian government in 2011 under the Hong Kong-Australia BIT challenging Australia's tobacco plain-packaging legislation. Critics believe the inclusion of ISDS in international investment agreements compromises a government's sovereignty by enabling foreign corporations to sue a government for passing new laws or implementing new policies - effectively, domestic regulation in the public interest.
However, properly understood, it is not the ISDS clause that gives rise to this issue, but the vague nature of the substantive rights within the treaty itself. The terms of the substantive rights within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) stand in contrast to the vague nature of the rights found within older treaties. The CPTPP is part of a new generation of international investment agreements which, by its terms, better achieves the balance between investment protection and regulatory discretion. As a result, the CPTPP is unlikely to restrict a government of a member State from legitimately regulating in the public interest.
This article is based on an article that was first published in The Investment Treaty Arbitration Review, 1st edition (in April 2016) and is reproduced with permission from Law Business Research Ltd and the co-author of that article, Andrew Stephenson.
This paper will be part of the TDM Special Issue on "Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)". More information here https://www.transnational-dispute-management.com/news.asp?key=1621