Restoring Balance in Investor State Dispute Settlement: Addressing Treaty Shopping and Indirect Expropriation Claims and Consistent Approaches to Decision-Making
This article explorestwo of the apparent concerns of Western liberal democraciesregarding investor state dispute settlement provisions in bilateral and multilateral investment treaties and trade agreements. Both of these concerns were highlighted in the arbitration in wherein Philip Morris Asia challenged Australia’s Tobacco Plain Packaging Act 2011 as amounting to, amongst other things, indirect expropriation or a breach of the fair and equitable treatment (FET) standard. This challenge came about as a result of Philip Morris Asia acquiring all of the shares in Philip Morris Australia, so that a claim could be brought under the 1993 bilateral investment treaty between Hong Kong and Australia. The case, therefore, highlighted the possibility of treaty shopping by an investor to secure the protection of an investment treaty, as well as the possibility of challenging state regulation on the basis of indirect expropriation or breach of the FET standard. This article will explore recent responses to these two issues, both through analysing the response of the arbitral tribunal in the Philip Morris case and other cases to the treaty shopping issue; and by analysing responses in more recent treaties to protecting state regulatory power, including in the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and in the Trans-Atlantic Trade and Investment Partnership (TTIP) currently being negotiated between the US and the EU. Reference is also made to the Trans Pacific Partnership (TPP) as, while the US withdrew from the TPP on 21 January 2017, thus bringing to an end the prospect of the 12-nation trade deal that had originally been envisaged,1 its negotiated provisionssought to address concernsraised in this article. Further, the TPP is now being pursued by the remaining 11 nations2 in the form of a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with a view to maintaining the balance seen to be inherent in the TPP and protecting state rightsto regulate.3 Finally, the article will review some of the arguments for and against an investment court structure for investment treaty arbitrations, including the possibility of a more consistent and certain approach to decision-making regarding the issues raised in this article.
Arbitration: the international journal of arbitration, mediation and dispute management
International Trade Law