find the latest legal job
Freelance Lawyers
Category: Banking and Finance Law | Location: All Perth WA
· Freelance opportunities through Vario from Pinsent Masons
View details
Freelance Lawyers
Category: Other | Location: All Adelaide SA
· • Qualified lawyer with a strong academic background
View details
Freelance Lawyers
Category: Other | Location: All Melbourne VIC
· • Qualified lawyer with a strong academic background
View details
Insurance Lawyer (1 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Great Career Opportunity ·
View details
Insurance and Health Lawyer (1-4 PAE)
Category: Insurance and Superannuation Law | Location: Melbourne CBD & Inner Suburbs Melbourne VIC
· New position to support Growth ·
View details
Investor protection under the TPP

Investor protection under the TPP

Jo Delaney

The 12-nation free-trade agreement agreed last week includes protective measures for investors, including an ISDS provision, writes Jo Delaney.

Negotiation of the long-awaited Trans-Pacific Partnership (TPP) was finally concluded after a marathon of meetings over Australia's labour day long weekend.

The TPP is a free-trade agreement between 12 pacific nations – Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam – which reportedly represent around 40 per cent of global GDP and one third of world trade.

The text of the TPP is still being finalised by the TPP states and is not yet available. Any analysis of the content of the TPP is so far restricted to summaries and reports provided by the TPP states, such as the comprehensive summary provided by the US Representative (USTR).

Reports confirm that the TPP includes an Investment Chapter with basic investment protections and a "modern" investor-state dispute settlement (ISDS) mechanism.

Investment protections

A draft of the Investment Chapter that was leaked and released on Wikileaks was very similar to the 2012 US Model Bilateral Investment Treaty (US Model BIT). Reports indicate that while the TPP Investment Chapter may have included some provisions that are different to the US Model BIT, this model may still form the basis of the TPP Chapter.

According to the USTR summary of the TPP, the Investment Chapter provides protection to investors of one TPP state that are investing in another TPP state. These investment protections include:
• minimum standard of treatment in accordance with customary international law;
• national treatment;
• most favoured nation treatment; and
• prohibition of expropriation that is not for the public purpose, without due process, or without compensation.

This means that investments made by Australian companies in any of the TPP states will be entitled to these protections. Investments made in some of these states, such as Chile, Singapore and Vietnam, may already be entitled to protection under an existing bilateral investment treaty or a free trade agreement (for example, Australia-Chile Free Trade Agreement and the Australian (ASEAN) New Zealand Free Trade Agreement (AANZFTA)).

However, Australian investments made in other states, such as the US and Japan, are not entitled to protection under existing agreements.

Investor-state dispute settlement

The USTR summary reports that ISDS has been included in the TPP.

The ISDS mechanism provides that an investor may bring a claim in international arbitration against the TPP State in which it has invested if that state fails to provide the investment protections. For example, an Australian company makes an investment in a TPP state. If that state then interferes with the investment by, for example, cancelling approvals or a licence, or unilaterally changing the law, then the Australian investor will be able to bring a claim in international arbitration for breach of one of the protections provided for in the TPP Investment Chapter. That will be a claim for damages for losses suffered as a result of the state's failure to provide the necessary protections.

The USTR summary indicates that there are substantive safeguards to ensure that governments may continue to regulate in the public interest, including on health, safety and the environment. It also indicates that the TPP states may specifically exclude the application of the Investment Chapter to certain industries (which may include, for example, the tobacco industry).

In addition, the USTR summary describes procedural safeguards included in the ISDS mechanism to, for example, prevent "abusive and frivolous claims", ensure transparency of arbitral proceedings, impose time limitations on the commencement of claims and rules to prevent parties from pursuing the same claim in parallel proceedings. It is also reported that the TPP will conclude a binding code of conduct for arbitrators appointed to tribunals in investment arbitrations.

Next steps

The TPP is reported to open up markets for trade and investment across the 12 TPP states. The conclusion of the negotiations is the first step. The TPP parties continue to finalise the text of the TPP. Once it is finalised, it is hoped that it will be released to the public. It may yet be some time before the TPP enters into force.

Jo Delaney is a special counsel at Baker & McKenzie.

Like this story? Subscribe to our free newsletter and receive Lawyers Weekly every day straight to your inbox!

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Investor protection under the TPP
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Please, Continue (Hamlet), Melbourne Festival
Oct 16 2017
Hamlet suffers slings and arrows of top Victorian barristers
Victorian judges and barristers have performed the unique play Please, Continue (Hamlet) at the Melb...
Julian Assange
Oct 13 2017
When justice fails, according to Assange
WikiLeaks founder Julian Assange has dismissed the capacity of judicial systems to deal with complex...
Aussie anti-terrorism laws, detention of 10-year-olds
Oct 13 2017
Treatment of kids under Aussie anti-terrorism laws an over-reach: ABA
The Australian Bar Association has urged the government to reconsider proposed reforms to Australian...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...