Author: Luke Nottage

[A version of this posting appears on Kluwer Arbitration Blog.]
Critics of the Trans-Pacific Partnership (TPP) free trade agreement, and ISDS protections more generally, have often argued that a particular concern is that the US is not only a large source of FDI, but that it is ‘the nation whose corporations use ISDS the most’ (referring to ANU’s Professor Thomas Faunce). A recent paper by ANU’s Dr Kyla Tienhaara for the ‘GetUp’ campaign in Australia, in the context of ongoing parliamentary inquiries into ratifying the TPP, contends that:

The biggest users of ISDS are US multinational corporations. This means that entering into a trade deal with the US that includes ISDS provisions – such as the TPP – places a country at high risk of ISDS suits.

The inference is that Americans are particularly ‘litigious’ in the field of investment treaty claims – perhaps like they are purported to be in civil litigation in their home courts. In fact, empirical research into comparative civil dispute resolution patterns had long pointed out that a representative state within the US (in terms of urban/rural population mix, such as Arizona) has fewer filings per capita than countries such as Israel and Germany [Nottage & Wollschlaeger ‘What Do Courts Do?’ [1996] NZLJ 369].
Table A and Figure A-1 in the attached version of this posting confirm that investors from the US had indeed lodged the most ISDS claims by end-2015 (138). Yet, on a per capita basis (per 100,000 people in the home state), US investors are historically less litigious compared to investors from eleven other countries whose investors have filed considerable numbers of ISDS claims. Those states are all in the EU (including Belgium and Luxembourg, which generally conclude investment treaties collectively and whose investors have filed the most claims per capita), except for Switzerland (whose investors become the fourth most litigious) and Canada (the fifth most litigious home state). As further indicated in Table A and Figure A-2, if we group together most of these EU states their investors’ per capita ISDS claim rate is also higher than that for US investors.

Continue reading “Are US Investors Exceptionally Litigious with ISDS Claims?”

By: Prof Luke Nottage, Sydney Law School
The Trans-Pacific Partnership free trade agreement, signed on 4 February 2016 among 12 Asia-Pacific economies, faces a rocky road to ratification. In the run-up to the US presidential election in November, both Donald Trump and (for now) Hillary Clinton say they are opposed.
Yet Australian Prime Minister Turnbull urged President Obama to put the FTA to a vote in Congress during the ‘lame duck’ session before inauguration the new President is inaugurated, to counter the spectre of protectionism but also for broader geopolitical reasons. The Abe Government, fortified by its mid-year Upper House election victory, would surely then ensure ratification by Japan, thus bringing the TPP into force within the two-year window from its signature. (Beyond that, it can still come into force but only if all 12 countries complete ratification.)
However, back home in Australia, the Turnbull Coalition Government faces its own challenges in enacting tariff reduction legislation needed before it too can ratify. After the 7 July general election, although the Government was returned with a razor-thin majority in the lower House of Representatives, it has a reduced minority in the upper house (30 out of 76 Senators). It would therefore need votes from at least nine other Senators, yet the (nine) Greens Senators will never vote with the Government given their Party’s implacable opposition to FTAs. Of the 11 other cross-bench Senators, Pauline Hanson’s ‘One Nation’ (four) Senators are notoriously xenophobic, while the Nick Xenophon Team (three) Senators favour more support for local manufacturing.
Accordingly, the Government will more likely have to court votes from the Labor Opposition. Yet the latter has generally not been cooperative in Parliament, perhaps hoping something will happen in the lower House to trigger a new election. And in June, Labor had reiterated that if elected, it would not countenance ‘new’ FTAs that added the option of investor-state dispute settlement (ISDS) – in addition to inter-state arbitration provisions – to better enforce substantive commitments aimed at encouraging more foreign direct investment (FDI). The TPP provides for ISDS, like almost all FTAs nowadays, and this continues to generate broader public debate – as does FDI more generally. My recent co-authored econometric study outlined below examines more generally the links between ISDS-backed treaty commitments and FDI, which can inform ongoing policy debates in Australia and further afield.

Continue reading “TPP and Foreign Investment: Does ISDS Promote FDI?”

International investment treaties and investor-state dispute settlement (ISDS) are in the news again, notably in Australia and India, which are negotiating a bilateral Free Trade Agreement (FTA) as well as the Regional Comprehensive Economic Partnership (RCEP or “ASEAN+6” FTA). The possibility is emerging of a shift from US-style to contemporary EU-style treaty drafting in the broader Asian region, as a new compromise between the interests of foreign investors and host states.

Continue reading “US vs EU vs Other Models for Investment Treaties in the Asian Region”