Evolving Approach to Investment Treaties in ASEAN

Sufian Jusoh

Jakarta 10.12.2014

AEC Workshop - Brisbane 19 May 2014 1

Evolution

BITFTA

Positive List

FTA Negative

List

ASEAN IGA

AIA ACIA

6

21

63

23

67

6

35

40 40

60

20 1 0

4

0 1

14

7

23 3 3 3 3 3 3 3 3 3

0

7 7 7

4 4 5 46

8

0

10

20

30

40

50

60

70

80

Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar ThePhilippines

Singapore Thailand Vietnam

BIT

FTA

ASEAN FTA

BIT with AMS

3

Key Features of Bilateral Investment Treaties

Direct action by investors v. states

Minimum standard of Protections

Clear ForumDirect

Enforcement

BIT

4

ASEAN IGA

• Protection and Promotion

• Investor-State Dispute Settlement Mechanism

AIA Agreement

• Schedules (I. Facilitation, II. Promotion, III. Liberalisation), Temporary Exclusion List 5 Sectors; Sensitive List 5 Sectors

• Protocol: Temporary Exclusion List for 5 services; Sensitive Lists for services incidental to 5 sectors.

ACIA• Four Pillars, Liberalisation, 2 Annexes: Approval in writing, Expropriation and

compensation, ISDS

• Schedule: Reservation Lists

5

Came into force on 29 March

2012.

to enhance the flow of cross-border

investment and to promote the freer

flow of capital.

Measures adopted or maintained by an AMS in

relation to: any investment in that AMS

by an investor of a different AMS on or after

29 March 2012

6

ACIA

Protection

Facilitation

Promotion

Liberalisation

7

3rd country national through

juridical person in AMS

Juridical person in

AMS

Natural person of

AMS

8

9

Manufacturing Agriculture Fishery ForestryMining and Quarrying

10

National Treatment

Most -Favoured-Nation Treatment at pre and post-establishment

Senior Management and Boards of Directors

Freedom to operate without any performance requirement

More transparent,

consistent and predictable investment

rules, regulations, policies and procedures;

Harmonised investment

policies;

Streamlined and simplified procedures for

investment applications

and approvals; and

Dissemination of investment information,

rules, regulations, policies and procedures.

11

Main Protections

12

Fair & Equitable Treatment

Full Protection

and Security

No Unlawful

Expropriation

Free Transfer of

Funds

13

Alternative Dispute

Resolutions

Mediation

Conciliation

Consultation & Negotiation

Domestic Courts

Domestic Courts

Domestic Tribunals

Arbitration

ICSID

UNCITRAL

Other Agreed Rules

Protocol to ACIA: Annex 3- Procedures for Amendment or Modification of Reservation

Reduction or elimination

Modification within 12 months of entry into

force

Modification or withdrawal after the 12

months of entry into force

Procedures for “Member States who

consider interest affected”: consultation

and negotiations .

Major Policy Considerations in Negative List Approach

Standstill Roll Back

Ratchet

Evolved Role of ACIA

ASEAN Wide Investment Agreement

Benchmarked for National Level

Investment Law

ACIA and other ASEAN FTAsACIA ACFTA AKFTA AANZFTA

Application To investment establishment

Before and after the agreement. Include China Customs Territory

to investment after coming into force

National Treatment

admission, establishment, acquisition, expansion, management, conduct of operation, sale and disposition of investment

management, conduct of operation, maintenance, use, sale, liquidation

Same as in ACIA

Subject to work program. establishment, acquisition, expansion, management, conduct, operation, liquidation, sale, transfer, other disposition of investment

Most-Favoured NationACIA ACFTA AANZFTA AKFTA

In like circumstances No automatic

MFN, Subject to

Work Program

In like

circumstances

to member states in

relation treatment

accorded to a

member state and

non-member state

to parties or third

country

To parties or

third country

admission, establishment, acquisition,

expansion, management, conduct, operation

and sale or other disposition of investments.

ACFTA include maintenance, use, liquidation

Same as ACIA

MFN ExclusionACIA ACFTA AKFTA

benefit resulting from any

sub-regional arrangements

any PT under any existing bilateral, regional and/or

international agreements or to non-parties

existing or future PT in any agreement or

arrangement between or among ASEAN Member

States. ACFTA includes between party and its

customs territories

A party may request MFN accorded under any future

agreements or arrangements between a Party and

non-Party, AKFTA includes the party is not obliged to

grant MFN but provide an adequate opportunity to

negotiate the benefits. ACFTA also includes

negotiated MFN

Denial of Benefits

ACIA ACFTA AANZFTA AKFTA

juridical person who is

controlled by a non-AMS

person and has no

substantive business persons

in the country where it is

established

To juridical person who is

controlled by a non Party and

has no substantive business

persons in the country where it

is established

Where the non-AMS person

comes from a country that

has no diplomatic relations

with the host AMS

ProtectionsInvestment Topic ACIA ACFTA AANZFTA AKFTA

FET and protection of

security

Applicable

Compensation for

Losses in cases if strife

applicable Not applicable Applicable Not

applicable

Transfers Applicable

Expropriation and

compensation

Applicable

ISDS Applicable

Thanks You