The State of Investor-State Arbitration: A Reality Check of the Issues, Trends, and Directions in Asia-Pacific
| Author | Julien Chaisse - Rahul Donde |
| Position | Mr. Julien Chaisse (LL.M., Ph.D.) is Professor, Faculty of Law, Director of the Centre for Financial Regulation and Economic Development (CeFRED), at the Chinese University of Hong Kong. Mr. Rahul Donde (LL.B., LL.M.) is Senior Associate at the Geneva-based L´evy Kaufmann-Kohler law firm. This Article partly draws on some ideas earlier... |
| Pages | 47-67 |
The State of Investor-State Arbitration: A Reality
Check of the Issues, Trends, and Directions in
Asia-Pacific
J
ULIEN
C
HAISSE AND
R
AHUL
D
ONDE
*
I. Introduction
The significant increase in the number of international investment
agreements (IIAs) over the past two decades has been accompanied by a
meteoric rise in the number of investor-state disputes.
1
In 2015 alone, 77
investor-state arbitrations were initiated, the highest number of cases in a
single year and significantly up from the 58 arbitrations initiated in the
previous year.
2
The Asia-Pacific region itself has witnessed a startling
number of investment disputes; about 21 percent of all investment disputes
* Mr. Julien Chaisse (LL.M., Ph.D.) is Professor, Faculty of Law, Director of the Centre for
Financial Regulation and Economic Development (CeFRED), at the Chinese University of
Hong Kong. Mr. Rahul Donde (LL.B., LL.M.) is Senior Associate at the Geneva-based L´evy
Kaufmann-Kohler law firm. This Article partly draws on some ideas earlier published as Julien
Chaisse and Rahul Donde, The Future of Investor-State Arbitration: Revising the Rules? In: Julien
Chaisse, Tomoko Iskikawa, Sufian Jusoh (eds) Asia’s Changing International Investment Regime:
Sustainability, Regionalization, and Arbitration (New York: Springer 2017). The authors would
like to thank Manjiao Chi, Tomoko Ishikawa, Lise Johnson, Sufian Jusoh, Shintaro Hamanaka,
Matthew Hodgson, Luke Nottage, Karl P. Sauvant, and Romesh Weeramentry for comments
on key ideas and/or earlier drafts of this Article. We are also grateful to the editors and staff of
The International Lawyer for their hard work and skillful editing. The views expressed herein by
Authors are their own personal ones.
1. See U.N. C
ONF
.
ON
T
RADE
& D
EV
. (UNCTAD), World Investment Report 2016,
Investor Nationality: Policy Challenges, at xii, U.N. Sales No. E.16.I.D.4 (2016) [hereinafter
“WIR 2016”] (noting that the number of investor-state arbitrations in 2015 set a new annual
high); U.N. C
ONF
.
ON
T
RADE
& D
EV
. (UNCTAD), IIA Issues Note No. 2, Investor-State Dispute
Settlement: Review of Developments in 2015, 38, UNCTAD/WEB/DIAE/PCB/2016/4 (June
2016) [hereinafter “IIA Issues Note 2”]; Malcolm Langford, Daniel Behn & Runar Hilleren Lie,
The Revolving Door in International Investment Arbitration, 20 J. I
NT
’
L
E
CON
. L. 301, 307 (2017);
Umakrishnan Kollamparambil, Bilateral Investment Treaties and Investor State Disputes 1, 1–2
(Econ. Research South Africa, Working Paper No. 589, 2016), https://econrsa.org/system/files/
publications/working_papers/working_paper_589.pdf (concluding based on empirical analysis
that investors initiate a higher number of cases against countries with bilateral investment
treaties).
2. WIR 2016, supra note 1, at xii; IIA Issues Note 2, supra note 1, at 1-2; U.N. C
ONF
.
ON
T
RADE
& D
EV
. (UNCTAD), IIA Issues Note No. 1, Recent Trends in IIAs and ISDS, 1, 5,
UNCTAD/WEB/DIAE/PCB/2015/1 (Feb. 2015). This is the number of publicly known cases.
As a significant number of cases are conducted in a confidential framework, the actual number
of disputes is likely to be higher.
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involve Asian states.
3
The vast majority of claims are against India (twenty-
two), making it the eleventh highest sued country in the world, followed by
Kazakhstan (eighteen) and Kyrgyzstan (thirteen) in the Asia-Pacific.
4
Several authors foretell a greater number of disputes involving Asian parties,
mainly because of the rising number of IIAs in parallel with increasing FDI
flows, coupled with a greater awareness of investment rules shown by Asian
actors.
5
While international arbitration remains the preferred mechanism for
resolving disputes between an investor and a state,
6
several states
disenchanted with, or simply critical of, investment arbitration are proposing
viable alternatives.
7
Several states are redefining the current investor-state
arbitration framework and its relationship to democratic decision-making.
In fact, the EU-Vietnam Free Trade Agreement contemplates the creation of
an “investment court” that would resolve disputes between investors and
Member States.
8
Other states have chosen to significantly reduce the scope
3. Proportion of investment disputes involving Asian states compared to all investment
disputes, Investment Dispute Settlement Navigator, U.N. C
ONF
.
ON
T
RADE
& D
EV
. (UNCTAD),
http://investmentpolicyhub.unctad.org/ISDS (follow “advanced search” hyperlink; then enter
respondent’s nationality as “Asia,” dates of initiation as “1980 to 2016,” and “Search”; see total
number of cases loaded; then compare to results from enter respondent’s nationality as
“World,” dates of initiation as “1980 to 2016,” and “Search”) (last visited Sept. 25, 2017). See
also Julien Chaisse, Assessing the Exposure of Asian States to Investment Claims, 6 C
ONTEMP
. A
SIA
A
RB
. J. 187, 202-03 (2013) (concluding that more than ninety investment disputes involving
twenty-four Asia-Pacific states were filed since 1987). Dr. Chaisse’s study did not include cases
involving Asian investors, or claims filed from 2014 to 2017.
4. Number of claims against states, and rank among states, Investment Dispute Settlement
Navigator, U.N. C
ONF
.
ON
T
RADE
& D
EV
. (UNCTAD), http://investmentpolicyhub.unctad.
org/ISDS (follow “COUNTRY” hyperlink; then toggle “Cases as Respondent State” to
descending order) (last visited Sept. 25, 2017).
5. See Julien Chaisse, The Shifting Tectonics of International Investment Law–Structure and
Dynamics of Rules and Arbitration on Foreign Investment in the Asia-Pacific Region, 47 G
EO
. W
ASH
.
I
NT
’
L
L. R
EV
. 563, 567, 612 (2015); Julien Chaisse, Assessing the Exposure of Asian States to
Investment Claims, 6 C
ONTEMP
. A
SIA
A
RB
. J. 187, 206 (2013); Joongi Kim, A Pivot to Asia in
Investor-State Arbitration: The Coming Emergence of Asian Claimants, 27 ICSID R
EV
. 399, 400,
415 (2012); Sam Luttrell, ISDS in the Asia-Pacific: A Regional Snap-shot, 19 I
NT
’
L
T
RADE
B
US
. L.
R
EV
. 20, 21 (2016); Loretta Malintoppi, Is there an “Asian Way” for Investor-State Dispute
Resolution?, K
UALA
L
UMPUR
R
EGIONAL
C
TR
.
FOR
A
RB
. N
EWSL
. N
O
. 19 (Kuala Lumpur
Regional Ctr. for Arb., Kuala Lumpur, Malay.), July-Sept. 2015, at 16-17, 20.
6. See generally Kenneth J. Vandevelde, A Brief History of International Investment Agreements,
12 U.C. D
AVIS
J. I
NT
’
L
L. & P
OL
’
Y
157, 174-75, 184 (2005) (noting that foreign investors are
increasingly resorting to international arbitration to resolve their disputes with host states).
7. See Nathalie Bernasconi-Osterwalder & Diana Rosert, Investment Treaty Arbitration:
Opportunities to Reform Arbitral Rules and Processes, at 2, 11-17, I
NT
’
L
I
NST
.
FOR
S
USTAINABLE
D
EV
. (IISD), IISD Report (Jan. 2014).
8. On February 1, 2016, the text of the EU-Vietnam Free Trade Agreement was published,
following the announcement of the conclusion of the negotiations. The legal review of the text
has now begun and will be followed by translation into the EU’s official languages and
Vietnamese. The Commission will then present a proposal to the Council of Ministers for
approval of the agreement and ratification by the European Parliament. European Commission
Press Release, The EU and Vietnam finalise landmark trade deal (Dec. 2 2015), http://
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AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
PUBLISHED IN COOPERATION WITH
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