Investment & ISDS

The investment chapter attempts to draw a balance between the requirements of non-discriminatory investment and a basic rule of law, against the desire to protect the ability of Parties’ governments to achieve legitimate public policy objectives.1 

The parties have adopted a negative list agreement; markets are fully open to foreign investors, except where they have taken an exception (non-conforming measure). Further, the ISDS (investor-state dispute settlement) system is intended to protect states’ abilities to regulate in the public interest, including on health, safety, and environmental protection.

1 For a complete summary, see USTR “Summary of the Trans-Pacific Partnership Agreement” (October 2015) Office of the United States Trade Representative <>.

ACCC airs concerns over intellectual property provisions in Trans-Pacific Partnership

Gareth Hutchens, SMH: Federal Politics (1 December 2015).
[Extract] The Australian Competition and Consumer Commission has warned the intellectual property provisions in the Trans-Pacific Partnership may “tilt the balance” in favour of IP rights holders to the detriment of competition and consumers. It also warns the investor-state dispute settlement (ISDS) provisions in the agreement risk making it harder for the Turnbull government to pursue domestic reforms in Australia’s interest. The ACCC is one of the most high-profile government bodies to raise such concerns.

US Perspectives: TPP Strengthens Controversial IP Arbitration

Steven Seidenberg, Intellectual Property Watch (30 November 2015).
[Extract] ISDS isn’t new. Over the last 30 years, ISDS provisions have been put into more than 3,000 international trade agreements. However, ISDS has changed over time. It originally was intended to protect investors, such as mining companies, whose property was seized by foreign governments without appropriate compensation. ISDS allowed investors to complain to neutral arbitrators, who in turn could order expropriating governments to pay fair compensation.

But in recent years, investors’ lawyers (many of whom also work as ISDS arbitrators) have successfully expanded the scope of ISDS. Arbitrators have issued multimillion-dollar awards against countries because ordinary government actions – protecting such things as health, labor rights, and the environment – interfered with foreign companies’ expected profits…

The New Gold Standard? Empirically Situating the TPP in the Investment Treaty Universe

W Alschner & D Skougarevskiy, The Graduate Institute (23 November 2015).
9 – Substantive Protection – Investor-State Dispute Settlement (ISDS) – “Minimum Standard of Treatment” (MST) – Existing Treaties

[Abstract]…Combining traditional legal analysis with computational text comparisons we are able to situate the TPP in the wider universe of international investment agreements (IIAs). We find that the TPP investment chapter offers few truly novel features and is instead heavily influenced by prior American treaty practice — 82% of its text is taken from the USAColombia FTA investment chapter. The TPP investment disciplines do, however, set high standards that go beyond the majority of IIAs previously concluded by the TPP parties and beyond…

The TPP’s Investment Chapter: entrenching, rather than reforming, a flawed system

Lise Johnson & Lisa Sachs, CCSI (21 November 2015)
9 – Investment – ISDS – FET Obligation – Dispute Settlement – Damages – Public Interest – Environment – Public Health – Bilicon v Canada – Philip Morris

…In this Policy Paper, CCSI’s Lise Johnson and Lisa Sachs respond to the USTR’s claims that the “TPP upgrades and improves ISDS” and “closes loopholes and raises standards higher than any past agreements.” Indeed, as the memo discusses, there are a number of problems from previous trade agreements that have been carried over into the TPP, and new provisions added to the TPP that do not appear in other US FTAs and that raise additional concerns.”

Comparison: Australian Government Claims & Final TPP Text

Dr Deborah Gleeson, La Trobe University (9 November 2015).
9 – Investor-State Dispute Settlement (ISDS) – Safeguards – Public Health – Environmental Protection – Tobacco – “Minimum Standard of Treatment” (MST)

The Trans-Pacific Partnership investment chapter sets a new worldwide standard

Mélida Hodgson, CCSI (9 November 2015).
[Extract] The Trans-Pacific Partnership (TPP) investment chapter released on November 5, 2015 heralds the emergence of a new standard for international investment agreements (IIAs), building on the post-NAFTA United States (US) experience. The chapter has widened the regulatory space reserved to states, but exhibits some perplexing changes. This Perspective focuses on developments having a broader systemic effect…

Secret TPP Investment Chapter Unveiled: It’s Worse than We Thought

 Public Citizen (5 November 2015).
9 – Investor-State Dispute Settlement (ISDS) – Financial Regulation – Public Interest – “Minimum Standard Treatment” (MST) – “Indirect Expropriation” – Tobacco

“The final TPP investment chapter provides stark warnings about the dangers of “trade” negotiations occurring without press, public or policymaker oversight…the reforms to the ISDS process that the administration has been advertising did not materialize. There are no new conflict interest rules. There is no appeals mechanism. There is no cap on tribunal costs or discretion about how much governments can be ordered to pay the investor. The ONLY improvement in the text from a public interest perspective is a partial carve-out of tobacco control policies from ISDS attack, and that clause in part highlights how no other public health or environmental policies are similarly safeguarded.”

Cosmetic “safeguards” will not prevent foreign investors from suing governments over domestic laws

Dr Deborah Gleeson, La Trobe University (November 2015).
[Extract] Australia has agreed to the inclusion of rights for foreign investors to sue governments for millions of dollars in international tribunals if they can argue that a change in domestic law or policy at national , state or local level will ‘harm’ their investment, known as Investor-State Dispute Settlement (ISDS). The tribunals consist of investment lawyers who are not independent judges but can continue to be practising advocates, with obvious conflicts of interest. Increasing numbers of cases against health, environment and even minimum wage laws show that ISDS can undermine democratic and sovereign rights to regulate…

Investor-State Dispute Settlement, Public Interest and U.S. Domestic Law

Lise Johnson, Lisa Sachs & Jeffrey Sachs, CCSI (May 2015).
[Abstract] “As negotiations are ongoing in the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership Agreement (TTIP), CCSI staff and Jeffrey Sachs discuss the implications of investor-state dispute settlement (ISDS) for domestic law and policy, focusing on effects within the US. The paper concludes that the risks ISDS poses for domestic law are significant and unjustified, and that there are preferable policy alternatives to pursue as a means of protecting the rights of investors operating overseas.”

TPP’s clauses that let Australia be sued are weapons of legal destruction, says lawyer

Jess Hill, The Guardian (10 November 2015).
“Leading arbitration lawyer says there are critical loopholes in the Trans-Pacific Partnership’s investment chapter that leave Australia wide open…When the text of the Trans-Pacific Partnership was finally released last Friday morning, many supporters and detractors went straight to one of its most controversial provisions: so-called investor-state dispute settlement (ISDS). This provision, opposed by Labor and the Greens in Australia, gives foreign investors the power to sue the Australian government for introducing legislation that harms their investment…”

Andrew Robb defends TPP after full release of trade deal document

Shalailah Medhora, , (5 November 2015).
“…But George Kahale III is not one of the usual suspects. As chairman of the world’s leading legal arbitration firm – Curtis, Mallet-Prevost, Colt & Mosle LLP – his core business is to defend governments being sued by foreign investors under ISDS. Some of his clients are included in the TPP, and he says the trade minister’s critics are right: “There are significant improvements in this treaty, but they do not immunise Australia from any of these claims. If the trade minister is saying, ‘We’re not at risk for regulating environmental matters’, then the trade minister is wrong.”

Trans-Pacific Partnership: four key issues to watch out for

Katharine Murphy, The Guardian (6 November 2015).
“Overnight, thousands of pages of text of the Trans-Pacific Partnership have been released, ending months of secrecy. As experts around the world begin the task of poring over the detail, here are four key issues to watch…[Environment, Labour Rights, Intellectual Property and Investment].”