Disaffection regarding treaty-based investor–State dispute settlement (ISDS), especially binding arbitration, is slowly spreading from a few, mostly leftist regimes in South America,3 to middle-income and developed countries in other parts of the world. In particular, now that the European Union (EU) has exclusive competence to conclude treaties relating to foreign direct investment (FDI),4 tension has emerged between the European Commission and the European Parliament, particularly in the context of the Trans-Atlantic Trade and Investment Partnership (TTIP),5 given the potential economic impact of such a free trade agreement (FTA) still being negotiated between the EU and the USA. However, there has also been some debate over the advisability of having included ISDS in the FTAs recently concluded with Canada6 and even Singapore.7
The reverberations are now being felt in the rapidly growing Asian region.8 Asian States have gradually come to accept extensive ISDS provisions not only in their bilateral investment treaties (BITs) and FTA investment chapters, but also in their existing regional agreements, notably the Association of Southeast Asian Nations (ASEAN) Comprehensive Investment Agreement and the ‘ASEAN+’ agreements with Australia and New Zealand (AANZFTA), China, Korea9 and India (signed in September 2014).10 Yet the path has been a winding one, with a few dead ends. For example, an investment chapter was omitted altogether from the ASEAN–Japan FTA. Although Japan has FTAs and/or BITs with all ASEAN Member States, including Myanmar (signed in December 2013),11 which all incorporate ISDS provisions, it agreed to a request from the Philippines to omit ISDS from its bilateral FTA.12 Neither Vietnam, Laos, Myanmar, Thailand or India are State parties to the 1965 ICSID Convention.13 More generally, it has been suggested that a ‘combination of a historical sense of hostility, nationalism that continues to dictate events, pragmatism and competition among themselves to attract foreign investment underlies the different policies of the Asian states’ towards FDI.14
Most recently, in February 2014, Indonesia declared that it would not be renewing its existing BIT with the Netherlands. Indeed, Indonesia indicated that it would review its other BITs as they expire—seemingly with respect to both procedural and substantive provisions—albeit not necessarily its FTAs.15 India also announced a reassessment of its investment treaties in 2013.16 This announcement resulted in the Ministry of Finance proposing a new draft model BIT in December 2014,17 with the government reportedly aiming to review its 82 treaties in line with the new model.18 However, the impact in practice remains hard to discern or predict, especially under the new government under Narendra Modi.19 In both countries, the reviews may also have been linked to domestic politics during election years. In addition, both India20 and Indonesia21 have recently been subjected to claims by Australian resource companies as well as claimants from several other countries.
More surprisingly, public debate over ISDS has resurfaced in Australia. For the political left, it burgeoned after Philip Morris Asia served a notice of claim on 27 June 2011 against Australia, alleging expropriation of trademarks and other violations of a 1993 BIT with Hong Kong due to Australia’s tobacco plain packaging legislation.22 ISDS was also questioned from the economic right by the Productivity Commission’s 2010 report, which was generally critical of preferential FTAs, preferring instead unilateral or multilateral liberalization measures.23 In April 2011, the Trade Policy Statement initiated by the (Labor-led) government under Julia Gillard declared that it would no longer agree to ISDS in future treaties, even with developed countries.24 However, as outlined in the second part of this note, this policy shift has proven to be open to significant criticism.
Since the (Liberal-led Coalition) government under Tony Abbott won the general election on 7 September 2013, it has quietly reverted to including ISDS on a case-by-case assessment.25 Accordingly, ISDS was included in Australia’s FTA with Korea,26 but not with Japan.27 On 17 November 2014, negotiations were also concluded on the FTA with China, reportedly including ISDS provisions.28
Remarkably, however, a (minority Greens Party) Senator from Tasmania introduced on 3 March 2014 a private member’s bill, the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014,29 which simply states: ‘The Commonwealth must not, on or after the commencement of this Act, enter into an agreement (however described) with one or more foreign countries that includes an investor-state dispute settlement provision’. As explained in the third part of this note, the Senate’s Foreign Affairs, Defence and Trade Legislation Committee issued a report, dated 27 August 2014, with the Coalition Senators and even the Labor Party Senators (but not the Committee’s two Greens Party Senators) recommending against enactment. However, this debate over ISDS has also impacted on Australia’s ratification of the Korea–Australia Free Trade Agreement (KAFTA), which was recommended by the Joint Parliamentary Standing Committee on Treaties (JSCOT) but with dissenting reports by members from the Labor Party as well as the Greens.30
As sketched in the fourth part of this note, over the short to medium term, this situation will complicate the finalization of Australia’s bilateral FTAs (including those being negotiated with India and Indonesia) as well as the expanded Trans-Pacific Partnership (TPP) Agreement31 and the Regional Comprehensive Economic Partnership (RCEP).32 Longer term, it will mean that Australia will continue to stand out as a developed country that has disengaged somewhat from treaty-based ISDS, especially in treaty relations with other developed countries.
II. OPPOSITION FROM THE (POLITICAL) LEFT AND (ECONOMIC) RIGHT
Prior to 2010—with the prominent exception of the Australia–USA FTA33 and its first FTA signed in 1982 with New Zealand34—all of Australia’s 21 BITs35 and four FTAs36 have included rights to investor–State arbitration. Most of these treaty counterparties are developing States, reflecting the traditional assumption that investor–State arbitration is conceptually justifiable if foreign investors do not have access to an efficient, functioning and independent judicial system. In 2011, however, the then Australian government made the landmark announcement that it would no longer include any form of ISDS in future trade agreements.37
This remarkable policy shift was largely due to the recommendation of an independent government agency—the Productivity Commission—whose past work had injected admirable rigour and objectivity into the Australian policy-making process. In its 2011 Trade Policy Statement, the Gillard government publicly acknowledged that the Productivity Commission’s 2010 Research Report on Bilateral and Regional Trade Agreements38 ‘has been closely considered in the preparation of this review’ and that the government’s new ‘policy positions are highly consistent with the Productivity Commission’s recommendations’.39 Problematically, however, many of the analytical justifications offered by the Productivity Commission are incomplete, and, when it comes to ISDS, the Commission failed to thoroughly identify and weigh alternative strategies available to decrease the sovereignty costs associated with this type of extra-domestic protection.40
The Productivity Commission, staffed primarily by economists, commences its analysis with a sensible methodological approach to testing the value or otherwise of investment disciplines. The Commission’s assessments ‘first need to establish whether there is market failure or other economic concern that provisions in BRTAs could effectively address’.41 Such assessments ‘also need to consider the balance of benefits and costs that might flow from the provision, and whether other mechanisms or settings would be better placed to address the issues identified’.42 There is, of course, a natural and integral connection between these two research items. To the extent that a particular type of market failure or economic risk is identified, investment treaty disciplines would offer a benefit (if they address that problem) in the absence of credible and sufficient alternatives.
It makes good sense then to begin—as indeed the Commission elected to do—by identifying the possible benefits before isolating the costs associated with investment law commitments. When it comes to the question of benefits, it is important to bear in mind that Australia is now both a significant capital importer and exporter. The costs incurred (by Australia) from investment disciplines, as will be seen later in this note, are not only potentially counter-balanced by the benefits from inbound foreign investment into Australia (including, but not limited to, greater inbound foreign investment provided that it can be established that this is caused by entry and/or operation of Australia’s investment disciplines). In addition, there may well be benefits to Australia’s ‘offensive’ interests, understood as the protection of outbound Australian capital. The Productivity Commission tends to elide this distinction even though it is critical to a full and complete cost-benefit analysis.
More generally, there is a troubling variance between the Commission’s excellent analyses on traditional trade issues compared to its examination of investment commitments. On the latter, the Commission’s framing is shallower and less sophisticated, perhaps reflecting its relative inexperience with investment law. For example, in an earlier part of the report, it begins by selectively focusing on the quantitative liberalization of border restrictions to the entry of foreign capital (such as screening processes) in coming to a conclusion that the direct economic impacts from Australia’s FTA provisions on investment and services ‘to date have been modest’.43 On this point, the Commission is attempting to identify whether there is a causal relationship between investment treaties and one particular economic benefit that could be understood as an increase in inbound foreign investment. This is an important line of inquiry that has attracted multiple and conflicting empirical studies in recent years.44 Yet instead of fully engaging with this complex literature, the Commission has elected to consider only one study in coming to the summary conclusion that ‘committing to ISDS provisions does not influence foreign investment flows into a country’.45
An even more egregious failure is the Commission’s attempt to isolate the potential benefits that flow from the entry into investment treaties. Unlike trade in goods, the critical barriers to foreign investment do not mainly take the form of simple border measures (such as tariffs), whose effects are easily quantifiable. Of far greater import is the panoply of behind-the-border regulatory interventions, which, if discriminatory or arbitrary, can lessen or even extinguish the profitability of foreign investment in the receiving State. The Commission is remarkably cavalier in assessing both the likelihood and economic impact of these behind-the-border barriers. For instance, it claims ‘evidence that, in practice, host governments are not systematically biased against foreign investors.’46 In effect, the Commission, by relying on a handful of studies, has concluded that there is no risk of protectionism whatsoever at play in the formation of host State policy towards foreign investment. There is little attempt to address the actual political economy literature on this key question, an omission that is doubly surprising given the Commission’s particular statutory mandate and expertise.
In comparison to its superficial treatment of likely benefits that can flow from investment treaties, the Commission’s analysis of costs is much longer. Here too we are faced with both incomplete analysis and troubling assumptions. The costs associated with entry into investment treaties can be understood in conceptual terms as the restriction of Australian policy space, against a counter-factual of full sovereignty. This necessarily requires the Commission to identify, with some precision, the outer contours of the scope of investment protection afforded by Australia’s investment treaties. It would be plainly insensible here to focus only on the text of the treaties themselves, including, but not limited to, the clauses outlining rights to ISDS. Like much of international economic law, investment treaties are incomplete contracts, with the outer limits of protection designated by the rulings of tribunals constituted to hear specific disputes.47 Of course, there is no hard rule of precedent at play in this system. De facto, however, tribunals will often (but not always) tend to situate a given decision by reference to prior rulings.48 Surprisingly, there is no attempt whatsoever to engage with the actual case law handed down by investor–State tribunals, especially in recent years, in understanding the outer contours of the system. Instead, the Commission merely cites a select part of a secondary account of some cases collated by the United Nations Conference on Trade and Development.49
In sum, the cost-benefit calculus for investment treaty disciplines (including ISDS) is far more complex than the minimalistic account offered by the Commission. It is also important to note that State parties have significant flexibility to structure their negotiations so as to decrease costs while preserving the benefits associated with entry-into-investment protections. These strategies span choice-of-treaty partner (with inclusion or exclusion of ISDS assessed on a case-by-case basis) to the protection of core domestic policy space through the dedicated exception for State conduct [such has long existed in the law of the World Trade Organization (WTO)]. None of these strategies, which are already employed by a range of State parties in their treaty practice, including Australia, were considered in any detail or with care by the Commission. Yet they are plainly an essential research item in any rigorous and accurate study of sustainable engagement with investment treaty disciplines.
Despite these problems, the Gillard government’s Trade Policy Statement of 2011 took literally the recommendations of the Commission that Australia should no longer seek to include ISDS provisions in any future treaties. Accordingly, in 2012, Australia agreed to a bilateral FTA with Malaysia that omitted ISDS.50 However, the impact in practice was minimal as its regional FTA with ASEAN already contained investment protections underpinned by ISDS.
It is also important to note that concerns about ISDS arose not just on the part of economists within the Productivity Commission but also from those on Australia’s political left. While in opposition in 2004, when the (centre-right) government under John Howard signed the Australia–USA FTA, the (centre-left) Labor Party had joined with others in campaigning strongly against this treaty, raising already the spectre of ISDS and the possibility of not voting for implementing legislation in the Senate (where the Howard government lacked an absolute majority). ISDS provisions were omitted, however, and legislation passed so the Treaty could be ratified.51 After the Labor Party won a resounding victory in the 2007 general election, the government under Kevin Rudd nonetheless quietly agreed to ISDS in FTAs signed with Chile (in 2008) and ASEAN (2009).52 However, by March 2010, Rudd’s trade minister had declared that the Australian government continued to have ‘serious reservations’ about ISDS and would make those clear in the negotiations already underway for an expanded TPP, in response to concerns about the possibility of more controversial provisions being revisited in the new regional agreement involving the USA.53 Prime Minister Rudd was then deposed by Gillard shortly before the 21 August 2010 general election, which the Labor Party only just won under her leadership. The new Gillard government needed to rely on support from independent and (more leftist) Greens parliamentarians, with a formal alliance between the Labor Party and the Australian Greens Party ending only in February 2013.
III. THE ‘ANTI-ISDS BILL’ AND KAFTA BEFORE THE AUSTRALIAN PARLIAMENT54
After the (centre-right) Coalition convincingly won the September 2013 general election, and the Abbott government reverted to the policy of including ISDS in Australia’s treaties on a case-by-case assessment, this debate resurfaced in a new form. After a slow start followed by an internet campaign, the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014 (Anti-ISDS Bill), which was essentially anti-ISDS and introduced by Greens Party Senator Peter Whish-Wilson on 5 March 2014, attracted 141 submissions—mostly short documents in support of the Bill.55 The Senate’s Foreign Affairs, Defence and Trade Legislation Committee also received ‘over 11,000 emails from individuals using an online tool asking people to express their opposition’ to ISDS.56 Nine individuals were invited to give evidence, including one of the present authors,57 in public hearings that were held (and recorded) on 6 August 2014.58 Although the Committee’s report of 27 August 2014 recommended against the enactment of the Bill59—making it very unlikely to even get to a vote—ISDS is likely to remain a political issue in Australia.
Procedurally, the Anti-ISDS Bill sought to have the Parliament set in advance specific parameters for treaty negotiations conducted by the executive branch of government. Yet section 61 of the Australian Constitution states that treaty- making is the formal responsibility of the executive. This starting point, differing, say, from the US system,60 has limited the scope for long-standing calls for greater prior parliamentary scrutiny of treaty-making in Australia. Such calls date back to at least 1983, resulting in the establishment in 1996 of JSCOT, which comprised members from both the Senate and the lower House of Representatives and which only advises the executive branch of government about whether or not to proceed with ratifying treaties that it has signed and then tabled in Parliament. The Treaties Ratification Bill 2012,61 another private member’s Bill partly aimed at preventing further FTAs, had proposed to go further by requiring both Houses to approve all treaties before ratification. However, this Bill was also opposed by both major parties, Liberal and Labor, during the Gillard government era (2010–13).62 Consistently, in the Senate Committee inquiry into the anti-ISDS Bill, additional comments provided by the Labor Party Senators agreed with Coalition Senators that this Bill should not be enacted, primarily on the basis that it ‘is not desirable to radically constrain the executive’s treaty-making power in the manner proposed’.63
Substantively, the Anti-ISDS Bill also faced an uphill battle in that no other developed country has decided that all forms of ISDS—in conjunction with substantive protections offered by investment treaties—are so flawed as to justify excluding them altogether. The benefits of ISDS are admittedly more obvious when treaty partners are developing countries or those where domestic courts provide processes and substantive rights for all investors that fall below widely accepted international standards. The risks are also lower for a developed country agreeing to ISDS with such countries, which are less likely to be sources of inbound investment and eventual arbitration claims against the developed country. Yet Australia’s Anti-ISDS Bill would have precluded ISDS even in such situations, including negotiating a pluri-lateral arrangement within a regional treaty such as the expanded TPP or the RCEP, with an ISDS carve-out between developed country members (as between Australia and New Zealand in AANZFTA, which was signed in 2009).64
Even between developed countries, it may be worth including some form of ISDS, although the arguments are more finely balanced. As mentioned more generally by some submissions opposed to the Anti-ISDS Bill,65 no domestic legal system is perfect, especially when judged against evolving international standards. Canadian investors found this in Loewen v United States,66 and a USA-based investor is presently in dispute with Korea.67 International arbitrators may also be able to resolve disputes with greater expertise and even expedition, compared to domestic court judges with multiple levels of appeals. If treaty partners want additional scope for review, they can agree to an appellate mechanism (even one staffed with permanent appointees, such as the WTO Appellate Body for trade disputes). Several treaties now provide for further negotiations to establish such a mechanism, including KAFTA,68 although, interestingly, no States have chosen to actually set one up. ISDS can be brought even closer to domestic court proceedings by first requiring (time-limited) ‘exhaustion of local remedies’ by foreign investors, as suggested recently by the Chief Justice of Australia.69 Transparency of proceedings can also be enhanced, as under KAFTA, which adopts detailed provisions as well as a side letter requiring consultations about adopting the new Transparency Rules under the United Nations Commission on International Trade Law.70 The risks of excessive claims or ‘regulatory chill’ for host States—namely by not introducing measures genuinely in the public interest—should be less for developed countries (which generally have higher standards of good governance). They can be further managed through drafting general and specific exceptions (although care is needed especially when attempting to transpose exceptions from other instruments) such as the WTO Agreement.71
For similar reasons, both the European Commission72 and the US government73 proposed the inclusion of appropriate provisions on ISDS and substantive rights in the TTIP presently under negotiation. The Commission engaged in a public consultation from May to July 2014,74 given justifiable public concerns raised mostly, however, by those who are unfamiliar with the rationales, evolution and current operation of the treaty-based international investment law system. Yet a recent comprehensive report from the Dutch government recommends the retention of ISDS even in the TTIP.75 Admittedly, the theoretical and demonstrable net benefits of ISDS remain reduced in treaties among developed countries. But a broader advantage of retaining ISDS with more extensive safeguards is that it should also then make it easier to negotiate such protections in treaties with developing countries.
Overall, therefore, the Anti-ISDS Bill represents an over-reaction. Until it can be shown that the vast majority of States worldwide have taken a wrong turn in continuing to countenance ISDS provisions, it seems inadvisable for Australia to opt out of the system altogether. Rather, it should more carefully negotiate both procedural and substantive rights in future investment treaties. In the Senate Committee inquiry, it was suggested that Australia should also initiate a public consultation to develop a model investment treaty or standard provisions. The Australian government was also urged to review its old treaties as they come up for renewal76 and even to consider approaching treaty partners to renegotiate provisions that do not meet its contemporary standards (albeit for future investments).77 Unfortunately, this approach also appears to be precluded by this Bill.78 Yet the Philip Morris Asia arbitration reveals problems for host States under the early BIT with Hong Kong (signed in 1993). In addition, the recent ICSID jurisdictional decision in Planet Mining v Indonesia has serious implications for investors making claims under oddly drafted provisions in many of Australia’s other treaties from the 1990s.79
Indeed, as noted in the main report on the Anti-ISDS Bill issued by the Senate Committee on 27 August 2014, it agreed ‘with Professor Nottage and others that the risks associated with ISDS can and should be managed more effectively and in ways which do not require legislation, including careful treaty drafting (of both old and new agreements) and development of a well-balanced Model Investment Treaty’.80 The report concluded that ‘many of the alleged risks to Australian sovereignty and law making arising from the ISDS system are overstated and are not supported by the history of Australia’s involvement in negotiating trade agreements’.81
However, while agreeing with the recommendation that the Bill should not be enacted, the additional comments by Labor Senators insisted that it was unnecessary to include ISDS provisions in any treaties. They reiterated the core arguments from the Productivity Commission against the possible benefits, and contended that:
The Labor Senators also claimed that ‘[g]overnments and groups in Germany, France, Indonesia and South Africa have all expressed their lack of support for future ISDS provision in multilateral agreements’.83 However, they emphasized that in Australia the executive branch of government is responsible for negotiating and signing treaties, with ultimate accountability to the voting public, and that previous Labor governments have accordingly achieved ‘progressive reforms in the national interest’ (such as protecting human rights and the environment).84 The Labor Senators concluded that:
the current ISDS legal system suffers from some of the same problems as underdeveloped legal systems, including substantial delays, substantial costs, lack of precedent and lack of an appeal mechanism.
1.9 Another unintended consequence from the growth of ISDS litigation is ‘regulatory chill’ where states may delay or fail to implement public policy measures for fear of an ISDS claim.82
Assuming that both Coalition and Labor Senators follow their party lines, as indicated in their comments and recommendations in the report on the Anti-ISDS Bill, it falls far short of the number of votes required to pass. Even in the highly unlikely event of the Labor Party shifting to support the Greens on this Bill, and further persuading a few other minor party or independent Senators to pass it in the upper house of Parliament, it would not pass the lower House of Representatives, provided the Abbott government retains its absolute majority there and adheres to its stated policy of including ISDS on a case-by-case assessment.
1.19 Labor will continue to scrutinise the actions of the Government, including its treaty-making actions, to ensure its conduct is in the national interest and will give appropriate consideration to enabling legislation.
1.20 Labor has moved in the Senate to order the tabling of all proposed trade agreements at the conclusion of negotiations and before signing.85
Nonetheless, as indicated in the earlier-mentioned additional comments from the Labor Senators and in subsequent remarks in Parliament, the Labor Party remains opposed in principle to ISDS. In particular, Labor Party parliamentarians have consistently objected to ISDS provisions being included in KAFTA. They dissented in the JSCOT inquiry report of 13 May 2014,86 which recommended (by majority) that this FTA with Korea be ratified by Australia. In a report dated 1 October 2014 from a separate inquiry into KAFTA by the Senate’s Foreign Affairs and Trade References Committee comprising three Labor Party members (and one Greens member) out of six, it was agreed (with a dissent from the Greens substitute member, Senator Whish-Wilson) that, on balance, the treaty should be ratified. However, the report recommended that the ISDS provisions be narrowed by side letter and not included in future agreements.87
Despite such misgivings, Labor Party members voted in favour of the two bills that the Coalition government needed to introduce on 4 September 2014 in order to implement associated changes primarily to the customs regime.88 Despite urging the government to renegotiate KAFTA to omit ISDS provisions, a key figure in the Labor Party conceded that the FTA had remained overall in the national interest and therefore should be ratified.89 The implementing legislation consequently passed both Houses by 1 October, receiving royal assent on 21 October. KAFTA (including the unchanged ISDS provisions) entered into force on 12 December 2014, after an exchange of notes between the Korean and Australian governments on 3 December (the day after Korea’s National Assembly agreed to ratification).90
Yet because Labor Party parliamentarians continue to warn the Coalition government about including ISDS in further investment agreements, there is no guarantee that the party will vote in favour of implementation legislation for the FTA that was substantially agreed with China on 17 November 2014, as it too reportedly provides for ISDS. The government will probably follow existing practice and only disclose the finalized text of the treaty around the time of its signing in early 2015, but it will doubtless then face even more intense parliamentary scrutiny given strong public concerns, especially about inbound investment from China.91 If the Labor Party joins with the Greens in voting against implementation legislation in the Senate for this particular treaty, the government will need to (i) secure votes from smaller parties or independent Senators, (ii) wait and hope for broader changes in the Senate composition or (iii) seek to renegotiate with China the agreement reached regarding ISDS.
The public debate over ISDS in Australia, triggered by the arbitration claim by Philip Morris Asia and the Productivity Commission’s trade policy inquiry in 2010, has even contributed to the Senate’s Foreign Affairs and Trade References Committee commencing another broader inquiry into the constitutional allocation of treaty-making authority.92 At the immediate micro-level, the present (centre-right) Coalition government has reinstated the pre-2011 Australian policy and practice of including ISDS provisions in treaties on a case-by-case assessment. The calculus on inclusion is apparently shaped by strong demands from the counterparty to the negotiations (as with Korea) and/or by lobbying Australia’s business sector involved in outbound investment (especially into developing countries, as within the proposed TPP or RCEP).93 These new-generation treaties also continue a trend of countervailing sovereignty costs (and thereby offering greater political cover) by injecting levels of flexibility via exceptions for public regulation, often modelled on the law of the WTO. However, the (centre-left) Labor Party continues to vocally oppose ISDS and has even held out the possibility that its elected representatives in the Senate may block implementing legislation for future FTAs that include such protections (as is reportedly occurring now with China). Of course, the risk of political obstructionism is necessarily lower for a major political party that seeks electoral reinstatement (with the then inevitable need to negotiate with Australia’s treaty partners) than it is for minor and fringe political actors (such as, for now, the Australian Greens). Indeed, it is telling that the Labor Party has publically proclaimed its opposition to ISDS while allowing the Coalition government to ratify KAFTA. While no doubt appealing to some of its constituents, this Janus-like stance may ultimately prove unsustainable or sub-optimal.
Australia is currently involved in a range of bilateral and regional FTA negotiations involving a number of other States. As we have seen, many of these countries have specific concerns about ISDS (often due to their own episodic experience as respondents to challenges) as well as the broader trajectory of international investment law. The two major Australian political parties now have the rare and valuable opportunity to guide and shape debates surrounding those politically difficult questions. Ideally, they would do so by reflecting on the strengths and weaknesses of the complex set of policy shifts and treaty practices undertaken by successive Australian governments over the last decade. A mature assessment of this sort could allow for a shared and sustainable policy stance and might even find overdue embodiment in a model investment treaty or model provisions for Australia.94
Australia’s willingness and ability to reflect on its own experience so as to present a principled approach to investment treaty constraints has charged systemic implications. We now live in a period of acute political contestation surrounding the role, content and procedure of investment treaty limitations on State sovereignty. The Australian experience shows that the re-politicization of ISDS attracts multiple constituencies and actors to the field who will forcefully advocate their position to treaty negotiators and governmental actors. Re-politicization of this sort is inevitably characterized by heterogeneity, as different State parties understand that there are legitimately varying choices on investment treaty disciplines, which turn on questions of economic strategy, development goals, risk profile and levels of institutional quality (including that of the judicial system). When guided by rigorous theoretical and empirical analysis,95 these types of contestation offer real potential to foster progressive and sustainable reform of the system in a way that could even address some of the concerns of its most entrenched opponents. At least the recent parliamentary reviews of the Anti-ISDS Bill and treaties such as KAFTA, together with related media coverage,96 have allowed some more reasoned debate and a better understanding of the pros and cons of ISDS in the twenty-first century.
This note is part of an Australian Research Council Discovery Project (DP140102526) funded over 2014–16 jointly with Shiro Armstrong, Jurgen Kurtz and Leon Trakman. We thank Melanie Trezise for editorial assistance.
a narrower definition of ‘expropriation’;
a non-exhaustive list of public policy areas covered by the term
limitations as suggested by Chief Justice French or as subsequently formally recommended by the Council of Chief Justices; and
that the parties promptly establish a bilateral appealant [sic] mechanism as envisaged in Annex 11-E of the agreement.