Foreign Investment In and Out of Japan: Economic Backdrop, Domestic Law, and International Treaty-Based Investor-State Dispute Resolution

Abstract

This paper provides the first-ever detailed analysis of the dispute resolution provisions contained in Japan’s burgeoning international investment treaties (BITs and FTAs or EPAs). That development is also located in the context of Japan’s inbound and outbound flows in foreign investment and the background domestic law limiting or protecting foreign investment, as well as an overview of the process by which the Japanese government negotiates these treaties. The paper concludes that the considerable diversity in treaty provisions (especially regarding investor-state arbitration or ISA) increases transaction costs for governments and investors, but leaves scope to develop some innovative provisions (eg on Arb-Med or transparency of proceedings) at a time of considerable debate over the pros and cons of ISA.

Our related paper focuses on the substantive provisions of Japan's investment treaties: forthcoming in Chester Brown and Devashish Krishan (eds) Commentaries on International Investment Agreements (OUP, 2011).

Keywords: Japan, Trade and Investment Policy, Bilateral Investment Treaties (BITs), Free Trade Agreements (FTAs), International Economic Law, International Investment Law, International Arbitration, Foreign Investment Regulation, Constitutional Law, Japanese Law

JEL Classification: K01, K20, K30, K33