Deciding Investor States Disputes: Australia's Distinctive Approach
15(1) Journal of World Investment and Trade (2014)
48 Pages Posted: 28 Sep 2013 Last revised: 9 Nov 2013
Date Written: September 25, 2013
This article examines Australia’s controversial 2011 Trade Policy Statement in which the Federal Government indicated that it will no longer provide for investor-state arbitration (ISA) in future bilateral and regional trade agreements (BRTAs), choosing instead to rely on alternatives to ISA. These are likely to vary from encouraging investor-state parties to negotiate contracts that provide mechanisms for dispute resolution to providing by treaty that domestic courts resolve such disputes. In analysing this policy shift, the paper discusses the nature of foreign direct investment (FDI) and its economic significance to host and home states, as well as to inbound and outbound foreign investors. Following this analysis, the paper outlines the reasons behind Australia’s rejection of ISA and evaluates its perceived advantages and disadvantages in contrast with the reliance on domestic courts for the resolution of investment disputes. The paper expresses caution about a complete rejection of ISA and illustrates the challenges of implementing this Policy in light of the proposed Investment Chapter of the Trans-Pacific Partnership Agreement (TPPA) and Australia’s trade interests in the wider Asia region. Instead, the article urges adoption of a BIT policy, which would include various dispute avoiding measures and provide parties with access to either domestic courts or ISA in a manner that is consistent with Australia’s national interests and international good practice.
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