International Investment Arbitration in Southeast Asia: Guest Editorial
42 Pages Posted: 1 Nov 2016 Last revised: 1 Feb 2017
Date Written: November 1, 2016
The Association of Southeast Asian Nations (ASEAN) brings together over 600 million people in one of the world’s largest and fastest growing economic regions. Its ten member states have individually concluded many standalone bilateral investment treaties (BITs) and a growing number of bilateral and regional free trade agreements (FTAs), supplemented by intra-ASEAN and ‘ASEAN’ agreements. These aim to facilitate and protect burgeoning foreign direct investment (FDI) flows, which are outlined in Part 2 below, with large outflows recently from several member states. Part 3 outlines treaty-making trends, including considerable consistency in approach by many member states as well as some interesting innovations, against the backdrop of persistent problems of corruption and poor governance in most member states.
Part 4 highlights the relative paucity of Investor-State Dispute Settlement (ISDS) claims against ASEAN member states, despite the large volumes of inbound FDI and growing ISDS-backed investment treaty commitments. There are only 28 known ISDS claims (including several where consent to ICSID arbitration was given by contract or licence rather than through treaties). Only one adverse award has been given (in 2009, against Thailand), but as of October 2016 it was still being contested and had not been paid. Meanwhile, investors based in Malaysia and Singapore have brought five ISDS claims.
Part 5 concludes that this backdrop explains why member states (even recently Indonesia), and ASEAN as a whole, have not gone as far as eschewing treaty-based ISDS completely, as for example in parts of South America, South Africa and (only over 2011-13) Australia. It also summarises some key contributions to international investment law understandings that have emerged from the arbitral case law related to Southeast Asia. Overall, the subregion does indeed offer potential to take a leading role in influencing the future trajectory of international investment law world-wide.
Keywords: foreign direct investment (FDI), international investment law, bilateral investment treaties (BITs) and free trade agreements (FTAs), investor-state dispute settlement (ISDS), arbitration, ASEAN, Asian law
JEL Classification: K10, K30, K33
Suggested Citation: Suggested Citation