The impact of TPP on the investment environment seen from chapter Investment 3The Investment chapter of TPP has basic regulations on investor protection [...]
3The Investment Chapter of the TPP has basic regulations on investor protection, including notable points such as the freedom to transfer money related to an investmentinvestment, except in some cases such as the host country wants to control capital flow instability...
The Investment Chapter in the TPP is intended to protect investments by investors of a TPP member country in the territory of another member. The Investment chapter of the TPP has similarities and differences compared to other bilateral and multilateral international investment agreements.
Similarities
Like other international investment agreements, the Investment chapter of the TPP requires host member countries to create an attractive investment environment by enforcing investor protection standards such as equal and fair treatment, and full protection and safety for investors. Member states must also compensate investors for nationalization or expropriation.
And like other international investment agreements, TPP allows investors the right to sue host states in international arbitration courts and empowers international arbitration courts to issue binding awards on compensation for investors when host states or their organizations violate the agreement. And investors have the right to choose to participate in arbitration at the International Center for Settlement of Investment Disputes (ICSID) or other arbitration organizations and laws.
The Investment Chapter of TPP has basic provisions on investor protection like most other international investment agreements, including:
– Equal and fair treatment is a principle that requires the host state to at least not be allowed to conduct arbitrary, unfair, unjust, discriminatory, or non-transparent acts towards investors.
– National and Most Favored Nation (MFN) treatment, is the principle of ensuring an equal environment for investors and their investments, and must be compensated for discrimination.
-The host state must not only not discriminate against foreign investors unfavorably compared to domestic investors, but also must not discriminate them against foreign investors from other (member) countries.
-Prohibition of expropriation without public purpose, without following process and without compensation. Full protection and security, is the principle of ensuring that assets and individuals related to legitimate investments are not harmed in the host country.
-Prohibition of “performance requirements”, such as requirements on localization content and technology localization rate.
-Free transfer of funds related to an investment, except in certain cases such as the host country wants to control capital flow instability and cases related to economic crisis.
Difference
The TPP Investment Chapter has a narrower scope of application of equal and fair treatment standards than other international investment agreements. Often, the standard of equal and fair treatment is not clearly defined, but it is understood that investors are entitled to a predictable legal and business framework, and that this right will not allow the host state to impose rules that are inconsistent with the investors' reasonable expectations at the time they invest. Thus, and in fact, the standard of equal and fair treatment has become the main cause of disagreements between investors and the state.
To avoid this risk, the Investment chapter of the TPP defines fair and equitable treatment standards under which eligible investors are entitled to treatment in accordance with the minimum standards of customary international law. Thus, even if the host state applies laws contrary to the investor's reasonable expectations, this is still not enough to constitute a violation of the agreed standard of equal and fair treatment. To have a better basis, there needs to be an additional factor, such as arbitrariness or discrimination.
More importantly, TPP focuses more on ensuring a balance between investor protection provisions and host state sanctions rights. This can be seen when the Investment chapter of the TPP has a number of exclusion clauses to ensure regulatory autonomy for the host state in some areas such as public health, environmental protection, and labor standards.
While the TPP also allows investors who are citizens of another member state to sue the host state before international arbitration courts in cases where the host state takes measures that violate the investment protection standards under the agreement to the detriment of that investor's investment, the Investment chapter provides very effective tools to prevent abusive and frivolous claims, while ensuring the right of host states to sanction in the public interest, such as health health, safety, and environmental protection.
These tools include: rapid review of frivolous claims, along with the right of the arbitration court to award attorneys' fees to the prevailing party; detailed regulations on transparency, requiring the arbitral tribunal to make public arbitrations and publish all minutes related to the trial; the possibility of allowing a third party friendly to the court (e.g. an NGO) to give an arbitral opinion; compensation for damages (limited to compensation for monetary loss, i.e. the court cannot issue a reinstatement judgment, require the host state to restore a certain policy, legal institution or change a certain statute and law; review of the judgment either by domestic courts or by an international review board; general interpretations are bindingof the provisions in the Investment chapter of the TPP are also binding in a court; and the right of the arbitral tribunal to use the results of proceedings in cases arising under the same circumstances or facts to avoid retrial.
Another difference is that the Investment chapter requires member states to provide detailed information on the ethics of arbitrators, their neutrality and impartiality, an issue that has increasingly come up after a series of scandalous arbitrations accused of questionable ethics of arbitrators. Members participating in the TPP negotiations believe that the Investment chapter of the TPP will establish a "gold standard" in the field of international investment law based on lessons learned from trials within the framework of current international investment agreements. However, the practical use of TPP in effectively protecting investors needs time to be verified.
According to Young Intellectuals
Procedures
