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Comprehensive Insights on Investment Protection and ISDS

This session delves into investment protection and ISDS mechanisms, covering key articles from TPP Chapter 9 and Philippines' experiences with treaty-based ISDS. Explore potential ISDS issues related to labor, environment, and non-conforming measures. Gain knowledge on defense procedures and interpretation of ISDS annexes. Ask questions to deepen your understanding.

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Comprehensive Insights on Investment Protection and ISDS

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  1. Session 3: Investment Protection and Investor-State Dispute Settlement (ISDS) 17 March 2016 Amb. Manuel A.J. TEEHANKEE

  2. Tpp Chapter 9, Section A Mandates • Article 9.4: National Treatment. • Article 9.5: Most-Favoured-Nation Treatment. • Article 9.6: Minimum Standard of Treatment. • the customary international law minimum standard; • “fair and equitable treatment”; and • “full protection and security.” • Article 9.6bis: Armed Conflict or Civil Strife.

  3. Tpp Chapter 9, Section A Mandates • Article 9.7: Expropriation and Compensation. • Article 9.8: Free Flow of Financial Transfers. • Article 9.9 Prohibition against Performance Requirements (Exports, Domestic Content, Technology Transfer etc.). • Article 9.10 Senior Management Nationality/ Residence Requirements.

  4. Philippines and ISDS in GENERAL Two Types of Investor State Arbitration • Ad Hoc Investor State Arbitration • Derived from Contractual Consent • Project by Project Basis • Contract-based Arbitration • Institutional Investor State Arbitration • Consent Contained in Advance through BITS or FTAs • Treaty-Based

  5. Philippines and TREATY-BASED ISDS • Treaties with ISDS Provisions • Bilateral Investment Treaties (38 treaties in force) • Asean Comprehensive Investment Agreement (2012) • Asean Australia New Zealand FTA (2015) • Philippine Experiences with Treaty-based ISDS • Germany-Philippines BIT (1997) • Fraport AG v Philippines, ICSID (filed 2003/2011) • Belgium-Philippines BIT (1998) • Baggerwerken DEZNV v Philippines (filed 2011) • Philippines-Switzerland BIT (1999) • SGS v Philippines (filed 2002)

  6. Potential ISDS Issues - Labor Labor Standards • TPP Chapter 19 includes “non-derogation clause” mandating compliance with ILO / Labor Standards • ISDS Minimum Wage Case: • Veolia Propreté v. Arab Republic of Egypt, ICSID Case No. ARB/12/15. • Egypt was sued by an investor for raising its Minimum Wage. • Issue was not whether or not Egypt had to repeal its Minimum Wage policy but whether it can be bound to a contractual obligation arising from said act and thereby lead to money damages.

  7. Potential ISDS Issues - ENVIRONMENT TPP Article 9.15: Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health, or other regulatory objectives. • Bilcon of Delaware Inc. et al v. Canada (NAFTA, 2015) – NAFTA Panel ruled that Canada violated Minimum Standard Treatment by denying Bilcon a mining license, because by encouraging investments in mining, it created a reasonable expectation from investors that their licenses will be approved.

  8. PHILIPPINE EXAMPLES – NON CONFORMING MEASURES/REQUIRED RESERVATIONS 1987 PHILIPPINE CONSTITUTION Article XII • Section 2 - foreign ownership limit of 40% on exploitation of natural resources. • Section 11 - Limit of 40% foreign ownership in public utilities. • Section 12 – preferential use of “Filipino labor, domestic materials, and locally produced goods.”

  9. E.O.184 (2015) – PHILIPPINE INVESTMENT NEGATIVE LIST

  10. E.O.184 (2015) – PHILIPPINE INVESTMENT NEGATIVE LIST

  11. ISDS -- ANNEX Defense Procedures (90 days) • Article 9.25: Interpretation of Annexes • If a respondent asserts as a defence that the measure alleged to be a breach is within the scope of a non-conforming measure set out in Annex I or Annex II, the tribunal shall, on request of the respondent, request the interpretation of the Commission on the issue. The Commission shall submit in writing any decision on its interpretation under Article 27.2.2(f) (Functions of the Commission) to the tribunal within 90 days of delivery of the request. • A decision issued by the Commission under Paragraph 1 shall be binding on the tribunal, and any decision or award issued by the tribunal must be consistent with that decision. If the Commission fails to issue such a decision within 90 days, the tribunal shall decide the issue.

  12. Session 3: Investment Protection and Investor-State Dispute Settlement (ISDS) Thank you … Questions welcome ….

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