AUSTRALIA AND INDONESIA SIGN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

On 4 March 2019, Australia and Indonesia signed the Australia-Indonesia Comprehensive Economic Partnership Agreement (“CEPA“). In this post, we briefly consider some of the noteworthy features of the CEPA chapter on investment and in particular its provisions regarding investor-State dispute settlement (“ISDS“).

Indonesia and Australia signed a bilateral investment treaty (“BIT“) containing ISDS provisions in 1992. Both States are also party to the ASEAN-Australia- New Zealand Free Trade Agreement (“AANZFTA”), signed by Australia in 2009 and Indonesia in 2012, which contains an investment chapter.

As we reported in a previous post, Indonesia announced in 2015 that it would seek to renegotiate and replace its older investment treaties with more modern agreements. The Australia-Indonesia BIT, however, will remain in force even after CEPA enters into force. This is in contrast to the Hong Kong-Australia Free Trade Agreement signed this week (see our post here) pursuant to which Australia and Hong Kong have agreed to terminate the Hong Kong-Australia BIT, which was signed in 1993 and became infamous in Australia after Philip Morris used the treaty to commence arbitration against Australia challenging the Tobacco Plain Packaging Act 2011.

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AUSTRALIA AND HONG KONG SIGN NEW TRADE AGREEMENT CONTAINING INVESTOR-STATE DISPUTE RESOLUTION PROVISIONS

On 26 March 2019, Australia and Hong Kong signed the Australia-Hong Kong Free Trade Agreement (A-HKFTA) and its associated Investment Agreement (Agreement).

These agreements were negotiated against the background of a heated political debate in Australia regarding the benefits and risks of investment treaties. This debate occurred as a result of an arbitration brought against Australia by Philip Morris in 2011 under the 1993 Hong Kong-Australia Bilateral Investment Treaty (1993 BIT), challenging the introduction of the Tobacco Plain Packaging Act 2011 (Cth).

The 1993 BIT will be replaced by the new Agreement once it enters into force, which is expected to occur after both countries complete their respective treaty-making processes and ratify the agreements. Accordingly, investors who may have a claim under the 1993 BIT should consider whether to pursue it before that treaty is terminated.

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