A Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Key points

  1. The ministers responsible for the Trans-Pacific Partnership (TPP) of 11 countries have announced that the core elements of a Comprehensive and Progressive Agreement for Trans-Pacific Partnership are agreed (CPTPP). While much of the original TPP looks to remain intact, 20 provisions of the TPP are suspended, in particular with respect to Investor–State Dispute Settlement (ISDS) disputes for initial approvals of investments and financial services. There are also 4 items to be finalised by the Parties’ consensus.
  2. The final impact of these changes can only be determined after the release of the full text. Current indications are that the differences will not significantly change the shape of ISDS under the TPP. Investors making investments into these 11 countries will still want to proactively consider how to take advantage of the protections given by this agreement if it comes into force.
  3. This is a significant step forward to implementing a mega-regional agreement for the Asia-Pacific region, which substantially is the form rejected by the United States early this year.

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Filed under Australia, East Asia, Investment Arbitration, ISDS, Japan, Malaysia, News, Public International Law, Singapore, South East Asia, The Americas, TPP, Trade law, Treaty negotiation, interpretation and impact, US, Vietnam

UK government introduces new sanctions and anti-money laundering bill

On 19 October the UK Government published the text of a proposed new Sanctions and Anti-Money Laundering Bill (the “Bill“), which seeks to create a post-Brexit domestic legislative framework for the imposition and enforcement of sanctions. The introduction of the Bill follows the publication on 2 August of the Government’s response to the consultation on the UK’s future legal framework for sanctions (see our previous blog post).

The new proposals would give the Government broad discretionary powers to impose a wide range of sanctions by way of secondary legislation, including asset freezes and other financial sanctions, travel bans and immigration restrictions and trade restrictions affecting goods and services. The Bill also provides for the creation of exceptions and licences in relation to any sanctions, including a new ability for the Government to issue general licences to permit particular types of conduct, such as (according to the impact assessment for the Bill) the operation of NGOs in Syria.

The Government has expressly stated that the Bill is not designed to bring any substantive policy changes in respect of the current sanctions regime, with the main aim being to make it easier to impose sanctions and respond to future events while maintaining the existing sanctions regime, which currently comprises a mixture of EU and UK legislation. The proposals also give the Government wide-ranging powers to supplement or amend the UK’s existing anti-money laundering (“AML“) regime, although the Bill itself does not impose any new AML-related requirements. Continue reading

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ITLOS rules in favour of Ghana in long-standing maritime dispute with Côte d’Ivoire

On 23 September 2017, a Special Chamber of the International Tribunal for the Law of the Sea (ITLOS) delivered its judgment on the longstanding maritime boundary dispute between Ghana and Côte d’Ivoire.

The Special Chamber reconfirmed the relevance of the equidistance methodology in determining the maritime boundary between the two States. The judgment also touches on important issues affecting States and international companies operating in disputed waters such as the applicable obligations pending resolution of such disputes.
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Filed under Africa, Arbitration Proceedings, Boundaries and Delimitation, ITLOS, Public International Law, UNCLOS

UK Government’s Future Partnership Paper on Foreign policy, defence and development: including proposals for co-operation on sanctions, cyber security, and the defence and security industries

The UK Government has released a Paper outlining the UK’s proposals for a future partnership with the EU regarding foreign policy, defence and development. The Paper highlights the UK’s shared interests and values with the EU regarding foreign policy and defence, and the UK Government’s offer and intention to work closely with the EU in the future in a partnership “unprecedented in its breadth”, and that is deeper than any other third country relationship. The Paper offers a number of insights into the practical ways in which the UK envisages that such cooperation will be achieved after Brexit, including in relation to sanctions, cyber security, defence and security, development and broader foreign policy. Continue reading

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Enforcement and dispute resolution under the Withdrawal Agreement and any future relationship agreement: no role for the CJEU….or is there?

On its face, the thrust of the UK Government’s Future Partnership Paper on Enforcement and Dispute Resolution (the Paper), published on 23 August, is to rule out the jurisdiction of the Court of Justice of the European Union (CJEU) to determine the enforcement of rights and obligations by individuals and businesses derived under the Withdrawal Agreement (and any future relationship agreement) and disputes between the EU and the UK.  Since the Paper was published, the Prime Minister has again reiterated the Government’s position that “the UK will be able to make its own laws – Parliament will make our laws – it is British judges that will interpret those laws, and it will be the British Supreme Court that will be the ultimate arbiter of those laws.”

However, as discussed below, whilst perhaps consistent with the stage of negotiations, the Paper is drafted to leave considerable room for manoeuvre, and it leaves many questions unanswered regarding enforcement of rights and obligations under the Withdrawal Agreement and any future relationship agreements and dispute resolution between the UK and the EU after Brexit.

The Paper follows the publication on 22 August of the UK Government’s Future Partnership Paper on Providing a Cross-border Civil Judicial Cooperation Framework, considered in our blog post here, which presented the UK’s position on the extent to which current EU rules on choice of law, jurisdiction and enforcement of judgments should continue to apply as between the UK and the EU Member States post-Brexit.   Continue reading

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PCA Tribunal rules on disputed Slovenia and Croatia land and maritime boundaries

In a long-running dispute, the Permanent Court of Arbitration (“PCA“) Tribunal has issued its Final Award. The Final Award, which runs to nearly 400 pages, determines disputed territorial and maritime boundaries between the Republic of Slovenia and the Republic of Croatia. The Final Award also creates a “junction” in the Adriatic Sea for Slovenia’s uninterrupted access to and from international waters and a regime for use of that junction. The parties are bound to comply with the Final Award within six months of its issue.

Having purported to withdraw from the arbitration in 2015, Croatia has stated that it does not consider itself bound by the Final Award. Slovenia, on the other hand, has indicated that it considers continued incursions into its territorial sea as delimited by the Tribunal to be a breach of both international and EU law (as Slovenia became part of the Schengen area on its accession to the EU).

The parties are reported to be engaging in dialogue regarding the implementation of the Final Award, with speculation as to if and how the EU Commission will bring pressure to bear on Croatia. Continue reading

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UK Government Publishes Technical Notes, including relating to “Privileges and Immunities”

On 28 August, in advance of the next round of EU-UK talks, the UK Government published three Technical Notes, one of which “provides further information to support the UK’s position published on 13 July in the UK’s position paper on Privileges and Immunities” (the Technical Note). The 13 July Position Paper is discussed in our blog post here. The Technical Note requests clarification from the EU on a number of issues, in particular as regards the EU’s position on the implications of the UK’s withdrawal from Protocol (No 7) on the privileges and immunities of the European Union of the Treaty on the Functioning of the EU (Protocol 7).

As a general premise, the Government asks whether the EU’s position on the extent of the privileges and immunities to be granted under the Withdrawal Agreement (the Agreement) should differ depending upon whether or not the Agreement confers, or continues to confer, upon the EU functions in, or in respect of, the UK.

In particular, the Technical Note seeks confirmation from the EU that it agrees that the privileges and immunities granted to EU institutions, agencies and officials in the UK should reduce after exit so as to be linked solely to any function that may be conferred, or continue to be conferred, by the Withdrawal Agreement. To the extent that any wider application of privileges and immunities of the EU in the UK is envisaged, the EU is asked to clarify why this is necessary.  Specifically, the Government requests an indication from the EU as to the rationale for any continued protections in the UK for MEPs, and how such protections would operate.

The Technical Note foresees the continued presence of an EU delegation to the UK after the UK’s exit, and asks for clarification regarding how provision could be made to allow for this. It also asks for confirmation and assurances that the UK’s representation to the EU should continue to enjoy the same diplomatic privileges and immunities as a permanent mission of a Member State after Brexit. A reciprocal recognition is also acknowledged of ongoing privileges and immunities for representatives of Member States taking part in the work of institutions, agencies or bodies based in the UK, and of the UK taking part in the work of the EU within Member States’ territory, where such continued work is envisaged in the Agreement.

COMMENT

The questions posed in the Technical Note provide an interesting indication of the nature of the discussions taking place between the EU and the UK on the issue of ongoing privileges and immunities. This issue is fundamentally bound into the nature of the future relationship between the UK and the EU under the Agreement (and any further relationship agreements). As such, the Technical Note centres its requests on the continuing functions to be carried out by each side, and seeks clarification in respect of privileges and immunities that may be sought outside such functions. Central to these questions, therefore, will be the continuing role of the EU in the UK, and vice versa, under the Agreement.

For more information, please contact Andrew Cannon, Partner, Hannah Ambrose, Professional Support Consultant, Vanessa Naish, Professional Support Consultant or your usual Herbert Smith Freehills contact.

Andrew Cannon
Andrew Cannon
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Hannah Ambrose
Hannah Ambrose
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Vanessa Naish
Vanessa Naish
Professional Support Consultant
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+44 20 7466 2112

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Filed under Brexit, EU, EU Law, Europe, Immunity, Privileges and immunities, Sovereign Immunity/State Immunity, State Immunity

A warning shot for investor-state dispute settlement under NAFTA 2.0?

The US Trade Representative (USTR) is reportedly finalizing a proposal to dramatically restructure NAFTA’s investor-state dispute settlement (ISDS) mechanism, transforming it into an “opt-in” regime under which each NAFTA state would elect whether or not to permit investors of other NAFTA parties to bring claims directly against it.[1] The proposal apparently remains under discussion within the US administration, and has not yet been formally communicated to Canada and Mexico.

The ambition of this reported proposal, which would fundamentally reshape investor protection under NAFTA, far exceeds what the US administration had tabled in advance of the negotiations.[2]

Developed states may have historically viewed the submission to arbitral jurisdiction to resolve disputes with certain investors under investment treaties and free trade agreements primarily as a benefit for their own investors going abroad, rather than as a potential source of liability. However, that appears to be changing with the tides of global investment flows, and as developed states have increasingly been the respondents in investor-state arbitration. US Trade Representative Lighthizer has echoed this criticism, saying that he is “troubled by the fact that nonelected non-Americans can make the final decision that the United States law is invalid“, as the US has committed itself in numerous bilateral and multilateral international agreements, including NAFTA.[3]

This is not the first time that investor-state arbitration, which has the potential to hold states accountable for measures taken in violation of their international obligations, has come under fire. In recent international practice, states have explored alternatives to the investor-state arbitration mechanism. For example, the recently concluded Canada-EU Comprehensive Economic and Trade Agreement (“CETA“) instead adopted an international investment tribunal featuring a regularized 15-person membership and limited appellate procedures, among other innovations.

While the EU has sharply broken with past practice on ISDS mechanisms, the US recently supported including investor-state arbitration in the ill-fated Trans-Pacific Partnership (TPP) and the contemplated US-EU Trans-Atlantic Trade and Investment Partnership (TTIP). ISDS has lost favor among some governments and other stakeholders, but remains popular among influential groups; for example, in advance of the NAFTA renegotiations, the National Association of Manufacturers, which includes many businesses with investments in cross-border supply chains, mobilized to lobby in favor of maintaining NAFTA’s investor-state arbitration mechanisms.[4] The USTR proposal will likely generate significant controversy, as some stakeholders will think it goes too far to strip protections for international investors, while others would prefer the wholesale abandonment of ISDS.

It is, of course, too soon to attempt to draw far-reaching conclusions about the USTR’s reported proposal, but it does appear to signal a significant shift in US policy. Businesses with global supply chains and international investments should closely follow the NAFTA renegotiations, as a move by the US away from ISDS may signal the emergence of serious cracks in the foundations of investment protection under international law.

 

This is part 2 of our ongoing series concerning the future of NAFTA. Round one of the NAFTA renegotiations ended Sunday, August 20, 2017, after which the negotiating parties issued a trilateral statement reaffirming their intentions to continue at a rapid pace. Round two of the talks will take place in Mexico from September 1-5, before moving to Canada for round three from September 23-27.

For more context, see our previous posts:

 

 

If you have specific questions about how the NAFTA renegotiations may affect your business, please contact Christian Leathley, Partner, Timothy Hughes, Associate, or your usual Herbert Smith Freehills contact.

Christian Leathley
Christian Leathley
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Timothy Hughes
Timothy Hughes
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[1]        http://www.foxbusiness.com/features/2017/08/22/u-s-bid-to-exit-nafta-arbitration-panels-draws-ire-from-businesses.html

[2]        In the objectives released by the US Trade Representative on July 17, 2017, the administration signaled a more modest agenda in relation to NAFTA’s ISDS mechanisms, including measures to improve transparency and expanded opportunities for non-parties to make submissions in a dispute.

[3]        http://www.foxbusiness.com/features/2017/08/22/u-s-bid-to-exit-nafta-arbitration-panels-draws-ire-from-businesses.html

[4]        https://www.law360.com/articles/952633/biz-groups-mobilize-to-maintain-nafta-investment-arbitration

 

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Filed under Americas, ISDS, ISDS Reform, Public International Law, Trade law, US

What to watch for as NAFTA (re)negotiators get to work

On August 16, 2017, trade representatives of the United States, Mexico and Canada will convene in Washington, DC for the first of seven scheduled rounds of negotiations in relation to the North American Free Trade Agreement (NAFTA). The negotiations have been covered extensively in national and international media and, given the scope of the interests at stake, we expect that coverage to only intensify.

To provide practical insights to stakeholders in key industries, we have focused this update on the context of the negotiations, the interests and objectives laid out by the states in advance of the talks, and our strategic view of what interested observers should watch for. We will periodically publish sector-focused insights as the negotiations develop. Continue reading

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Filed under Americas, Investment Arbitration, ISDS, ISDS Reform, News, Public International Law, Trade law, Treaty negotiation, interpretation and impact, US