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The Evolution of Investor-States Dispute Settlement Methods in Free Trade Agreements between the EU and some States in East and South-East Asia

Author: Michel Trochu

Type: Article

ref: 52018465-498

N0:5 of 2018

Pages: 465-498

Over time, the Investor-State Dispute Settlement mechanism (ISDS) has been much criticized. Among the most recurrent of these is that it is now multinationals who engage in litigation against states by targeting, for example, measures adopted by countries to protect public health, environment or to prevent climate related risks. Thus, these States, faced with the risk of being awarded multi-billion-dollar damages by arbitral tribunals, may be reluctant to adopt environmental or health regulations that could lead to complaints from foreign investors.
Given this new context, on 16 September 2015 the European Commission adopted a proposal for a new regulation, called the investment court system.
How was this new orientation received in the Free Trade Agreements between the EU and certain East and South-East Asian States? The situation is quite varied in this area. Thus, while the EU–South Korea Agreement is silent on a specific investor-state dispute settlement mechanism, the maintenance of an "improved" dispute settlement mechanism was mentioned in the EU–Singapore Agreement. On the other hand, there is the new system advocated by the Commission in the EU–Vietnam Agreement. It, however, is debatable and proves difficult to implement in Vietnam. Japan, from the outset, has expressed strong reservations about this disputes settlement system.