The Investor-State Dispute Settlement (ISDS) provisions of the TPP have become a subject of controversy in Washington and other world capitals, with some fearing that ISDS could derail the agreement. The TPP has finally been agreed upon but no draft has been publicly shown. The expectation is that ISDS provisions of the TPP will include protections commonly found in investment agreement, including national treatment protections against discrimination, the customary international law minimum standard of treatment, which includes fair and equitable treatment and full protection and security and the freedom to appoint senior management positions regardless of nationality.
Some experts are anticipating innovations in the ISDS chapter of TPP as the U.S. will try to continue to build on reforms and come up with more innovations:
- Transparency requirements favoring open proceedings and disclosure of filings and arbitral awards
- Provisions allowing the non-disputing TPP States to make submissions to a tribunal
- Expedited review of frivolous claims and a mechanism for awarding costs
- Recognition of the rights of States to regulate in the public interest, including with respect to health, safety and environmental protection
- New ethics guidelines for arbitrators.
Jeremy Sharpe, partner in Shearman & Sterling, said that the TPP promises both investors and States with new and efficient dispute-settlement procedures that play to Shearman & Sterling’s strenghts handling must-win arbitrations for their clients.
In many states, ISDS will involve complex domestic political battles. Even after it has been agreed by the 12 countries, it still needs to be passed by the lawmakers of those countries. The TPP is also a focal point in Canadian and US election campaigns. Some controversies in Japan and protests in New Zealand have been a part of TPP, and we expect acrimonious debate on many provisions of the agreement.