Australia announced last week that it had signed a free
trade agreement with South Korea – this is good news for
The agreement was said to be a long time coming because South
Korea insisted on having a dispute resolution clause that allows
investors to bring an arbitration against the State if they
haven't been treated fairly.
Australia had refused to include investor-state arbitration
provisions ever since (as we reported
earlier) Australia was sued by cigarette giant Phillip Morris
before an international arbitration tribunal in Singapore under a
similar treaty between Hong Kong and Australia.
We haven't seen the text of the South Korea-Australia treaty
yet but it is said to include an investor-state arbitration clause,
with special carve outs for environmental or health policies
adopted by a government.
But the question remains, what happens if an investor gets an
arbitral award against Australia – how and where could it be
enforced? Well in the other big news of last week: an investor who
sued Argentina and won, brought that question before the US Supreme
In the early 1990s BG invested in the newly privatised gas
distribution network in Argentina. By the early 2000s Argentina
implemented a number of macroeconomic measures that compromised
BG's investment and contravened the terms of the 1990 United
Kingdom-Argentina Bilateral Investment Treaty (BIT). BG brought an
investor-state arbitration against Argentina under the BIT. In
2007, the arbitral tribunal found in favour of BG awarding it
US$185 million. BG now wants to enforce that award in the US.
To resist enforcement Argentina had to show that the tribunal
acted outside of its jurisdiction.
The final judgment is yet to be delivered and we'll keep you
posted on the outcome.
In any event, if you'll be doing business in South Korea or
anywhere overseas, it's worth structuring the deal to get the
protection of treaties like these.
We do not disclaim anything about this article. We're
quite proud of it really.
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The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
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