Key Points: The AANZFTA is important if you are currently investing in,
or are considering investing in, any one of the ten ASEAN member
Earlier this year, the ASEAN-Australia-New Zealand Free Trade
was signed. In this article we'll pay particular attention
to the significance of AANZFTA for investment in the region, and
the means for resolving any investment dispute that may arise.
If you are currently investing in, or are considering investing
in, any one of the ten ASEAN members (Burma, Brunei Darussalam,
Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore,
Thailand and Vietnam) or New Zealand, AANZFTA is important to
AANZFTA applies to a broad range of investments. The definition
of "investment" includes movable and immovable property
and other property rights, shares, stocks, bonds and debentures,
intellectual property rights, contractual rights, and business
Importantly, AANZFTA does not apply to a company or other entity
which is owned or controlled by an investor of a non-party or an
investor of the host State unless the entity has substantive
business operations in the territory of another AANZFTA party.
AANZFTA protects investors of one party against:
unfavourable treatment by another party relative to its local
investors and their local investments
expropriation or nationalisation of the investment, either
directly or indirectly, without prompt, adequate and effective
compensation. "Indirect expropriation" is understood to
mean a taking which substantially deprives the investor of the use,
control or enjoyment of his investment, or a taking which deprives
the investor of the whole or a significant part of the economic
benefit of the investment. AANZFTA requires compensation equivalent
to the fair market value of the expropriated investment at the time
of expropriation, with interest
restrictions on the repatriation of profits, capital gains,
dividends, royalties and other income accruing from an
treatment which is not "fair and equitable". That is,
an investor is entitled to due process and a stable, predictable,
transparent investment environment
AANZFTA also provides for greater transparency in relation to
investments, requiring the prompt publication of laws, regulations,
and policies relating thereto.
Notably, there is no "most-favoured-nation" clause in
AANZFTA. A "most-favoured-nation" clause requires the
host State to treat foreign investment no less favourably than
investment from a third country. Arguably, the absence of this
standard means that, say, the Philippines favours investment from a
Singaporean company to investment from an Australian company, the
Australian company may not have a claim (unless a claim can be made
out under the fair and equitable standard or some other standard).
The same may be said of treatment favouring a non-party, such as
India or the UAE.
In the event of an investment dispute, the disputing parties are
required to resolve, as far as possible, the dispute through
consultation. If the dispute is not resolved within 180 days of the
receipt by a party of a request for consultation, AANZFTA provides
the investor with the right to refer the dispute to conciliation or
arbitration, before a three arbitrator tribunal, under the ICSID
Rules1, the UNCITRAL Arbitration Rules (or any other
arbitration rules agreed by the disputing parties). There is a
three year limitation period in which the investor must submit a
claim to conciliation or arbitration, commencing from the time the
investor becomes aware, or should reasonably have become aware, of
the offending conduct.
The ICSID Convention and the ICSID Rules of Procedure for
Arbitration Proceedings (in the event that both parties are party
to the ICSID Convention) or the ICSID Additional Facility Rules (in
the event that only one of the parties is party to the ICSID
Convention - (note: Burma, Laos and Vietnam are not party to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
China has released regulations to reconstruct how it taxes goods sold on its highly popular e-commerce platforms.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).