At the recent ASEAN Summit it was decided that the
ASEAN-Australia-New Zealand Free Trade Agreement
(AANZ-FTA) will enter into force on 1 January
The AANZ-FTA, signed in early 2009, covers 12 countries, over
600 million people and approximately 20% of Australia's total
trade. For Australians investing in Asia, the AANZ-FTA heralds a
new era of safer investment and simpler dispute resolution.
The AANZ-FTA grants significant rights in respect of trade and
implements a tried and true dispute resolution mechanism,
international arbitration. In conjunction, the two make the
AANZ-FTA a very powerful tool for anyone asserting trade-related
rights in an Asian country.
Who is in ASEAN again?
Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia,
the Philippines, Singapore, Thailand and Vietnam.
What is an FTA?
An FTA is a treaty that imposes obligations on each State party
to protect the investments of investors from other State parties.
What makes FTA's particularly nifty is that they give an
investor a cause of action against the State in which it
What does the AANZ-FTA protect?
The AANZ-FTA covers goods, services, investment, intellectual
property, e-commerce, temporary movement of business people and
Investment is defined broadly in the AANZ-FTA and includes
movable and immovable property andother property rights, shares,
stocks, bonds and debentures, contractual rights and business
What protections does the AANZ-FTA offer for
The Investment protections offered by the AANZ-FTA include:
no expropriation or nationalisation of an investment unless it
is done with due process for a public purpose, is
non-discriminatory and is promptly, adequately and effectively
fair and equitable treatment, and full protection and
national treatment (i.e. investments to be treated no less
favourably than investments by the nationals of the host
transparency of State regulations.
How will Investment disputes be resolved?
Investment disputes are to be resolved by way of consultation
and, failing that, conciliation or arbitration under either the
ICSID Rules (the Arbitration Rules of the International Centre for
Settlement of Investment Disputes), ICSID Additional Facility
Rules, UNCITRAL Arbitration Rules (United Nations Commission on
International Trade Law), or other rules if the parties agree.
It is important to note that where an Investment claim is made
against the Philippines or Vietnam, those countries have the option
of referring the dispute to the courts or tribunals of those
countries (provided that they have jurisdiction).
It is also important to note that there is a three year
limitation period on any Investment claims brought under the
How is this relevant to me?
The AANZ-FTA provides significant protections for Australian
companies operating or investing in Asia.
Imagine that you are an Australian company that owns a rubber
plantation in an ASEAN country. The Prime Minister of that country,
following local criticism for allowing natural resources to be
'plundered' by foreign companies, begins implementing a
policy of nationalising various export industries.
As a result, the government nationalises your plantation, paying
only nominal compensation. In a scenario like this you would have a
claim for relief under the AANZ-FTA.
The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
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