Worldwide: The Trans-Pacific Partnership Agreement

Chapter 9: the Investment Chapter

The Trans-Pacific Partnership Agreement (TPP) is a comprehensive, multilateral free trade agreement (FTA) among 12 states representing nearly a third of the world's trade. Chapter 9, the investment chapter of the TPP, tightens standards of investment protections, sets out the role of the TPP Commission and adopts investor-state arbitration. Although the Investment Chapter alludes to the possibility of an appellate mechanism, none has been specified in the TPP.

The TPP is a 30-chapter, 6,000-page FTA among 12 states bordering both sides of the Pacific that represents nearly 40 per cent of the world's GDP and almost a third of the world's trade. The TPP builds on the 2006 Trans-Pacific Strategic Economic Partnership Agreement between Brunei, Chile, New Zealand and Singapore, expanding that to include Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States of America and Vietnam (TPP States).

Significant milestones of the TPP thus far are as follows

  • Text of the TPP finalized on October 5, 2015
  • TPP formally signed on February 4, 2016
  • Ratification of the TPP through domestic law within two years from the date of signing to bring it into force
  • TPP may also be brought into force after two years if six signatories representing at least 85 per cent of the combined GDP of the TPP States ratify the TPP.

This article briefly reviews the some of the key features of the Investment Chapter, namely the substantive protections and provisions on investor-State dispute settlement (ISDS).

Substantive protections in the TPP

The TPP represents a departure from the typical bilateral investment treaty (BIT) of the past. Taking its cue from modern treaty-making practice (notably from the US and Canada), the TPP tightens the applicable substantive standards to create greater certainty for State parties and qualified investors.

Definition of 'Investment'

(Article 9.1)

'Every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk'.

Article 9.1 includes examples of what constitutes an investment, and expressly excludes 'an order or judgment'. This definition is broadly consistent with the definition of 'investment' of the tribunal in Salini v Morocco (Decision on Jurisdiction, July 23, 2001, [56]).

Definition of customary international law

(Annex 9-A)

'Customary international law' is 'a general and consistent practice of States that they follow from a sense of legal obligation. The customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the investments of aliens'.

Minimum standard of treatment

(Article 9.6.2)

Fair and equitable treatment includes 'the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world'.

This likely acknowledges recent cases involving denial of justice e.g. Saipem S.p.A v The People's Republic of Bangladesh (ICSID Case No. ARB/05/07, Award dated June 30, 2009), where the Bangladeshi courts failed to enforce international commercial arbitral awards, and White Industries Australia Limited v Republic of India, where the Tribunal found that India breached an obligation to provide 'effective means of asserting claims and enforcing rights' because White Industries faced severe delay in enforcement of an award in the Indian courts (Final Award dated November 30, 2009, [11.1.5]).

Full protection and security is confined to 'police protection required under customary international law', and excludes more expansive definitions in past ISDS cases (e.g. Azurix v Argentina, Award, July 14, 2006).

Direct or indirect expropriation

(Article 9.7)

Expropriation of a 'covered investment' is permitted only if it is: for a public purpose; implemented in a non-discriminatory manner; accompanied by payment of prompt, adequate and effective compensation; and effected in accordance with due process of law.

A non-discriminatory regulatory action by any TPP State that is designed and applied to protect legitimate public welfare objectives, e.g. public health, safety and the environment, does not constitute indirect expropriation except in 'rare circumstances'. A 'rare circumstance' is not defined in the Investment Chapter.

The TPP clarifies that 'a Party's decision not to issue, renew or maintain a subsidy or grant, or decision to modify or reduce a subsidy or grant' does not itself constitute an expropriation (Article 9.7.6).

Non-conforming measures

(Article 9.11)

The TPP States may maintain 'non-conforming measures' which are not subject to the TPP national treatment and most-favoured-nation treatment standards.

Regulatory objectives

(Article 9.15)

The TPP States may adopt measures to ensure that investment activity in their territories is undertaken in a manner sensitive to their environmental, health or other regulatory objectives, provided that such measures are not otherwise inconsistent with the Investment Chapter.

Parallel claims and forum shopping

(Article 9.20)

The Investment Chapter attempts to preclude parallel claims and forum shopping. A claimant needs to provide a written waiver (together with the notice of arbitration) of its right to continue or initiate any proceedings before domestic courts or under other dispute settlement procedures concerning events for which the claimant is commencing arbitration for breach of the TPP.

This does not prevent an affiliate of the claimant from commencing action under a different treaty based on the same events and affecting the same investment.

TPP Commission

(Article 27.1)

The TPP Commission comprises ministers and senior officials of the TPP States and is empowered to seek the advice of non-governmental persons or groups. One key function of the Commission is to 'issue interpretations of the provisions of the Agreement' (27.2(f)). An arbitral tribunal is required to render decisions that are consistent with these interpretations.

What remains to be seen is whether the TPP Commission will promulgate such interpretations of the TPP in accordance with international investment law or public international law.

Investor-State Dispute Settlement (ISDS) in the TPP

(Chapter 9 Section B)

ISDS in the Investment Chapter includes

  • Pre-arbitral negotiations and consultations between a claimant and State party
  • Choice of procedural rules (ICSID Rules, ICSID Additional Facility Rules, UNCITRAL Rules or other institutional rules by agreement of the parties)
  • Consolidation of claims
  • Transparency provisions, e.g. documents generated in an arbitration are available in the public domain, open hearings;
  • Interim measures of protection
  • The option for a respondent to raise preliminary objections, e.g. that a claim is manifestly without legal merit.

The TPP alludes to the possible development of an 'appellate mechanism' under 'other institutional arrangements'. The EU-Singapore FTA alludes to an appellate mechanism but envisages that an appeal could only arise on a point of law.

By contrast, the current draft of the Transatlantic Trade and Investment Partnership (TTIP) provides for a unique two-tier arbitration mechanism consisting of a first instance tribunal and an appellate tribunal. Each tribunal would have three members selected from a roster of 'Judges' or 'Members'. An appeal of an award rendered by the first instance tribunal may be brought within 90 days of its issuance on the basis of, inter alia, an error of law or manifest error of fact. This two tier arbitration mechanism has been adopted in the Canada-EU FTA (CETA), as seen in the revised text published on February 29, 2016.

Trends to watch

Given that the majority of TPP States are from the Asia Pacific, the TPP is likely to increase the involvement of APAC parties in investment arbitration.

Once in force, the TPP may also end up trumping the North American FTA (NAFTA) as Canada, Mexico and the US are TPP States.

Currently, there are at least 35 overlapping treaties among the TPP States, so qualified investors could look to use related entities as claimant to bring claims under different treaties for different breaches arising out of the same investment.

Will an appellate mechanism be adopted in the TPP? While the EU and Canada have agreed to an appellate mechanism in CETA, this may depend on whether the EU and the US agree to an appellate mechanism in the TTIP.

Martin Valasek is a partner in our Montréal office and Katie Chung is a senior associate in our Singapore office.

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see

Law around the world

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

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.