The ASEAN Comprehensive Investment Agreement: Realizing a Regional Community

Abstract

In recent decades, States have concluded numerous regional investment treaties, even as the feverish growth in bilateral investment treaties worldwide continues apace. This increasing regionalism within international investment law is a double-edged phenomenon. On the one hand, the risks of fragmentation and incoherence increase exponentially as a regional layer is added to the already-messy "spaghetti bowl" of investment treaties. The noble dream of a uniform, multilateralized set of investment-protection standards thus looks ever more unattainable. On the other hand, a regional investment treaty affords an opportunity for a group of States to balance, in a particularistic manner, between investment-related obligations and other non-investment priorities. This essay focuses on the ASEAN Comprehensive Investment Agreement signed in 2009, arguing that it is a region-specific bargain embedded within ASEAN's wider normative and institutional framework. The potential conflicts between ASEAN Member States' investmentrelated obligations and their commitments under two other regional projects are explored, and recommendations are made as to how arbitral tribunals can manage such conflicts.

The ASEAN Comprehensive Investment Agreement: Realizing a Regional Community

“…A new ASEAN investment agreement was first conceptualized in the ASEAN Economic Community Blueprint ("AEC Blueprint"), 23 which charts a detailed plan for transforming ASEAN into an economically-integrated region (the ASEAN Economic Community, or "AEC") by 2015. As the AEC Blueprint notes, ASEAN's goal of regional integration demands a rationalized, rules-based framework for economic cooperation which is "consistent with multilateral rules", 24 in order to maintain ASEAN's attractiveness to foreign investors. 25 The newly-concluded ACIA thus seeks to establish a comprehensive, rules-based framework for investment-protection "which is forward-looking, with improved features and provisions, comparable to international best practices".…”

“…28 Under its pillar of 'investment protection', the ACIA therefore updates ASEAN's investment rules regime 29 by replacing 30 ASEAN's previous two RITs-namely, the 1987 Agreement for the Promotion and Protection of Investments 31 ("IGA") and the 1998 Framework Agreement on the ASEAN Investment Area ("AIA"). 32 For the sake of conceptual clarity, we may sketch two diametricallyopposed images of the ACIA, each comprising a triad of propositions (see Table 1 below). The first image, which I shall term "multilateralized protection", corresponds with the official characterization of the ACIA as being "consistent with multilateral rules".…”

“…33 It holds that the ACIA merely extends into ASEAN the investment rules (or what ASEAN has termed "international best practices") found in IIAs like the U.S. Model BIT and NAFTA Chapter 11; that it is primarily concerned with protecting the investor through expansive rules; and that it emphasizes investment-related objectives over non-investment ones. 34 "The AEC and Investment and Capital Flows" in Michael G. 30 See ACIA, Art. 47, which states that (subject to transitional arrangements) "[u]pon the entry into force of [the ACIA], the ASEAN IGA and the AIA Agreement shall be terminated."…”

“…On the one hand, the co-existence of BITs and RITs will result in a multilayered skein of bilateral and regional investment rules 19 that is more likely to be self-contradictory than mutually-reinforcing, thus falsifying the 'multilateralization' thesis. 20 On the other hand, the increasing regionalism of international investment law also presents groups of States with opportunities to 15 Report of the World Commission on Environment and Development: Our Common Future, UN GAOR, 42nd Sess., Supp. No.…”

“…2004/1 (May 2004) at 4-7. 20 Cf. Stephen Woolcock, "Making Multi-Level Rules Work: Trade and Investment Rules in Regional and Bilateral Agreements" in Philippe de Lombaerde, ed., Multilateralism, Regionalism and Bilateralism in Trade and Investment: 2006 World Report on Regional Integration (Dordretcht, the Netherlands: Springer, 2007) 37 at 37-39, arguing that rule-making on trade and investment issues has shifted from the multilateral level (e.g., the OECD and the WTO) during the period of 1945 to the mid-1990s, to the regional/bilateral level.…”