Originally from Investment Treaty Arbitration and International Law - Volume 4

The question posed for this discussion panel is whether Asian international dispute agreements (IIAs) are headed in the "right" direction. That, however, begs the question of whether it can be determined if Asian IIAs are heading in a single direction, and if so, what that direction is. At the same time, I have also been tasked with helping engender discussion by taking something other than what may be conventional views on such questions.

With these parameters in mind, I would argue that insofar as a single dominant trend in Asian IIAs can be discerned, it is toward what may be called qualified liberalization. Rather than adopt wholesale the kinds of broad protections perceived as most investor-friendly by many commentators on investor-state arbitration, Asian IIAs appear to seek a balance between providing certain fundamental protections for foreign investors, such as access to international dispute resolution, and preserving the ability of States to regulate their own affairs without incurring liability toward foreign investors on the international plane.

There are good reasons to argue that this is indeed the "right" approach. First, this approach provides significant substantive protections to investors that are likely adequate to encourage investment without unduly limiting States' flexibility. Contrary to arguments made in the context of bilateral investment agreements in other regions, it is not clear that such an approach would deter foreign investment to countries that follow it in their investment agreements. Moreover, and just as importantly, this approach furthers the important goal of ensuring that States retain sufficient flexibility to undertake crucial regulatory actions domestically without incurring what may become excessively burdensome international legal obligations to provide compensation to foreign investors. Ultimately, the move toward qualified liberalization reflects a more integrated view of foreign investment as part of a larger set of a relationships and recognizes that investment may and increasingly does flow both ways.