The Future of Investment Arbitration in the Asia-Pacific Region - Chapter 11 - Investment Treaty Arbitration and International Law - Volume 4
Jeffrey Sullivan is Counsel in the London office of Allen & Overy LLP, specialising in foreign investment disputes and public international law.
Originally from Investment Treaty Arbitration and International Law - Volume 4
The substantial increase in the number of investment arbitrations over the past decade has been well documented.1 Factors which are often cited as contributing to this "surge"2 include an increase in global foreign direct investment (FDI) and the ever-increasing number of international investment agreements (IIAs).3 As the United Nations Conference on Trade and Development (UNCTAD) puts it: "…increases in international investment flows lead to more occasions for disputes, and more occasions for disputes combined with more IIAs are likely to lead to more cases."4
However, the Asia-Pacific Region (the Region) has not thus far followed the global trend. As in the rest of the developing world, FDI has played a leading role in many of the Region’s economies and Regional States are increasingly active in entering into new IIAs. Yet despite these developments, the Region has not seen any increase in the number of investment arbitration proceedings. This is in stark contrast to other regions such as Latin America and Central and Eastern Europe, which have largely fuelled the surge in the total number of investment arbitrations. What factors have kept the number of investment arbitration proceedings in the Region relatively low? Will these factors continue to limit the number of proceedings in the future? Or will the Region see its own surge in investment arbitration over the next decade? In short, what is the future of investment arbitration in the Region?
It is, of course, always difficult to predict what may happen in the future. However, examining these questions in the context of the Region, given its size and diversity, is particularly difficult. Economic, political and cultural differences abound across the Region. Australia and the Republic of Korea (Korea) are very different culturally. New Zealand and the People’s Republic of China (China) are at opposite ends of the spectrum in terms of their respective political systems. China, India and Indonesia are three of the four largest States in the world by population, while Singapore has less than five million inhabitants. While Papua New Guinea is comparable to Singapore in terms of population, its per capita gross domestic product is a mere fraction of Singapore’s.5