Originally from Investment Treaty Arbitration and International Law - Volume 4

I. INTRODUCTION

In considering the future of investment arbitration in Asia, one should not lightly discount the historic role of Asian states in the field. It is well-known that the first investment arbitration brought under a bilateral investment treaty (BIT) involved Sri Lanka as the respondent state.1 In addition, one of the earliest arbitrations under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) consisted of a claim by an American company against Indonesia.2 That dispute, which took over 12 years to finally resolve, involved only the second annulment proceeding in ICSID's history. Arbitrations brought by a Swiss investor against Pakistan and the Philippines respectively produced seminal decisions on the meaning of a BIT's umbrella clause, a provision that continues to generate conflicting decisions.3 Another recent award and subsequent annulment decision in an investment arbitration brought by a UK investor against Malaysia provided new insight into the controversial notion of investment in ICSID arbitration.4 These cases and others demonstrate the importance of disputes involving Asian parties to the development of investment arbitration as a method of investor-state dispute resolution.

Still, Asia's role in investment arbitration is not proportionate to its remarkable economic growth and prominence as the world's largest and most populous continent. Depending on the definition one applies, its geographic reach spans over four distinct regions, and the continent consists of some forty-seven different countries (though this paper will focus largely on countries in South Asia, East Asia, and the Pacific).5 In China and Japan, Asia boasts two of the three largest economies in the world,6 and many analysts predict that both China and India will soon surpass the United States in terms of economic size.7 Reflecting trends of economic liberalization and increased outward openness, the foreign direct investment traveling to and from Asian countries has reached historic highs in recent years,8 and many economic analysts have denominated the 21st Century as the "Asian Century."9 Despite these various economic indicators and perceptions, Asian states have been respondents in only 8% of the arbitrations registered with ICSID,10 and (to this author's knowledge) Asian parties have been claimants in only ten investment treaty arbitrations.11