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Investor State Arbitration and the TPPA

Investor State Arbitration and the TPPA

It looks likely that an agreement is imminent regarding the Trans Pacific Partnership. With it will come provisions to settle disputes between nation states and corporates.

We provide information on the investor state arbitration, otherwise known as investor state dispute settlement.

Q: What is arbitration?

A: Arbitration is the private determination of disputes, by independent third parties – arbitrators. Arbitrators tend to be specialists in commercial disputes appointed by agreement between the parties.

Q: What is investor state arbitration or investor state dispute settlement?

A: Investor state arbitration or investor state dispute settlement (ISDS) is a process that gives an investor – a business, the right to sue a foreign government for violating its rights. The process used is arbitration.

Q: Is the decision of this kind of arbitration binding?

A: Yes.

Q: Is investor state arbitration confidential?

A: Unlike domestic arbitration (i.e., arbitration between nationals of the same state) most investor state arbitration is not confidential. Recent investor state arbitrations have even been streamed live on the internet.

Q: Why is investor state arbitration part of the TPPA?

A: Protection of property rights is central to an integrated global economy. Arbitration is generally agreed to be the way disputes that cross borders are resolved, rather than parties submitting to the courts of one of the signing parties. This ensures that disputes are dealt with in accordance with accepted standards, like the rule of law, free from corruption and bias.

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Q: How will New Zealand’s sovereignty be affected?

A: The impact on sovereignty will depend on the wording of the agreement. Previously, trade disputes were dealt with between States under the WTO. Investor State Treaties, of which TPPA is one, allow businesses to protect their trading rights directly. These rights have historically been qualified by the ability of the signatory States to regulate health and safety and other issues regarded as “sovereign”. The extent of those protections will become clear once the text of the TPPA is released.

Q: Has New Zealand ever been sued by way of an agreement that includes an investor state arbitration clause?

A: No.

Q: Is there expertise in New Zealand if there was an arbitration taken under the TPPA?

A: Yes. We have a small, but highly expert number of people who are working internationally on these kinds of arbitrations.

Q: What is AMINZ?

A: The Arbitrators’ and Mediators’ Institute of New Zealand, AMINZ, is New Zealand’s largest dispute resolution organisation. Its members include arbitrators and arbitration practitioners.


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