(Yomiuri: July 27, 2015 – p. 2)
A system under which foreign investors may demand compensation when they suffer damages as a result of arbitrary change of rules by the host country’s government is now likely to be introduced under the TPP negotiations. While the U.S. has been demanding the introduction of this system, Australia has been reluctant. The 12 TPP nations have now entered final coordination on introducing the system on condition of putting in place measures to prevent excessive filing of court cases.
The investor-state dispute settlement (ISDS) system is an important investment rule. The TPP chief negotiators’ meeting currently taking place in Hawaii is working on the final details for implementing the system, which is expected to be agreed upon at the ministerial meeting starting on July 28.
According to a source on the TPP talks, Australia has opposed the ISDS provisions for fear of proliferation of litigation against the government and violation of national sovereignty. The following conditions are being considered: (1) a time limit for litigation to be filed under ISDS provisions; (2) prompt rejection of cases filed with clearly no legal basis; and (3) information disclosure and transparency in cases where ISDS provisions apply.
The Japanese government has in mind cases where Japanese companies suffer damages after newly emerging nations cancel permits to build factories already granted to them, on such pretexts as environmental regulations, for the purpose of protecting domestic companies. The introduction of the ISDS system will make it more difficult for host countries to impose irrational policies on foreign companies, and this will reduce risks for Japanese companies doing business overseas.