The Bar Council's International Malaysia Law Conference 2016 ("IMLC 2016") was held at The Royale Chulan Kuala Lumpur from 21 to 23 Sept 2016.
By Louis Liaw
The first breakout session of IMLC 2016 under the Business Law stream, entitled “Investment Arbitration”, focused on Investor State Dispute Settlement (“ISDS”), also known as treaty arbitration. Associate Professor Michael Ewing–Chow, WTO Chair of National University of :Singapore, began by first stating that ISDS has been used as a major point of criticism against international trade agreements, including the TPPA. It is because it is included in these trade agreements that when there are disputes, including when states are sued by corporations ie for failing to fulfil the corporation’s legitimate expectation when it invested in the state, the dispute shall be resolved through ISDS, which is adjudication through an international arbitrator as opposed to the normal court system. Considering the high stakes involved, for example the precedents of countries being ordered to pay billions out of these suits, ISDS does not use a precedent system as courts do, and thus lacks the predictability and certainty of outcome. Furthermore, the supranational nature of ISDS also leads to the possibility of a suit against a government that lost in national courts getting a second bite of the cherry through ISDS.
However, Mr Ewing–Chow argued that ISDS is necessary for various reasons such as the lack of confidence in a states’ Judiciary, especially among those of the Asian countries, and the perception of bias when a suit against the government of a particular state is heard before the judiciary of the state.
Lucy Reed, Professor and Director at National University of Singapore, was the second to speak and began by saying she was surprised at the criticisms towards ISDS. Ms Reed argued that ISDS has improved greatly since it first started and is now a much more balanced and fair adjudication system that takes care of the interest of the state, the corporations, and the public. Furthermore, trade agreements have also improved by including clauses that allows self–judging. Finally, Ms Reed also argued that the jurisprudence for treaty arbitration has matured so much, and that there is now consistency and predictability.
In addition to what Ms Reed said, Avinash Pradhan from Rajah & Tann Singapore LLP reminded delegates that governments will only be sued and resort to ISDS when they breach minimal standards such as failing to provide fair and equitable treatment towards investing corporations. Therefore, the provision of ISDS should not cause a fear as being a supranational adjudication system, but instead be treated as an incentive for governments to behave. He urged a focus on the improvement of ISDS instead of its elimination.
The last speaker was Kamraj Nayagam from Mah–Kamariyah & Philip Koh, who stated that investment arbitration is a growing sector in the Malaysian legal industry, as more companies and individuals are only beginning to recognise this form of dispute resolution, as well as due to the increasing international trade agreements that countries enter into, including Malaysia.
The panel then concluded by stating that if there is international trade and there are trade agreements, there are bound to be disputes, which are best resolved through an independent mechanism like ISDS.
This session was moderated by Philip Koh of Mah–Kamariyah & Philip Koh.
This session was sponsored by Kuala Lumpur Regional Centre for Arbitration ("KLRCA").
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