In my May 2015 column on “Regulation and Investor Protection under the Trans-Pacific Partnership” (May 1, 2015), I suggested that the Obama administration should drop the controversial requirement for Trans-Pacific Partnership (TPP) parties to agree to mandatory arbitration of U.S. investors’ claims against host governments. The TPP, a proposed 12-nation trade and investment convention, seeks to facilitate U.S. investments abroad. Its arbitration requirement, currently included in the latest draft of the TPP, would enable U.S. investors in TPP countries to commence private arbitration proceedings against host governments under either the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID) or the U.N. Commission on International Trade Law (UNCITRAL).
Under the TPP as currently drafted, U.S. investors could demand such arbitration against a host country’s national government by alleging “regulatory takings” and other TPP violations growing out of efforts by those governments to protect their nations’ environment or address global issues such as climate change or pollution of the world’s oceans, whether that action was taken by the country’s executive, legislative, judicial branch or a municipality.
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