Foreign Direct Investment is increasingly becoming an important goal of the country and the region. Facing this trend, ASEAN countries after more than two years of preparation and drafting have adopted The ASEAN Comprehensive Investment Agreement (ACIA) 2009 to take effect and replace The Promotion and Protection of Investment (IGA) 1987.
1. The ASEAN Agreement for the Promotion and Protection of Investment (IGA) 1987
On December 15, 1987, ASEAN 6 signed an agreement to encourage and protect investment with the desire to create favorable investment conditions for citizens and companies of any ASEAN member states investment in the territory of other ASEAN countries, as well as private investment activities to enhance the prosperity of these countries.
With only 14 articles, the provisions are relatively basic with regard to investment activities among ASEAN countries, such as the scope of application, the general obligations of receiving countries and institutions, the legal level for investors, measures to ensure investment … but the Agreement is the starting point for the process of investment cooperation at regional level later.
2.The ASEAN Comprehensive Investment Agreement (ACIA) 2009
The ASEAN Comprehensive Investment Agreement (ACIA) was signed in February 2009 and took effect from March 29, 2012, replacing the 1987 ASEAN Investment Promotion and Protection Agreement (IGA) and the First Regional Agreement. ASEAN Investment Area (AIA) 1998. Creating a new legal framework, regulating investment activities in AIA, one of the basic elements that constitute the common market and the basis of ACE unification.
II. Comparison of advantages of investor-state dispute mechanism under the provisions of ACIA 2009 and IGA 1987
Basically, ACIA’s governing scope retains the provisions of the AIA and IGA Agreements, however, the beneficiaries of the Agreement are extended to investors of third countries operating primarily in the territory of an ASEAN member country, such as an investor entitled to permanent in accordance with the laws of a member country, an enterprise with 100% foreign capital if holding the nationality of an ASEAN member state.
According to ACIA, investment activities in ASEAN include four pillars. The IGA only deals with elements of investment protection and promotion. In addition, ACIA also clearly stipulates the relationship between regulations on investment liberalization and protection of investment. Liberalization activities are also extended to any field agreed by all member states.
To remove barriers to investment which are measures to prohibit investment, Articles 7 and 8 of ACIA stipulate the removal of specific investment ban measures that prohibit Performance Requirements and measures related to corporate governance. This is a completely new rule compared to IGA and AIA.
2. Dispute settlement
Under the ISDS, the disputing investor may file an action based on any of the following causes: NT (Article 5), MFN (Article.6), Senior management and board of directors (Article 8), Treatment of investment (Article 11), Compensation in case of strife (Article 12), Fund transfers (Article13), Expropriation and compensation (Article 14).
Disputing investors may submit claims to any of the following institutions at choice: To domestic courts of the host country, or Under various forms of international arbitration, such as ICSID (International Center for Settlement of Investment Disputes) Convention, ICSID Rules of Procedure for Arbitration Proceedings, ICSID. Additional Facility Rules, UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules, or To Regional Center for Arbitration at Kuala Lumpur or any other regional center for arbitration in ASEAN, or To any other arbitration institution.
Besides, ACIA encourages prompt management of conflicts through other techniques such as: Meditation, Conciliation, which may run concurrently with arbitration may begin and be terminated at the request of investors at any time. Consultations and negotiations, which may be used by disputing parties prior to seeking arbitration.
3.Dispute settlement procedure
In order to minimize losses to ASEAN investors, ACIA regulates a separate section on resolving disputes between investors and member states from Article 28 to Article 41. This is a new point, expanding the scope, with more detailed rules for dispute settlement compared to IGA, AIA. For example, AIA only provides for AIA to refer to the provisions of the Protocol on dispute settlement mechanism as a basis for resolving disputes between member states about investment activities, but only disputes relating to the interpretation and application of AIA or any other agreement arising out of AIA.
The investment dispute resolution process consists of 5 stages: notice of intention to initiate a lawsuit; notice of suing; submit; provide information and adjudication. Before sending a formal lawsuit notice, in addition to conducting mandatory consultation procedures for a minimum of 180 days, the disputed investor must send an intention to initiate a lawsuit at least 90 days before sending the notice of initiation.
Thus, ACIA has inherited the provisions of the AIA and IGA Agreements, and introduced a number of new regulations more suitable to the investment liberalization mechanism which concentrate on the interests of investors and their investments.