Wells and Ahmad also criticise some home state providers of “political risks insurance”, such as that in the US, requiring foreign investors in effect to commence an arbitration before claiming on that (express) insurance. They point out that this can lead to over-hasty arbitration claims, which might be better suspended while (re)negotiations proceed with the host state, sometime informally involving the investor’s home state, as was the norm (but perhaps too much the norm) in earlier eras of such disputes, including those involving Indonesia.

Also running through their book is a concern about the lack of consistency and transparency in the ISA system. This is a major factor nowadays in South America, but the new Australia-Chile FTA points to some solutions that can be built directly into bilateral treaties to address such problems. Kate Miles and I, in the longer paper cited/linked in my posting, would go even further in coverage of revised Rules (eg building in an appeals mechanism). But we would balance this by offering these Rules as optional for investors, hoping they will commit to them to promote the long-term improvement of the ISA system, and to maximise short-term chances of enforcing arbitral awards after going through a process that host states would consider fairer).

Let’s see what the respective negotiators of the Australia-Japan FTA decide.