Challenging the constitutionality of Indonesia’s Investment Law

By Yudha Fathoni, IIED Publication, 2014.

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In 2008, a high-profile case was filed by a coalition of civil society organisations in the Constitutional Court of Indonesia to challenge the validity of the 2007 Investment Law. SPI (Serikat Petani Indonesia, the Indonesian Peasant Union), and a wider national coalition, considered aspects of this law to be a threat to the rights of peasants. The court ruled that the law did not accord with the Constitution.

Initiating constitutionality review processes is one strategy used by SPI’s legal unit to advance the rights of peasants through legal avenues on behalf of its members – that is, taking a case to the Constitutional Court in order to challenge the compatibility of legislation with the national Constitution. This paper distils lessons from SPI’s experience. It discusses the steps taken, the court decision, and the lessons learnt on how to make more effective use of this legal strategy. It also touches on important parallel strategies.

To download the report English or French.

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The Journal of World Investment & Trade (JWIT) is a double-blind peer-reviewed journal that focuses on the legal aspects of foreign investment relations in a broad sense. This encompasses the law of bilateral, multilateral, regional and sectoral investment treaties, investor-State dispute settlement, and domestic law relating to foreign investment, but also relevant trade law aspects, such as services, public procurement, trade-related investment measures, and intellectual property, both under the WTO framework and preferential trade agreements. In addition, the Journal aims to embed foreign investment law in its broader context, including its interactions with international and domestic law, both private and public, including general public international law, international commercial law and arbitration, international environmental law, human rights, sustainable development, as well as domestic constitutional and administrative law.

The Journal is institutionally independent and ideologically neutral. It is not attached to specific national jurisdictions, but has a global outreach. It covers both the mainstream of foreign investment law and investment law’s frontiers. It offers a place for the publication of scholarly studies dealing with fundamental and systematic problems of foreign investment relations and their solutions, but also welcomes analyses of current topics, such as international and domestic policy trends, relevant case law, and country- or industry-specific case studies, including in the natural resources and energy sectors. It is open to doctrinal analysis as well as theoretical, conceptual, and interdisciplinary approaches, including law and economics analysis, empirical analysis, historical analysis, political science analysis, or normative analysis. It aims to address scholars, government officials, members of international and non-governmental organizations, and legal practitioners in both capital-exporting and capital-importing countries.

The Laws on Investment in Cambodia

BUN Youdy, " The Laws on Investment in Cambodia ", New York State Bar Association Seasonal Meeting, Hanoi, 24 oct. 2013 (online version).

Book : Regionalism in International Investment Law

Edited by : Leon Trakman,Nicola Ranieri
Oxford University Press
2013

Regionalism in International Investment Law provides a multinational perspective on international investment law. In it, distinguished academics and practitioners provide a critical and comprehensive understanding of issues in a field which has grown exponentially in its importance particularly over the last decade, focusing on the European Union, Australia, North America, Asia, and China. The book approaches the field of foreign direct investment from both academic and practical viewpoints and analyzes different bilateral, regional, and multinational agreements, often yielding competing perspectives. The academic perspective yields a strong conceptual foundation to often misunderstood elements of international investment law, while the practical perspective aids those actively pursuing foreign direct investment in better understanding the landscape, identifying potential conflicts which may arise, in more accurately assessing the risk underlying the issues in conflict and in resolving those issues. Thorny issues relating to global commerce, sovereignty, regulation, expropriation, dispute resolution, and investor protections are covered, depicting how they have developed and are applied in different regions of the world. These different treatments ensure that readers are able grasp the subject matter at multiple levels and provide a comprehensive overview of developments in the field of foreign direct investment.

ASEAN regional investment agreements is discussed in chapter 8 of this book at page 182.

Investment regime and arbitration in Myanmar

Shaun Lee, " Investment regime and arbitration in Myanmar ", Singapore International Arbitration Blog, 13 march 2013 (online version).

ASEAN's Liberalization of Legal Services: The Singapore Case

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This article shall be cited as Pasha L. Hsieh " ASEAN's Liberalization of Legal Services: The Singapore Case ", Asian Journal of WTO & International Health Law and Policy, Vol. 8, No. 2, pp. 481-504, September 2013 (online version).

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This article examines the liberalization of legal services in the Association of Southeast Asian Nations (“ASEAN”) within the framework of the ASEAN Economic Community and ASEAN’s free trade agreements. Although trade in legal services is important to ASEAN’s goal as a “single market and production base,” the article challenges the weaknesses of ASEAN’s legal services liberalization. It then explores Singapore’s experiment on the regulations of foreign law firms and foreign lawyers, which have become substantially liberalized in the past decade. The article argues that while Singapore may serve as a positive example, ASEAN countries should be cautious of the gap between Singapore’s legal framework and the actual practice of foreign law firms. By analyzing the Singaporean concepts of Formal Law Alliances, Joint Law Ventures and Qualifying Foreign Law Practices, the article provides recommendations forASEAN governments and legal communities for liberalization in the legal services sector.

Rule of law key to building an ASEAN Community by 2015

                                                                                                                                                                   

This article should be cited as : Imelda Deinla, " Rule of law key to building an ASEAN Community by 2015 ", East Asia Forum, 8 march 2013, (http://www.eastasiaforum.org/ 2013/03/08/rule-of-law-key-to-building-an-asean community-by-2015/).

Imelda Deinla is a Postdoctoral Fellow at RegNet, College of Asia and the Pacific, Australian National University.

                                                                                                                                                                   

ASEAN is on its path to establishing an ASEAN Community by 2015, where the ASEAN Economic Community (AEC) will be its flagship initiative to regional integration.

The AEC Blueprint spells out the aims of ASEAN’s economic integration: the creation of a single market and production base characterised by free movement of goods, services, capital and skilled labour, and the identification of twelve priority integration sectors. At a minimum, it will require a certain degree of political integration that involves the building of common institutions, laws and rules to facilitate enforcement of agreements among member states.

Establishing the rule of law in the context of regional integration has been widely acknowledged as a goal and mechanism of integration. At least in the EU, the rule of law is regarded as the key driver of integration, particularly in its early years of removing barriers to trade. There is a fundamental difference, however, between the EU and ASEAN perception of the function of rule of law. Where the EU has readily consented to limiting and pooling their sovereignties, ASEAN has remained steadfast in its non-interference of members’ sovereignties. The EU started from the adoption of formal rules and formal adjudication processes to deepen economic integration, and progressed to the development of shared laws and principles that transformed the function of the rule of law from a narrow instrumentalist conception of facilitating the market, to one that regulates the European market. This transformation provided transparent decision making, holding decision makers to account, and re-iterates protection of human rights. On the other hand, ASEAN has eschewed the use of supranational autonomous institutions and the minimal use, where possible, of formal and legally binding instruments. Instead, it has pursued a different pathway to the rule of law using soft laws and other informal processes and mechanisms with no attendant or negligible loss of sovereign control.

While the functions of the rule of law in the EU and ASEAN are quite distinct, we see convergence between ASEAN and the EU in the increasing use of soft, informal and voluntary mechanisms to develop stable and predictable bodies of laws and regulations in the economic sector, albeit with different motivations for doing so. In the past few years, ASEAN has embarked on rapid institution building that seeks to facilitate cooperation, coordination and delegation of functions between regional and state organs. While a WTO-like dispute resolution mechanism was adopted to facilitate enforcement, the ASEAN Dispute Settlement Mechanism remains unused; instead the ASEAN Secretariat performs a coordinating and monitoring function using the AEC Scorecard. In the absence of judicial enforcement of member states to remove trade barriers, ASEAN has turned to trade facilitation measures such as standard setting, harmonization and mutual recognition arrangements. Informal rule-making that involves cross-border policy coordination and standard setting is progressively being used. This produces non-legally binding but normative output and involves the participation of non-traditional international law actors such as experts, industry groups, international organisations and domestic agencies. Since integration began in the late 90s informal rule-making has become the primary mechanism in trade facilitation initiatives in ASEAN.

ASEAN has so far demonstrated its potential to achieve incremental integration using this soft approach. Its intra-regional trade has attained 25 per cent of total trade, intra-ASEAN investment is at 23 per cent, with increasingly diversified trade partners, and aims to remove almost all tariffs for all member countries by 2015. ASEAN’s informal mechanisms are also showing the potential of developing common rules and standards that could be directly applied to member countries. This would satisfy the minimalist conception of the rule of law that involves the establishment of general, stable and predictable legal regimes and level playing field for economic actors. For example, the work of the ASEAN Consultative Committee on Standards and Quality (ACCSQ) and its Working Groups have shown the possibility of developing a body of ASEAN economic rules and standards directly enforced in member countries, and broadening the engagement of ASEAN with non-state actors. The relative success of the ACCSQ also demonstrated that development of common rules and policies can be achieved despite national differences, by being underpinned by international standards and the collaboration of stakeholders from the public and private sectors. It also underscores the importance of the leadership role and institutional capacity of member states.

There is still much to be desired in terms of participation, transparency and accountability as components of the rule of law. ASEAN’s informal mechanisms offer limited non-state participation, operate in an almost invisible manner and do not contain accountability or feedback mechanisms. There is no regulatory framework through which these mechanisms operate that would constrain excesses or remedy negative impacts. As ASEAN works toward its goal in building an ASEAN Community by 2015, it needs to pay particular attention to these elements as the dynamics of integration create more complexities and generate more expectations from the ground.

Investment law in Indonesia

Normin S. Pakpahan, " The critical evaluation of investment laws as a tool of progress within ASEAN : The case of Indonesia ", Asean law association, 2009, (online version).

Melli Darsa, " Critical issues on investment law harmonization in ASEAN : The indonesian perspective", Asean law association, 2012, (online version).

Investment law in ASEAN

Vivienne Bath & Luke R. Nottage, " The ASEAN comprehensive investment agreement and 'ASEAN Plus' - The Australia - New Zealand Free Trade Area (AANZFTA) and the PRC - ASEAN investment agreement, SSRN, 2013 (online version).

Mariani Sallehuddin, " Critical issues on investment law harmonization within ASEAN", Asean law association, Workshop, 2012 (online version).

C. Lin, " ASEAN's investment environment : A comparative study of foreign investment regulation in selected ASEAN members", International energy law and policy research paper series, N°2010/11, (online version).

Juliana W. Chen, " Achieving supreme excellence : How China is using agreements with ASEAN to overcome obstacles to its leadership in Asian regional economic integration ", Thailand law journal, vol. 10, issue 1, 2007, (online version).

Lawan Thanadsillapakul, " ASEAN Bilateral Investment Agreement ", Thailand law journal, vol. 6, issue 1, 2003, (online version).

Lawan Thanadsillapakul, " Framework Agreement on the ASEAN Investment Area (AIA) ", Thailand law journal, vol. 5, issue 1, 2002, (online version).

Lawan Thanadsillapukul, " The investment regime in ASEAN countries", Thailand law journal, vol. 5, issue 1, 2002, (online version).

Lawan Thanadsillapakul, " Open regionalism and deeper integration : The implementation of ASEAN investment area (AIA) and ASEAN free trade area (AFTA), Thailand law journal, vol. 3, issue, 1, 2000, (online version).

Denise Eby Konan, " The need for common investment measures within ASEAN ", Asean economic bulletin, vol. 12, issue 3, 1996, p. 339, (online version).

Sue S.C. Tang " The legislative framework for direct foreign investment in ASEAN ", Asean economic bulletin, vol. 10, issue 2, 1993, p. 155.

Michael R. Reading, " The bilateral investment treaty in ASEAN : A compartive analysis ", Duke law journal, vol. 42, 1992, p. 679, (online version).

M. Sornarajah, " The new international economic order, Investment treaties and foreign investment law in ASEAN ", Malaya law review, vol. 27, 1985, p. 440.

Investment law in Thailand

Pittaya Suvakunta, " China's go-out strategy : Chinese foreign direct investment in Thailand ", Thailand law journal, vol. 14, issue 1, 2011, (online version).

Pornchai Wisuttisak, " Thailand and Australia Free Trade Agreement (Tafta) : The advantage pace of foreign investment of both countries ", Thailand law journal, vol. 12, issue 2, 2009, (online version).

Michael Doyle, " Opinion & analysis : Does Thailand want foreign investment ?", Thailand law forum, 2007, (online version).

Roberto Bergami, " The Thailand-Australia Free Trade Agreement (TAFTA) : Regulation and procedures ", Thailand law journal, vol. 10, issue 1, 2007, (online version).

Piyanuj Ratprasatporn & Kobkit Thienpreecha, " Foreign investment in thailand : Review of the current legislative regime", Tilleke & Gibbins International Ltd., 2002, (online version).

Jonathan W. Leeds " The income tax treaty between the United States and Thailand : An overview and analysis ", Thailand law journal, vol. 1, issue 1, 1998, (online version).