Old Agreements Must Be Terminated to Bring Life to Investment

Abstract

Australia and Indonesia have signed a Comprehensive Economic Partnership Agreement that includes an investment chapter as well as an investor-State dispute settlement mechanism. Yet the concluded treaty affirms rights and obligations under all existing treaties including an older-style bilateral investment treaty (BIT). With elections just completed in both countries, an opportunity arises to rethink this approach to overlapping treaties. The two countries should agree to terminate their older BIT upon entry into force of the new agreement. Failure to do so risks complicating the existing relationship and heightening uncertainties with respect to regulatory sovereignty in both countries. Australia and Indonesia should look to their own existing practices to terminate the older agreement. Termination in such circumstances provides an important means of reforming international investment law.

Keywords: arbitration, Australia, Indonesia, international law, investment, trade

JEL Classification: K33