Expert takes sober look at TPPA

by Hannah Norton08 May 2015
World leading arbitrator and litigator Gary Born is urging New Zealand lawyers to take a look at the track record of international arbitration – which spans three decades – in judging the merits of the Trans-Pacific Partnership Agreement (TPPA).

The agreement is a proposed regional free trade deal between 12 countries in the Asia-Pacific region, which has been hailed by the Ministry of Foreign Affairs and Trade (MFAT) as a tool to deepen economic ties between members by opening up trade, boosting investment flows, and promoting closer links in both economic and regulatory spaces.

But the TPPA has been met with public backlash, including protests across the country featuring placards with slogans such as “TPPA – Taking People’s Power Away”.

Their opposition is based on the investor-state dispute settlement (ISDS) provisions, which they claim will enable foreign investors to challenge laws or policies of governments that the investors believe will impact future profits.

Speaking to NZLawyer, Born said these claims were unfounded and had misdirected the debate about the TPPA in New Zealand.

“It strikes me that it is very important that the debate be brought back to the ground and that we take a hard look, soberly and objectively, at what it is that investment arbitration does do and what it doesn’t do.

“There are, quite rightly, desires that arbitral procedures be appropriate, that they be fair, that they be open, and transparent, and that they be reciprocal - and there is ample scope for addressing all of those concerns - such as concerns about transparency, concerns about appellate review - and in designing a TPPA, with arbitral chapters setting out the procedure for arbitration.”

Born, who acted as counsel for Greenpeace in the Greenpeace v France arbitration 30 years ago and is routinely ranked by Chambers, Legal 500, Euromoney and Global Counsel as the world’s leading authority on international commercial arbitration and international litigation, was in New Zealand this week for the New Zealand Centre of International Economic Law’s (NZCIEL) inaugural senior visiting research fellowship.

A number of existing free trade agreements, and some treaties, already cover approaches and procedures used in international investment arbitration, Born said.

"I think there is a lot to be gained and very little to be lost from exploring and regulating differences of opinion about those various procedures.

"What I think what is less constructive are the debates about the loss of sovereignty that might arise from investment arbitration or the risks of large multinationals being guaranteed robust bottom line profits [attributable to arbitration].”

It is important to recognise that any treaty can bring with it limitations on the sovereignty in return for positive spin-offs such as opening up trade channels and increasing flows of investment, he said.

“That's the whole point of an international agreement. And it's not a loss or a divestiture of your sovereignty; it's actually an exercise of sovereignty. It's a way that a state, by obtaining commitments from each treaty partner, can actually exercise its sovereignty to survive better things for its people.

"Therefore, to reduce the debate to one that focuses on a loss of sovereignty is to misdirect the debate entirely.”

Criticisms that investment arbitration inevitably favour the investor or that the sorts of arbitrators that are chosen for investment arbitrations are subject to conflicts of interest are unfounded, Born said.

“They are simply not grounded in the objective facts.

“I think if one looks, with any care, at the track record of investment arbitration, one sees a much more nuanced and – frankly – a very sensible set of decisions.”

Born is sitting in on a number of international investment arbitrations currently, and has an “extremely high regard” for the practitioners involved, he said.

“Awards that have been made by these tribunals compare very well with decisions of international and national arbitration courts.”

Rigorous standards for impartiality are also considered and applied during the process, he said.

“Although it is critically important that there be open, vigorous debate about investment arbitration and about the TPPA, it is equally important that debate is sober and reflective and is based on the real facts about investment arbitration and not about the sorts of slogans and caricatures that one sees.”