On August 9, 2023, the Biden administration issued a much-anticipated Executive Order establishing a new regime to limit certain U.S. investments in key Chinese technology sectors to prevent the financing of Chinese military advancement. The order, once implemented via regulation, will prohibit U.S. persons from investing in, or engaging in certain other transactions with, Chinese companies engaged in specified conduct involving semiconductors and microelectronics, quantum information technologies, and artificial intelligence. The regulations will likely come into force in 2024 after multiple rounds of public comment, including an initial 45-day comment period that is now underway on an advanced notice of proposed rulemaking (“ANPRM”) issued by the U.S. Department of the Treasury (“Treasury”).

The regulations will prohibit some investments altogether, while others will be subject only to official notification requirements. Treasury, which will implement and enforce the restrictions, stated that it anticipates exempting “certain transactions, including potentially those in publicly traded instruments and intracompany transfers from U.S. parents to subsidiaries.”

Continue Reading Amid Growing Trade Tensions, U.S. Imposes Unprecedented Restrictions on Outbound Investments to China

On 7 July 2023 the European Commission published a formal proposal for the withdrawal of the European Union (EU) from the Energy Charter Treaty (ECT or the Treaty).  The move comes after many years of intensive efforts (notably by the EU) to modernize the ECT, in response to concerns that the Treaty prevented ECT Contracting States from meeting their climate change mitigation obligations as set out in the Paris Agreement.  The European Commission’s current proposal leaves much to be desired in terms of clarity and legal certainty.  Energy companies covered by the ECT should therefore be well-advised to explore alternative sources of protection to ensure that their investments enjoy adequate coverage in case of disputes.

Continue Reading We’ll always have Paris? European Commission formally proposes the withdrawal of the European Union from the Energy Charter Treaty, invoking the Paris Agreement

The United Kingdom (UK) is officially set to sign the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at the CPTPP Ministerial-level Meeting, which is scheduled to take place on 15-16 July 2023 in Auckland, New Zealand.

As we previously reported, the UK will be the first country to accede to the CPTPP outside the original signatories States.  The decision to accede comes on the heels of Chile officially joining the CPTPP in February of this year.  Other States Parties to the CPTPP include Australia, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and Peru.  Brunei Darussalam is the only signatory which has not yet completed the ratification process.  The CPTPP will become binding upon the UK 60 days after it deposits its instrument of accession.

The attention now shifts to other countries which have expressed an interest in joining the CPTPP, notably China, Costa Rica, Ecuador, South Korea, and Uruguay.  The CPTPP Commission has already adopted detailed rules and criteria governing the accession of aspirant economies.  According to New Zealand, Chair of the CPTPP Ministerial Commission Meeting for 2023, a key priority in the upcoming meeting will be to support the expansion of CPTPP by economies that are willing to demonstrate they can meet and adhere to its high standards, and to advance efficient and fair accession rules and processes that will make the CPTPP attractive to aspirant States.  Moreover, a key objective for New Zealand is the effective and improved implementation of the CPTPP and the promotion of inclusive and sustainable trade.

The members of the Indo-Pacific Economic Framework (IPEF) reached a significant milestone at the IPEF Ministerial Meeting in Detroit, Michigan with the substantial conclusion of negotiations on a landmark Supply Chain Agreement. This agreement, involving all 14 IPEF member countries, is aimed at fortifying the resilience, efficiency, and inclusivity of their supply chains through a combination of collaborative activities and individual actions. The agreement lays the foundation for improving supply chain resilience and transparency, as well as enhancing public-private cooperation and business certainty in and among IPEF member states – particularly in sectors deemed “critical” by member governments. 

Continue Reading Unveiling the Landmark IPEF Supply Chain Agreement

On April 28, 2023, the Secretariats of the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL) published the final draft of the Code of Conduct for Arbitrators in International Investment Disputes (the Code of Conduct). The draft concludes nearly six years of heated debates concerning two primary issues: disclosure obligations for arbitrators sitting on investment treaty tribunals; and “double-hatting,” (i.e., where a lawyer sits as arbitrator while at the same time acting as counsel in other investment treaty matters).

The ICSID and UNCITRAL Secretariats developed the Code of Conduct jointly, with substantive efforts led by Working Group III—UNCITRAL’s task force mandated to consider possible reforms to investor-State dispute settlement (ISDS). A separate Code of Conduct for Judges in International Investment Dispute Resolution was also published for judges who would sit on the prospective Multilateral Investment Court proposed by the European Commission.

On March 27-31, 2023, Working Group III finalized its revisions to the Code of Conduct during its forty-fifth session at the United Nations Headquarters in New York City, with representatives of more than ninety-five State delegations and fifty international organizations in attendance. The primary objective of the Code of Conduct is to provide principles and provisions that clarify the duties of international arbitrators—including impartiality, independence, and the conduct of proceedings with integrity, fairness, efficiency, and civility.

The final drafts of both the Code of Conduct for Arbitrators and the Code of Conduct for Judges will now be presented to UNCITRAL for formal adoption during its fifty-sixth annual session in Vienna on July 3-21, 2023.

Continue Reading A New Code of Conduct for Arbitrators May Soon Be Available to Parties in Investor-State Disputes—But No Ban on Double-Hatting

Introduction

On April 12, 2023, the High Court of Australia (High Court) rendered a unanimous judgment affirming that a foreign state was not immune from proceedings seeking recognition and enforcement of an International Centre for Settlement of Investment Disputes (ICSID) arbitral award.  This landmark decision provides welcome guidance on the interaction between Australia’s sovereign immunity regime and its international arbitration legislation implementing the ICSID Convention.

Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. v. Kingdom of Spain (ICSID Case No. ARB/13/31)

Kingdom of Spain v. Infrastructure Services Luxembourg S.à.r.l. & Anor [2023] HCA 11

Continue Reading <em>A Ray of Sunshine for Solar Energy Investors: High Court of Australia Rejects Spain’s Sovereign Immunity Plea Against Recognition and Enforcement of ICSID Arbitral Award</em>

The United Kingdom’s (U.K.) accession to the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) might have been a bumpy ride, but it will soon come to fruition.  While all eyes are on the trade implications of the CPTPP, another component of the CPTPP that is getting comparatively little attention – the CPTPP treaty provisions on investment – may turn out to have a much greater impact for the United Kingdom.

Continue Reading Coming to a Country Near You: The U.K. Announces Imminent Accession to the CPTPP – Including Its Investment Chapter

On 1 March 2023, the EU’s General Court delivered its judgment in Case T‑540/20, Jushi Egypt for Fiberglass Industry v Commission, ruling that the EU’s anti-subsidy Regulation does not preclude the countervailing of subsidies that are granted by a foreign state to companies in a third country, which can be attributed to the government of the country of origin or export of the products concerned. The Court’s ruling confirmed the Commission’s interpretation in Implementing Regulation (EU) 2020/870, which imposed a definitive countervailing duty on imports of continuous filament glass fibre products (‘GFR’) originating in Egypt.

Continue Reading EU Court recognizes transnational subsidies are countervailable

On February 21, 2023, the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) formally entered into force for Chile, after undergoing an intense, four-year legislative process.  The CPTPP covers the full range of modern trade agreements, including market access for goods and services, public procurement disciplines, temporary entry, and investment protection, among others.  Despite the CPTPP’s entry into force, the future of investor-State dispute settlement (ISDS) in Chile remains a point of controversy.

Continue Reading The CPTPP Enters into Force for Chile – but Mind the Fine Print

Canadian, Mexican and United States investors considering bringing a claim under the North American Free Trade Agreement (NAFTA) against a NAFTA State Party should be aware that the three-year window for notifying their claim will soon come to an end.  They must therefore take quick action to notify their claim by the end of March 2023 to be in a position to submit their request for arbitration before July 1, 2023, the final deadline for the submission of legacy NAFTA investment claims.

The NAFTA was terminated on July 1, 2020, with the entry into force on that same date of the United States-Mexico-Canada Agreement (USMCA). The USMCA Parties recognized the importance of a smooth transition from the NAFTA to the USMCA, particularly with regard to investors who had invested on the understanding that NAFTA’s Chapter Eleven (Investment) protections would be in place.  Annex 14-C of the USMCA therefore maintains NAFTA provisions on the protection and promotion of legacy investments for a period of three years post entry into force of the new agreement.  These provisions are consistent with the practice of Canada, the United States, and Mexico to provide a sunset period for investment protection under their bilateral investment agreements. 

Continue Reading The Window for Putting a USMCA State Party on Notice of a NAFTA Legacy Investment Claim Closes at the End of March