Any book that tries to describe a region as diverse in its foreign investment and dispute resolution law and practice in Asia risks being incomplete, superficial and susceptible to changing policies, laws and practices of particular governments across the Asian region. This book admirably demonstrates the significance of regional divergence on foreign direct investment (FDI) and how that divergence impacts on investment law and practice in Asia. The contributing authors depict shifts from seemingly intransigent to pragmatic and adaptable attitudes among Asian governments towards inbound and outbound investment. The authors also describe the reasons for divergence among Asian governments as to the manner in and extent to which FDI is, or ought to be, regulated and disputes resolved.
The contributing authors add important insights to existing understanding of key investment issues. They underscore the growing economic and political importance of direct foreign investment in the Asian region which now accounts for over 35 per cent of international investment globally. They illustrate recent developments in investment practice among Asian countries and how Asian countries have incorporated them into their domestic legal systems, and their bilateral investment agreements (BITs). The authors also illustrate how Asian governments diverge in their receptiveness towards investor-state arbitration (ISA), among other means of dispute resolution.
The 13 chapters consist of an introduction by the editors of the book followed by individual chapters, including one (co-)authored by each editor. Each chapter contributes an understanding to the complex web of FDI laws and practices among Asian countries. The analysis illustrates how different Asian countries—including China, India and Vietnam—protect their domestic economies from FDI while seeking to attract FDI by treaties and other means.
Chapter 2 by Luke Nottage and Romesh Weeramantry provides an important theoretical and practical foundation to the book. It explores five macro attitudes attributed to Asian governments and claimants concerning comparatively few ISA proceedings in particular, and concludes that one attitude (‘institutional barriers’ to defending or initiating claims) most likely prevails over all the others. Countries across Asia are concerned about the time and cost associated with ISA, as well as with its potentially disruptive character. They are sometimes, therefore, hesitant to pursue ISA proceedings, despite their growing presence in BITs.
In Chapter 3, Shotaro Hamamoto skilfully depicts Japan as a ‘late starter’ in modern investment practice and in investment dispute resolution in particular. He similarly argues that Japanese businesses are reluctant to engage in ISA for various cultural-economic reasons, preferring negotiated solutions that avoid or limit conflict. However, he concludes that the Japanese Government appreciates the need to accommodate global investment practice. This is evident in Japan entering into a growing number of BITs and Free Trade Agreements (FTAs) containing investment chapters including ISA protections. Hamamoto concludes that, despite its traditional reliance on amiable methods of resolving investment disputes, Japanese parties may well formally pursue ISA proceedings in the future.
In Chapter 4, Vivienne Bath provides an incisive account of the dilemma of China, in maintaining a balance between a two-tier legal system in which inbound investment is centrally regulated as a matter of political and economic policy, while outbound investment is less centrally regulated. She notes that this leads to the cautious and often indirect liberalization of laws regulating inbound investment, such as when foreign investment initiatives are reconstituted into domestic entities. However, she observes that the Chinese Government continues to exercise perceptible regulatory control over inbound investment, including by scrutinizing how foreign investors propose to acquire an interest in domestic entities before it approves of such investments. Bath points out that the dilemma for China lies in being perceived as changing its policies towards regulating FDI without materially relinquishing its umbrella control over it. She illustrates this dilemma by describing how China has shifted away from restrained first generation BITs to more investor friendly second-generation BITs. At the same time, she notes that China's liberalization of international investment law is limited, typified by the fact that China continues to deny foreign investors ‘national treatment’, among other protections. Bath recommends caution in respect of FDI in China, advising that foreign investors be fully cognizant of the investment environment and treaty context in which they are planning to invest in China. Chapter 5, by Nils Eliasson, reinforces Bath's observations in analysing Chinese investment treaties primarily from a procedural perspective.
The succeeding chapters each add an expert perspective to FDI and dispute resolution in law and practice in other Asian countries. Simon Butt eloquently explores foreign investment law and practice in Indonesia, as does Joongi Kim in relation to Korea. Salim Farrar provides a telling account of the relationship between foreign investment laws and FDI in Malaysia. Hop Dang examines the extent to which Vietnam protects domestic investment from FDI. Prabhash Ranjan outlines the tension between regulatory protection and regulatory power in India.
In a particularly thoughtful chapter 7, Sita Sitaresmi skilfully evaluates the Japan-Indonesia Economic Partnership Agreement. She demonstrates how two important Asian countries have reached an agreement on energy security. She also provides insights into the process by which agreement was reached and its political, social and legal significance.
The concluding Chapter 13, written by Sornarajah, ends on an undisguised note of caution. He contends that FTAs and BITs fall short of an investment panacea. He argues that trade and investment liberalization of trade and indeed the ideals of democratic liberalism are abating, and that liberalization is often inoperable in practice or is simply ignored, particularly by Asian states. He decries the development of investment agreements on grounds that they have undermined rather than advanced the interests of foreign investors, through the selective privileging of already privileged foreign investors. Sornarajah recommends that foreign investors reach investment agreements outside the framework of BITs, as occurred prior to the BIT revolution. He regards this as a preferable and more sustainable strategy in which contracting parties can consent to investment agreements with states, rather than serving as supplicants of those states.
The overriding strength of this book lies in its exploratory and problem-solving focus. The contributing editors and authors well appreciate the divergent attitudes and practices towards investment law and practice in Asia. They are all experts in their fields. This book is a valuable tool for academics, students and practitioners engaged in Asian international investment law and practice. It provides incisive guidance to potential investors in Asia, suggesting whether, when and how they might invest in particular Asian countries, what kinds of support or resistance they may encounter and how they might plan their cross-border investments in light of that support or resistance. Viewed holistically, they provide a remarkably articulate assessment of divergent socio-economic, political and cultural reasons for that divergence among Asian countries, including their impact upon FDI and ISA in particular.
