INVESTMENT POLICY BRIEF
www.southcentre.int

No. 1 ● July 2015

Indonesia’s Perspective on Review of
International Investment Agreements
By Abdulkadir Jailani
Director for Treaties of Economic, Social and Cultural Affairs,
Ministry of Foreign Affairs, Republic of Indonesia
1.

Introduction

Following the contemporary discourse surrounding International Investment Agreements (IIAs), Indonesia is currently undergoing a thorough review of its 64 Bilateral
Investment Treaties (BITs) as well as 5 Investment Chapters under various free trade agreements.1 The review envisages a critical evaluation of the impact of existing IIAs
on the Indonesian national economy and formulation of a
new approach towards IIAs, which will be fine-tuned in
favor of its interest in pursuing national development
goals. Within this context, Mrs. Retno Marsudi, the Minister for Foreign Affairs of the Republic of Indonesia, specifically emphasized in her Annual Press Statement that economic diplomacy carried out by Indonesia will also aim at
creating a new regime for investment agreements between
Indonesia and other countries.2 This policy brief tries to
share the Indonesian experience in undertaking such an
intention.
For this purpose, this brief will flesh out the rationales
of the review. It will also explain how the review process is
being undertaken and the challenges faced during the review process. The brief will also attempt to present a set of
critical outlooks to some outstanding issues that appear
during the review.

2.

Rationales of the Review

The rationales for the review conducted by Indonesia are
essentially similar to the rationales for reviews undertaken
by other countries.
First, the review has been undertaken to strike a balance
between investor protection and national sovereignty as
indicated by Mrs. Retno Marsudi in her opening remarks
at the Regional Interactive Meeting on the Development of
Investment Treaty Models hosted by the Ministry of Foreign Affairs of the Republic of Indonesia, International
Institute for Sustainable Development (IISD) and United
Nations Conference on Trade and Development
(UNCTAD).3
Second, most provisions of the existing IIA are outdated
as they grant extensively broad protections and rights for
foreign investors, leaving the host state with little to no

policy space to implement its own development goals. Indonesia also believes that the current regime of IIAs does
not grant sufficient space for sustainable development.
Therefore, a general modernization is needed to update the
existing outdated IIAs in order to preserve the right for
states to exercise their regulatory and policy space. 4
Third, one of Indonesia’s greatest concerns regarding
IIAs is the provision on the Investor-State Dispute Settlement
(ISDS), which has increased Indonesia’s exposure to investor claims in international arbitration. To Indonesia, ISDS
provisions seem to be problematic and their benefits are far
from clear. They also create uneven playing fields between
national and foreign corporations. It is expected that the
inclusion of ISDS provisions will be a highly contentious
issue in the ratification process.
To date, Indonesia has been involved in at least 6 ISDS
cases. In comparison to other Association of South-East
Asian Nations (ASEAN) countries, Indonesia has the highest number of international arbitration cases.5 The decision
to undertake the review was particularly encouraged by a
billion-dollar lawsuit by the UK-listed Churchill Mining
and a frivolous claim arising from a bail-out following the
collapse of a private bank (Rafat Ali Rizvi vs. Indonesia).6
Due to this reason, the then-President of the Republic of
Indonesia, Mr. Susilo Bambang Yudhoyono, stressed that
the Government will not let those multinational companies
do as they please with their international back-up and put
pressure on developing countries such as Indonesia.7
Similarly, Jan Knoerich and Axel Berger in their seminal
work Friends or Foes? Interactions Between Indonesia’s International Investment Agreements and National Investment Law
held that, because the ISDS clause is being invoked by foreign investors with increased frequency, IIAs are beginning to have serious repercussions for developing countries, particularly for Indonesia8.
Fourth, the provisions in IIAs may potentially override
national legislation. Moreover, the decisions of international arbitration may possibly supersede the decision of domestic courts. These two considerations are well-founded
considering that the current IIA regime has sometimes appeared to be superior to national law, which will raise
questions of the law applicable for either the investors or

* This new policy brief series focuses on investment, including international investment agreements (IIAs), and experiences of
developing countries.

 Indonesia’s Perspective on Review of International Investment Agreements
the Host States.9
From the aforementioned rationales of the review, it
can safely be assumed that Indonesia has not lost faith
in IIAs in general. Indonesia merely intends to modernize and to renegotiate its IIAs with a view to providing
greater capacity to regulate in the public interest. For
that purpose, excessive benefits to foreign investors that
may prejudice Indonesia’s policy space need to be reexamined. The new investment regime should aim at
fostering investments that do not only reap benefits for
the Host State but also contribute to the overall development of that particular Host State. Such review process also includes the need to place procedural and substantive restraints on foreign investors from lodging
international claims against Indonesia.

3.

Steps Taken

The review process is undertaken through 3 steps,
namely the discontinuation of existing IIAs, reassessing
the provision of the existing IIAs and developing a new
treaty model of IIA. In pursuing those steps, the Government of the Republic of Indonesia also invites academicians, international/national lawyers, nongovernmental organizations, UNCTAD and experts
from various countries and agencies to contribute their
perspectives. Indonesia also undertakes an intensive
engagement with business sectors in the process.
The first step taken by Indonesia is to discontinue its
existing IIAs, which as of the date of the writing of this
brief has reached 17 out of 64 IIAs.10 It is important to
underline that this discontinuation process is done
gradually by means of discontinuing IIAs that are due
to expire according to the requirement period set in the
termination clause of the IIA, or commonly known as
the ripe period.11 Another option in this discontinuation
process is to do so immediately if the IIA authorizes
either Party to end the agreement at any time.
This gradual approach is taken in order to avoid any
unwanted political implications and bilateral backlash
that might potentially undermine Indonesia’s position.
Indonesia believes that by ending the agreement “bythe-book” according to the provisions set in the agreement, which was of course agreed bilaterally, Indonesia
need not be concerned about such backlash.
However, during the review process, there has been
an emphatic call to look at this approach again. As the
ripe periods of many IIAs concluded by Indonesia
would be many years to come, such as the IndonesiaRussia IIA that will end in 2024, it has been suggested
that Indonesia consider an earlier discontinuation. If its
counterpart disapproves the proposal, Indonesia may
just officially notify its intention to terminate the IIA
upon the expiration of the period of validity of the IIA.
Such notification can be submitted to the other party to
the treaty, although the period of validity of such IIA
still remains to be in place for a long time.
The second step that Indonesia has taken completely
relates to the fact that the core gravity of the review is
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the reassessment of the existing provisions. Every single
IIA is dissected to find the most problematic provisions
such as the ‘scope’ and ‘definition of investment’, the
‘Most-Favored-Nation Treatment’ principle, ‘National
Treatment’ principle, ‘Fair and Equitable Treatment’,
‘expropriation’ and ISDS. The reassessment is aimed at
identifying problems and finding the most feasible solutions which will serve as the Government’s new position
on IIAs. The assessment particularly looks into the extent
to which those provisions provide protection to the investors and its impact to the policy space of the Government.
The third step is the development of a Treaty Model.
The purpose of developing a model is to set up a guideline for Indonesian officials in negotiating and concluding
investment treaties as had been done by India and South
Africa with their respective models.12 Based on the review
itself, new elements were added in the model to envisage
a balance between investor protection and the state’s policy space with a view to promoting sustainable development principles. The model will also ensure consistency in
treaty-making practice, although, on the other hand, it
may create less flexibility in negotiations.

4.

Challenges of IIA Review

Conducting an all-encompassing review of the whole IIA
regime proves to be a very challenging endeavor. We
have identified a number of challenges, which range from
concerns about scaring off investors to the more technical
challenge of how to further address the survival clause
issue. The detailed explanation of each challenge are as
follows:
Fear of scaring-off investors
One of the main challenges is to overcome the unjustified concern that the whole review and discontinuation
process is scaring off investors. The Government of the
Republic of Indonesia has taken this concern seriously. In
the World Investment Forum 2014, Mr. Mahendra Siregar,
Chairman of the Investment Coordinating Board of the
Republic of Indonesia, assertively assured that the review
process shall not compromise the legal certainty and protection of foreign investment. All foreign investment continues to enjoy the same level of protection under the Indonesian National Law on Investment.13
It is a matter of fact that the review process does not
really affect the foreign investment inflows to Indonesia.
In fact, 2014 was the year in which foreign direct investment to Indonesia hit a record high of 78.7 trillion US dollars, according to the latest data by the Indonesian Investment Coordinating Board (BKPM).14 The comparison with
previous years can be seen in the table in the next page.
Balance between protection of investors and preserving policy space for states
The second challenge that comes to the fore is the question on whether the review and reassessment will be able
to achieve the right balance between investment protection and the furtherance of public interest. To this end, we
need to recognize what the real balance should look like.

I N V E S T M E N T P O L I C Y B RI E F

 Indonesia’s Perspective on Review of International Investment Agreements

In principle, it might be possible to strike the balance
between the two interests. Yet, it is indeed a complicated task as the interest of investor protection and policy
preservation seem to be irreconcilable.
The temptation to include broadly drafted clauses on
public policy exceptions is very obvious among the
policymakers. They maintain that the incorporation of
a set of robust clauses that may effectively serve as important tools to safeguard public policy interest would
provide additional comfort to the Government.
However, concerns were expressed about the possible abuse of such public policy clauses as they give too
much power to the state. Business sectors may perceive
that the existence of such clauses will potentially defeat
the purpose of concluding IIA as an instrument in attracting higher amounts of foreign investment.
Nevertheless, this concern has also been questioned
on the basis of two strands of arguments. First, the assumption that IIA will increase foreign direct investment inflow in many countries, including in Indonesia,
is empirically disputed. Therefore, the existence of such
clauses should not correlate with foreign direct investment. Second, the public policy clauses may be formulated in such a way to prevent their arbitrary invocation. Then, the real challenge would be how to draft
such clauses in setting out legitimate regulations of the
activities of the foreign investors without permitting
unreasonable or unjustified treatment.
Investment chapters under Free Trade Agreements
(FTAs) or Economic Partnership Agreements (EPAs)
Another challenge is the problem of investment chapters under FTAs or EPAs. Given the legal nature of in-

I N V E S T M E N T P OL I C Y B R I E F

vestment chapters, they are essentially IIAs; they should
be therefore subject to the review process. Nonetheless,
the review process of the investment chapters could not
be conducted in the same manner as in the case of bilateral IIAs. As the FTAs or EPAs consist of various chapters,
which are integrated into a single undertaking instrument, a specific discontinuation of the investment chapter
is not legally possible unless it is done altogether with all
chapters of those FTAs or EPAs. Article 44 (1) of the Vienna Convention on the Law of Treaties clearly provides
that a right of a state to denounce or withdraw from a
treaty may be exercised only with respect to the whole
treaty unless the treaty provides or the Parties otherwise
agree.
It is true that all chapters of FTAs or EPAs can be technically terminated altogether in accordance with their termination clauses. The problem does not, however, lie in the
technical context. Discontinuing the whole chapters of
FTAs or EPAs will certainly require much more extensive
consideration of wider bilateral relations as it may lead to
more complicated implications. Consequently, so far, not
much can be done with respect to investment chapters of
FTAs or EPAs.
The lesson we can learn from this challenge is that the
issue of terminating FTAs or EPAs should be wisely dealt
with during negotiations. It is recommended that FTAs or
EPAs include a clause allowing partial termination of a
chapter, particularly the investment chapter.
Survival clause
One of the most interesting notion in reviewing and
discontinuing IIAs is that the IIA will not necessarily
cease to have any effect to the existing investments even
after they have been discontinued, due to a provision

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 Indonesia’s Perspective on Review of International Investment Agreements
commonly known as the ‘survival clause’. This clause
allows foreign investors, who have had their investments made or acquired prior to the date of termination, to enjoy prolonged protection for a certain amount
of time (usually 10 – 15 years) even after the treaty has
been terminated.
The clause has posed substantial challenge during
the review process. It means that all possible legal risk
posed by the discontinued IIAs will remain intact despite the fact that the treaty is not in force anymore.
Thus, the question of the survival clause needs to be
assessed and revised with a view to shortening the time
period of such a clause. Also, particular consideration
on different survival clause durations for different sectors of investment needs to be taken.
Challenge of drafting a treaty model
The review process envisages development of an
IIA model which will serve as a basis for future IIA negotiations. The model will provide clearer guidelines in
order to maintain coherence between IIAs. According
to Jonathan Bonnitcha, the existence of a treaty model
will substantially diminish the number of inconsistencies between existing IIAs.15 That being said, once a
treaty model is in place, it will provide Indonesia with a
strong and consolidated initial negotiating text that will
prove useful in future negotiations.
Apart from the obvious advantages of having such
treaty model at our disposal, there are also a couple of
potential disadvantages to this process. Firstly, due to
the vast amount of stakeholders involved in drafting
the model, a model will take a long time to develop.
Secondly, by having a basic text, we are somehow reducing our flexibility in negotiations. Different
counterparts will require different elements in their
intended IIAs and a treaty model will somehow limit
their options, which will arguably hamper or slow
down the negotiation to a certain degree. Hence, the
ultimate challenge is not that of developing a welldrafted treaty model, but how to actually defend the
text in negotiation.
In addressing this challenge, Indonesia is now considering developing a set of basic elements of a position
that would be translated by an illustrative model treaty.
Therefore, the illustrative model treaty in one way or
another can be modified during negotiation, bearing in
mind that some fundamental principles shall be strictly
upheld and are off-limits to any kind of compromise.

5.

Most Outstanding Issues

The review process undertaken by Indonesia has addressed almost all common provisions included in IIAs.
Yet, the most outstanding issue in the review process is
the ISDS. In spite of this, excluding ISDS provisions
altogether might not be a wise approach. Therefore,
Indonesia considers limiting the scope of application of
the ISDS provision. The limitation would be substantive and procedural in nature.

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Substantive limitations
The definition of investment is very essential as it will
determine the scope of the protection rendered under the
IIA. A narrower definition of investment will also narrow
down the possible number of cases brought via the ISDS
mechanism. Therefore, the review has led Indonesia to
reform its position into a more limitative definition (a
combination between an asset-based and enterprise-based
approach which targets particular investments). Portfolio
investment is certainly excluded from the definition. The
“Salini Test” characteristic of investment has been considered to be part of the definition. By doing so, not all investments may enjoy benefits under an IIA unless such
investments also contribute to national development of
the host state.16
Furthermore, the current scope of the National Treatment (NT) clause also needs to be reduced. The NT clause
in existing IIAs by Indonesia extends to the preestablishment phase. Therefore, the clause will apply not
only to investors who are already operating in Indonesia
(post-establishment treatment) but also potential investors
seeking to make investments. This kind of NT clause creates the so-called pre-establishment right (right to establishment). It gives potential foreign investors the right to
enter Indonesia and make investments in any sector on
the same terms applicable to domestic investors.17 The
clause provides both protection and liberalization undertaking. Having said that, the review process suggests that
the NT clause should only cover the post – establishment
phase. It is also suggested that liberalization is better regulated through national law and not through investment
treaties. This new approach to the NT clause also considers excluding special treatment in favor of domestic
small/medium enterprises, measures affecting certain
sectors related to development needs, particularly natural
resources and sectors which possess close ties to national
security.
Likewise, restricting the scope of Most-Favored-Nation
(MFN) clause is also necessary for limiting the possible
application of ISDS. The MFN clause in existing IIAs to
which Indonesia is party seems to be too broad, as it potentially allows a foreign investor to invoke provisions of
any treaty other than the one concluded between the
Home State of the investor and Indonesia. This classic
principle has been substantially modified to fit Indonesia’s current stance on IIAs. Some of the important exclusions incorporated in the new MFN clause are, namely:


pre-establishment measures;



any existing or future regional FTAs and EPAs;



existing and future IIAs;



ISDS provisions; and



any preferential system for any least-developed
countries.

The inclusion of the clause on Fair and Equitable Treatment (FET) has brought about a high degree of unpredictability, particularly with respect to ISDS. In that regard,
I N V E S T M E N T P O L I C Y B RI E F

 Indonesia’s Perspective on Review of International Investment Agreements
the FET clause has been numerously and successfully
used by investors as a basis of their claim against
states.18 The FET clause was initially introduced to provide a just and equal treatment to foreign investors as if
they were domestic investors. However, due to its
over-extensive application, there has been a number of
uncertainties and legal risks associated with FET. One
of the most worrying concerns is the tendency for arbitral tribunals to interpret FET broadly in favor of foreign investors, particularly with respect to the notion of
“legitimate expectation”.
The review process undertaken by Indonesia found
that a vague and broad wording of the FET obligation
carries risk of overreach in the application of the principle.19 This has led Indonesia to craft a new provision to
replace FET, namely Standard Treatment, which simply
shifts the focus from investor rights to protection from
denial of justice. In this newly formulated provision,
assurances were made regarding the fact that investors
shall not be subjected to denial of justice in criminal,
civil or administrative proceedings. To augment this
treatment, Indonesia also provides police protection
from any physical harm to the investors and/or investment.
As far as expropriation is concerned, Indonesia still
maintains the clause of expropriation. In that regard, a
distinction is made between direct expropriation, and
indirect expropriation, which is entirety excluded.
Direct expropriation shall only be made for the purpose of public interest and carried out with due process
of law and followed by prompt and adequate compensation. Yet, the issue of indirect expropriation20 seems
to be very problematic as investors may have the liberty to assume that any regulatory action taken by the
Host State that diminishes the economic value of an
investment is a form of expropriation.
Such an approach potentially reduces the Host
State’s authority and policy space to implement development-oriented measures and/or policies. Within its
new approach to IIAs, Indonesia plans to exclude in
whole the provision on indirect expropriation. This also
means that any measures that have effect or consequences that amount to expropriation shall be excluded
from the clause of direct expropriation. This is done to
preserve a greater degree of regulatory space for Indonesia to pursue its development goals without facing
legal risk of challenges through the ISDS mechanism.
Procedural limitation
Imposing procedural limitations is a useful way to
minimize legal risk of ISDS. In most IIAs, the Host
States have already given their consent that an investor
may bring any dispute against the Host State to international arbitration without requiring further consent
from the Host State. It is also the case in Indonesia’s
IIAs.21 This approach has become a grave concern for
Indonesia as it will pose great legal risk to the country.
As a solution to this legal risk, Indonesia considers in-

I N V E S T M E N T P OL I C Y B R I E F

troducing separate consent requirement before an investor could bring a matter to international arbitration.
Therefore, an investor may bring a case to international
arbitration if the investor and the Host State have expressed their consent to settle the case through the arbitration. A special agreement to settle a dispute through international arbitration would be required on a case per case
basis. This approach would be expected to cut down the
number of ISDS claims in international arbitration. At the
same time, it will also promote settlement of investor –
State disputes through the domestic courts or alternative
dispute resolutions.

6.

Conclusion

Indonesia’s review of its IIAs was mainly triggered by the
increased exposure to investor claims in international arbitration. The review itself has been manifested in several
steps such as IIA discontinuation, reassessment of existing
provisions and the development of a new IIA model. The
effort has met several challenges, including on whether
the review will scare off investors, how to strike the balance between protection to investors and policy space
preservation, problems of investment chapters in FTAs or
EPAs, survival clauses and the development of a new
model of IIA. The review process focuses on how to limit
the scope of application of ISDS provisions. In light of
this, substantive and procedural limitations are envisaged.
As far as the substantive limitations are concerned, there
are at least five pertinent issues related to the definition of
investment, national treatment, MFN, FET and indirect
expropriation. For procedural limitations, the new IIAs by
Indonesia will require a special agreement between the
investor and Indonesia for bringing a case to international
arbitration. This review is a dynamic process and not a
one-off event. Constructive input and suggestions from
every stakeholder, including business sectors, and indepth analysis are still highly needed to further fine-tune
Indonesia’s new approach which will be crystallized in
the new treaty model.

End notes:
1 Indonesia-Japan

Economic Partnership Agreement, ASEANAustralia-New Zealand Free Trade Agreement, ASEANChina Agreement on Investment, ASEAN-Korea Free Trade
Agreement and ASEAN Comprehensive Investment Agreement.
2 The Foreign Minister also emphasized Indonesia’s commitment to attract foreign investors to Indonesia and also to introduce a simplified permit procedure for foreign investors.
See Annual Press Statement of the Minister for Foreign Affairs of the Republic of Indonesia, 8 January 2005. Available
at
http://www.kemlu.go.id/Documents/PPTM%202015/
PPTM%202015%20ENG%20FINAL%20PDF.pdf (accessed 7-4
-2015).
See the Report of the Regional Interactive Meeting on the
Development of Investment Treaty Models available at
http://www.iisd.org/pdf/2015/investment-treaty-modelsjakarta-report-2015.pdf (accessed 6-4-2015).
3

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 Indonesia’s Perspective on Review of International Investment Agreements
J.J. Losari and M. Ewing-Chew, “Reflective or Reactionary? Indonesia’s Approaches to International Investment
Agreements and Recommendations for the Future”, Transnational Dispute Management, Vol. 12 Issue 1 (January 2015),
Page 4.
5 Indonesia has the highest number of ISDS cases among
ASEAN member states, which amount to six cases to date.
The Philippines comes in second place among ASEAN
member states with three recorded cases. See
http://www.italaw.com/search/site/indonesia?f[0]=im_f
ield_case_type%3A1090
and
http://www.italaw.com/search/site/philippines?f[0]=im
_field_case_type%3A1090.
6 In the Rafat Ali Rizvi v. Indonesia case, the issue of frivolous claim came to surface. The claim which rose under the
Indonesia-UK IIA made by the investor was deemed frivolous, or not having legal merit, by the International Centre
for Settlement of Investment Disputes (ICSID) Panel.
7 Bagus Saragih, “SBY frets over int’l arbitration”, Jakarta
Post,
29
June
2012.
Available
from
http://www.thejakartapost.com/news/2012/06/29/sbyfrets-over-int-l-arbitration.html .
4

Jan Knoerich and Axel Berger, “Friends or Foes? Interactions Between Indonesia’s International Investment Agreements and National Investment Law”, Studies (Bonn,
Deutsches Institut fur Entwicklungspolitik, 2014), Page 7.
9 Ibid, page 78.
10 So far Indonesia has discontinued BITs with the Netherlands, Bulgaria, Italy, Malaysia, Slovakia, Spain, Kyrgyzstan, China, Laos, France, Egypt, Hungary, Cambodia,
Norway, Romania, Turkey, Vietnam.
11 Ripe period refers to the period in which the IIA is eligible to be discontinued/terminated. One example is Article
XIII(2) of the Indonesia-Chile IIA: This agreement shall remain in force for a period of ten years. Thereafter it shall remain
in force indefinitely unless one of the Contracting Parties gives
one year’s written notice of termination through diplomatic
channels. From this provision it is clear that the ‘ripe period’ is in effect after 10 years.
12 Kavaljit Singh, “The very model of a modern Indian investment
treaty”.
Available
from
http://www.eastasiaforum.org/2015/02/06/the-verymodel-of-a-modern-indian-investment-treaty/. Southern
African
Development
Community
Model
(http://www.iisd.org/itn/wpcontent/uploads/2012/10/sadc-model-bit-templatefinal.pdf, accessed 7-4-2014).
13 See Statement of Mr. Mahendra Siregar, Chairman of the
Investment Coordinating Board, before the World Investment Forum 2014, 16 October 2014. Available at
8

http://unctad-worldinvestmentforum.org/wpcontent/uploads/2014/10/Wibowo.pdf (accessed 6-4-2014).
14 Badan Koordinasi Penanaman Modal, “Foreign Direct Investment in Indonesia Hit Record High in 2014”. Available
from http://www.indonesia-investments.com/news/newscolumns/foreign-direct-investment-in-indonesia-hit-recordhigh-in-2014/item5262 (accessed 6-4-2014).
15 Jonathan Bonnitcha, Cost and Benefit Analysis of Developing Model IIAs. Presented at the Regional Interactive Meeting
on the Development of Investment Treaty Models, Jakarta,
20-22 January 2015.
16 Salini Costruttori SpA and Italstrade SpA v. Morocco (ICSID
Case
No.
ARB/00/4).
Available
from
http://www.italaw.com/cases/958 (accessed 6-4-2015).
17 Organisation for Economic Co-operation and Development,
Treatment of Investors and Investments (Pre/PostEstablishment), Negotiating Group on the Multilateral Agreement on Investment, DAFFE/MAI(95)3. Available from
http://www1.oecd.org/daf/mai/pdf/ng/ng953e.pdf.
18 FET is the most frequently invoked clause in investment
disputes. According to UNCTAD, in 2013, of the seven decisions finding states liable, five decisions found a violation of
the FET provision. At least five decisions rendered in 2013
awarded compensation to the investor, including an award of
USD 935 million plus interest, the second highest known
award in history. See United Nations Conference on Trade
and Development, “Recent Developments in Investor-State
Dispute Settlement”, IIA Issues Note No. 1, April 2014, Page
10,
available
at
http://unctad.org/en/publicationslibrary/webdiaepcb2014
d3_en.pdf.
19 United Nations Conference on Trade and Development,
“Fair and Equitable Treatment”, page 3. Available from
http://investmentpolicyhub.unctad.org/Upload/Document
s/PACER_6%20Fair%20and%20Equitable%20Treatment.pdf.
20 Indirect expropriation in principle is measures that a state
takes to regulate economic activities within its territory, even
where such regulation is not directly targeted at an investment. In this case, the legal title to the investment is not
affected. See Suzy H. Nikiema, “Best Practices, Indirect Expropriation”, IISD Best Practices Series, March 2012, page 1.
Available
at
http://www.iisd.org/pdf/2012/best_practice_indirect_expr
opriation.pdf.
21 One example of this automatic consent can be found in Article VIII(2) of the Indonesia--Cambodia BIT: If such a dispute
cannot be settled within a period of six months from the date of a
written notification either party requested amicable settlement, the
dispute shall, at the request of the investor concerned, be submitted either to the judicial procedures provided by the Contracting
Party concerned or to international arbitration or conciliation.

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I N V E S T M E N T P O L I C Y B RI E F

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