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Investment protection under the proposed ASEAN-United States free trade agreement.

I. INTRODUCTION

In October 2009, U.S. Senator Richard Lugar (R-IN) introduced legislation to initiate free trade negotiations between the United States and the Association of Southeast Asian Nations (ASEAN). (1) This article examines the proposed ASEAN-U.S. free trade agreement, focusing on the central element of arbitration. Part II provides background on the ten-country ASEAN and its progress towards improving the regional economy. Part III provides background on free trade agreements (FTAs) and the recent proliferation of these agreements entered into by Asian governments, including the agreement between ASEAN, Australia and New Zealand which came into effect in 2010. This agreement gives foreign investors recourse through arbitration. Part IV explains that the proposed ASEAN-United States free trade agreement will undoubtedly include this feature. Lastly, Part V describes substantive protections that will maximize the efficacy of the ASEAN-United States agreement. By building upon their previous efforts, the United States and ASEAN can promote economic activity between them and across Southeast Asia.

II. BACKGROUND ON ASEAN, AFTA, AND AIA

Southeast Asia was a political hotbed during the 1960s. Its governments agreed upon "a fundamental need to develop a regional forum to alleviate pressures within the region and to promote economic growth between the countries." (2) Thailand, Indonesia, Malaysia, the Philippines, and Singapore created ASEAN by executing the Bangkok Declaration on August 8, 1967. The initial ASEAN objectives were "to alleviate intra-ASEAN tensions, to reduce the regional influence of external actors, and to promote the socioeconomic development of its member states to further hedge against Communist insurgency." (3)

ASEAN eventually expanded to include the five other Southeast Asian countries. Brunei joined in 1984, after receiving independence from the United Kingdom. (4) One decade later, four additional countries joined ASEAN: Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. (5) ASEAN regularly convenes at summits, and its decision-making is based on consensus. The "ASEAN way" involving diplomacy as opposed to confrontation is manifest in the "strong cohesion that now exists between the ASEAN member states." (6)

Decades after its formation, ASEAN transitioned into an institution fostering regional economic integration. (7) Beginning at its January 1992 meeting in Singapore, ASEAN executed a series of agreements, collectively known as the ASEAN Free Trade Agreement (AFTA), which seek to liberalize economic activity within the region. (8) The primary mechanism that AFTA employs is the reduction of tariffs on goods originating within ASEAN; (9) members remain free to set their own tariffs for goods imported from outside ASEAN. Specifically, AFTA sets targets for the gradual reduction of these tariffs up to five percent. (10) This approach seeks to stimulate intra-ASEAN trade because, under the theory of comparative advantage, lowered tariffs will increase economic transactions amongst ASEAN members, thereby improving the regional economy. (11)

In 1997, Southeast Asia experienced a severe economic crisis that originated in Thailand and spread to Indonesia, crippling that country. (12) Investment poured out of the region. (13) Each affected member had to chart its own path towards economic recovery because ASEAN was unable to coordinate a response. (14) This shortcoming prompted a two-pronged reaction by ASEAN at its December 1998 meeting in Hanoi, Vietnam, in an effort to alleviate the impact of the crisis and prevent reoccurrences. In its first response, ASEAN accelerated the AFTA tariff reduction schedule, (15) although the later-added ASEAN members were given additional time to comply. (16) As a result of this acceleration, intra-regional tariffs were reduced dramatically; now more than 99% of all goods are traded within a 0-5% tariff rate between the first six members, with the four newest members "not far behind" in implementing tariff reduction. (17) This accomplishment represents a significant economic achievement for ASEAN. With reduced tariffs, ASEAN members are well-positioned to maximize internal trade with a concomitant increase in regional wealth.

The second response by ASEAN to the 1997 crisis was the enactment of a series of measures designed to entice foreign direct investment (FDI). (18) FDI provides a buffer against financial crises because foreign owners have an incentive to protect their projects through capital improvements as opposed to liquidating at the first sign of economic unease. By contrast, indirect investment is fluid, as evidenced by the Thai stock market collapse in 1997. (19) Although increasing FDI was an AFTA objective, its tariff reduction impetus did not stimulate FDI into Southeast Asia. (20) In 1998, ASEAN created the ASEAN Investment Area (AIA) to promote "direct investment from ASEAN and non-ASEAN sources by making the region a competitive, open and liberal investment area." (21) Although AIA seeks to increase both intra-ASEAN investment and FDI into Southeast Asia, it is the latter which presents the strongest barrier against a recurrence of the sudden economic turmoil experienced in 1997.

AIA bestows upon investors from one ASEAN country two important protections when investing in a different ASEAN country.

These guarantees, typical of those contained in FTAs, (21) are:

National Treatment: 'each Member State shall ... accord immediately to ASEAN investors and their investments ... treatment no less favourable than that it accords to its own like investors and investments ...'; (22) and

Most Favoured Nation (MFN) Treatment: 'each Member State shall accord immediately and unconditionally to investors and investments of another Member State, treatment no less favourable than it accords to investors and investments of any other Member State with respect to all measures affecting investment....' (23)

Despite AIA, ASEAN has not yet realized its potential as an investment destination. (24) AIA entices intra-ASEAN investment by immediately guaranteeing national and MFN treatment upon ASEAN investors, but does not offer commensurate protection to other foreign investors. (25) Furthermore, the ASEAN dispute resolution mechanism is an obstacle to FDI. In 2004, ASEAN formalized the resolution of disputes amongst its members through a three-tiered process of mandatory consultation, issuance of panel reports, and appellate review. (26) This process is not binding on ASEAN members. (27) Furthermore, while third party participation is allowed, only ASEAN countries have recourse. (28) Foreign investors in Southeast Asia, whether from outside the region or an ASEAN country different than the host country, have no ability under AIA to resolve disputes directly against governments. This can correlate with less intra-ASEAN investment because investors may hesitate if they lack recourse to dispute resolution. (29) Without such a mechanism to lure FDI into Southeast Asia, AIA has not achieved the level of investment it envisioned.

III. BACKGROUND ON FTAs

The first wave of FTAs occurred in the late 1980s and into the 1990s. (30) These agreements seek to liberalize economic activity between two or more countries and include regional arrangements such as AFTA and the 1994 North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada. (31) NAFTA Chapter 11 affords foreign investors substantive rights and gives them recourse to pursue violations through arbitration directly against the host government. This feature of NAFTA, and other FTAs, is a fundamental purpose of Bilateral Investment Treaties (BITs) that came into being alongside FTAs and now number more than two thousand. (32) The BITs, as well as AIA, provide the substantive protections of national treatment and MFN treatment. (33) NAFTA Chapter 11 and BITs, however, enumerate many additional protections, including the guarantees of "fair and equitable treatment" and compensation for expropriation. (34) Procedurally, neither AFTA nor AIA provide investors with an ability to pursue recourse through arbitration.

The initial surge of FTAs and BITs was championed by western countries. (35) The United States consistently and actively encourages its trading partners to enter into FTAs. (36) One of the many FTAs it has entered into is the United States-Singapore (US-SG) FTA that became effective in 2004. (37) The investment protection chapter of the US-SG FTA closely tracks the U.S. Model BIT that also became effective in 2004. (38) Both contain investment protection similar to NAFTA Chapter 11 by providing recourse through investor-state arbitration, (39) as well as numerous substantive protections including: national treatment; MFN treatment; "fair and equitable treatment"; and compensation for expropriation. (40) Singapore has distinguished itself as an Asian country eager to employ FTAs to solicit foreign investment by entering into the US-SG FTA and AIA. The US-SG FTA goes far beyond AIA; as Singapore and the other ASEAN members provided only the protection of national and MFN treatment under AIA, without recourse through investor-state arbitration.

China, Japan, and Korea initially refrained from entering into FTAs. (41) These economically strong Asian countries began cautiously executing FTAs in the current millennium, as demonstrated by the China-ASEAN Free Trade Agreement (CAFTA), (42) the world's largest free trade area by population covering nearly 1.9 billion people. (43) A framework agreement in 2001 gave CAFTA "only the barest of skeletons.... CAFTA has come into existence gradually, annex-by-annex, as a chain of modest steps." (44) CAFTA follows the AFTA model of setting targets for phasing out tariffs within a geographic area. (45) Effective in 2010, China and the first six ASEAN countries "have to remove almost all tariffs"; (46) the later ASEAN members "will gradually reduce tariffs in coming years and must eliminate them entirely by 2015." (47) CAFTA does provide investor protection resembling NAFTA Chapter 11 including investor-state arbitration, (48) and proponents hope that it will stimulate Chinese investment in Southeast Asia. (49)

Also effective in 2010 is the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (ASEAN-AU-NZ FTA). (50) Signed in February 2009 in Cha-am, Thailand, (51) this watershed economic achievement covers 600 million people with a combined gross domestic product of 2.8 trillion U.S. dollars. (52) The investment protection it provides resembles NAFTA Chapter 11 and BITs by providing recourse to investor-state arbitration for alleged violations of numerous substantive protections, (53) including: "fair and equitable treatment"; (54) compensation for expropriation; (55) and national, (56) but not MFN treatment. (57) The ASEAN-AU-NZ FTA operates to update AIA in that each ASEAN member bestows recourse to investor-state arbitration upon investors of other ASEAN members, in addition to investors from Australia and New Zealand.

In early 2010, U.S. President Barack Obama underscored the intent of the United States to enter into FTAs with Asian governments. His State of the Union address explained: "If America sits on the sidelines while other nations sign trade deals, we will lose our chances to create jobs on our shores.... [W]e will strengthen our trade relations in Asia...." (58) China, Australia, and New Zealand already have active FTAs with ASEAN, (59) but the United States does not. Therefore, the October 2009 call for FTA negotiations between the United States and ASEAN by U.S. Senator Richard Lugar (R-IN) is expected to gain traction. (60) Just as ASEAN employed FTAs to alleviate and protect against additional economic crises--like the one that struck Southeast Asia in 1997--the United States views FTAs as a necessary reaction to the severe economic turmoil that originated on Wall Street in late 2008. (61) FDI stimulation is a critical component because such interlocking of economies can buffer against localized downturn. Having nationals directly invest abroad and hosting foreign investments may lessen and prevent the economic crisis that ASEAN members and the United States experienced during the economic crises they experienced one decade apart.

IV. PROCEDURAL INVESTMENT PROTECTION UNDER THE PROPOSED ASEAN-US FTA

The proposed ASEAN-US Free Trade Agreement (ASEAN-US FTA) must provide for investor-state dispute resolution to entice FDI. Without such guaranteed recourse through an established dispute resolution mechanism, investment may be less forthcoming. The inability of ASEAN to increase intra-ASEAN investment can be attributed in part to the lack of investor-state arbitration in AIA. Until 2010, ASEAN did not offer the investment protection typified by NAFTA Chapter 11. Singapore recognized early on the importance of this feature, making it part of the 2004 US-SG FTA. The remaining ASEAN members now accept this FTA component, as evidenced in its inclusion in the ASEAN-AU-NZ FTA and CAFTA. (62)

The proposed ASEAN-US FTA is expected to give investors the option of recourse against host governments through different arbitration formats. BITs provide for investor-state arbitration using the rules provided by the International Centre for the Settlement of Investment Disputes (ICSID), (63) ICSID Additional Facilities, (64) and the United Nations Commission on International Trade Law (UNCITRAL). (65) These three options are included in the investment protection provisions of FTAs entered into by the United States, such as NAFTA and the US-SG FTA, (66) demonstrating that the United States endorses these formats. The recent ASEAN-AU-NZ FTA also provides investors with these three format options, reflecting ASEAN acceptance. Consequently, the ASEAN-US FTA should also allow investors alleging breach to select amongst ICSID, ICSID Additional Facilities and UNCITRAL in arbitrating their challenges.

An alternate arbitration format where the parties agree should be additionally provided for in the proposed ASEAN-US FTA. Both ASEAN-AU-NZ FTA and the US-SG FTA have this added flexibility, (68) although NAFTA does not. (69) Among these three FTAs, only the ASEAN-AU-NZ FTA sets forth another dispute resolution process, namely: "Where the Philippines or Viet Nam is the disputing Party, to the courts or tribunals of that Party, provided such court or tribunals have jurisdiction over such claims." (70) Perhaps these two ASEAN members required the articulation of their courts as a venue, and they may further require the inclusion of this language in the proposed ASEAN-US FTA. It is not expected, however, that foreign investors will pursue investor-state dispute resolution through domestic courts; the perception that only the host government judiciary was available to investors resulted in the arbitration option becoming a defining feature of FTAs and BITs. (71)

The proposed ASEAN-US FTA is expected to require that claims ripen before investors may resort to arbitration against the host government. (72) FTAs and BITs typically include language providing that arbitration is available only if the investor alleges that a breach occurred and that loss or damage was incurred "by reason of, or arising out of, that breach." (73) Because both the ASEAN-AU-NZ FTA and US-SG FTA contain this qualification, the proposed ASEAN-US FTA should likewise use this language so that only ripe claims proceed to arbitration. Although the determination as to what constitutes a ripe claim will depend on its substance, (74) including this language common to FTAs and BITs will ensure that the ASEAN-US FTA is used not for merely advisory purposes but instead to resolve concrete instances in which foreign investors were harmed prior to seeking redress.

The proposed ASEAN-US FTA must set forth its scope of coverage by defining an investment that will provide the basis for recourse through investor-state arbitration. (75) The term is typically defined broadly, which is a hallmark of BITs. However, the definition of investment differs amongst FTAs, as illustrated by comparing the ASEAN-AU-NZ FTA with the US-SG FTA. These FTAs set forth the basic definition of investment as "every asset owned or controlled by an investor." (76) Both agreements thereafter set forth numerous types of investment, including the following common language:
   [M]ovable or immovable property, and related property rights, such
   as mortgages, liens or pledges; (77)

   shares, stocks, bonds, debentures and other forms of participation
   in an enterprise; (78)

   intellectual property rights; (79)

   rights under contracts, including 'turnkey, construction,
   management, production or revenue-sharing contracts'; (80) and

   does not include an order or judgment entered in a judicial or
   administrative action. (81)


The US-SG FTA definition of investment is identical to the U.S. Model BIT, (82) and includes significantly more examples than the ASEAN-AU-NZ FTA. (83) An investment expressly listed as an example under the US-SG FTA but not the ASEAN-AU-NZ FTA, is clearly within the scope of the former, but may not be covered by the latter. For example, the US-SG FTA covers "futures, options, and other derivatives." (84) These may be covered by the ASEAN-AU-NZ FTA as well, but an arbitration proceeding under that agreement could find otherwise due to the lack of express language in the investment definition. Because investment is defined with sufficient breadth in the ASEAN-AU-NZ FTA, (85) the proposed ASEAN-US FTA should use this same investment definition. Such a comprehensive scope will sufficiently assure foreign investors, without covering assets only marginally qualifying as investments. The proposed ASEAN-US FTA should stimulate FDI without probing the boundaries of what qualifies as an investment.

V. SUBSTANTIVE INVESTMENT PROTECTION UNDER THE PROPOSED ASEAN-US FTA

The substantive protections provided to foreign investors under the proposed ASEAN-US FTA are critical aspects of the agreement. Like the ASEAN-AU-NZ FTA, the proposed ASEAN-US FTA national treatment guarantee should use the "like circumstances" phrase and MFN treatment should not be afforded to avoid engendering uncertainty. (86) Its "fair and equitable treatment" guarantee should be explicitly tied to the customary international law minimum, thereby enabling individual countries to provide greater protection. (87) With respect to crafting its expropriation standard, the proposed ASEAN-US FTA should select amongst language in the ASEAN-AU-NZ FTA and US-SG FTA to reflect the current state of the doctrine. (88)

A. National Treatment and MFN Treatment

The FTA national treatment provision gives foreign investors rights identical to those of citizens of the host state. AIA affords this guarantee, but without recourse through investor-state arbitration. (89) The AIA national treatment protection further differs from those in most FTAs because it does not qualify the protection with the phrase "in like circumstances." (90) This language ensures that national treatment is required where appropriate--as opposed to presenting an absolute mandate--(91) and has generated a substantial body of legal interpretation. (92) Given the inclusion of this phrase in the ASEAN-AU-NZ FTA and the US-SG FTA, the proposed ASEAN-US FTA should contain the following common national treatment guarantee:
   Each Party shall accord to investors of another Party, and to
   covered investments, in relation to the establishment, acquisition,
   expansion, management, conduct, operation, liquidation, sale
   transfer or other disposition of investments, treatment no less
   favourable than that it accords, in like circumstances, to its own
   investors and their investments.


Although intra-ASEAN investors are guaranteed MFN treatment in AIA, the ASEAN-AU-NZ FTA does not contain this substantive protection. (94) MFN clauses are "designed to guarantee treatment to foreign investors ... at least equal to the treatment granted to foreign investors of any other country." (95) MFN treatment therefore looks to the FTAs and BITs of each country for purposes of conferring benefits upon foreign investors. Arbitration awards, however, sharply diverge with one another as to whether MFN clauses apply only to substantive protections--or to procedural guarantees as well. (96) At best, "the issue remains controversial, and hotly debated." (97)

This MFN treatment concern is illustrated by the US-SG FTA investment definition that is more expansive than the ASEAN-US-NZ FTA by including "futures, options, and other derivatives." (98) In AIA, Singapore agreed to give investors from the other ASEAN members MFN treatment. (99) The ASEAN-AU-NZ FTA provides investors of one ASEAN member with recourse to arbitration against another ASEAN member pursuant to a particular definition of investment. (100) If the MFN treatment protection includes procedural guarantees, the AIA MFN treatment clause operates to give ASEAN investors in Singapore the investment definition of the US-SG FTA with its greater list of examples. Therefore, coverage for "future, options, and other derivatives" would be bootstrapped via the AIA MFN clause. If, however, MFN treatment is limited to substantive protections, the only relevant investment definition for intra-ASEAN investor-state arbitration is found in the ASEAN-AU-NZ FTA, which does not expressly include "futures, options, and other derivatives." (101)

The MFN clause in AIA therefore injects uncertainty as to what protections are automatically afforded to foreign investors by virtue of one ASEAN member entering into an FTA with another country. The ASEAN-AU-NZ FTA avoids this ambiguity altogether by not conferring the substantive protection of MFN treatment. (102) A less drastic approach for the proposed ASEAN-US FTA would be to carefully craft an MFN treatment clause that clarifies exactly which protections will be transposed from other FTAs. (103) That the ASEAN-AU-FTA did not do so may likely reflects a lack of comfort amongst ASEAN members regarding MFN treatment. (104) This hesitation is understandable given that an MFN clause implicates other FTAs and BITs already in existence, like the US-SG FTA, as well as those that may be entered into in the future. To avoid unpredictability, the proposed ASEAN-US FTA should follow the ASEAN-AU-NZ FTA and decline to afford the substantive protection of MFN treatment.

B. Fair and Equitable Treatment

An investment protection found in virtually every BIT is the guarantee of "fair and equitable treatment and full protection and security." (105) This phrase implicates two distinct substantive protections. The "full protection and security" guarantee requires the host government "defend the investor or investment against others, for instance, rebel forces." (106) The "fair and equitable treatment" guarantee provides a type of international due process that protects against unacceptable conduct by the host government. (107) Arbitration awards interpreting this language recognize a schism in international law between the customary international legal (CIL) minimum and the heightened standard unconstrained by, or autonomous under, international law. (108)

NAFTA Chapter 11 follows the CIL minimum even though its "fair and equitable treatment" guarantee does not make clear which standard is implicated. (109) The three NAFTA parties in 2001 clarified that Chapter 11 affords foreign investors CIL-based "fair and equitable treatment." (110) In the wake of the NAFTA "fair and equitable treatment" controversy, more recent FTAs and BITs specify which standard is afforded. The US-SG FTA, the U.S. Model BIT, and the ASEAN-AU-NZ FTA each contain the following identical language confirming that the "fair and equitable" treatment guarantee is the CIL-based minimum:
   Each Party shall accord to covered investments fair and equitable
   treatment and full protection and security.... [T]he concepts of
   'fair and equitable treatment' and 'full protection and security'
   do not require treatment in addition to or beyond that which is
   required under customary international law, and do not create
   additional substantive rights. (112)


The proposed ASEAN-US FTA can likewise be expected to limit its "fair and equitable treatment" standard consistent with that of CIL. The ASEAN-AU-NZ FTA contains a footnote in which the limiting language does not apply to Indonesia. (113) Consequently, the question remains unresolved as to which "fair and equitable treatment" standard is afforded foreign investors in Indonesia. Perhaps as a means to further entice FDI, Indonesia has either decided to provide the greater protection of the autonomous standard or tabled the issue until a later date. Regardless of motivation, the fact that Indonesia did not tie its "fair and equitable treatment" protection to CIL in the ASEAN-AU-NZ FTA suggests that it will follow suit in the proposed ASEAN-US FTA. Indonesia's lack of commitment to the CIL-minimum standard demonstrates the benefit of using the language contained in the ASEAN-AU-NZ FTA and the US-SG FTA. Individual states may always elect to confer additional protection to increase FDI, notwithstanding the CIL-based standard articulated in an FTA.

Despite the CIL-based "fair and equitable treatment" standard's apparent equality with the global minimum, it provides investors with strong protection against government malfeasance. According to a recent NAFTA Chapter 11 award, government conduct is "sufficiently egregious and shocking" to constitute violations when the acts amount to a gross denial of justice, manifest arbitrariness, blatant unfairness, a complete lack of due process, evident discrimination, or exhibit a manifest lack of reasons. (114) In addition to this character-based protection, (115) the award further recognizes that the standard protects investor expectations against government repudiation of action that reasonably induced investment. (116) For example, if a permit issued by the federal government is effectively revoked, a violation of fair and equitable treatment will likely result. (117) Given these important protections afforded by the CIL-based standard, its inclusion in the ASEAN-US FTA will stimulate FDI.

C. Expropriation

The proposed ASEAN-US FTA will undoubtedly compensate investors for expropriation, as do the ASEAN-AU-NZ FTA, the USSG FTA, NAFTA, CAFTA, and BITs. (118) To provide context for this international protection, its genesis and development in tandem with U.S. constitutional law is set forth in Section V.C.1. Against this background, the proposed ASEAN-US FTA should craft its expropriation language to advance the doctrine, as set forth in Section V.C.2.

1. Background on Expropriation Law

A common BIT guarantee is for host governments to compensate expropriated investments. (119) International expropriation law closely tracks the protection afforded to U.S. citizens under the takings clause of the U.S. Constitution. (120) This eighteenth century protection makes government liable for "just compensation"--(121) synonymous with fair market value--(122) when it takes private property for a public purpose. (123)
   As originally conceived, owners of 'taken' property receive payment
   in the event that government physically acquires land to confer a
   benefit on greater society, such as constructing a public road....
   For more than a century, this protection provided relief only to
   those property owners whose land was physically taken. (124)


The U.S. Supreme Court in 1922 first required compensation for a government action that devalued but did not physically acquire property, explaining that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." (125)

This "too far" standard of the Supreme Court generated decades of uncertainty regarding when the American government must compensate for regulatory takings. (126) In 1978, the Supreme Court provided an analytical framework in Penn Central Transportation Corp. v. City of New York. (127) Over time, U.S. courts extracted the following three factors from Penn Central: (1) economic impact of the regulation--(128) a sufficiently large devaluation is required for a taking, and a greater economic impact increases the likelihood of compensation; (129) (2) "reasonable investment-backed expectations"--an (130) objective assessment as to whether the government action complained of was "foreseeable" or could have been "reasonably anticipated" considering the "regulatory environment" context; (131) and (3) the "character of the government action." (132)

The Penn Central facts demonstrate the tension between takings liability and government ability to regulate. The plaintiff challenged the denial of a permit to construct a large office building above Grand Central Terminal. (133) The Supreme Court denied compensation, concluding that the three factors discussed above weighed in favor of New York (134) The structure had been designated by New York as an architectural landmark--"one of New York City's most famous buildings" and "a magnificent example of the French beaux-arts style." (135) By contrast, in the 1992 case Lucas v. South Carolina Coastal Council, (136) the Supreme Court held that the government, in trying to protect the environment, must compensate a beachfront property owner who was unable to develop his property due to erosion concerns. (137)

Lucas found a taking due to a complete deprivation of economic impact, creating a per se rule where the property is rendered completely valueless. (138) In per se takings, compensation is automatically required without consideration of the remaining Penn Central factors. (139) Lucas is the high-water mark for property rights under the U.S. constitutional takings guarantee, (140) and sent the strong message that the government may be liable for takings when acting to protect the environment. (125)

NAFTA was being negotiated when Lucas was decided, and unsurprisingly an emphasis on property protection is manifest in Chapter 11. The expropriation clause mirrors the U.S. Constitution in requiring the government act with a public purpose and specifying that the remedy for a violation is the fair market value of the property. (141) To clarify that compensation is not dependent upon physical acquisition, Chapter 11 uses the term "indirect" expropriation. (142) An early Chapter 11 arbitration awarded more than sixteen million U.S. dollars to compensate an American investor unable to operate a landfill on Mexican property acquired for that purpose. (143) In that 2000 arbitration, Metalclad Corp. v. Mexico, the Mexican Federal Government permitted the project, but actions by political subdivisions prevented the landfill from operating. (144) Metalclad provoked an outcry of concern that government would not take measures necessary to protect the environment for fear of a debilitating fiscal impact. (145)

Beginning in the new millennium, U.S. takings law swung away from property rights protection and toward government ability to regulate. (146) This era commenced with the 2002 case Tahoe-Sierra Preservation Council v. Tahoe Reg'l Planning Agency (TRPA). (147) There the Supreme Court declined to compensate property owners who were unable to develop sensitive lands during a thirty-two-month planning moratorium in the watershed surrounding Lake Tahoe. (148) All three Penn Central factors weighed in favor of TRPA. (149) Tahoe-Sierra endorsed both the Penn Central framework, (150) and the ability of government to regulate without being subject to takings liability. (151) Tahoe-Sierra also influenced U.S. foreign policy--within two years the U.S. Model BIT, as well as the US-SG FTA, included language both employing the Penn Central standard and excepting regulations that address legitimate public policy objectives from the definition of expropriation. (152) The specific language of the U.S. Model BIT is as follows:

(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors:

(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;

(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and

(iii) the character of the government action.

(b) Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations. (153)

In 2005, the U.S. Supreme Court decided a pair of cases further establishing the ability of government to withstand takings liability. The first held that what constitutes a public purpose should be determined by the legislature and that unelected courts should not second-guess the representatives of the people in determining whether a particular action is for a public purpose. (154) The other, clarifying the Penn Central character factor, held that a takings inquiry presupposes the government acted for a valid purpose, and that U.S. courts should not consider the motivation and effectiveness of the action under review in assessing whether to compensate. (155) These cases shifted the U.S. regulatory takings analysis in the government's favor by refusing to consider how and for what purpose the government acted, instead asking whether the action is functionally equivalent to a physical acquisition. (156)

NAFTA expropriation law has developed in tandem with U.S. regulatory takings law. A survey of the Chapter 11 arbitration awards show that the three Penn Central factors are considered. (157) Moreover, just as U.S. law retreated from heightened property protection after Lucas, NAFTA arbitration has moved away from investor protection since Metalclad. In fact, Metalclad stands as the only Chapter 11 arbitration to award compensation. (158) In 2009, the Glamis Gold Ltd. v. United States arbitration award denied compensation to a Canadian investor frustrated by environmental regulation in its efforts to mine a portion of the California desert. (159) Glamis's takings analysis found against the investor after considering only one factor. (160) The economic impact of the regulation was insufficient to warrant compensation without having to consider investor expectations or the character of government action. (161) Glamis describes the economic impact assessment as a "foundational threshold inquiry" to be undertaken before consideration of the expectations and the character factors. (162)

Glamis represents the foremost legal development of both indirect expropriation under FTAs/BITs, and regulatory takings under the U.S. Constitution. (163) Both legal regimes have grappled with ascertaining when government must compensate those affected by regulation; both forms of dispute resolution consider economic impact, expectations, and the character of the government action. (164) The 2002 Tahoe-Sierra holding that the three-factor Penn Central framework gives government leeway to regulate without having to compensate is set forth in the U.S. Model BIT and the US-SG FTA. (165) In 2005, the U.S. Supreme Court began circumscribing the inquiry by clarifying that American courts will not second-guess lawmakers in the takings analysis. (166) Glamis, however, goes further in holding that no liability will accrue in the absence of a substantial economic impact. (167)

Glamis modified Penn Central's framework by providing a logical and focused approach to analyzing takings. Only if the requisite devaluation is established first will consideration of additional factors become necessary. (168) The Glamis takings inquiry may consider the economic impact factor alone to preclude compensation, and thus follows an "inverse-Lucas" approach. (169) "Because this analysis avoids considering unnecessary factors and maximizes the ability of government to regulate, it should be adopted worldwide." (170)

2. Proposing Expropriation Language For the ASEAN-US FTA

The expropriation language in both the ASEAN-AU-NZ FTA and the US-SG FTA provide models for the proposed ASEAN-US FTA. Both compensate investors for indirect expropriation, but employ different language. The US-SG FTA, like NAFTA Chapter 11, uses the term "indirect" expropriation. (171) Although the ASEAN-AU-NZ does not use the term indirect expropriation, (172) any doubt about coverage is extinguished by the following clarification annexed to the agreement:

2. Article 9.1 (Expropriation and Compensation) of Chapter 11 (Investment) addresses two situations:

(a) the first situation is direct expropriation, where a covered investment is nationalized or otherwise directly expropriated through formal transfer of title or outright seizure; and

(b) the second situation is where an action or series of related actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure. (173)

Given the state of expropriation law, the proposed ASEAN-US FTA will undoubtedly compensate investors for indirect expropriation irrespective of whether the term is used. The above quoted ASEAN-AU-NZ FTA language explaining the dichotomy presents a good summary of the issue and should be included in the ASEAN-US FTA. This language addresses a settled area of expropriation law. The ASEAN-US-FTA does contribute to the evolving expropriation doctrine with the following annexed attempt at a standard for when compensation is required:

3. The determination of whether an action or series of related actions by a Party, in a specific fact situation, constitutes an expropriation of the type referred to in Paragraph 2(b) requires a case-by-case, fact-based inquiry that considers, among other factors:

(a) the economic impact of the government action, although the fact that an action or series of related actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that such an expropriation has occurred;

(b) whether the government action breaches the government's prior binding written commitment to the investor whether by contract, license or other legal document; and

(c) the character of the government action, including, its objective and whether the action is disproportionate to the public purpose.

4. Non-discriminatory regulatory actions by a Party that are designed and applied to achieve legitimate public welfare objectives, such as the protection of public health, safety, and the environment do not constitute expropriation of type referred to in Paragraph 2(b). (174)

The expropriation standards articulated in the ASEAN-AU-NZ FTA and US-SG FTA share common introductory and economic impact factor language. (175) Therefore, the proposed ASEAN-US FTA can be expected to explain the standard as an inquiry that considers different factors, including economic impact, and mere devaluation alone will not likely require compensation. (176) The proposed ASEAN-US FTA, however, should avoid replicating this language because it represents an antiquated view of indirect expropriation and seemingly precludes the Glamis approach by making the expropriation analysis not dependant on any one factor. (177) The proposed ASEAN-US FTA should instead employ language making it clear that compensation will only be required if a substantial economic impact is first shown, thereby following the Glamis approach of simplifying the takings analysis and maximizing the ability of government to regulate without having to compensate. (178)

Irrespective of whether the proposed ASEAN-US FTA frames economic impact as a foundational inquiry, its expropriation standard will undoubtedly articulate expectations and character factors. (179) These factors in the ASEAN-AU-NZ FTA expropriation clauses deviate significantly from those in the US-SG FTA. (180) The latter, based on the U.S. Model BIT, uses the term "reasonable investment-backed expectations." (181) This phrase requires an objective evaluation of whether a reasonable investor would anticipate being able to proceed, (182) and is used by both U.S. courts and investor-state arbitration. (183) The ASEAN-AU-NZ FTA instead asks whether "the government action breaches the government's prior binding written commitment." (184) This subjective inquiry focuses on the actual interaction between investor and state, as opposed to the amorphous concept of objective reasonableness. (185) The ASEAN-AU-NZ FTA's clear and exacting expropriation standard for determining when expectation frustration factors in favor of compensation should be employed in the ASEAN-US FTA.

The expectations factor demonstrates the interplay between the protections of expropriation and "fair and equitable treatment." Glamis denied compensation after considering only the economic impact factor, (186) and proceeded to consider investor expectations in its "fair and equitable treatment" analysis. (187) Under this CIL-based legal protection, Glamis found that countries are liable if foreign investors can first establish objectively reasonable, investment-backed expectations and next show a subjective breach of "specific assurances" by the host government. (188) Thus, according to Glamis, "fair and equitable treatment" liability accrues when the expropriation expectations standards of both the US-SG FTA and the ASEAN-AU-NZ FTA are satisfied. (189) Although this conflation of standards is confusing, (190) frustration of investor expectations is better evaluated under "fair and equitable treatment" because of the wide discretion to award damages to remedy violations. (191) The fair market value remedy for expropriation may not be appropriate in all circumstances. (192)

Similarly, the character factor further presents a complicated interplay between U.S. takings law and the international protections of expropriation and "fair and equitable treatment." The phrase "character of government action"--included in both the ASEAN-AU-NZ FTA and the US-SG FTA (193)--references the Penn Central factor that was until 2005 understood as a broad inquiry into government motivation and effectiveness. (194) Under current U.S. law, the takings character factor now focuses on the extent to which the subject regulation can be characterized as a physical acquisition. (195) In sharp contrast, the ASEAN-AU-NZ FTA contains additional language maintaining the broader inquiry into governmental objectives and "whether the action is disproportionate to the public purpose." (196) This standard directs an assessment of the public purpose that is contrary to the 2005 U.S. Supreme Court holding that the public purpose determination is strictly for lawmakers, and not courts, to make. (197) International expropriation law likewise recognizes that, despite the standard expropriation clause language requiring that government act for a public purpose, (198) such determinations are for governments to make. (199)

The ASEAN-AU-NZ FTA character factor conflicts with the broader trend in international investment protection. (200) The recent Glamis award considered the character of the government action in its "fair and equitable treatment" analysis after denying compensation based on the economic impact factor alone. (201) Glamis found that this CIL-based legal protection makes states liable if their conduct towards a foreign investor can be characterized as: a gross denial of justice; manifest arbitrariness; blatant unfairness; a complete lack of due process; evident discrimination; or exhibiting a manifest lack of reasons. (202) Glamis explained that this inquiry is highly deferential to government and limited in its scope, confirming that investor-state arbitration will not second-guess government action. (203) The proposed ASEAN-US FTA should likewise endorse a circumscribed approach to the character factor through replicating the "character of the government action" phrase in its expropriation standard, in accord with the US-SG FTA. (204) It should not, however, include the additional, open-ended language in the ASEAN-AU-NZ FTA. (205)

The proposed ASEAN-US FTA expropriation standard can be expected to include a disclaimer. Both the ASEAN-AU-NZ FTA and the US-SG FTA expressly disclaim: "[n]on-discriminatory regulatory actions by a Party that are designed and applied to [achieve] legitimate public welfare objectives, such as public health, safety, and the environment." (206) While these actions are absolutely excepted from the compensation requirement in the ASEAN-AU-NZ FTA, the US-SG FTA prefaces its disclaimer with this qualification: "[e]xcept in rare circumstances." (207) This qualifying language, from the U.S. Model BIT, (208) reflects the state of U.S. regulatory takings law in the wake of Tahoe-Sierra. (209) Given that the U.S Supreme Court and investor-state arbitration have subsequently moved toward greater flexibility for governments to regulate, (210) the disclaimer without the introductory qualification is more reflective of current law. The proposed ASEAN-US FTA should contain an expropriation standard with the updated and unqualified disclaimer set forth in the ASEAN-AU-NZ FTA.

VI. CONCLUSION

ASEAN and the United States should build upon their previous efforts to negotiate an FTA that protects foreign investors. Investor-state arbitration should be made available for ripe claims pursuant to ICSID, ICSID Additional Facilities, UNCITRAL or another format if the parties agree. The proposed FTA should adopt the ASEAN-AU-NZ FTA definition of "investment" to provide ample coverage without necessarily reaching the outermost scope of marginal investments. It should qualify its national treatment with "like circumstances." MFN treatment should not be ensured, in accord with the ASEAN-AU-NZ FTA, to avoid injecting uncertainties as to the protection afforded. The "fair and equitable treatment" requirement should be explicitly CIL-based, reserving for each state the ability to provide greater protection. In its expropriation standard, the proposed ASEAN-US FTA should make the economic impact factor a foundational inquiry, as does Glamis. The character factor should be lifted from the US-SG FTA, while the expectations factor and disclaimer should be lifted from the ASEAN-AU-NZ FTA. This progressive investment protection will stimulate FDI while giving host governments flexibility to regulate. An ASEAN-US FTA will positively interlock the ASEAN and United States economies, creating a buffer against the economic turmoil that each experienced one decade apart.

(1.) See Press Release, Richard G. Lugar, U.S. Senator, Lugar Encourages Free Trade Agreement Negotiations With ASEAN (Oct. 9, 2009), available at http://lugar.senate.gov/record.cfm ?id=318838& [hereinafter Press Release, Richard G. Lugar] (indicating Sen. Lugar's plans to initiate ASEAN free trade legislation).

(2.) George O. White III, Foreigners Beware? Investing In a Jungle With Many Predators: The ASEAN Investment Area, 37 TEX. INT'L L.J. 157, 159 (2002). See infra Part I (explaining Association of Southeast Asian Nations' history and economic improvement).

(3.) White, supra note 2, at 160. See infra Part III (describing increase of free trade agreements among Asian countries).

(4.) Megan R. Williams, Note, ASEAN: Do Progress and Effectiveness Require a Judiciary?, 30 SUFFOLK TRANSNAT'L L. REV. 433, 448 (2007).

(5.) See Association of Southeast Asian Nations (ASEAN), Overview (2009), http://www.aseansec.org/ 64.htm (last visited May 12, 2010) [hereinafter ASEAN, Overview 2009] (providing dates Vietnam, Cambodia, Laos, and Myanmar joined ASEAN).

(6.) White, supra note 2, at 161. "[N]on-intervention policy among [ASEAN] members has been the bonding principle as well as the main obstacle to institutional evolvement. ASEAN discusses issues beneficial to its members but avoids hard issues that could cause loss of face to any member." Mamiko YokoiArai, Legal and Political Effects of Financial and Monetary Regional Integration in Asia 12 L. & BUS. REV. AM. 47, 51-52 (2006); see also Termsak Chalermpalanupap, ASEAN-10: Meeting the Challenges, 2-39, presented at the Asia-Pacific Roundtable in Kuala Lumpur (June 1, 1999), available at http://www.aseansec.org/ 3063.htm (analyzing challenges posed by enlargement of ASEAN).

(7.) See Timothy Webster, Bilateral Regionalism: Paradoxes of East Asian Integration, 25 BERKELEY J. INT'L L. 434, 437-38 (2007) (indicating transition of ASEAN's focus from political to economic issues).

(8.) Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area, Jan. 28, 1992, 31 I.L.M. 513 [hereinafter CEPT]; Framework Agreement on Enhancing ASEAN Economic Cooperation, Jan. 28, 1992, 31 I.L.M. 506; ASEAN Framework Agreement on the Facilitation of Goods in Transit, Dec. 16, 1998, 38 I.L.M. 502. These three agreements are collectively referred to as the ASEAN Free Trade Agreements (AFTA).

(9.) See CEPT supra note 8, art. 2.1 (stating "[a]ll members shall participate in the CEPT scheme"); id. art. 1.1 (stating CEPT tariff reductions apply to goods originating from ASEAN Member States). "A product shall be deemed to be originating from ASEAN Member States, if at least 40% of its content originates from any Member State." Id. art. 2.4.

(10.) See id. at 2.7, 4 (outlining time frame for reduction of tariffs to five percent or less).

(11.) ANDREAS F. LOWENFELD, INTERNATIONAL ECONOMIC LAW 3 (Oxford University Press, 2d ed. 2008).
   [The] perception that international trade is beneficial, that the
   gains to society from trade outweigh the losses to those who are
   hurt by competition from abroad, and that value is created through
   specialization and exchange in open markets ... that leads to the
   overriding principle of the GATT/WTO system that barriers to trade
   imposed by government should be subjected to international
   disciple, and that regular procedures should be established looking
   to reduction or elimination of such barriers.


Id.

(12.) See Jordan C. Kahn, Southeast Asia and the IMF: One Decade Following the Economic Crisis, an Analogous Regional Institution is Needed to Withstand Contagion From Wall Street, 26 SING. L. REV. 32, 39-46 (2008) [hereinafter SE Asia & IMF] (explaining spread of economic crisis across Southeast Asia). This crisis also affected Korea. Id. at 49 n.229.

(13.) Id. at 41, 44.

(14.) See Williams, supra note 4, at 443 (explaining failure of ASEAN to deal with Asian Financial Crisis in 1997).

(15.) ASEAN, Hanoi Plan of Action (Dec. 15, 1998), 2.1.1, http://www.aseansec.org/ 8754.htm (maximizing and expanding tariff coverage).

(16.) Id. 2.1.1(a), (b) (exempting Vietnam, Laos and Myanmar).

(17.) ASEAN, ASEAN Free Trade Area (AFTA Council), http://www.asean.org/ 19585.htm (last visited May 12, 2010).

(18.) See Org. for Econ. Co-operation and Dev. (OECD), OECD Benchmark Definition of Foreign Direct Investment, 234 (4th ed. 2004), available at http://www.oecd.org/dataoecd/ 42/56/43985557.pdf (defining foreign direct investment). "Foreign direct investment" (FDI) refers to an investment in a particular state's economy that is owned by foreign nationals for the purpose of establishing a lasting interest. Id.

(19.) See SE Asia & IMF, supra note 12, at 42.

(20.) White, supra note 2, at 162.

(21.) See, e.g., North American Free Trade Agreement, U.S.-Can.-Mex, arts. 1102-03, Dec. 17, 1992, 32 I.L.M. 289 [hereinafter NAFTA], arts. 1102,1103.

(22.) Framework Agreement on the ASEAN Investment Area, art. 7(1)(b), Oct. 7 1998, available at http://www.aseansec.org/7994.pdf [hereinafter AIA].

(23.) Id. art. 8(1).

(24.) See generally Williams, supra note 4.

(25.) AIA, supra note 22, art. 4(b) ("national treatment is extended to ASEAN investors by 2010, and to all investors by 2020").

(26.) ASEAN Protocol on Enhanced Dispute Settlement Mechanism, arts. 3, 59, 12, Nov. 29, 2004, http://www.aseansec.org/16754.htm.

(27.) See id. art. 14(1) ("Where a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member State concerned bring the measure into conformity with that agreement.").

(28.) See id. art. 11.

(29.) See generally Martin Endicott, Promoting and Protecting Investment in the Asia-Pacific Region: What is the Role for International Investment Agreements? in INVESTMENT ARBITRATION IN THE ASIA PACIFIC (T. Weiler & I. Laird eds., forthcoming 2010) (manuscript at 12-16, on file with author) (surveying the challenges associated with assessing whether international investment agreements [IIAs] promote investment). Endicott concludes as follows:
   At this point, the view that seems to be emerging most strongly is
   that IIAs, which improve investment protection, add to the
   stability and predictability of the wider investment regulatory
   framework, and which liberalize market access, have a role, if not
   an essential one, in the promotion of investment flows. While there
   are evident challenges with empirically establishing that IIAs
   promote investment flows, the wealth of activity in the economic
   treaty-making field in the Asia Pacific suggests that the region's
   policymakers believe that IIAs have a beneficial effect.


Id. at 16 (citations omitted).

(30.) Webster, supra note 7, at 443.

(31.) NAFTA, supra note 21.

(32.) LOWENFELD, supra note 11, at 554.

(33.) See id. at 555, 572; CEPT, supra note 8, arts. 7-8.

(34.) NAFTA, supra note 21, arts. 1102, 1103, 1105, 1110; see infra Part V.BC (explaining "fair and equitable treatment" and expropriation).

(35.) See LOWENFELD, supra note 11, at 554 ("all the Western European states as well as the United States have made BITs an element of their foreign economic policy.").

(36.) See Free Trade Agreements, U.S. Department of State, http://www.state.gov/ e/eeb/tpp/bta/fta/ (last visited May 12, 2010) (stating "free trade agreements have proven to be one of the best ways to open up foreign markets to U.S. exporters"); Benefits from Existing Free Trade Agreements, U.S. Department of State, http://www.state.gov/e/eeb/tpp/bta/fta/c26474.htm (last visited May 12, 2010) (extolling virtues of FTAs and encouraging Congress to conclude free trade negotiations already underway).

(37.) See United States-Singapore Free Trade Agreement, U.S.-Sing., May 6, 2003, 42 I.L.M. 1026, available at http://www.ustr.gov/trade-agreements/ free-trade-agreements/singapore-fta/final-text [hereinafter US-SG FTA].

(38.) Compare id. art. 15 with Office of the U.S. Trade Representative, U.S. Model BIT (2004), available at http://www.ustraderep.gov/assets/ Trade_Sectors/Investment/Model_BIT/asset_upl oad_file847_6897.pdf [hereinafter 2004 U.S. Model BIT].

(39.) US-SG FTA, supra note 37, arts. 15.14-15.25; 2004 U.S. Model BIT, supra note 38, arts. 24-25; NAFTA, supra note 21, arts. 1120-22.

(40.) US-SG FTA, supra note 36, arts. 15.4, 15.5.1, 15.6; 2004 U.S. Model BIT, supra note 38, arts. 3-6; NAFTA, supra note 21, arts. 1102-05, 1110.

(41.) See Webster, supra note 7, at 443.

(42.) Agreement on Investment of the Framework Agreement on Comprehensive Economic Co-Operation Between the Association of Southeast Asian Nations and the People's Republic of China, Aug. 15, 2009, available at http://www.aseansec.org/ 22974.pdf [hereinafter CAFTA].

(43.) The China-ASEAN Free Trade Agreement, ECONOMIST, Jan. 7, 2010.

(44.) Id. at 446.

(45.) See id.; CEPT, supra note 8, arts. 2, 4 (addressing tariff targets).

(46.) See Liz Gooch, In Southeast Asia, Unease Over Free Trade Zone, N.Y. TIMES, Dec. 29, 2009 ("over 90% of trade between ASEAN and China will be tariff-free, liberalizing 'substantially all trade' within a decade."); Webster, supra note 7, at 446.

(47.) Gooch, supra note 46. "Some agricultural products and parts for motor vehicles and heavy machinery will still face tariffs in 2010, but those will gradually be phased out." Id.
   [S]ome manufacturers in Southeast Asia are concerned that cheap
   Chinese goods may flood their markets, once import tariffs are
   removed, making it more difficult for them to retain or increase
   their local market shares. Indonesia is so worried that it plans to
   ask for a delay in removing tariffs from some items like steel
   products, textiles, petrochemicals and electronics.


Id.

(48.) See CAFTA, supra note 42, arts. 4 (National Treatment), 5 (Most-Favoured-Nation Treatment), 7 (Treatment of Investment), 8 (Expropriation), 14 (Investment Disputes between Party and Investor).

(49.) See Gooch, supra note 46 (detailing optimism of Sothirak, Cambodia's Minister of Industry). "While [Sothirak] does not hold much hope that Cambodian textile exports would be able to compete with China's highly developed garment industry, he said he believed the free trade area might entice more Chinese garment factories to set up operations in Cambodia, where production costs and labor are cheaper." Id.

(50.) Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, ch. 11 [section] B, arts. 18-28, Feb. 27, 2009, available at http://www.aseansec.org/ 22260.pdf [hereinafter ASEAN-AU-NZ FTA]. The ASEAN-AU-NZ FTA entered into force on January 1, 2010 for: Australia; Brunei; Malaysia; Myanmar; New Zealand; the Philippines; Singapore; and Vietnam. Government of Australia Department of Foreign Affairs and Trade, ASEAN--Australia --New Zealand Free Trade Agreement, http://www.dfat.gov.au/trade/fta/ asean/aanzfta/. The ASEAN-AU-NZ FTA subsequently entered into force for Thailand, and is expected to do so for the remaining countries (Cambodia, Indonesia and Laos) later in 2010. Id.

(51.) ASEAN, Joint Media Statement of the Inaugural ASEAN Economic Community (AEC) Council Meeting Cha-am, Thailand, 27 Feb. 2009, http://www.aseansec.org/22383.htm.

(52.) Robert Fenner, Australia, New Zealand Free Trade Agreement With Asean Starts, BLOOMBERG NEWS, Jan. 4. 2010, available at http://www.bloomberg.com/apps/ news?pid=20601081&sid=ayPmJs1y_Pwk.

(53.) See ASEAN-AU-NZ FTA, supra note 46, ch. 11 [section] B, arts. 18-28.

(54.) Id. ch. 11 [section] B, art. 20(a); see also id. ch. 11 [section] B, art. 6.

(55.) Id. ch. 11 [section] B, art. 20(a); see also id. ch. 11, [section] B, art. 9, Annex on Expropriation and Compensation.

(56.) Id. ch. 11 [section] B, art. 20(a); see id. ch. 11 [section] B, art. 4.

(57.) See id. ch. 11 [section] B, art. 20(a).

(58.) President Barack Obama, State of the Union Address (Jan. 27, 2010) (transcript available at http://whitehouse.gov/the-pres-office/ remarks-presidentstate-union-address).

(59.) See ASEAN-AU-NZ FTA, supra note 46; See supra text accompanying notes 41-44 (discussing the China-ASEAN Free Trade Agreement (CAFTA)).

(60.) See Press Release, Richard G. Lugar, supra note 1.

(61.) See SE Asia & IMF, supra note 12, at 67. For example, ASEAN FTAs were used to alleviate the economic crisis resultant from the financial disaster that struck Southeast Asia in 1997. Id.

(62.) ASEAN-AU-NZ FTA, supra note 50, ch. 11 [section] B, arts. 18-28 (establishing investment dispute resolution system); CAFTA, supra note 42, art. 14 .

(63.) The ICSID arbitration format may be employed where the investor state and the host state are both parties of the ICSID Convention. See LOWENFELD, supra note 11, at 570, 536-37. The following ASEAN member states have ratified the ICSID Convention: Brunei; Cambodia; Indonesia; Malaysia; Philippines; and Singapore. See ICSID, List of Contracting States and Other Signatories of the Convention, http://icsid.worldbank.org/ ICSID/FrontServlet?requestType=ICSIDDocRH&action Val=ContractingStates&ReqFrom=Main (last visited May 12, 2007). Thailand has signed, but not ratified the ICSID Convention. Id. Laos, Myanmar, and Vietnam have not signed the ICSID Convention. See id. The United States, Australia, and New Zealand have each signed and ratified the ICSID Convention. Id.

(64.) The ICSID arbitration format may be invoked where either the investor's state or the host state are both members of the ICSID Convention. See LOWENFELD, supra note 11, at 541 n.19.

(65.) UNCITRAL arbitration format does not require that a state implicated in the investor-state dispute be a member of any particular convention. See FAQ-UNCITRAL and Private Disputes/Litigation (UNITRAL FAQ), http://www.uncitral.org/uncitral/en/uncitral_texts/ arbitration_faq.html (last visited May 12, 2010). "Who may use the UNCITRAL Arbitration Rules? Parties to a contract may agree to use the UNCITRAL Arbitration Rules to guide the resolution of disputes arising between them. Nothing in the Rules limits their use to nationals of States which are Member States of the Commission." Id.

(66.) See LOWENFELD, supra note 11, at 570-71; NAFTA, supra note 21, art. 1120; US-SG FTA, supra note 37, ch. 15, art. 5(a)-(c).

(67.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 21.1(b)-(d). CAFTA provides recourse through these formats as well. CAFTA, supra note 42, art. 14.4(b), (c), (d).

(68.) See ASEAN-AU-NZ FTA, supra note 53, ch. 11, art. 21.1(e); US-SG FTA, supra note 37, ch. 15, art. 5(d). CAFTA has this flexibility as well. CAFTA, supra note 42, art. 14.4(e).

(69.) See NAFTA, supra note 21, art. 1120.

(70.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 21(a).

(71.) See LOWENFELD, supra note 11, at 570.

(72.) See Glamis Gold Ltd. v. United States, Award, 328 (NAFTA Arb. Trib.), available at http://www.state.gov/documents/organization/125798.pdf (finding language of NAFTA art. 1117(1) requires ripeness prior to claiming compensation under art. 1120).

(73.) See, e.g., NAFTA, supra note 21, art. 1117.1.

(74.) See Glamis, Award, 328. For a NAFTA expropriation "claim to be ripe, the governmental act must have directly or indirectly taken a property interest resulting in actual harm to an investor." Id.

(75.) LOWENFELD, supra note 11, at 555.

(76.) ASEAN-AU-NZ, supra note 50, ch. 11, art. 2(c) (beginning with "every kind of asset"); US-SG FTA, supra note 37, ch. 15, art. 15 (13) (adding "directly or indirectly," after "controlled"). See also CAFTA, supra note 42, art. 1(d) (employing similar definition of "investment" and providing examples similar to those included in the ASEAN-AU-NZ FTA).

(77.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c)(i); US-SG FTA, supra note 37, ch. 15, art. 15(13)(h).

(78.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c)(ii); US-SG FTA, supra note 37, ch. 15, art. 15(13)(b), (c).

(79.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c)(iii), at 145; US-SG FTA, supra note 37, ch. 15, art. 15(13)(f).

(80.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c)(v); US-SG FTA, supra note 37, ch. 15, art. 15(13)(e).

(81.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c); US-SG FTA, supra note 37, ch. 15, art. 15(13)(g).

(82.) Compare US-SG FTA, supra note 37, art. 15(13) with 2004 U.S Model BIT, supra note 38, at 3-4.

(83.) Compare ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c) with USSG FTA, supra note 37, ch. 15, art. 15(13).

(84.) US-SG FTA, supra note 37, ch. 15.1(13)(d).

(85.) See ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c).

(86.) See infra Part V.A.

(87.) See infra Part V.B.

(88.) See infra Part V.C.

(89.) See AIA, supra note 22, art. 7(1)(b).

(90.) Compare id. (detailing AIA national treatment protection) with NAFTA, supra note 31, arts. 1102(1) ("National Treatment"), 904(3)(b) (setting forth the non-discriminatory treatment policy found in the basic rights and obligations section).

(91.) See R. DOAK BISHOP ET AL., FOREIGN INVESTMENT DISPUTES 1152 (2005) (quoting RODOLF DOLZER & MARGETE STEVENS, BILATERAL INVESTMENT TREATIES (Kluwer Law International 1995)).

(92.) See id. at 1135-54 (quoting NAFTA arbitration awards construing phrase "like circumstances" referencing WTO panels, appellate body interpretations).

(93.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 4; see US-SG FTA, supra note 37, ch. 15, art. 15(4) (using virtually identical language); see also CAFTA, supra note 42, art. 4 (containing similar "National Treatment" clause).

(94.) See AIA, supra note 22, art. 8(1)(describing most favored nation treatment); ASEAN-AU-NZ FTA, supra note 53, ch. 11, art. 20(a) (outlining process by which claim made by investor party).

(95.) See LOWENFELD, supra note 11, at 117.

(96.) See id. at 572-77. The first award extending procedural protections through the MFN treatment clause is Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7 (2001). See LOWENFELD, supra note 11 at 572-77;.BISHOP, supra note 91, at 1156-62.

(97.) LOWENFELD, supra note 11, at 577.

(98.) See id.; US-SG FTA, supra note 37, ch. 15.1(13).

(99.) See AIA, supra note 22, art. 8 (establishing MFN treatment for ASEAN members).

(100.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 2(c).

(101.) See US-SG FTA, supra note 37, ch. 15.1(13) (providing relevant definitions).

(102.) See generally ASEAN-AU-NZ FTA, supra note 50 (lacking any MFN clause). CAFTA does, however, provide for MFN Treatment. CAFTA, supra note 42, art. 5.1.

(103.) See LOWENFELD, supra note 11, at 575-76 (observing that seemingly divergent MFN treatment awards may be reconciled by comparing the language of MFN clauses).

(104.) But see CAFTA, supra note 42, art. 5 ("Most-Favoured Nation Treatment").

(105.) See id.; NAFTA, supra note 21, art. 1105(1) (defining minimum standard of treatment); CAFTA, supra note 42, art. 7.1.

(106.) See LOWENFELD, supra note 11, at 476 (providing example of instance involving rebel forces in Sri Lanka).

(107.) See Jordan C. Kahn, A Golden Opportunity for NAFTA, 16 N.Y.U. ENVTL. L.J. 380, 414-15 (2008) [hereinafter Golden Opportunity] (examining the impact of NAFTA's "fair and equitable treatment" protection in article 1105).

(108.) Jordan C. Kahn, Striking NAFTA Gold, 33 FORDHAM INT'L L.J. 101, 136-37 (2009) [hereinafter NAFTA Gold].

(109.) NAFTA, supra note 21, art. 1105(1); Golden Opportunity, supra note 107, at 435-37.

(110.) See Official Statement, NAFTA Free Trade Comm'n, Notes of Interpretation of Certain Chapter 11 Provisions (July 31, 2001), available at http://www.state.gov/ documents/organization/38790.pdf; Golden Opportunity, supra note 107, at 435-37.

(111.) See Golden Opportunity, supra note 107, at 436. The clarification by the NAFTA parties that NAFTA's "fair and equitable treatment" protection is the CIL-based minimum generated harsh criticism and was described by one NAFTA Chapter 11 arbitration award as an ultra vires attempt to amend NAFTA. Id.

(112.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, arts. 6. 1, 6.2 (c); US-SG FTA, supra note 37, ch. 15, art. 15.5(1), (2); 2004 U.S. Model BIT, supra note 38, art. 5.1.2. CAFTA does not include this language, but instead clarifies that "fair and equitable treatment refers to the obligation of each Party not to deny justice in any legal or administrative proceedings." CAFTA, supra note 42, art. 7.2(a).

(113.) ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 6.2.

(114.) See Glamis, Award, (NAFTA Arb. Trib. 2009), 627, 616, 626, 824, 828

(115.) NAFTA Gold, supra note 108, at 138-39.

(116.) See id. at 135, 146-49.

(117.) See id. at 152-53.

(118.) See, e.g., CAFTA, supra note 42, art. 8.

(119.) See LOWENFELD, supra note 11, at 559.

(120.) See RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES [section] 712 Rep. n.6 (2009) ("In general, the line in international law is similar to that drawn in United States jurisprudence for purposes of ... determining whether there has been a taking requiring compensation.").

(121.) U.S. CONST. art. V.

(122.) See LOWENFELD, supra note 11, at 564; Golden Opportunity, supra note 107, at 413 n.196.

(123.) See U.S. CONST. art. V.

(124.) See Golden Opportunity, supra note 107, at 405.

(125.) See Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).

(126.) See Golden Opportunity, supra note 107, at 405.

(127.) 438 U.S. 104 (1978).

(128.) See Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001) (citing Penn Cent., 438 U.S. at 124).

(129.) "Generally speaking, the greater the economic impact of a government action the greater the likelihood of a taking. Furthermore, in the absence of a very significant economic impact, a regulatory taking claim will generally fail; as the Supreme Court has explained, takings recovery is limited to 'extreme circumstances.'" John D. Echeverria, Making Sense of Penn Central, 23 UCLA J. ENVTL. L. & POL'Y 171, 178 (2005) (quoting United States v. Riverside Bayview Homes, 474 U.S. 121, 124 (1985)).

(130.) See Palazzolo, 533 U.S. at 617 (citing Penn Cent., 438 U.S. at 124).

(131.) See Appolo Fuels, Inc. v. United States, 381 F.3d 1338, 1349 (Fed. Cir. 2004) (quoting Commonwealth Edison Co. v. United States, 271 F.3d 1327 (Fed. Cir. 2001)); Making Sense, supra note 129, at 184.

(132.) Palazzolo, 533 U.S. at 617.

(133.) See Penn. Cent., 438 U.S. at 116-17.

(134.) See id. at 138.

(135.) Id. at 115, 134-38.

(136.) 505 U.S. 1003 (1992).

(137.) See id. at 1030-32 (finding taking may occur when governmental act renders property without value), 1018 (finding taking may occur when land loses all economically beneficial use).

(138.) See id. at 1018.

(139.) See id.; Echeverria, supra note 129, at 178.

(140.) See Richard J. Lazarus, The Measure of a Justice: Justice Scalia and the Faltering of the Property Rights Movement Within the Supreme Court, 57 HASTINGS L.J. 759, 775 (2006).

(141.) NAFTA, supra note 21, art. 1110. NAFTA article 1110 provides in relevant part:

Article 1110: Expropriation and Compensation

1. No party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:

(a) for a public purpose;

(b) on a non-discriminatory basis;

(c) in accordance with due process of law and Article 1105(1); and

(d) on payment of compensation.

2. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ('date of expropriation').

Id.

(142.) Id.

(143.) Metalclad Corp. v. United Mexican States, CASE No.ARB(AF)/97/1, [paragraph][paragraph] 113, 122, 131 (NAFTA Arb. Trib 2000) available at http://icsid.worldbank.org/ICSID/FrontServlet ?requestType=CasesRH&actionVal =showDoc&docId=DC542_En&caseId=C155.

(144.) Id. [paragraph][paragraph] 43, 50, 59, 104-10, 112.

(145.) See Paul Stanton Kibel & Jonathan R. Schultz, Rio Grande Designs: Texans' NAFTA Water Claim Against Mexico, 25 BERKELEY J. INT'L L. 228, 247 (2007) (quoting Gustavo Alanis-Ortega, Citizen Panel Sees Faults and Suggests Reform, ENVTL. FORUM, July-Aug. 2003, at 34, 38) (discussing perception that NAFTA Chapter 11 has "chilling effect on regulators" and is used "as a weapon by some multinational corporations against environmental protection"); Vicki Been & Joel C. Beauvais, The Global Fifth Amendment? NAFTA's Investment Protections and the Misguided Quest for an International "Regulatory Takings" Doctrine, 78 N.Y.U. L. REV. 30, 40-44 (2003); John D. Echeverria, The Real Contract on America, ENVTL. FORUM, July-Aug. 2003; see generally Lauren Godshall, Note, In the Cold Shadow of Metalclad: The Potential for Change to NAFTA's Chapter Eleven, 11 N.Y.U. ENTVL. L.J. 264 (2002).

(146.) Cf. Lazarus, supra note 140, at 775.

(147.) 535 U.S. 302 (2002); see also Jordan C. Kahn, Lake Tahoe Clarity and Takings Jurisprudence: the Supreme Court Advances Land Use Planning in Tahoe-Sierra, 26 ENVTL. L. & POL'Y J. 33 (2002) [hereinafter Tahoe Clarity].

(148.) Tahoe-Sierra, 535 U.S at 302, 342-43.

(149.) Tahoe-Sierra Pres. Council v. Tahoe Reg'l Planning Agency, 34 F. Supp. 2d 1226, 1242 (D. Nev. 1999), rev'd on other grounds, 216 F.3d 764 (9th Cir. 2000) (finding against takings liability using Penn Central analysis). Because the district court found takings liability under Lucas and the plaintiffs did not appeal the Penn Central holding, neither the Ninth Circuit nor the U.S. Supreme Court had the opportunity to review the district court's Penn Central conclusion. See Tahoe Clarity, supra note 147, at 50.

(150.) Tahoe-Sierra, 535 U.S. at 332, 336 (calling Penn. Central framework the "default rule" to evaluate regulatory takings). Tahoe-Sierra greatly confined the applicability of Lucas and its per se approach to compensating property owners. Tahoe Clarity, supra note 147, at 60-62.

(151.) Tahoe Clarity, supra note 147, at 56-64.

(152.) See 2004 U.S. Model BIT, supra note 37, Annex B: Expropriation, [paragraph] 4; Letter from Robert B. Zoellick, U.S. Trade Representative, to George Yeo, Minister for Trade and Industry, Singapore (May 6, 2003), [paragraph] 4 [hereinafter Zoellick Letter]. The Zoellick Letter became part of the US-SG FTA. Id. at 2 ("I have the honor to propose that this understanding be treated as an integral part of the Agreement."); Letter from George Yeo, Minister for Trade and Industry, Singapore, to Robert B. Zoellick, U.S. Trade Representative (May 6, 2003), at 2 ("I have the further honor to confirm that this understanding is shared by my Government and constitutes an integral part of the Agreement.").

(153.) 2004 U.S. Model BIT, supra note 37, Annex B: Expropriation; Zoellick Letter, supra note 152, [paragraph] 4.

(154.) Kelo v. New London, 545 U.S. 469, 488-89 (2005). The Supreme Court upheld New London's decision to buy out homes: "Just as we decline to second-guess the City's considered judgments about the efficacy of its development plan, we also decline to second-guess the City's determinations as to what lands it needs to acquire in order to effectuate the project." Id. at 488-89.

(155.) Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 542 (2005) (explaining that the takings analysis under U.S. constitutional law "presupposes that the government has acted in pursuit of a valid public purpose").

(156.) See Michael B. Kent, Jr., Construing the Canon: An Exegesis of Regulatory Takings Jurisprudence After Lingle v. Chevron, 16 N.Y.U. ENVTL. L.J. 63, 101 (2008) ("[A] better interpretation of the [Takings Clause] character factor is one that emphasizes the concept of 'functional equivalence'").

(157.) See Golden Opportunity, supra note 107, at 417-37.

(158.) See NAFTA Gold, supra note 108, at 114.

(159.) See Glamis, Award, [paragraph] 355 (finding United States not responsible for either expropriation or violation of "fair and equitable treatment").

(160.) Id. [paragraph] 536.

(161.) See NAFTA Gold, supra note 108, at 129-33.

(162.) Glamis, Award, 356.

(163.) See NAFTA Gold, supra note 108, at 133-35.

(164.) See Golden Opportunity, supra note 107, at 417-37 (discussing use of the Penn Central factors in the assessment of expropriation under NAFTA Chapter 11); 2004 U.S. Model BIT, supra note 38, Annex B: Expropriation; Tahoe-Sierra Preservation Council v. Tahoe Reg'l Planning Agency (TRPA), 535 U.S. 302, 332, 336(2002); Tahoe Clarity, supra note 147, at 60-63.

(165.) See 2004 U.S. Model BIT, supra note 38, Annex B: Expropriation [paragraph] 4; Zoellick Letter, supra note 153, [paragraph] 4; Tahoe-Sierra, 535 U.S. 302.

(166.) See Kelo v. New London, 545 U.S. 469, 488-89; Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 542 (2005).

(167.) See NAFTA Gold, supra note 108, at 129-33.

(168.) Id. at 133-35.

(169.) Id. at 129-33.

(170.) Id. at 155.

(171.) See NAFTA, supra note 21, art. 1110.1; US-SG FTA, supra note 37, art. 15.16.

(172.) See ASEAN-AU-NZ FTA, supra note 50, ch. 11, art. 9. It provides in relevant part:

Expropriation and Compensation

1. A party shall not expropriate or nationalise a covered investment either directly or through measures tantamount to expropriation or nationalisation ("expropriation"), except:

(a) for a public purpose;

(b) in a non-discriminatory manner;

(c) on payment of prompt, adequate, and effective compensation; and

(d) in accordance with due process of law.

2. The compensation referred to in Paragraph 1(c) shall:

(a) be paid without delay;

(b) be equivalent to the fair market value of the expropriated investment at the time when or immediately before the expropriation was publicly announced, or when the expropriation occurred, or whichever is applicable.

Id. CAFTA contains a virtually identical expropriation clause, although "due process of law and Article 1105(1)" is replaced with "domestic laws, including legal procedures." CAFTA, supra note 42, art. 8(1), (2).

(173.) ASEAN-AU-NZ FTA, supra note 50 Annex on Expropriation and Compensation, [paragraph] 2, at 177.

(174.) ASEAN-AU-NZ FTA, supra note 50, Annex on Expropriation and Compensation, [paragraph][paragraph] 3-4, at 177-78.

(175.) Compare ASEAN-AU-NZ FTA, supra note 50, Annex on Expropriation and Compensation, [paragraph][paragraph] 3-4, at 177-78, with Zoellick Letter, supra note 153, at 4(a).

(176.) See supra note 175 and accompanying text (citing comparison of ASEAN-AU-NZ FTA with Zoellick Letter)

(177.) Compare ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(a), at 177, with Glamis, Award, (NAFTA Arb. Trib. 2009), [paragraph][paragraph] 356-57, 364-65.

(178.) NAFTA Gold, supra note 108, at 133-35.

(179.) See ASEAN-AU-NZ FTA, supra note 46, Annex on Expropriation and Compensation, [paragraph][paragraph] 3(b), 3(c), at 177-78; Zoellick Letter, supra note 140, [paragraph] 4(a).

(180.) Compare ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph][paragraph] 3-4, at 177-78, with Zoellick Letter, supra note 153, [paragraph] 4.

(181.) See Zoellick Letter, supra note 153, 4(a)(ii); 2004 U.S. Model BIT, supra note 38, Annex B [paragraph] 4(a)(2).

(182.) Appolo Fuels, 381 F.3d at 1349 (quoting Commonwealth Edison Co. v. United States, 271 F.3d 1327 (Fed. Cir. 2001)); Echeverria, supra note 129, at 184.

(183.) Fireman's Fund Ins. Co. v. United Mexican States, Decision on the Preliminary Question, ICSID Case No. ARB(AF)/02/01 [paragraph] 176(k), at 84 (NAFTA Arb. Trib. 2006), available at http://icsid.worldbank.org/ICSID/ FrontServlet?requestType=CasesRH&actionVal =showDoc&docId=DC624_En&caseId=C207; Palazzolo, 533 U.S. at 617 (citing Penn Cent., 438 U.S. at 124).

(184.) ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(b), at 177.

(185.) See Golden Opportunity, supra note 107, at 422-28.

(186.) See Glamis, Award, [paragraph][paragraph] 356-57, at 364-65; NAFTA Gold, supra note 108, at 129-33.

(187.) Glamis, Award, [paragraph] 799. Glamis found that there had been no violation of an expectations-based right to "fair and equitable treatment." See id. [paragraph] 801.

(188.) Id. [paragraph][paragraph] 599, 620-622, 766, 800.

(189.) See NAFTA Gold, supra note 108, at 147-49; ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(b), at 178.; Zoellick Letter, supra note 153, at [paragraph] 4.

(190.) See NAFTA Gold, supra note 108, at 147-49, 152, 155.

(191.) See S.D. Myers, Inc. v. Canada, 40 I.L.M. 1408, 1443 (NAFTA Arb. Trib. 2000).
   By not identifying any particular methodology for the assessment of
   compensation in cases not involving expropriation, the Tribunal
   considers that the drafters of the NAFTA intended to leave it open
   to tribunals to determine a measure of compensation appropriate to
   the specific circumstances of the case, taking into account the
   principles of both international law and the provisions of the
   NAFTA. In some ... cases, a tribunal might think ... that the
   application of the fair market value standard is not a logical,
   appropriate or practicable measure of the compensation to be
   awarded.


Id.

(192.) NAFTA Gold, supra note 108, at 148.

(193.) ASEAN-AU-NZ FTA, supra note 50, Annex on Expropriation and Compensation, [paragraph][paragraph] 3(c), at 178; Zoellick Letter, supra note 152, [paragraph] 4(a)(iii).

(194.) See Lingle, 54 U.S. at 542-45, 548; Echeverria, supra note 129, at 199.

(195.) See Lingle, 544 U.S. at 537; Kent, supra note 156, at 99-01.

(196.) ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(c), at 178..

(197.) See Kelo v. New London, 545 U.S. 469, 488-89 (holding public purpose determination sole discretion of legislature).

(198.) See, e.g., NAFTA, supra note 21, art. 1110.1.a; ASEAN-AU-NZ, supra note 50, ch. 11, art. 9.1(a); US-SG FTA, supra note 37, ch. 15, art. 15.6.1(a); 2004 U.S. Model BIT, supra note 38, art. 6.1(a); CAFTA, supra note 42, art. 8.1(a).

(199.) See LOWENFELD, supra note 11, at 562. "The requirement of public purpose is generally a tautology because it is the state that has acted for what it considers a benefit." Id.

(200.) Compare ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(c) (describing a broad inquiry considering governmental "objective and whether the action is disproportionate to the public purpose.") with Glamis, Award, [paragraph] 779 (arbitrators not to second-guess governmental action).

(201.) See NAFTA Gold, supra note 108, at 138-46. Glamis concluded that there had not been a violation of the character-based protection of "fair and equitable treatment." See Glamis, Award, [paragraph] 762.

(202.) Glamis, Award, [paragraph][paragraph] 627, 616, 626, 824, 828.

(203.) Id. [paragraph] 779.

(204.) See Zoellick Letter, supra note 153, at [paragraph] 4(a)(iii).

(205.) ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 3(c), at 178.

(206.) ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 4(b), at 178; Zoellick Letter, supra note 153, at [paragraph] 4(b). The US-SG FTA uses the term "protect" instead of "achieve". Zoellick Letter, supra note 153, at [paragraph] 4(b).

(207.) ASEAN-AU-NZ FTA, supra note 53, Annex on Expropriation and Compensation, [paragraph] 4, at 177-78; Zoellick Letter, supra note 153, at [paragraph] 4(b).

(208.) 2004 U.S. Model BIT, supra note 38, Annex B: Expropriation, [paragraph] 4(b).

(209.) 535 U.S. 302 (2002).

(210.) See Glamis, Award, [paragraph][paragraph] 353-66; NAFTA Gold, supra note 108, at 129-35; Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 542-45, 548 (2005); Kelo v. New London, 545 U.S. 469, 488-89.

Jordan C. Kahn, Law Clerk, Judge Evan J. Wallach, 2008-2010, U.S. Court of International Trade; LL.M., International Legal Studies, New York University School of Law, 2008; Assistant Counsel, Tahoe Regional Planning Agency, 1999-2007; J.D., University of Colorado School of Law, 1998; B.S., Political Economy of Natural Resources, University of California at Berkeley, 1994.
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