Overview of the New Indonesia-Singapore Bilateral Investment Treaty

On 9 March 2021, the latest Singapore-Indonesia Bilateral Investment Treaty (the “BIT“) entered into force and updates the countries’ investment protection framework vis-a-vis each other. This BIT was previously signed on 11 October 2018 with the goal of promoting stronger economic ties and cooperation between the countries, and replaces the previous Singapore-Indonesia Bilateral Investment Treaty which had entered into force on 21 June 2006 and expired on 20 June 2016 (the “Previous BIT“).

Singapore and Indonesia have historically maintained strong trade ties with each other. Despite trade disruptions brought about by the COVID-19 pandemic, Singapore was Indonesia’s largest foreign investor in 2020, with investments totalling USD 9.8 billion; the countries also enjoyed strong bilateral trade in 2020 of approximately USD 36.8 billion.

Updates to Singapore-Indonesia investment provisions

We summarise some of the more salient updates to the Singapore-Indonesia investment provisions below (where applicable, Singapore and Indonesia will hereafter each be referred to as a “State“):

  • Broadened express definition of “investment”: Whilst the categories of assets which qualify as an “investment” are not closed, the express definition of assets which fall within the meaning of “investment” for purposes of the BIT has been broadened. In particular, the express definition now explicitly includes inter alia construction, production or revenue-sharing contracts, licences, authorisations, permits and similar rights conferred pursuant to the applicable domestic law, and other tangible or intangible property. However, the overarching requirement is that such assets must have the characteristics of an investment.
  • Most-Favoured-Nation Treatment Clause: Article 5 of the BIT (i.e. the Most-Favoured Nation Treatment clause) clarifies that its provisions will not be construed to oblige a State to extend to the investors of the other State benefits of any treatment, preference or privilege from bilateral investment agreements that were initialled, signed or entered into force prior to the entry into force of the BIT, or geographical arrangements within the framework of specific projects. Article 5 also clarifies that it does not apply to options or procedures for the settlement of disputes available in other agreements, and substantive obligations in other international investment treaties or trade agreements do not themselves constitute “treatment” and will not give rise to a breach of Article 5 per se.
  • Restrictions on transfer of assets: Article 8 of the BIT now clarifies circumstances in which a State may prevent an investor’s transfer of assets out of said State through the equitable, non-discriminatory and good faith application of its laws relating to inter alia, bankruptcy, insolvency or the protection of creditors’ rights; dealing in securities, futures, options or derivatives; criminal or penal offences; financial reporting or record keeping as necessary to assist the authorities; ensuring compliance with judicial and administrative orders or proceedings; or severance entitlements for employees. Article 9 of the BIT also provides that a State may in exceptional circumstances, impose reasonable and non-discriminatory restrictions on the transfer of assets or capital.
  • Right to regulate: Article 11 of the BIT sets out expressly the States’ right to regulate within their respective territories to achieve legitimate policy objectives, and clarifies that the mere fact that a State regulates, including through modification of its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, will not amount to a breach of an obligation under the BIT.
  • Longer pre-arbitration consultation period between disputing investor and State: Article 17 of the BIT provides for a 1 year consultation period (or recourse to mediation processes) before the investor may submit the dispute to arbitration or relevant national court, this consultation period was 6 months in the Previous BIT.

Comparison with previous generation of investment treaties

The above updates to the investment protection framework between Singapore and Indonesia must be seen in context, and it would be apposite to examine the language of the BIT’s articles in light of key characteristics of other investment-related treaties concluded recently in the region.

The Regional Comprehensive Economic Partnership Agreement (“RCEP“) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP“) are similar to the BIT in being modern treaties promoting regional economic partnerships, containing investment protection provisions. The RCEP was signed on 15 March 2020, whereas the CPTPP was signed on 8 March 2018 and entered into force on 30 December 2018.

An examination of the BIT, the RCEP’s investment provisions and the CPTPP’s investment provisions makes clear that these treaties are part of a new generation of investment treaties which rebalances and recalibrates rights and obligations vis-à-vis contracting States and investors. This has been done by inter alia expressly carving out sufficient regulatory space for the host State through express language of investment provisions, and drafting said treaties with the intent of ensuring that tribunals do not interpret investment protection provisions beyond the scope of what contracting States had intended.

In relation to the BIT’s investment provisions specifically:

  • Sufficient regulatory space for the host State: Article 8(3) allows a host State to restrict investors’ transfer of capital into and out of its territory in connection with legitimate regulatory purposes, and Article 9 allows a host State to impose calibrated restrictions in exceptional circumstances where said transfer may cause serious difficulties for the State’s macroeconomic management. Most pertinently, Article 11 expressly provides for a State’s right to regulate, and clarifies that a State’s regulatory acts do not amount to a breach of the BIT’s obligations per se. Such provisions were uncommon in previous generations of investment treaties.
  • Preventing investment protection provisions from being interpreted too widely: It is apparent that the BIT was drafted with the objective of ensuring that tribunals do not interpret its Articles beyond the scope of what contracting States intended. In this connection, the draftsmen of the BIT have drawn lessons from tribunals’ interpretation of previous generations of investment treaty terms to significantly narrow the scope of interpretative uncertainty in the BIT. For example, the BIT curtails the scope of its Most-Favoured-Nation Treatment clause (Article 5) by expressly providing that it does not apply to dispute resolution procedures and substantive obligations in other agreements. In the same vein, the language of the BIT (Articles 3(2) and 3(3)) expressly clarifies what the BIT means by “fair and equitable treatment” and “full protection and security”, in attempts to foreclose the possibility of such provisions being interpreted in an excessively wide manner (as had notoriously been the case for previous generations of investment treaties).

Concluding observations

The BIT serves as a prime modern example of investment treaties which seek to rebalance the distribution of rights between host States and investors, whilst retaining familiar investor State dispute settlement mechanisms which provides for recourse to ad hoc tribunals. This stands in contrast to the other strand of modern investment treaties, which adopts the more drastic approach of doing away with (or phasing out) traditional investor State dispute settlement mechanisms in favour of a public investment court system (e.g. Chapter 8 of the Comprehensive and Economic Trade Agreement). Only time can tell which approach will set the standard for the next generation of investment treaties.


Brexit and Roma: What does the future hold?

Travelling communities – including Roma and Gypsies – are some of the most discriminated against minority groups in Europe. They have long been the targets of prejudice and hate and have experienced widespread inequalities across almost area of society since they have existed. In the UK alone, both Roma and Irish-Gypsies are disadvantaged in the education, health, and business sectors (to name a few). They are regularly discriminated against – by individuals, groups and authorities – and they are often cut off from vital services.

Despite these inequalities, the UK remains a relatively safe place for Travellers when compared to its neighbouring countries, and as such has become a long-standing refuge from states which are less tolerant. In the run up to and during the Second World War, for instance, Romani Gypsies fled Germany and other Nazi-occupied countries for the UK when they were persecuted by the Nazi regime. Equally, over the last century, Roma have fled places like Hungary, Romania, and the Czech Republic where they are commonly the targets of persistent persecution and racism. As such, the UK has historically acted as a refuge of sorts for Travelling communities, with Roma either officially claiming asylum or utilising free movement laws to move here. The latter has long been a core facet to Roma culture, which centres around nomadic principles; the ability to move easily across borders and maintain mobility in this respect is therefore a vital part of their lifestyle.

Brexit, and the end of free movement it promises, greatly threatens the future mobility of Roma and Gypsy communities, both in and outside of the UK. And it does this in multiple ways. Firstly, it threatens it on a fundamental level; the end of free movement will mean that moving from or into the UK from any European country will be more complex at the border. More documentation will be required at customs, and visa restrictions will apply for anyone looking to visit, work in, or study in Britain. This threatens Romani and Gypsy lifestyle principles, as such restrictions would effectively end their ability to be ‘rootless’, as is central to nomadic practices. What’s more, this loss of mobility also presents extra hurdles for those looking to flee persecution and discrimination in other EU countries. Needing to secure a visa, or claim political asylum makes the process that much harder – particularly for groups like Roma who are often cut off from legal services

Equally, Brexit also poses a threat for European Roma populations already living in the UK. Although Johnson and his cabinet may have promised to ensure that the rights of European nationals living in the UK remain the same after Brexit, there are uncertainties about what will happen to those who do not register to keep them in time for the deadline. As it stands, any EU national who arrived in the UK before or during the implementation period (which ends on 31st January 2020), can register for settled status in the UK which secures their right of abode. Currently, there is less than a year to register, and still an estimated 500,000 people yet to do so.

According to Mihai Bica, a representative from the Roma Support Group, a huge portion of this total is made up by members of Roma, Gypsy and Traveller communities. This disparity, she suggests, is down to a combination of three factors: a lack of resources and services to inform Roma of their rights; an inability to access or use the online tools required to register; and a lack of supporting documentation.

In the wake of the Windrush scandal, the idea that Travelling communities could be left to fall through the cracks of the system is extremely worrying, particularly since they are already ostracised from society. Roma and Gypsies have long been the bearers of racism and xenophobia, at both a public and political level. Communities face a string of inequalities across the education, social, health, and business sectors, to name a few. At the other end of the spectrum, they are subject to serious and life-threatening hate crime.

And Brexit has a part to play in this too. Since the referendum result in 2016, hate crime has spiked, rising by almost double in four years; social landscapes have changed drastically and anti-migrant and anti-other attitudes have been normalised in many sections of British society, and even harnessed by pro-Leave groups and organisations.

Unfortunately, though, it is not only in its impact on mobility, status, and attitudes that Brexit is set to hurt Travelling communities. As it stands, the EU currently holds a budget of €11.6 billion for social research and strategy – about 20% of this is dedicated to social inclusion. This is used within minority communities, including Roma, for integration schemes which aim to open up dialogues with and promote the inclusion of Travelling communities. Once the UK entirely leaves the EU at the end of the year, this budget will be lost, and it is unclear what it will be replaced with (if it is replaced with anything at all).

As such, it would seem that Brexit’s threat to the Roma and Travelling communities is three-fold; individuals are set to lose their movement rights, lose access to funding, and be put at a further risk of discrimination and hate crime. Urgent and vast work must be conducted to prevent and address these issues. Support must be given to inform and assist unregistered European Roma living in and entering the UK during the next year, and schemes must be put into place to continue with and improve on EU Roma integration and inclusion efforts. Equally, dialogues must be started in every sector, particularly education which forms the attitudes of children of young people, to promote understanding and representation of Gypsy culture – it is only through this that racist, xenophobic and discriminative attitudes can be challenged.

Luna Williams is the political correspondent at the Immigration Advice Service, an organisation that assists migrants emigrating to the UK and Ireland.    


Iraq Parliament votes to end presence of foreign forces

In a special session on Sunday the Iraqi Parliament approved a resolution that calls for the Iraqi government to end the presence of foreign forces in the country.

The vote comes in response to a US drone strike that killed Iranian General Qassim Suleimani and Iraqi militia leader Abu Mahdi al-Muhandis. Despite the potential difficulties associated with the removal of US troops, Iraqi Prime Minister Adil Abdul-Mahdi ultimately recommended removal to the Council of Representatives. The resolution was passed unanimously by the 172 members in attendance.

US State Department spokesperson Morgan Ortagus said in a statement Sunday, “while we await further clarification on the legal nature and impact of today’s resolution, we strongly urge Iraqi leaders to reconsider the importance of the ongoing economic and security relationship between the two countries and the continued presence of the Global Coalition to Defeat ISIS.”

While explaining the decision to target Suleimani, US Secretary of State Michael Pompeo said in a Sunday interview that the US is preparing for several risks not only “from the proxy militias in Iraq but in the region more broadly along every vector, including cyber.”

Trump signs order banning Huawei in US

US President Donald Trump signed an executive order Wednesday that effectively prohibits US companies from using any telecoms equipment manufactured by China’s Huawei.

The executive order, which has been under consideration for a year, cites the International Emergency Economics Power Act, a law enacted in 1977 that gives the president broad power to control trade in response to a national emergency.

The order does not mention any countries or companies by name. It instead creates a review process that allows the US commerce secretary to review any transactions involving companies that are viewed as posing a security threat to the country, which would include Huawei.

Chinese Foreign Ministry spokesman Geng Shuang said during a daily briefing in Beijing on Wednesday that “for some time, the US has been abusing its national power to tarnish the image of and crack down on specific Chinese companies.” Nevertheless, the United States has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G networks that it calls “untrustworthy.”