Trans-Pacific Partnership agreed

The Trans-Pacific Partnership ("TPP") is a free trade agreement being negotiated by 12 Pacific Rim nations, including Australia, Japan, Malaysia, New Zealand, Singapore and the United States. China and South Korea have both indicated their interest in joining the TPP. The 12 TPP nations represent around 40% of global GDP and one third of world trade.  The TPP is a comprehensive trade agreement which covers all aspects of commercial relations including intellectual property, data exclusivity, investment and competition. 

The full text of the TPP has now been released.  The TPP States are still finalising the text and obtaining approvals in accordance with their domestic laws in order to sign and ratify the TPP.

Investment Chapter

What is protected?

The Investment Chapter protects investments made by investors of one TPP State in another TPP State (TPP Host State). Both "investors" and "investment" are broadly defined.

An "investor" includes a citizen of or company incorporated in a State that is party to the TPP.

An "investment" is broadly defined to include all types of tangible and intangible assets held directly or indirectly, such as property, intellectual property, shares, loans and some contractual rights.  The investment must have certain characteristics of an investment such as the commitment of capital or other resources, the expectation of a gain or profit or the assumption of risk.

The TPP protects an investor against acts or measures by the TPP Host State or a State entity that interferes with or impacts upon the investment.  This includes measures by central, regional or local governments and authorities and any person that exercises government authority such as a state enterprise.

Standards of protection

The investment protections included are:

  • fair and equitable treatment;
  • full protection and security;
  • national treatment;
  • most favoured nation treatment; and
  • no expropriation without compensation. 

There are also provisions relating to the transfers relating to an investment, performance requirements and other protections.

The breach of any of these standards of protection may entitle the investor to compensation.

Carve outs

The TPP provides for a general exception whereby States are not to be prevented from adopting measures that it considers appropriate to ensure that "investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives".

There are also specific exclusions relating, for example, to non-conforming measures in each State (which are set out in Annexures to the Investment Chapter).

ISDS - international arbitration

The Investment Chapter sets out the investor-state dispute settlement provisions ("ISDS"). These provisions give an investor of one of the TPP States the right to bring a claim in international arbitration against another TPP State in which it has made an investment. This means that rather than pursuing a claim in the courts of the TPP Host State, the investor is able to commence a claim in a neutral and independent forum.  Indeed, the TPP provides that when an investor commences a claim in arbitration it must also formally waive any rights to pursue a claim in the national courts (other than an application for interim measures).

The claim brought by the investor is for any actions attributable to the TPP State that are in breach of the investment protections in the Investment Chapter.

Before commencing arbitration, an investor must send a notice of dispute to the TPP Host State requesting negotiations or consultations.  If the dispute is not resolved within 6 months, the investor may commence arbitration.  The investor must first give 90 days notice of its intention to submit the dispute to arbitration before submitting the notice of arbitration.

The Investment Chapter provides detailed provisions for the arbitral process.  It sets out the arbitral rules that may be used, provisions on the appointment of the Tribunal and the conduct of the arbitration.  


The TPP provides a modern and comprehensive approach to investment protection an ISDS.  Once the TPP comes into force, it will encourage investment and provide certain protections for investors of the TPP States.

China-Australia Free Trade Agreement

The Australian government has announced that the China-Australia Free Trade Agreement entered into force on 20 December 2015.  See our summary of the ChAFTA.