The text of the TPP, negotiated for about 7 years, was agreed on 5 October 2015.
It is not known how soon it will enter into force (or if at all, being at the whim of each country’s domestic politics)5. It will enter into force when (or if) at least six of the original signatories, who must account for at least 85% of the combined GDP of the original signatories in 2013, have ratified the agreement.6 This means that the TPP cannot enter into force unless both Japan and the United States ratify it.
There are many extant agreements between TPP member countries. Australia, for example, already has an investment agreement with every TPP member country except Canada.7 Although Australia’s existing agreements with Mexico, Peru and Vietnam will terminate on entry into force of the TPP, by side letter,the remainder of Australia’s investment agreements (and indeed, it seems all of the extant agreements between other TPP member countries) will remain in effect. This may mean that a foreign investor has a choice between suing under an existing investment agreement and suing under the TPP and, if it has that choice, will no doubt choose the agreement which provides to it the best protection. However, as discussed below, the curtailed scope of the application of the mostfavoured nation clause in the TPP means that an investor is unlikely to be able to sue under the TPP and rely on better terms in an existing agreement (or the absence of carve outs from investment protection in that existing agreement as found in the TPP). This is because the MFN clause in the TPP is limited in its application to future international investment agreements only.
2.2 The TPP – its terms
Preamble
Non-investment policy objectives rarely appear in the preamble of older international investment agreements (such as the Hong KongAustralia BIT). As a result, tribunals resolving disputes under those agreements have interpreted the standards therein (and any exceptions) in light of the narrow stated object and purpose of the treaty (i.e. investment protection and promotion). The preamble is an aid to the interpretation of a treaty8 and is commonly used by arbitral tribunals to identify the treaty’s object and purpose and to construe its terms.9
By contrast, some modern agreements contain language in the preamble which lists other noninvestment policy objectives (such as the promotion of sustainable development). The preamble to the TPP does this; it expressly recognises a State’s “inherent right to regulate”. It also states that the TPP member countries resolve to:
“preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or nonliving exhaustible natural resources, the integrity and stability of the financial system and public morals.”
This preamble should go some way to identifying areas which will be legitimate areas of regulation, even if that regulation adversely affects an investment of an entity from another TPP member State. However, it is unlikely that the preamble amounts to carte blanche for regulation in the specified areas. Presumably regulation must otherwise be consistent with the terms of the TPP; for example, it must not be discriminatory (i.e. discriminate in favour of domestic investments) and it must be reasonable (interpreted widely) to meet a legitimate policy.
Investor and Investment
The definitions of investor and investment are important to the scope of application of the rights and obligations of an international investment agreement. This is subject to the