actually turned its mind to the issue and made the determination. In addition, it seems reasonably arguable that the State must show the decision was made in good faith (i.e. not for a collateral purpose, such as avoiding the operation of the TPP).
Investment Schedules
The TPP also contains Schedules to the Investment Chapter in which each country has listed country specific measures or sectors that are exempt from particular provisions of the Investment Chapter. The exemptions are not insignificant. But, they do not apply to the expropriation protection in the Investment Chapter. Australia, for example, has listed foreign investment policy decisions including decisions made pursuant to recommendations of the Foreign Investment Review Board (FIRB), which regulates significant investments into the country. Australia has also reserved the right to adopt or maintain any measure (for example):
• according preferences to Indigenous persons; • with respect to the provision of law enforcement and correctional services; • with respect to social services established or maintained for a public purpose such as social welfare, public education, child care, public utilities, public transport, and public housing; • with respect to the creative arts, Indigenous cultural expressions and other cultural heritage; • with respect to gambling and betting.
2.3 Does the MFN clause undo all of the work of the TPP protections?
Some commentators have suggested the most-favoured-nation clause in the TPP undermines the protections therein to the extent that it allows an investor from a TPP member country to (for example) import substantive
protections38 or more favourable definitions39 or to bypass procedural preconditions to arbitration[40] from another BIT. In our view, it does not do so.
First, although it is unsettled as to whether an investor can use a MFN clause to bypass preconditions to arbitration (such as the requirement to litigate a dispute in the local courts for a certain period of time before submitting the dispute to arbitration), this issue does not arise under the TPP because the MFN clause (at Article 9.5(3)) expressly excludes dispute resolution from its scope. In any event, the procedural preconditions to arbitration in the TPP are competitive, as discussed below.
Secondly, Australia’s Schedule to Annex II to the Investment Chapter expressly excludes past treaties from its scope. It says:
“Australia reserves the right to adopt or maintain any measure that accords more favourable treatment to any service supplier or investor under any bilateral or multilateral international agreement in force or signed prior to the date of entry into force of this Agreement.”
Indeed, all of the TPP countries appear to have expressed in some form that the MFN clause will not extend to legal protections in treaties that are currently in force; they will extend only to protections in those treaties a host country signs in the future.
This means, for example, an investor cannot argue that Australia should be liable for