Investor State Dispute Settlement (ISDS)

Summary

​Investor State Dispute Settlement (ISDS)
ISDS is a mechanism that is included in a Free Trade Agreement (FTA) or an investment treaty to provide foreign investors, including Australian investors overseas, with the right to access an international tribunal if they believe actions taken by a host government breach its investment obligations.  
Australia has negotiated ISDS provisions over the past three decades to provide protection for Australian companies investing abroad.  ISDS promotes investor confidence and can protect against sovereign or political risk.  An investor can have their claim determined by an independent arbitral tribunal without having to rely on domestic legal remedies.  ISDS cases are usually decided by three arbitrators who are independent of both the government and the investor.
ISDS provides an opportunity for foreign investors, including Australian investors, to protect their investments overseas.  A foreign investor can use ISDS to seek compensation for certain breaches of a host state’s investment obligations – for example, obligations in relation to expropriation, non-discrimination and minimum standards of treatment (such as protection against denial of justice).  Investment obligations may also include a commitment to ensure that foreign investors will be able to move capital relating to their investments freely, subject to appropriate safeguards.
A confidential briefing paper was produced by an independent consultant (co-funded by MLA) to assist the National Farmers' Federation (NFF) and its members (CCA / SCA) in understanding and developing an approach on investor state arbitration in bilateral and regional trade agreements (FTAs).  
The written report remains the property of NFF and has been distributed to industry as appropriate.