EU-Singapore trade and investment protection agreements negotiated

The new EU-Singapore investor protection agreement has still to be ratified by EU law makers, but negotiations over its contents, and that of a new EU-Singapore free trade agreement, were concluded by the European Commission and representatives from the Singapore government earlier this month – 11 years after they began.

There are currently 13 bilateral investment treaties that some individual EU member states, including the UK, France and Germany, have in place with Singapore. These will be replaced by the new investor protection agreement if it is finalised.

The new investor protection agreement provides a new mechanism for businesses to raise complaints over actions by host state authorities that breach the provisions of investment protection where this causes alleged loss or damage to the foreign investor or its locally established company. This might include where the authorities seize business assets, unjustly revoke business licences or otherwise treat foreign investors unfair or unequally compared to treatment afforded to local companies.

The agreement will be interpreted according to the Vienna Convention on the Law of Treaties and other rules and principles of international law applicable between the parties. 

"This is a positive feature which brings certainty to the rules of interpretation and does not leave it to conflict of law principles," said Nicholas Brown, an international commercial dispute resolution expert at Pinsent Masons, the law firm behind Out-Law.com.

Brown said that, before cases are referred to a tribunal for determination under the agreement, parties must have sought amicable resolution as far as possible and must have submitted a request for consultation with the opposite side within prescribed deadlines.

If a dispute cannot be resolved within three months of submitting the consultation request, businesses can then submit a written notice of intent to submit the claim to arbitration and follow up after three months by submitting the claim itself to the tribunal under either the Convention on the Settlement of Investment Disputes between the States and Nationals of Other States of 18 March 1965 (the ICSID Convention), provided that both the respondent and the state of the claimant are parties to the ICSID Convention, the arbitration rules of the United Nations Commission on International Trade law (UNCITRAL) or any other rules if the disputing parties so agree. 

According to the agreement, a panel of three arbitrators will hear and decide on cases in public. The three will be drawn from a membership of six – four of those members will be nominated by the EU and Singapore – two each. The remaining two members, who will not be able to be nationals of any EU country or Singapore, will be jointly nominated. Tribunal members will serve an eight year term and should have specialised knowledge of or experience in public international law.   

The agreement also allows for businesses to pay for arbitration proceedings via third party funding. They will also be able to apply for interim measures of protection before the courts or administrative tribunals in the host state of the authorities prior to initiating proceedings, or while they are pending, before any dispute settlement is issued by arbitration.

It is the first time that a bilateral deal between the EU and a member of the Association of Southeast Asian Nations (ASEAN) has reached the Council of Ministers for approval.

Before they can take effect, the Council must adopt and sign the agreements and the European Parliament must give its consent. The European Commission said it hopes the new trade agreement with Singapore will come into force in 2019. The investor protection agreement will need to be ratified by each individual EU member state.

Brown said: "This may be viewed as a tidying-up exercise, bringing the international relationship under the uniform roof of the EU rather than those of the individual states thereof, however elements of the content are new and the implications of the EU representation both as a host government and an intermediate port for third-party host governments will be significant in the course of time."

According to the Commission, bilateral trade in goods and services between the EU and Singapore accounts for nearly €100 billion a year.

"Over 10,000 EU companies are established in Singapore and use it as a hub to serve the whole Pacific region," the Commission said. "With these agreements, the EU has therefore made an important stride towards setting high standards and rules for the important and fast-growing Southeast Asian region. The deals also represent the first building block of a future region-to-region trade and investment agreement between the EU and ASEAN."

"Singapore is already the number one location for European investment in Asia, with investment between the two growing rapidly in recent years. Bilateral investment stocks reached €256 billion in 2016. As well as offering huge economic opportunities, the trade agreements also include comprehensive chapters on trade and sustainable development; setting the highest standards of labour, safety, environmental and consumer protection; as well as strengthening joint actions on sustainable development and climate change and fully safeguarding public services."