Deciphering the Dystrophic Riddle of Trans-Pacific Partnership Agreement's ISDS: Is It Really Worth Joining, Indonesia?

Abstract

Indonesia’s discomfort of being overly exposed to international claims lodged by foreign investors is prominent – up to the point wherein it intended to terminate or let lapse all of its Bilateral Investment Treaties (“BIT”) in 2014. In the same year, Indonesia declared its intention to join the Trans-Pacific Partnership Agreement (“TPPA”), a newly emerging and potentially the largest free-trade agreement worldwide. In light of the foregoing, this Article will focus on TPPA’s investment chapter, particularly the Investor-State Dispute Settlement (“ISDS”) provision, as a ground to justify Indonesia’s intention to join the TPPA considering Indonesia’s well-known discomfort over ISDS provisions currently exist in its BITs. On its façade, TPPA’s investment chapter purports to heal the past wounds inflicted by ISDS systems upon States by containing safeguards to cushion host-States’ common fears of being attacked by foreign investors’ claims. This either tilt heads in disapproval or spark an interest for countries to join. The debatable credibility of TPPA’s ISDS provision gave rise to this Article’s analysis on whether such provision would really console some of the concerns of host-States, specifically Indonesia, in relation to the ISDS mechanism currently in force in their investment treaties.