ReSolution Issue 11, Nov 2016 | Page 44

Article 9.14 will not operate automatically. The right to deny will need to be exercised through positive action by the TPP member
country in question (such as an exchange of letters with the relevant investor).16

“Investment” is defined widely and is again based on US investment treaties (including the Australia-US FTA).17 The definition
sets out numerous specific (but non-exhaustive) examples of an investment including intellectual property rights, equity participation in an enterprise and construction contracts and other similar contracts. The definition of “investment” expressly excludes “an order or judgment in a judicial or administrative action”. In addition, the TPP also requires that the asset has the “characteristics of an investment” such as the commitment of capital, the expectation of gain or profit, or the assumption of risk. This is not a new test.18
It is, however, an additional hurdle for an investor to meet when bringing a claim.

Article 9.8: Expropriation and Compensation

The obligation on TPP member countries not to expropriate is described in terms with which we are already familiar. The language used is almost identical to that used in each of the existing investment treaties Australia has with TPP member countries.

Under Article 9.8, a Party must not expropriate or nationalise a covered investment, directly or indirectly though measures equivalent
to expropriation or nationalisation, except:

• for a public purpose – which is said to be a reference to a concept in customary international law.19

• in a non-discriminatory manner,

• on payment of prompt, adequate and effective compensation; and in accordance with due process of law.

As discussed below, Article 9.8 is to be interpreted in accordance with Annex 9-B.

By Article 9.8(6), the concept of ‘expropriation’ is clarified and narrowed. A State’s decision not to issue, renew or maintain a subsidy or grant, or to modify a subsidy or grant, absent a legal or contractual commitment to do so, or in accordance with the terms of the subsidy or grant, does not of itself constitute expropriation.











It is worth mentioning that the Hong Kong-Australia BIT, on which Philip Morris Asia relied, uses “deprivation” language only in its
expropriation clause, which is atypical of investment agreements.20 Article 6(1) of that treaty requires that investors “shall not be
deprived of their investments nor subjected to measures having effect equivalent to such deprivation”. This language, which prohibits
the “deprivation” of an investment, is significantly wider than the language in the TPP, which prohibits expropriation. The term
“expropriation” carries with it the connotation of a “taking” of a person’s property with a view to transferring ownership of that
property to another person (such as the State).21 By contrast, a “deprivation” can occur without a ‘taking’.22

The meaning and scope of “public purpose” under customary international law is obviously important. The tribunal in ADC Affiliate
Ltd v The Republic of Hungary23 stated that the treaty requirement of “public interest”24 requires some “genuine interest of the
public”. Andrew Newcombe and Lluis Paradell state that, at the very least, there must be some demonstrable public interest or genuine public