A Draft ISDS Protocol
We are currently seeking feedback on a Draft Investor-State Dispute Settlement (ISDS) Protocol.
The Waitangi Tribunal, in its report on the Trans-Pacific Partnership Agreement (WAI 2522), considered the issue of the Treaty of Waitangi exception clause in New Zealand’s free trade agreements. While the Tribunal accepted that the clause offered a reasonable degree of protection to Māori interests under the Treaty of Waitangi, the Tribunal made a suggestion that the Crown develop a protocol on ISDS.
The protocol would contain procedure and practices that the New Zealand Government would put in place where the Treaty of Waitangi exception in our free trade agreements might be part of New Zealand's defence.
While there has never been an ISDS case taken against New Zealand under a free trade agreement or bilateral investment treaty, the Government has been considering the Tribunal's suggestion.
In 2018 we began talking with Māori groups and individuals that are either directly involved in the WAI 2522 case, or have interests in trade and investment. Specifically, we asked for their perspective on:
- the Tribunal's suggestion, and
- what procedures a protocol might set out.
Based on their feedback, we put together a paper which suggested potential elements for the protocol on ISDS [PDF, 185 KB]. This paper was circulated widely to iwi, Urban Māori Authorities, and other interested Māori groups for feedback and consultation between 30 October and 21 December 2018.
Based on the feedback we received, we have now created a Draft ISDS Protocol document [PDF, 131 KB].
The protocol includes a commitment to inviting a legal expert of the Treaty of Waitangi and related issues to be part of the Crown team in defending a case. It also:
- sets out how such a person could be selected, and
- makes commitments around transparency during a dispute.
The draft document remains a work in progress as we continue our dialogue with Māori. As well as being published on this website, the draft protocol is being circulated by email to iwi, Urban Māori Authorities, and other interested Māori groups for final feedback.
To provide further context about how we arrived at this draft stage, we've created a Draft ISDS Protocol Explanatory Note [PDF, 108 KB]. This sets out the general themes of feedback received during our consultations and explains our response.
Feedback we receive about the Draft ISDS Protocol document will inform the finalisation of any ISDS Protocol.
Feedback deadline: Friday 28 February 2020
- to provide your feedback in writing
- to arrange for direct engagement with Victoria Hallum, Chief International Legal Adviser at MFAT, who is leading the process to develop the ISDS Protocol, or
- if you have any other questions.
What is ISDS?
Under several of New Zealand’s existing free trade agreements, New Zealand, and its partners, have committed to a framework of investment obligations, which set out the treatment they must provide to each other’s investors. Where a dispute arises about the implementation of these obligations, investors can directly resolve their dispute through a mechanism called ‘investor-state dispute settlement’ or ‘ISDS.’ Under ISDS, a covered foreign investor may be able to bring a claim against the New Zealand government before an international arbitral tribunal.
There are two types of ISDS mechanisms - compulsory ISDS and consent-based ISDS. Compulsory ISDS means New Zealand has provided prior consent to arbitrate disputes, whereas under consent-based ISDS provisions investors require consent from New Zealand to proceed to arbitration. This follows the general principle that a State must consent to be held accountable in a court of law outside its own jurisdiction.
While ISDS has been included in a number of New Zealand’s existing free trade agreements (for example, in the CPTPP and in the China-New Zealand FTA), the Government opposes the inclusion of ISDS in future free trade agreement negotiations.
What additional protections relating to ISDS are included in the CPTPP?
Read more about ISDS in the CPTPP here.
What is the Treaty of Waitangi exception clause?
Each of our free trade agreements includes a range of safeguards which could be invoked by New Zealand to successfully defend a claim from an investor that New Zealand had breached its investment obligations. One of these protections is the Treaty of Waitangi exception clause.
Combined with other provisions, this exception protects the Government’s ability to adopt policies that fulfil its obligations to Māori, including under the Treaty of Waitangi. The exception also excludes the interpretation of the Treaty of Waitangi by an arbitral tribunal.
How do I express my views about trade policy issues that aren’t covered by the ISDS protocol?
You can contact us about any trade agreement at any time at FTA_Outreach@mfat.govt.nz. Find more information on how the government consults on trade agreements as well as recent and upcoming face-to-face consultation meetings here.