The 'noodle bowl effect' of investment treaties in Asia: The phenomenon, the problems, the practical solutions

The 'noodle bowl effect' of international investment agreements (IIAs) is a serious challenge posed to the coherence and legitimacy of international investment law in the Asian region where there is the highest density of IIAs in the world. While trade disputes are state-to-state, an investment dispute involves investors who try to protect their investment using IIAs, such as the well-known case of Philip Morris, which launched proceedings against Australia via an Asian subsidiary using the Hong Kong-Australia investment treaty. Furthermore, each IIA can allow the importing of 'better' provisions from other IIAs using its most favoured nation (MFN) clause, which significantly complicates the interpretation of IIAs. There are three ways to mitigate the problem. First, the scope of MFNs should be carefully drafted to limit the 'mobility' of provisions, eg MFN treatment does not apply to investor-state dispute provisions or older IIAs. Second, while investors are mobile and tend to relocate their base to seek convenient IIA protection, there should be some discipline on such relocations. Just to fight against the policy in question, IIAs should not create an incentive for investment relocation. Third, the 'mobility of countries' should be enhanced by allowing them to join existing IIAs favourable to their investors and investments.