As has been expected, in the new NAFTA deal, the Trump administration has significantly scaled back the investment protection/ISDS provisions, which are now found in Chapter 14. One way to think about what happened is that there is no more general recourse to ISDS, but there are three ways you can still use it. In this regard, Article 14.2.4 explains:
For greater certainty, an investor may only submit a claim to arbitration under this Chapter as provided under Annex 14-C (Legacy Investment Claims and Pending Claims), Annex 14-D (Mexico-United States Investment Disputes), or Annex 14-E (Mexico-United States Investment Disputes Related to Covered Government Contracts).
Annex 14-C, para. 6 says:
(a) “legacy investment” means an investment of an investor of another Party in the territory of the Party established or acquired between January 1, 1994, and the date of termination of NAFTA 1994, and in existence on the date of entry into force of this Agreement;
However, the Annex also says:
1. Each Party consents, with respect to a legacy investment, to the submission of a claim to arbitration in accordance with the provisions in Section B of Chapter 11 of NAFTA 1994 and this Annex alleging breach of an obligation under:
(a) Section A of Chapter 11 of NAFTA 1994;
(b) Article 1503(2) (State Enterprises) of NAFTA 1994; and
(c) Article 1502(3)(a) (Monopolies and State Enterprises) of NAFTA 1994 where the monopoly has acted in a manner inconsistent with the Party’s obligations under Section A of Chapter 11 of NAFTA 1994.20 21
3. A Party’s consent under paragraph 1 shall expire three years after the termination of NAFTA 1994.
Without consent to arbitration, there is no automatic right to have your ISDS claim heard, so investment lawyers should take note that legacy investment claims need to be brought soon. I can imagine we will see a rush of filings to beat that deadline.
As for the Annex 14-D claims between the U.S. and Mexico, there are some serious limitations, including this:
Article 5: Conditions and Limitations on Consent
1. No claim shall be submitted to arbitration under this Annex unless:
(a) the claimant (for claims brought under Article 3.1(a) (Submission of a Claim)) and the claimant or the enterprise (for claims brought under Article 3.1(b)) first initiated a proceeding before a competent court or administrative tribunal of the respondent with respect to the measures alleged to constitute a breach referred to in Article 3 (Submission of a Claim to Arbitration);
(b) the claimant or the enterprise obtained a final decision from a court of last resort of the respondent or 30 months have elapsed from the date the proceeding in subparagraph (a) was initiated;
Finally, Annex 14-E applies to particular government contracts, including for oil and natural gas.
There's more to it, but I'll leave it to others to flesh it all out, and just close with a point about politics. Can Republican members of Congress accept scaling investment protection/ISDS in this way? And do the changes go far enough to pick up any Democratic votes?