Waitangi Tribunal Report on the TPPA

The Waitangi Tribunal today released its Report on the Trans-Pacific Partnership Agreement. The headline is that the Tribunal did not find a breach of the principles of the Treaty of Waitangi in relation to the text of the Trans-Pacific Partnership Agreement (TPPA) and the form of the Treaty exception clause (cl 29.6). However, the Tribunal does note a number of serious concerns about the rights of foreign investors to bring claims against the New Zealand government under the TPPA and “the extent to which those claims or the threat or apprehension of them, may have a chilling effect on the Crown’s willingness or ability to meet its Treaty obligations or to adopt otherwsise Treaty-consistent measures”. The Tribunal also makes a number of suggestions aimed at improving government engagement with Māori in relation to international treaty negotiations.

Claimants had initially sought an urgent hearing in June 2015 but at that time it appeared that there was no prospect of a Tribunal inquiry being completed before TPPA negotiations concluded. The Tribunal determined that there would be grounds for an urgent hearing once the text of the TPPA was released. TPPA negotiations continued through until October 2015 and the agreed text was made public on 6 November 2015. The Tribunal then convened an urgent hearing which was held from 14-18 March 2016 and was narrowly focused on two issues:

(a) whether or not the Treaty of Waitangi exception clause is indeed the effective protection of Māori interests it is said to be; and

(b) what Māori engagement and input is now required over steps needed to ratify the TPPA (including by way of legislation and/or changes to Government policies that may affect Māori).

The Tribunal looked to the findings of the Wai 262 Tribunal, which had recommended a sliding scale of Māori engagement in the development of international treaties that would be commensurate with the impact of those treaties on Māori interests. The Tribunal determined that “Māori interests are entitled to a reasonable degree of protection when those interests are affected by international instruments entered into by the New Zealand Government” and noted that it therefore needed to attempt the complex task of assessing the level of Māori interest in the TPPA.  The claimants contended that there were significant Māori interests at stake because the TPPA will restrict the Crown’s policy options across a range of different areas. The Crown, on the other hand, argued that “To the extent that Māori interests are impacted, those interests are primarily held as investors, businesses, or land owners.” The Tribunal disagreed:

“We find ourselves unable to accept the Crown’s characterisation of Māori interests put at issue by the TPPA as simply those they may hold as investors, businesses, or land owners. This seems to us to be an overly reductionist approach to Māori interests, and to the reach of the TPPA. It also misses in fundamental ways the findings and recommendations of the Wai 262 Tribunal.”

The Tribunal undertakes a detailed examination of the text of the Treaty exception. In doing so it relies on the evidence of three key expert witnesses, Dr Penelope Ridings (who gave evidence for the Crown), Professor Jane Kelsey (who gave evidence for the claimants) and Amokura Kawharu (who was commissioned as by the Tribunal). In terms of the scope of the Treaty exception, the Tribunal noted that “[t]he expert witnesses agree that the Treaty exception does not cover each and every act which the Crown might perform in fulfilment of its Treaty of Waitangi obligations.” This suggests to me that the TPPA is likely to constrain the Crown’s ability to implement Treaty-consistent law and policy.

The claimants also raised concerns that the Treaty exception clearly applied to state-state disputes but was unclear as to whether it also applied to investor-state dispute settlement (ISDS). In relation to this point the Tribunal noted

“At one point or another all three of the expert witnesses said that there was some ambiguity. Despite Ridings’ conclusion that the ambiguity is insignificant, this causes us some concern. The fact that the wording is materially unchanged from the Singapore FTA, which did not have ISDS provisions, is also of concern.”

The claimants also raised concerns about the potential chilling effect that potential litigation might have on government policy-making. In respect of these issues, the Tribunal found:

“We do not have the time, expertise, or sufficient evidential base to make findings as to whether the investment regime in the TPPA is likely to chill the capacity or willingness of the New Zealand Government to honour its Treaty obligations to Māori. If the TPPA is ratified, it will be a complex question of fact to determine whether a particular Crown act or omission in the face of an ISDS claim (or the threat or apprehension of one) is the result of prudent risk management, or the improper curbing of legitimate policy action due to a chilling effect. While the debate over the chilling effect can be factually and semantically complex, we do not doubt that it is an issue.”

Importantly, even though the Tribunal ultimately concluded that the Treaty of Waitangi exception in the TPPA offers a reasonable degree of protection to Māori interests, the report also highlights serious concerns in relation to ISDS, stating:

“We are not in a position to reach firm conclusions on the extent to which ISDS under the TPPA may prejudice Māori Treaty rights and interests, but we do consider it a serious question worthy of further scrutiny and debate and dialogue between the Treaty partners. We do not accept the Crown’s argument that claimant fears in this regard are overstated.”

and

“…we remain unconvinced that ISDS under the TPPA is low risk or not substantially different from exposure to ISDS unbder existing FTAs to which New Zealand is party.”

And the Tribunal did appear to leave open the door for future claims challenging Crown actions taken to implement aspects of the TPPA:

“If prejudice is alleged in future because of some Crown action or omission (short of introduction of a Bill) or inaction, then it remains open for Māori to submit a claim alleging a breach of the principles of the Treaty of Waitangi.”

The Tribunal also recommended that the Crown adopt a protocol that would govern New Zealand procedure in the event it became a party to an ISDS in which the Treaty exception clause was relevant. There was agreement amongst the expert witnesses that such a protocol should include:

  • a commitment to invoke the Treaty exception if there is an ISDS case concerning Māori;
  • a policy to lead expert Māori evidence where the Treaty exception may be invoked;
  • amicus curiae briefs for Māori to be encouraged;
  • a policy commitment to regular dialogue and consultation over the course of an ISDS case if it raises issues of concern to Māori;
  • in a case where the Treaty exception clause may be raised, Māori representation could be included as part of the New Zealand team;
  • a commitment to select an arbitrator with knowledge of Treaty principles and tikanga (and investment arbitration); and
  • if necessary, cooperate with the State of the investor to make a joint submission on interpretation of the Treaty exception (in the event it was considered that the arbitration tribunal was at risk of coming to an erroneous view).