RM.id – Rakyat Merdeka – More than 70 civil society organizations in Southeast Asia have urged the governments of Regional Comprehensive Economic Partnership (RCEP) member states not to include the Investor-State Dispute Settlement (ISDS) mechanism in the RCEP General Review, which is scheduled to begin in 2027.
The call was made at a forum titled “Challenges of a Just Energy Transition in Trade and Investment Agreements” at the Faculty of Law, University of Indonesia (UI), Jakarta, on Wednesday (12 August 2026).
The statement came in response to the 14th RCEP Joint Committee Meeting in Manila, Philippines, which is currently determining the scope of the RCEP review agenda, including provisions on green trade and supply chain resilience.
The civil society coalition argues that the inclusion of ISDS could undermine the public interest, threaten public finances, and hinder just clean energy transition policies across the ASEAN region.
ISDS is a mechanism that allows foreign investors to sue host governments through international arbitration tribunals.
Claims can be filed when a host government is deemed to have violated an agreement between the two countries or when the government introduces regulations considered detrimental to investment.
Rachmi Hertanti, a researcher at the Transnational Institute (TNI), said the ISDS mechanism grants multinational corporations special rights to sue governments when climate policies are deemed detrimental to their investments.
“Billion-dollar claims hinder the realization of a just energy transition because of potential compensation for investor losses and its impact on governments’ fiscal capacity,” Rachmi said.
Data presented at the forum showed that 75 percent, or 192 of the 257 coal-fired power plants still operating worldwide, are protected by at least one ISDS agreement.
Don’t Let ISDS Become a Silent Veto
Meliana Lumbantoruan, Deputy Director of Publish What You Pay (PWYP) Indonesia, warned that ISDS must not become a “silent veto” that constrains Indonesia’s climate policy space.
According to her, governments must have the freedom to implement energy transition policies without the threat of lawsuits from foreign investors hanging over them.
“A truly just energy transition must not force governments to pay twice,” Meliana stressed.
Concerns over the potential fiscal burden posed by ISDS were also raised by Chien Yen Goh of the Third World Network.
She referred to the ConocoPhillips v. Venezuela dispute. In that case, compensation through ISDS was reportedly capable of reaching 11.5 percent of a country’s Gross Domestic Product (GDP).
According to Chien, such circumstances risk worsening fiscal deficits and diverting public funds that should instead be allocated to public welfare and climate financing.
Criticism of ISDS has also been linked to environmental protection and sovereignty over natural resources.
Adam Wolfenden of the Pacific Network on Globalization (PANG), Fiji, said the threat of ISDS claims can place governments under pressure to reinstate mining permits that had previously been revoked to protect Indigenous communities and the environment.
ASEAN Needs Policy Space
Meanwhile, Joseph Purugganan of Focus on the Global South Philippines highlighted the global competition for critical minerals in the ASEAN region.
He said ASEAN countries need policy space to develop green industries and pursue domestic downstream processing without being threatened by lawsuits from foreign corporations.
“ASEAN countries need policy space to pursue downstream processing and develop green industries domestically without being threatened by lawsuits from foreign corporations,” Joseph explained.
Currently, the RCEP investment chapter does not include the ISDS mechanism. However, a provision requiring negotiations on ISDS within two years after the RCEP entered into force is considered to potentially open the door for the mechanism to be introduced during the RCEP General Review in 2027.
Therefore, more than 70 civil society organizations are urging all RCEP member governments to preserve national policy space in addressing climate change and the energy transition.
They argue that such policy space is essential for countries in the region to pursue an energy transition that is just, sustainable, and affordable for communities, without facing the risk of massive compensation claims from foreign investors.
Source: Rakyat Merdeka