The shift of Indonesian Government response to investor-state arbitration claim in public interest-related cases

This article aims at analysing factors that influence the changing response of the Indonesian Government to investor-state arbitration claims where public interest issues are involved. This article finds that the government strategy in responding to arbitration threat has been shifting over time. This shift may be found in two different phases. The first phase is when the government tends to avoid arbitration. The second phase is when the government is confident with its position and the result of the arbitration proceeding. This article argues that the combination of two factors contributes to the shift of government response, these are: 1) stable increases of FDI inflows and favourable investment climate; 2) Indonesia's strategic position in the world's competition for energy resources. All of the cases analysed in this article are related to the operation of TNCs in the natural resources sector. This particular sector is generally known as to have the highest potential to hamper public interest. Therefore, the shift of government response is a good signal and a promising development that the government will tend to protect the interest of the public, particularly when the public interest is in conflict with the interest of foreign investors.