The Council of the European Union is being asked to approve the Investment Protection Agreement (IPA) between the EU and Indonesia, concluded on 23 September 2025, which establishes a legal framework protecting EU and Indonesian investors and their investments. The proposal for a Council decision, published on 29 June 2026, sets out the terms of the agreement and requests the Council's adoption after obtaining the European Parliament's consent.
The IPA creates clear standards for investor protection, including non-discrimination, protection against expropriation without compensation, fair and equitable treatment, physical security, compensation for losses due to war or conflict, and free transfer of funds. It reaffirms both parties' right to regulate in the public interest, covering areas such as public morals, social or consumer protection, privacy, data protection, and sustainable development. The agreement includes a dispute settlement mechanism with investor-state mediation and state-state dispute settlement (SSDS). The EU and Indonesia commit to restart negotiations on investor-state dispute settlement and interpretative guidance on taxation and expropriation no later than the IPA's entry into force.
The agreement will not require the EU to amend its rules, regulations, or standards, and has no financial impact on the EU budget. The Council's decision is based on Article 207 of the Treaty on the Functioning of the European Union, which grants the EU exclusive competence over common commercial policy.
Stakeholder impact For EU investors in Indonesia and Indonesian investors in the EU, the IPA provides enhanced legal certainty and protection, reducing investment risk. EU and Indonesian regulators retain their right to regulate in the public interest, ensuring that policy objectives such as environmental protection or public health are not compromised. The dispute settlement mechanisms offer a structured process for resolving investment disputes, potentially reducing the likelihood of protracted legal battles. However, the agreement does not introduce new EU rules or budget implications, meaning no additional compliance costs for EU businesses or taxpayers.
Institutional follow-up The Council will now consider the proposal. Once adopted, the European Parliament must give its consent before the IPA can enter into force. The agreement also includes a commitment to resume negotiations on investor-state dispute settlement and tax-related interpretative guidance, which will require further institutional engagement.