A proposal for a Council decision on the signing of the Investment Protection Agreement between the European Union and Indonesia, published on 29 June 2026, sets out detailed annexes governing expropriation, dispute settlement procedures, and a code of conduct for panellists and mediators. The annexes provide operational clarity for the agreement, which aims to protect EU and Indonesian investors.
Annex 2-A defines direct and indirect expropriation, specifying that indirect expropriation requires a case-by-case, fact-based inquiry considering economic impact, duration, character, and investor expectations. Non-discriminatory measures protecting legitimate policy objectives—such as public health, safety, environment (including climate change), public morals, social or consumer protection, and cultural diversity—do not constitute indirect expropriation, except in rare circumstances where the measure is manifestly excessive. This provision balances investor protection with the parties' right to regulate.
for the EU, the European Commission or a Member State court or tribunal applying EU State aid law; for Indonesia, the Government of Indonesia. This clarifies which bodies handle investor-state disputes.
Annex 4-A sets out rules of procedure for dispute settlement panels. It governs notifications, appointment of panellists (including selection by lot), expenses based on WTO standards (assistant remuneration capped at 50% of a panellist's), written submissions (complaining party: 20 days; respondent: 20 days after receipt), hearing locations (Brussels if Indonesia is the complaining party; Jakarta if the Union is the complaining party; virtual or hybrid hearings possible), confidentiality, amicus curiae submissions, urgent cases, translation, and replacement of panellists. These rules aim to ensure efficient and fair proceedings.
Annex 4-B establishes a code of conduct requiring panellists to be independent, impartial, avoid conflicts of interest, disclose relevant interests or relationships prior to appointment and throughout proceedings, and perform duties thoroughly and expeditiously. This enhances the integrity of the dispute settlement mechanism.
The proposal now requires adoption by the Council before the agreement can be signed. The European Parliament will need to give its consent for the agreement to enter into force. The detailed annexes are expected to provide legal certainty for investors and reduce the risk of protracted disputes, benefiting both EU and Indonesian businesses. However, some stakeholders may view the broad carve-out for regulatory measures as potentially limiting investor protections in certain sectors.