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The Future of Investor-State Dispute Settlement: Exploring China’s Changing Attitude

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Handbook of International Investment Law and Policy

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Abstract

The legitimacy of investor-state dispute settlement (ISDS) system has come under fire in recent years, and the call for reform or even transformation of global foreign direct investment governance is in vogue, with proposals ranging from incremental improvement of the current system to a radical paradigm shift for a wholesale replacement. Given its economic scale, China’s position in ISDS reform will undoubtedly carry considerable weight in shaping the future of the ISDS system. This chapter intends to map out China’s interaction with the ISDS over the past 30 years as well as explain China’s attitude toward the ongoing ISDS reform. We argue that China’s switch from “light” to more strategic “heavy” engagement with the ISDS goes hand in hand with China’s shifting role from a major capital importing state to a key hybrid regime of capital importing and exporting state. This switching position also matches China’s more ambitious stance to be part of the global economic governance system reform. ISDS reform can be a good opportunity or window for China to voice its ideals in the international investment sphere.

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Notes

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    Ibid., para 122

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    Ibid., para 126

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    SGCA distinguished a number of arbitral awards relied upon by the Lao government, where arbitral tribunals had arrived at narrow interpretations of dispute resolution clauses that also referred to “the amount of compensation.” SGCA paid particular attention to the differences in language and architecture of the various BITs under consideration, as well as the interpretative context, placing particular emphasis on whether the BITs underexpressly demarcated the determination of the legitimacy of the expropriation from the amount of compensation, and whether there was a fork-in-the-road provision.

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    China Heilongjiang International Economic and Technical Cooperative Corp v Mongolia, above n 26, paras 435–454

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    Ibid., para 447

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    Ibid., paras 448–449

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    Ibid., para 451

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  82. 82.

    Under Article 8(3) of the BIT, the tribunal’s jurisdiction is limited to expropriation. Jurisdiction over all other matters is subject to specific agreement. Those “other matters” include the interpretation of the MFN clause in the first place. This means that the tribunal actually lacks the subject matter jurisdiction to consider whether MFN can be applied to expand subject matter jurisdiction.

  83. 83.

    Tza Yap Shum v. Republic of Peru, Para 216

  84. 84.

    Ibid., para 206

  85. 85.

    However, the tribunal appeared to be mistaken in its reasoning. The tribunal took an effect utile approach by differentiating between the application of the MFN clause based on an a priori categorization of general and specific provisions. This is unsound as the purpose of the MFN clause is to establish and maintain at all times fundamental equality without discrimination among all the countries concerned.

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  109. 109.

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  110. 110.

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  111. 111.

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  113. 113.

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  115. 115.

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Authors and Affiliations

  1. Durham Law School, Durham, UK

    Ming Du

  2. Shanghai Jiaotong University Law School, Shanghai, China

    Wei Shen

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  1. Ming Du
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  2. Wei Shen
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Correspondence to Ming Du .

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Editors and Affiliations

  1. Faculty of Law, The Chinese University of Hong Kong, Shatin, Hong Kong

    Julien Chaisse

  2. Professor of International Law; and Director of the Research and Innovation Theme in Democratic Citizenship, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

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Du, M., Shen, W. (2020). The Future of Investor-State Dispute Settlement: Exploring China’s Changing Attitude. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_86-1

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