China and Investor-State Dispute System: Cases, Issues and Implications

Abstract

This article summarizes China’s limited involvement in ISDS system, discusses the issues revealed and explores the implications of China’s policy and practice toward ISDS for stakeholders. Some issues are China-specific, such as status of SAR investor and IIAs, while some issues are among the commonly-encountered ones stemming from the combination of ad hoc arbitration with concise IIAs, such as application of narrow-worded ISDS provision and standard of expropriation. Future China-related investment disputes will be still subject to political uncertainty, namely the extent to which Chinese governments are willing to be directly exposed to ISDS tribunals, as well as legal uncertainty associated with diverse and loose-drafted IIAs. However, an open-minded and forwarded thinking on China’s active ISDS policy calls for a de-politicization process of ISDS adjudication in China at both domestic and international level. At national level, it is critical for Chinese government to improve its Rule of Law based national capacity building in lodging and defensing ISDS cases. At international level, it is the time for China and all stake-holding states in ISDS system to refine the whole ISDS system systematically to accommodate the changing expectations by inter alia initiating another round of negotiations on Multilateral Framework on Investment.