China (Shanghai) Pilot Free Trade Zone Investor-State Dispute Settlement: An Uncertain Experiment

Abstract

The China (Shanghai) Pilot Free Trade Zone (PFTZ) is the first free trade zone of the People’s Republic of China (PRC). It seeks to reform the national economy and open it up to foreign investment. This article argues that the suite of legal instruments that establish the PFTZ – the Framework Plan, the Negative List, the Decision, and the Management Method – are legally uncertain and that their legal uncertainty could cause disputes between PFTZ investors and the PRC. To address the problem of legal uncertainty, the article proposes, first, the adoption of a rational connection to the PFTZ as the test for jurisdiction of the PFTZ Court and the PFTZ Court of Arbitration; secondly, the enactment of the Negative List and the Decision as laws in order to clarify their legal status; and, thirdly, a reform of the PFTZ dispute settlement mechanism under the Management Method into an arbitral system.