The rebus sic stantibus doctrine in international investment law and ASEAN context: the case study of Vietnam

Since the conclusion of the first bilateral investment treaty (BIT) between Germany and Pakistan in 1959, the practices of the BITs have remained solely within the purview of nation states. According to the United Nations Conference on Trade and Development (UNCTAD), BITs are defined as “agreements between two countries for the reciprocal encouragement, promotion and protection of investments in each other's territories by companies based in either country”. A similar definition has been adopted by leading scholars. Therefore, in looking at state practices in BITs and investor-State arbitration cases, pertinent international organizations and most of the literature seem to assume that ‘states’ refers to sovereign states. Nonetheless, this assumption has been challenged recently by borderline cases where ‘states’ refer to something other than what is generally considered a sovereign state. One such example is a supranational organization, of which perhaps the best-known example is the European Union (the EU): a supranational organization with competence transferred to it by sovereign states. With the entry into effect of the Lisbon Treaty (1 December 2009), the EU has been conferred with exclusive competence over FDI. In exercising this new competence, the EU has sought, and been granted, a mandate to negotiate a stand-alone BIT with China (the envisaged EU-China BIT). Even before the entry into force of the Lisbon Treaty, the EU, by virtue of the use of ‘mixed agreements’, has concluded a number of free trade agreements (FTAs) which include an investment chapter. Another example is an unrecognized sovereign state. One such state, largely unrecognized in international community, is Taiwan. Taiwan recently concluded an investment protection agreement with China, which asserts that Taiwan is but a renegade province. But Taiwan has also concluded BITs with India and Japan, neither of which maintain official diplomatic relations with Taiwan. Thus, these two BITs were signed by semi-official agencies or non-governmental organizations with implicit or explicit authority delegated from the national governmental authority. The third anomaly relates to sub-state entities within a federal system, or the special administrative regions of China. One such example is Hong Kong, which using the title ‘Hong Kong, China’, has concluded and maintains a number of bilateral agreements with sovereign states. Using the status of a separate customs territory, Hong Kong has also concluded some FTAs that also include investment chapters. In view of these peculiarities, this article aims to redefine the ‘state’ in international investment law by looking at three anomalies to sovereign states: a supranational organization, an unrecognized state, and a sub-state entity. Referencing the three aforementioned cases, this article argues that sovereign states are not the sole actors in international investment law and policies – there are some subtle, but significant, variations. Specifically, this article explores the attribution difficulties that arise in linking these anomalous actors with their member states, governmental authority, or central government respectively. With regards to investor-State arbitration, there are two pertinent questions. The first concerns where, and against whom, an investment dispute should be brought. The second question relates to the enforcement of an arbitral award. Currently, the International Centre for the Settlement of Investment Disputes (ICSID) regime plays a key role in investor-State arbitration. In view of the fact that the ICSID convention does not provide an opportunity for these three anomalies to participate, this article proposes to soften the state-centric definition of ‘state’ in Additional Facility Rules so as to provide an opportunity for the participation of these three anomalous entities. In so doing, investor’s rights may also receive better protection. Further, given that most free trade agreements include investment chapters, softening the definition of state-centric ‘state’ and including these three anomalous entities will close the gap between trade regime and investment regime, bringing them closer. This article concludes that in exploring the contemporary role of the state in investor-State arbitration, a prerequisite is to redefine the state in a way which would cover many actors other than sovereign states. In view of this new reality, a closer look at attribution will play a key role in defining state responsibility in international investor-State disputes.

PurposeThe purpose of this paper is to analyze the effect of the duration of free trade agreement (FTA) and bilateral investment treaty (BIT) on the foreign direct investment (FDI) flows between OECDs and different level of income countries such as upper- and lower-middle-income countries.Design/methodology/approachThe authors applied the gravity model by adding more variables of interest such as trade openness, export volume, dummy and cumulative variables of FTA and BIT to find out the proper determinants of FDI attraction. Through Hasuman test, the authors find the fixed model is appropriate methodology. Hence, the authors basically use the fixed models to find the effect of the duration of FTA and BIT on FDI flows between different groups of countries.FindingsThe main results of the study are briefly summarized briefly as follows. First, the effects of FTA dummy variables and its cumulative variables are greater than those of BIT dummy variables and cumulative variables. If an FTA signifies attracting FDI as well as bilateral trade, and contains an investment agreement provision in it is included in the FTA, it can be seen that the FTA is more effective way of attracting FDI than BIT because FTA is more comprehensive agreement dealing with not only investment issues but also non-investment ones. Second, the BIT effect on FDI is only meaningful when developed countries invest in developing countries. In other words, when a country decides to invest in a developing country with a relatively poor investment environment, whether to enter into a BIT will provide investors with investment stability to gage the investment climate of the host country. Third, the BIT cumulative year effect showed a positive and significant results on FDI inflow and outflow of all cases, unlike the BIT effect. While the fact that BIT cumulative effect has a relatively less positive effect than the BIT dummy effect, implying that BIT effect was evident as time elapsed after fermentation.Originality/valueThe main contribution of this study is that we consider the duration of FTA and BIT explicitly in the model. Previous related studies tried to find out the effects of FTA and BIT on FDI by simply applying dummy variables of them. In this paper, by applying both dummy variables and cumulative variables of FTA and BIT that capture the duration effect, we can deeply understand the effects of national agreements dealing with investment clauses on FDI more dynamically.

India is the highest importer of foreign capital. The rights of foreign investors are protected through investment treaties, most of which are bilateral. India has recently issued a model bilateral investment treaty (BIT), which would form the basis for negotiating all future BITs. Model BIT is therefore an important statement about state practice. The recently issued Model BIT of 2015 introduces drastic changes in comparison to the 2003 Model BIT. The circumstances of the 2015 Model BIT are very different from the 2003 Model BIT and the change in circumstances has been accounted for the changes that have taken place in the 2015 Model BIT as compared to the 2003 Model BIT. The 2003 Model BIT followed a capital exporting country model, as India was still predominantly a capital exporting state. The 2015 Model BIT aims to protect India’s regulatory space while allowing protection to foreign investors under the BIT. This article analyses the shift in the treaty practice. This Model BIT brings about changes in the definition, jurisdiction, and the scope of protection, access to dispute resolution and introduction of exceptions and carve out provisions. The 2015 Model BIT seeks to reduce India’s exposure to potential investment claims. This shift in treaty practice is important since it has tendency to influence interpretation of treaties.

Law of treaties is one of most important topics in public international law. In recent decades, it has become an overriding issue as a result of the evolution of Bilateral Investment Treaties (BITs). The advent of BITs has led to a significant development of investor-State arbitration cases in which there is a great diversity and uncertainty with respect to the interpretation of BITs by arbitrators. Accordingly, a controversial question arises as to how and on what legal basis treaty interpretation rules are applied by investment arbitration tribunals. The Vienna Convention on the Law of Treaties (VCLT) is the most relevant legal source to treaty interpretation, but it is not the only one. Investment arbitration tribunals sometimes rely on criteria other than those codified in the VCLT, such as prior awards, principle of effectiveness, doctrinal views, treaties and instruments. Treaty Interpretation In Investment Arbitration is a welcome book which pays a...

The Use of Precedents in Investor-State Arbitration: A Legal Analysis

International investment law (IIL) is an attractive subfield within international economic law (IEL). China and Chinese investors are important actors in international investment law and process. With the rise of China, its influence on international investment law and governance is also growing. Since its reform and opening-up, China has been one of the most popular destinations for foreign direct investment (FDI), and since 2008, China has gradually become one of the largest overseas direct investment (ODI) countries. China is an active participant in the international investment regime and has concluded more than one hundred international investment agreements (IIAs), including more than ten free trade agreements (FTAs) with investment chapters. Chinese IIAs have experienced important shifts from the conservative IIAs providing limited investment protection, to the liberal IIAs providing high-level investment protection in the early 2000s, and then to the balanced IIAs protecting investment while safeguarding the regulatory rights of the host state. China has been respondent only in a few investor-state dispute settlement (ISDS) cases. China has also been participating in the ISDS reform process through its IIA practice and at the UN Commission on International Trade Law (UNCITRAL) forum. With the paradigm shift from the liberal IIAs to the balanced IIAs in IIL and the implementation of the Belt and Road Initiative (BRI), China has also been updating its old bilateral investment treaties (BITs) and participating in international investment governance reform. For example, China played the leadership role in the adoption of the G20 Guiding Principles for Global Investment Policymaking in 2016, and, more recently, the negotiations on the agreement on investment facilitation among World Trade Organization (WTO) members. At the domestic level, China has been constantly improving its FDI and ODI laws and system. For example, China adopted the negative list model for foreign investment admission in 2013, and formulated the new and united Foreign Investment Law. In recent years, Chinese investors have been actively participating in international investment arbitration. In international investment law and practice, China has faced many unique or special legal issues nationally and internationally, such as national security screening, transnational investment subsidy, state-owned enterprises’ overseas investment, the applicability of Chinese BITs to Hong Kong SAR and Macao SAR, restrictive arbitral jurisdiction provisions in old Chinese BITs, the role of labor provisions and sustainable development provisions in IIAs, the impact of the China-US trade war on IIL, compulsory technology transfer, the state capitalism debate, the BRI investment dispute settlement mechanism innovation, and the impact of the BRI and even the Chinese Model on the global economic legal order. China’s international investment law and practice and its role in the global economic order have attracted many legal scholars and practitioners both from China and from other countries. Since the 2010s, the study of the interaction between China and IIL has grown rapidly, and much academic literature on this subject has been produced.

In the last decade, international investment law has undergone an explosive growth, which is characterized by the proliferation of Bilateral Investment Treaties (BITs) and a growing number of investment-treaty arbitrations. The effect of BITs on developing countries (host states) can be far-reaching. There are cases when host states attempt to pursue the objectives of sustainable development have interfered with investments of foreign investors, and subsequently have violated BITs. Increasingly, the claim is made that broader societal interests, such as sustainable development, should be incorporated into BITs. In this article, important trends on the role of sustainable development in international investment law are analysed. Examples of states that attempt to incorporate sustainable development in their BITs are compared with states that oppose such reforms. This comparison shows that there is a lack of consistency and consensus on the future of the role of sustainable development in international investment law.

State capitalism is reemerging today. Some governments, notably newly emerging economies such as China and Russia and oil producing countries in the Middle East are placing much emphasis on state-led economic development, and they are making much use of state-owned enterprises (SOEs) to achieve that end. In some cases, SOEs enjoy privileges and immunities that may distort market competition between SOEs and foreign private firms. This paper explores this issue by examining the existing rules of international trade and investment law on competitive neutrality between SOEs and foreign private firms, and tracing the recent attempts of regulating SOEs through free trade agreements (FTAs), and, to a much limited extent, through bilateral investment treaties (BITs), so as to fill the gaps of existing rules of international trade and investment law on SOEs. As state capitalism and competitive neutrality are fairly new issues in contemporary international trade and investment law, it is still hard to know which of the recent attempts at regulating SPEs through FTAs and BITs is more effective than the other, etc. Continuous observation and assessment of the treaty practice is needed before we can reach any meaningful conclusion on this and other issues for the regulation of SOEs under international trade and investment law.

This paper is a submission made in response to a discussion paper issued by the Australian Government Department of Foreign Affairs and Trade in August 2020, as part of a review of Australia’s Bilateral Investment Treaties (BITs). This paper addresses concerns about specific provisions in Australia’s existing BITs, and explains alternative approaches that Australia should, in my view, consider in any renegotiation of its existing BITs. This paper addresses five key topics. Part 2 makes suggestions as to how Australia could further clarify the protection against indirect expropriation, if it chooses to include this protection in any renegotiated agreements. It highlights that provisions aimed at clarifying the indirect expropriation standard in Australia’s more recent Free Trade Agreements (FTAs) and BITs vary substantially, and these variations could have a significant effect on the regulatory space afforded to Australia. Part 3 summarizes concerns about the fair and equitable treatment (FET) provisions in Australia’s BITs and explains the options facing Australia. In summary, Australia could shift to utilizing FET provisions that contain a closed list of the categories of conduct that violate the standard, or could omit any reference to FET, and instead include an exhaustive statement of the types of conduct that are understood to violate the customary international minimum standard. Part 4 addresses general exceptions provisions, which are not included in Australia’s older BITs. It assesses the options facing Australia, including whether to utilize such provisions, and if they are utilized, additional clarifications or alternative drafting approaches that should be considered, beyond Australia’s practice in its recent FTAs and BITs. Part 5 turns to provisions that reaffirm the treaty parties’ right to regulate, which have sometimes been utilized by Australia in the investment chapters of its FTAs. It suggests that these provisions provide interpretative context that may inform how investment protection obligations are construed, and explains additional drafting options that Australia should consider, beyond its existing FTA practice, in any renegotiation of its BITs. Part 6 addresses provisions that exclude certain categories of public welfare measures from investor-state dispute settlement (ISDS), an area where Australia’s recent treaty practice, mainly in the FTA context, has been particularly innovative. It makes recommendations as to how this aspect of Australia’s treaty practice should be consolidated in any renegotiation of its BITs.

States have the practice of protecting foreign investments through investment treaties, designated variously as bilateral investment treaty (BIT); foreign investment protection and promotion agreement; multilateral agreement of investment (MAI), in English; Traité bilatéral d’investissement, in French; and Tratado Bilateral de Inversión, Acuerdo para Promoción y Protección Recíproca de Inversiones, in Spanish. Currently, BITs are an important source of investment protection. A BIT is an agreement executed between two states whose purpose is to promote and protect investments in the territory of one contracting state (the “host state”) made by investors from the other contracting state while furthering the development of both states. Although not all BITs have the same content, most of them contain—inter alia—provisions concerning the definition of investments and investors under the protection of the treaty and the standards of treatment and mechanisms for the settlement of disputes between states or between foreign investors and states. The first BIT was signed between Germany and Pakistan in 1959. At present, there are more than 2,700 BITs in force, concluded not only between developed and developing states, as was their original intent, but also between developing states or between developed states. Some states have a Model BIT, which is used as a basis in investment treaty negotiations. For example, in the last decade the following examples can be mentioned: India 2003 Model BIT, Canada 2004 Model BIT, France 2006 Model BIT, Colombia 2007 Model BIT, Norway 2007 Draft Model BIT, Germany 2008 Model BIT, and United States 2012 Model BIT. Apart from BITs, there are some regional treaties, treaties of commerce, or free trade agreements, that contain a chapter referred to as the protection of foreign investment. For the time being, there is no general multilateral agreement for the protection (and promotion) of foreign investment, despite the attempts to adopt a MAI within the Organisation for Economic Co-operation and Development.

Human rights matters are increasingly becoming interwoven with Arbitration. The fact that, so far, international human rights norms are, as a matter of international law, not directly applicable on a horizontal level -- that is, in the relation between foreign investors and other private parties -- makes it not straightforward to bring claims based on the breach by the foreign investor of human rights obligations before a treaty-based arbitral tribunal. Instead, such obligations exist mainly on the domestic legal level. Also, traditionally, international investment treaties are silent on issues of human rights. Although states have recently effectively included references to human rights norms in their bilateral investment treaties (BITs) and other multilateral treaties (MITs), such as the recently negotiated Draft Pan-African Investment Code (PAIC), the vast majority of contemporary BITs do not mention human rights. There is a global increase in the use of International arbitration as a dispute resolution mechanism especially in international investment disputes and the debates on: (I) obligations of foreign investors to respect human rights of host states, and (II) whether the state can sufficiently maintain policy space alongside Investment treaty obligations with International Investors and the feasibility of enforceability of an award arising from investor-state dispute. The overlap between arbitration and human right matters in Investment arbitration brings to fore the inseparability of these two seemingly distinct areas. The nagging question has been the impact of Investment treaties on the ability of the state to enforce policies which safeguard human rights and the extent of the jurisdiction of an arbitral tribunal in Human right matters arising from International Investment agreements. This is essential because most international arbitration agreements are based on Bilateral or Multilateral investment treaties. The relationship between human rights and international investment law manifests itself in different contexts and directions. Two general and broad approaches concerning human rights law exist from the perspective of investment protection: human rights can be used to support or enlarge claims of investors or they can be used to strengthen the state’s defence of its actions which are taken to respect, protect and fulfil human rights. Similarly, investment law can be viewed in two different ways from the perspective of human rights: it can be seen as creating restrictions on the state’s ability to respect, protect and fulfil the rights of occupants of the state; it may also be perceived as a breach of individual rights of investors under international investment law. This work will discuss the application of arbitration in International Investment disputes, in particular relation to emergence of Human right matters in arbitration of Investor-state disputes. It will consider the circumstances under which human rights concerns can be raised before an arbitral tribunal set up under a BIT, when and how this can be done, the limited jurisdiction of tribunals over human rights matters, and the challenge of finding a balance where there is an overlap between Human rights and arbitration.

A. Introduction When it comes to reasserting control over investment relations, there is no more dramatic measure open to States than seeking to terminate agreements which provide for investment protection and binding third-party dispute settlement. While the many bilateral investment treaties (BITs) concluded in the past few decades may have affected the content and scope of the minimum standard of protection to which foreigners are entitled under general international law, the backbone of the substantive rights enjoyed by investors around the world remains treaty law. Likewise, disputes opposing States and investors can only be brought before international forums if those States give their consent, which they typically do by concluding BITs. Treaty termination may thus come across as an intuitive and effective means to grasp the nettle: by getting rid of the treaties that constrain them, States can recover the room for policy choice that has been taken away by a system of investment protection with which many have become disillusioned. Treaty termination is, however, a constrained means to reassert control over investment relations, at least in the short term. In S.S. Wimbledon , the Permanent Court of International Justice described the ‘right of entering into international engagements’ as an ‘attribute of State sovereignty’, but that judgment made it abundantly clear that once this attribute is exercised, States cannot easily turn back. Indeed, the contemporary law of treaties makes international agreements particularly resilient – or as resilient as the parties wish them to be. To consider to what extent this proposition holds true in relation to investment treaties, this chapter looks into two ways in which States have sought to regain control over their investment relations. The first and most obvious is by attempting to terminate specific BITs by which they are bound. The second is by denouncing the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) with a view to impairing or affecting the application of compromissory clauses in existing BITs. B. Termination of BITs (1) Denunciation and Sunset Clauses The termination of BITs is a matter regulated by the general law of treaties, which is authoritatively articulated by the 1969 Vienna Convention on the Law of Treaties (VCLT).

Contemporary international investment law is directly related to the deepening and intensification of globalisation. In this era of enhanced economic globalisation, with rapidly increasing transnational investment activities, individual countries are becoming more and more dependent on foreign investments. Taking foreign investment as a short cut for domestic economic development, nearly all nations have tried to create a favourable environment to compete with each other in attracting it.1 The frequent incorporation of investor–State arbitration clauses into bilateral investment treaties (‘BIT’s) is one result of such competition. In these circumstances, refusing to enforce arbitral awards made under BITs would be regarded as providing a less favourable domestic investment environment. In order to retain a competitive status, countries seldom fail to enforce such awards. This has actually not only encouraged foreign investors to submit disputes to international arbitrations but also encouraged tribunals to publicise the arbitral awards, as the publication itself will impose pressure on the host countries to implement the awards. Therefore, beyond all doubt, contemporary international investment law must be examined by analysing the operation of the dispute settlement mechanisms relating to international investment, especially the awards made by the International Centre for Settlement of Investment Disputes (‘ICSID’).Established under the Washington Convention of 1965,2 ICSID has played an irreplaceable role in investor-State dispute settlement and become the most important institution for settling investment disputes. In addition to BITs, the Energy Charter Treaty and the North American Free Trade Agreement (‘NAFTA’), many free trade agreements (‘FTA’s) include provisions enabling investors to submit their disputes with host countries to ICSID. This may even be the case for those countries which are not parties to the ICSID Convention; in such cases, the disputing parties need to apply the Additional Facilities of ICSID.3This paper examines some of the fratures of international investment law from the perspective of the New Haven School of International Law, including interpenetration o f internationala nd nationaln orms, participation by arbitral tribunals in interpreting treaties and ascertaining values that parties are supposed to attach to such treaties, and the formation of case law in international investment.

It has been a while since Chinese investors established their dominant presence in Africa. Despite this, most Sino-African BITs are often criticised for failing to strike a balance between promoting Chinese investments and protecting public interests. Thus, this research examines the sufficiency of the existing international legal protections available to Chinese investors in Eritrea, Ethiopia and Tanzania. In doing so, it employs a qualitative research method that is primarily dependent on a comparative legal analysis and thus analyses the China-Tanzania and China-Ethiopia BITs by comparing them with each other and with other more recent BITs. At the same time, it makes a thematic analysis, using the manner in which these BITs define “investment” and “investor”, the favourable treatments they offer, the “regulatory space” and indirect expropriation regime they establish, the ISDS mechanisms they provide access to, and their commitment to safeguard public interests as guiding parameters. It also examines the potential adverse impacts of the absence of a BIT between Eritrea and China on their investment relations. The findings reveal that the legal protections available to Chinese investors vary significantly between the selected countries- from nothing in Eritrea to weak in Ethiopia and to relatively robust and comprehensive in Tanzania. The Sino-Ethiopian investment relationship is governed by an old BIT that has many limitations, making the available legal protections weak. In contrast, the Sino-Tanzanian investment relationship operates under a modern BIT designed to strike a balance between attracting Chinese investment and safeguarding Tanzania’s broader public interests, resulting in comprehensive and robust legal protections. Hence, this research recommends the conclusion of a BIT between Eritrea and China, a replacement (renegotiation) of the China-Ethiopia BIT, and a revision of the China-Tanzania BIT so that environmental concerns, human rights issues, and social development notions, including corporate social responsibility, are addressed adequately. It, in particular, calls Eritrea and Ethiopia to draw lessons from the China-Tanzania BIT, and thereby create a legal environment conducive to Chinese investors while at the same time ensuring that their domestic investors are not chocked and the natural environment and other public interests are not jeopardised

A. Setting the Scene Over the past fifty years, States have signed and ratified more than 3,300 investment treaties – either in the form of bilateral investment treaties (BITs) or free trade agreements (FTAs) with an investment protection chapter. With the exception of the very early BITs (e.g. the Germany–Pakistan BIT of 1959 and the Netherlands–Cameroon BIT of 1966) and the famous US–Australia FTA (which entered into force in 2005), most of the more than 3,300 existing investment treaties contain some form of dispute settlement rules, usually including investor-State dispute settlement (ISDS). By signing and ratifying investment treaties, States have consciously consented to the possibility that investors could bring a claim against them. Apparently, there was and is consensus that concluding investment treaties is beneficial for both Contracting Parties. In fact, States continue to negotiate, sign and ratify investment treaties. Indeed, recent studies show that after ratification of a BIT, foreign direct investment (FDI) flows increase on average by about 30 per cent. However, as the United Nations Conference on Trade and Development (UNCTAD) and the European Commission repeatedly have noted, it cannot be denied that an increasing uneasiness is felt within States, governments, parliaments and certain non-governmental organisations (NGOs) about ISDS and investment treaties. The public debate, though based largely on misperceptions and misrepresentations, has triggered a drive to reform the current ISDS system. In this context, it is important to note that this drive to reform is not limited to Europe but is also taking place in some of the BRICS (Brazil, Russia, India, China and South Africa) countries. For example, Brazil has concluded BITs on the basis of a new model text which does not include ISDS. India has recently published its new Model BIT, which departs significantly from the current ISDS system. Also, South Africa has moved away from ‘old school’ BITs by terminating many of them with EU Member States and replacing them with a new domestic investment law. More recently, within the context of the Transatlantic Trade and Investment Partnership (TTIP) negotiation, the European Commission has proposed the creation of an Investment Court System (ICS) that would create a semi-permanent two-tier court system, which would constitute a significant departure from the existing ISDS system. Indeed, the FTA between Canada and the European Union (Comprehensive Economic and Trade Agreement (CETA)) already contains the ICS proposal.