Power, Values of Asia and Its Potential Contribution to the ISDS Reform

CAI CongyanProfessor, School of LawXiamen University, China

E-mail: caicongyan@xmu.edu.cn

A. Description 1: Treaty Rules1. Evolution of Chinese Investment treaties(1) BIT

(2)FTA●FTA ConcludedChina-ASEAN FTA(2004) +China-ASEAN Investment Treaty(2009)China-Pakistan FTA(2006)China-Chile FTA(2005)China-New Zealand FTA(2008)China-Peru FTA(2009)China-Sigapore FTA(2008)Mainland and Hong Kong Closer Economic and Partship Agreement (2003)Mainland and Macau Closer Economic and Partship Agreement (2003)China-Costa Rica FTA(2010)China-Iceland FTA(2013)China-Switzerland FTA(2013)

● FTA under NegotiationChina-GCC(Gulf Cooperation Council) FTAChina-Australia FTAChina-Norway FTAChina-Korea FTAChina-Japan-Korea FTARegional Comprehensive Economic Partnership(RCEP)China-ASEAT FTA Upgrade NegotiaitonsChina-Sri Lanka FTA

● FTA under ConsiderationChina-India Regional Trade Arrangment Joint Feasibility StudyChina-Columbia FTA Joint Feasibility Study

● FTA to Be ConsideredTPP ?

2. ISDS provisions in Chinese investment treaties (1982-1997): ConservativeChina-Mongolia BIT(1991): If a dispute involving the amount of

compensation for expropriation may be submitted at the request of either party to an ad hoc arbitral tribunal.

3. ISDS provisions in Chinese investment treaties(1998-2007): Liberal

China–Barbados BIT (1998):any investment dispute will be allowed to be submitted to ICSID or ad hoc arbitration under the UNCITRAL Arbitration Rules.

4. ISDS provisions in Chinese investment treaties(2008-): Balanceda. Respect for the supremacy of BIT itself b. Respect for the sovereignty of host statec. Limits on investors d. Limits on tribunals

Japan-Korea-China Investment Agreement(2012)Article 15: (State-Investor Dispute Settlement)1. For the purposes of this Article, an investment dispute is a dispute between a Contracting Party and an investor of another Contracting Party that has incurred loss or damage by reason of, or arising out of, an alleged breach of any obligation of the former Contracting Party under this Agreement with respect to the investor or its investments in the territory of the former Contracting Party.

2. Any investment dispute shall, as far as possible, be settled amicably through consultation between the investor who is a party to the investment dispute (hereinafter referred to in this Article as “disputing investor”) and the Contracting Party that is a party to the investment dispute (hereinafter referred to in this Article as “disputing Contracting Party”). A written request for consultation shall be submitted to the disputing Contracting Party by the disputing investor before the submission of the investment dispute to the arbitration set out in paragraph 3

• 3. The investment dispute shall at the request of the disputing investor be submitted to either:... provided that, for the purposes of subparagraphs (b) through (e): (i) the investment dispute cannot be settled through the consultation referred to in paragraph 2 within four months from the date of the submission of the written request for consultation to the disputing Contracting Party; and (ii) the requirement concerning the domestic administrative review procedure set out in para. 7, where applicable, is met.

• 6. Notwithstanding para. 3 and 4, no claim may be submitted to the arbitration set out in para.3 unless the disputing investor gives the disputing Contracting Party written waiver of any right to initiate before any competent court of the disputing Contracting Party with respect to any measure of the disputing Contracting Party alleged to constitute a breach referred to in para.1.

• 7. When the disputing investor submits a written request for consultation to the disputing Contracting Party under paragraph 2, the disputing Contracting Party may require, without delay, the investor concerned to go through the domestic administrative review procedure specified by the laws and regulations of that Contracting Party before the submission to the arbitration set out in paragraph 3.

• 9. The award rendered by an arbitral tribunal established under paragraph 3 (hereinafter referred to in this Article as the “Tribunal”) shall include:

• (a) a finding whether or not there has been a breach by the disputing Contracting Party of any obligation under this Agreement with respect to the disputing investor and its investments; and

• (b) one or both of the following remedies, only if the disputing investor’s loss or damage is attributed to such breach:

• (i) monetary damages and applicable interest; nd (ii) restitution of property, in which case the award shall provide that the disputing Contracting Party may pay monetary damages and any applicable interest, in lieu of restitution.

• 11. Notwithstanding paragraph 3, no claim may be submitted to the arbitration set out in that paragraph, if more than three years have elapsed from the date on which the disputing investor first acquired, or should have first acquired, whichever is the earlier, the knowledge that the disputing investor had incurred the loss or damage referred to in paragraph 1.

• 12. Paragraph 3 (except subparagraph (a)) and paragraph 4 shall not apply to any investment dispute with respect to: (a) the obligations of a Contracting Party under subparagraph 1(b) of Article 9; and (b) the measures of a Contracting Party that fall within the scope of Article 20.

A. Description 2: Investment Disputes1. Investment Disputes Based on Investment Treaties

2. China as a respondent(1)Ekran Berhad v. People's Republic of China (ICSID Case No.

RB/11/15)

1. Chinese investors as complaints(1) China Heilongjiang International & Technical Cooperative Corp,

Qinhuangdaoshi Qinlong International Industrial, and Beijing Shougang Mining Investment v. Republic of Mongolia, PCA Case No. 2009-23

(2) Insurance Company of China, Limited and Ping An Insurance(Group) Company of China, Limited v. Kingdom of Belgium,ICSID Case No. ARB/12/29

(3) Tza Yap Shum v. Republic of Peru, ICSID Case No. ARB/07/6

4. How to explain the huge gap between Chinese BITs and BIT disputes?

B. Rationales

1. Capital-importing state and capital-exporting state（参见《中国对外投资合作发展报告2011~2012》）

2. Politicial approach and legal approach in terms of international dispute settlement

3. Introvertive paradigm and outrovertive paradigm in terms of reforming and opening-up

C. Benefits and Risks

A. Benefits1. Increase of confidence on investment climate in China

2. Improvement of rule of law in China

3. More effective remedy for Chinese investors

B.Risks1. Reducing policy space of China

2. Inducing ‘Litigation Blackmail’

D. Asia and the Reform of ISDS Mechanism

1. Reform of Investor-State Dispute Settlement: In Search of a Roadmap(UNCTAD, 2013)

● Promoting alternative dispute resolution(ADR);● Tailoring the existing system through individual treaty● Limiting investor access to ISDS● introducing an appeals facility● creating a standing international investment court

2. Power and Values of Asia●Power: “Asia Century”● Values: Bangkok Declaration(1993); Transcivilizational Perspective (Onuma)

3. Asian Involvement in ISDS● Respondent States● Investor Claimnts● Tribunal Arbitrators

Table 1：Structure of Nationality of ICSID Arbitrators as Tribunal Presidents(1996～2007) (CONTINUED)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total

Total/Year 5 5 10 9 12 10 19 19 31 20 14 24 178

Switzerland 1 1 2 1 3 2 6 6 3 5 30

U.K. 1 2 1 1 2 2 6 2 4 21

France 1 1 1 1 2 2 4 1 1 4 18

U.S.A. 1 1 1 1 2 6 1 2 15

Spain 2 1 3 2 1 2 11

Canada 1 1 1 4 1 2 2 12

Chile 1 1 1 2 2 1 1 9

Costa Rica 2 2 1 1 2 8

Australia 1 2 1 1 1 1 7

Italy 1 1 2 2 6

Germany 1 1 2 1 5

Argentina 2 1 1 4

Netherlands 1 1 1 3

India 1 1 1 3

Egypt 1 1 1 3

Belgium 1 1 1 3

Greek 1 1 2

Table 1：Structure of Nationality of ICSID Arbitrators as Tribunal Presidents(1996～2007)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total

Mexico 1 1 2

Singapore 1 1 2

Philippines 1 1 2

New Zealand 1 1 2

Venezuela 1 1

Colombia 1 1

Peru 1 1

Lebanon 1 1

Demark 1 1

Thailand 1 1

Barbados 1 1

Ecuador 1 1

Honduras 1 1

Morocco 1 1

Table 2：Structure of Nationality of Non-President Arbitrators (1996～2007) (CONTINUED)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Total/Year 9 12 16 15 24 22 28 38 60 40 30 48 322 U.S.A 2 4 3 2 5 3 3 3 7 8 4 6 50 French 1` 1 2 2 1 5 12 8 4 7 42 U.K. 1 4 2 2 4 3 5 6 3 30 Canada 1 1 6 6 4 4 4 8 32 Mexico 2 1 2 2 2 1 4 4 2 20 Italy 1 1 1 1 1 2 2 3 2 14 Spain 1 2 3 1 2 1 1 3 14 Switzerland 2 1 1 1 5 2 3 15 Germany 1 2 1 3 3 2 12 Australia 1 3 1 1 1 2 1 11 Netherlands 1 1 1 1 4 1 2 11 Belgium 1 1 1 2 1 2 10 Venezuela 1 6 7 Lebanon 1 2 1 1 1 6 Egypt 2 1 1 2 6 Brazil 1 1 1 2 5 Peru 1 1 3 5 Ecuador 1 2 2 5 Uruguay 1 1 1 1 4 Colombia 2 1 1 4

Table 2：Structure of Nationality of Non-President Arbitrators (1996～2007) (CONTINUED)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Chile 1 1 2 4 Argentina 1 2 3 Togo 1 1 1 3 Israel 1 1 2 Austria 1 1 2 Honduras 2 2 Algeria 1 1 2 Cyprus 2 2 Costa Rica 1 1 Guyana 1 1 Barbados 1 1 Philippine 1 1

Sri Lanka 1 1 Dominican 1 1 Guatemala 1 1

Senegal 1 1 Ghana 1 1

Table 2：Structure of Nationality of Non-President Arbitrators (1996～2007)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total

Benin 1 1

Croatia 1 1

Bulgaria 1 1

India 1 1

Czech 1 1

New Zealand

1 1

Argentina 1 1

Singapore 1 1

Gabon 1 1

Serbia 1 1

3. What Can Asian International Investment Lawyers Contribute to the Reform of ISDS Mechanism Considering the Power and Values of Asia?

An epistemic community of international investment law?

Thank you very much!