MOST FAVORED NATION TREATMENT OF SUBSTANTIVE RIGHTS & INVESTMENT ARBITRATION IN CHINA

Prof. Zhao Hong, Ph.D Minister Counsellor Permanent Mission of China to WTO Investment Arbitration: a perspective of China

Outline Arbitration: a means of dispute settlement within BITs CIETAC arbitration: a comparative view

BITs of China General perspectives The first case Evolution of Investor-state dispute settlement provision

General features of BITs of China Start from 1980s EU style Proliferating quickly: over 130 Investor protection, rather than market accession Three generations early 1980 mid century

The “first” case Whether the HK citizen a qualified investor under BIT between China and Peru Issue of consent Opposition of jurisdiction Future implications

Arbitration provision within BITS

China-Sweden BIT in 1982 The first BIT of China No investor- state dispute settlement provision Only state-state dispute settlement But there were very few cases like this (e.g. Thailand)

China BITs in 1990s All has investor-state dispute settlement provision only amount of compensation for nationalization and expropriation cannot be settled through negotiations within six months, could be submitted to international arbitration upon the request of investor For all other investor-state disputes, consent is required before submitting to international arbitration

China BIT Model text 2003 ARTICLE 9 SETTLEMENT OF DISPUTES BETWEEN INVESTORS AND ONE CONTRCTING PARTY 1. Any legal dispute between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of the other Contracting Party shall, as far as possible, be settled amicably through negotiations between the parties to the dispute. 2. If the dispute cannot be settled through negotiations within six months from the date it has been raised by either party to the dispute, it shall be submitted by the choice of the investor: to the competent court of the Contracting Party that is a party to the dispute; If the dispute cannot be settled through negotiations within six months from the date it has been raised by either party to the dispute, provided that the Contracting Party involved in the dispute may require the investor concerned to go through the domestic administrative review procedures specified by the laws and regulations of that Contracting Party before the submission to the ICSID. Once the investor has submitted the dispute to the competent court of the Contracting Party concerned or to the ICSID, the choice of one of the two procedures shall be final. 3. The arbitration award shall be based on the law of the Contracting Party to the dispute including its rules on the conflict of laws, the provisions of this Agreement as well as the universally accepted principles of international law. 4. The arbitration award shall be final and binding upon both parties to the dispute. Both Contracting Parties shall commit themselves to the enforcement of the award.

China BIT model text 2010 ARTICLE 13 SETTLEMENT OF DISPUTES BETWEEN INVESTORS AND ONE CONTRACTING PARTY 2. If the dispute that an investor of one Contracting Party claiming that the other Contracting Party has breached an obligation under Article 2 through 9 can not be settled through negotiations within six months from the date it has been raised by either party to the dispute, the disputing investor who incurred loss or damage from that breach may, by his choice, submit the claim: to the competent court of the Contracting Party that is a party to the dispute; to International Center for Settlement of Investment Disputes (ICSID) under the Convention on the Settlement of Disputes between States and Nationals of Other States, done at Washington on March 18,1965, for arbitration; to an ad-hoc arbitral tribunal to be established under the Arbitration Rules of the United Nations Commission on the International Trade Law (UNCITRAL); or to any other arbitration institutions or ad-hoc arbitral tribunals agreed by the disputing parties. The other Contracting Party may require the investor concerned to exhaust the domestic administrative review procedures specified by the laws and regulations of that Contracting Party before the submission to international arbitration.

Arbitration in CIETAC Cases received, No. 1 International arbitrator Qualified secretary international consistent Working rules Mediation ( only when parties agree) Low cost of fees Awards enforceable among 144 Members of NewYork Convention

Thank you Prof.Zhao Hong, Ph.D Minister Counsellor Permanent Mission of China to WTO