Originally from Dispute Resolution in China - Second Edition

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Under investment treaties, states undertake to promote and protect investments made by the investors of the other contracting state(s) in their territory.  A distinctive feature of investment treaties is that they most frequently provide foreign investors with the means to enforce these protections by commencing an international arbitration against the host state (hereinafter “investor-state arbitration”).  This is to be contrasted with the traditional recourses available to foreign investors – action before the domestic courts of the host state of the investment, and diplomatic protection if its own state is willing to exercise it. These options have been, more often than not, unsatisfactory in practice.

The first part of this chapter will survey China’s investment treaty programme (section I).  We will then address the notions of qualifying investor and qualifying investment to fall within the scope of a Chinese investment treaty (section II); before turning to the substantive protections offered by Chinese investment treaties (section III); as well as the means for foreign investors to enforce these protections against the host state of their investments, China here (section IV). Lastly, we will consider various means for foreign investors to enhance their investment treaty protection (section V).

I. China’s Investment Treaty Programme 

China has entered into two types of treaties for the promotion and protection of foreign investment: bilateral investment treaties and free trade agreements, which are together referred to hereinafter as “Chinese investment treaties”.

There are today over 2,930 bilateral investment treaties (“BITs”), i.e. investment treaties entered into between two states.  Although a relatively late starter, entering into its first BIT in 1982 (where other states commenced their BIT programmes in the 1950s), China has since entered into 145 BITs,  more than any country other than Germany.  Most recently, China entered into new BITs with Turkey, Tanzania, Canada, the Democratic Republic of Congo, and Uzbekistan,  and into renegotiated BITs with France, Germany, the Netherlands, the Republic of Korea, the Russian Federation and Switzerland.