Article from: TDM 4 (2010), in Editorial
We are pleased to present this special issue of Transnational Dispute Management. In this issue, over a dozen articles by practitioners and academics from Asia, Europe and the United States examine the theory and practice of the resolution of trade and commercial disputes in and connected with China.
China's rapid economic development continues unabated despite the recent global financial crisis. Much of this growth has been driven by inward foreign investment, although outbound investment by China in search of secure supplies of natural resources to feed its growing economy has also greatly increased in recent years. A natural consequence of all this economic activity has been a steady rise in the number of disputes between Chinese and foreign parties.
Arbitration is frequently preferred to litigation for the resolution of these disputes, for the usual reasons of neutrality, flexibility, confidentiality, cost and, most importantly, greater ease of cross-border enforcement. Practitioners unfamiliar with arbitration in China will find Felix Hess's survey of the arbitration environment in China useful. Clarisse von Wunschheim and Professor Romesh Weeramantry each examine in detail the potential for and challenges of enforcing arbitration awards in China. The Hong Kong SAR has retained its own arbitration regime, and Frances van Eupen provides an overview of its recent new Arbitration Ordinance.
Investment treaty arbitration was until recently not considered a viable option because the bilateral investment treaties entered into by China offered negligible protections. Only a handful of China-related treaty arbitrations have been commenced to date, all by Chinese investors against foreign states. However, recent BITs entered into by China offer a wide range of protections and so it should only be a matter of time before we see more treaty arbitrations involving China, including claims brought against China itself.
Several articles address the potential for such arbitrations and discuss how well or poorly they anticipate this system of dispute resolution to function. Kim Rooney offers an analysis of the jurisdictional difficulties facing investors who bring claims under the "first generation" of Chinese BITs, which had weak dispute resolution provisions. However, Ms. Rooney anticipates that investors who bring claims under the "second generation" of China BITs are more likely to receive effective investment protections because they include broad dispute resolution provisions and investment protections. Elodie Dulac observes that there is now a "third generation" of China BITs, which have effective dispute resolution provisions but more limited investment protections. Ironically, as Dr. Nils Eliasson points out, Chinese investors in natural resources in African states are less likely to receive effective investor protections because many African states signed first generation BITs with China.
Other authors examine specific aspects of the Chinese investment treaty regime. Warren H. Maruyama, Jonathan T. Stoel and Charles B. Rosenberg discuss potential difficulties in concluding a U.S-China BIT in light of the different approaches that each state has towards investment protections and dispute resolution. Priscilia Lam Tsz-Ying tests the investment treaty regime by considering how a hypothetical German investor would bring a claim against China. Zizhen Chen explores whether the Chinese investment treaty regime ought to protect the free speech rights of foreign investors, such as Google. Ms Chen's timely article attempts to harmonize conflicting policies of human rights, investment and sovereignty.
With China's economic growth, it has become an exporter of capital, raising legal and policy questions for Chinese investors and the states in which they invest. Heikki Marjosola answers some of these questions in the context of China's sovereign wealth funds. Joseph Doleschal-Ridnell addresses the competing desires of Australia for Chinese capital and to protect its industries from interference by Chinese investors, and proposes ways to balance those concerns through reforms to the investment treaty regime between the two states. Dr. Eliasson takes a careful look at Chinese outbound natural resources investments and the protections that they may or may not receive. Cameron Hassall, Christopher Yates, Joseph Chu and Antony Crockett address state immunity in Hong Kong and China, an issue that will often arise when Chinese investors attempt to enforce arbitral awards against host states with assets in Hong Kong and China.
The pace of economic growth and accompanying legal innovation in China is staggering. While we do not necessarily agree with every view of the authors, and might not have used their research methods, we hope that the articles and comments in this Special Edition collectively convey a sense of the profound changes that are taking place and provide useful and thought-provoking information and analysis of investment and dispute resolution developments concerning China.