Abstract

This article discusses the issue of investment arbitration within the context of the EU-China Bilateral Comprehensive Agreement on Investment (CAI) and its implications for the protection of the rights of EU investors. The study focusses mainly on the role and status of Chinese state-owned enterprises (SOEs) in China’s system of governance and economic model to explain the approach of the Chinese government to investor-state dispute settlement (ISDS) mechanisms in the bilateral investment treaties (BITs). Notably, China’s socialist market economy is not intended to be an economy free of state regulation. Thus, within the framework of China’s system of governance, the market conduct and investment activities of Chinese SOEs assume a symbolic role as they reflect the correlation between China’s political and economic processes. Chinese SOEs, with their investment activities, actively contribute to the advancement of China’s economic model. Hence, until such an instrumental view of China’s economic and investment policies will be predominant, any market-access provisions and any types of arbitration mechanisms introduced in BITs will not enjoy an entirely autonomous status. Most likely, these will continue to be regarded as subordinate to policies and rules which are considered by the Chinese government as strategic at a particular time for the promotion of the SOE sector and, ultimately, for the development of the socialist market economy. When considering ISDS mechanisms within the context of EU-China CAI negotiations, many controversies derive from the investment activities of Chinese SOEs in Europe. Here, the already contentious issue of ISDS is enriched by additional concerns depending on the characteristics of Chinese SOEs as potential claimants in investment arbitration procedures.

This paper will be part of the TDM Special Issue on "The Changing Paradigm of State-controlled Entities Regulation: Laws, Contracts and Disputes". More information here www.transnational-dispute-management.com/news.asp?key=1719