Published 23 June 2020
With the rise of state capitalism, state-controlled enterprises (SCEs) have been evolving and their activities are becoming more complex, both in terms of ownership, control and their business development strategies. Against this background, this article first argues that international investment law, as it stands now, is insufficiently equipped to deal with the level of structural and managerial flexibility that some SCEs have attained today. While early tribunals have tried to create some bright line rules in regard to the notions relating to SCEs, their efforts eventually prove futile. Given various ambiguities in relevant customary rules, tribunals today seem to rely on an eclectic approach that is highly fact-sensitive, leading to much legal uncertainties and scholarly criticisms. This article proposes two extra-legal tools that can guide future tribunals in their determination of the legal status of SCEs. Firstly, it is submitted that they can invoke relevant rules in international trade law, such as law of the World Trade Organization (WTO) and other new trade deals applicable between the parties. One the one hand, judicial bodies of the WTO have produced abundant case law concerning the notions of SCE. On the other hand, unlike the majority of early investment treaties, some recent trade deals have addressed to the current state of SCEs. They can be invoked on the basis of Art. 31(3) and Art. 32 of the Vienna Convention on the law of treaties. Secondly, it is submitted that they may refer to national competition rules. These rules can offer more insight to how the entities are treated in their own legal systems. By paying due respect to domestic legal regimes, tribunals can alleviate the concern that international law is unfairly biased against developing States.
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