Research On Legal Issues Related To The State-Owned Enterprises As Special Subjects In Foreign Direct Investment

In foreign direct investment,the special subject identity of state-owned enterprises(SOEs)gives rise to a series of legal issues in fair competition,fulfillment of corporate social responsibility and judgement of their subjects in international investment arbitration.Our in-depth analysis of these legal issues in this paper allows us to explore effective countermeasures to respond to the above legal issues and propose legal suggestions to improve the international investment environment and avoid legal risks for Chinese SOEs in foreign direct investment.This paper consists of four chapters.The first chapter is a general introduction of SOEs,mainly focusing on the concept of SOEs and the legal woes they face in foreign direct investment due to their special identities.The SOEs discussed in this paper are of both business and policy nature,with absolute control by state-owned capital.The outstanding contributions made by SOEs in promoting international investment are self-evident,especially Chinese SOEs,which have shown robust performance in international investment.Yet SOES have encountered a series of legal issues in foreign direct investment in recent years,such as competition,social responsibility and determination of their subjects in international investment arbitration,which have impacted them in carrying out international investment activities.The systematical study of the above legal issues as an effort to find appropriate solutions is of great theoretical and practical significance to promote the sound development of international investment and to remove the obstacles for Chinese SOEs’ globalization.The second chapter mainly discusses the legal issues of competition in SOEs’ foreign direct investment including the principle of "competition neutrality" and the new development of state review policy instruments.The "competition neutrality" principle can have both positive and negative effect on SOEs’ foreign direct investment: on the one hand,it can promote the modernization of SOEs in each country,and on the other hand,it can also become theoretically an instrument for certain countries to protect their native enterprises by restricting foreign SOEs.The new developments in national review policy tools such as countervailing review and security review in Europe and the United States,to a certain degree,set higher thresholds for foreign SOEs to invest,which would in turn cause some enterprises fail to invest and receive severe punishment.In order to remove the impedance of SOEs in foreign direct investment,we should continue reforms in SOEs in response to the new requirements and new rules in international investment;meantime,countries should actively participate in the construction of the new rules for SOEs to invest internationally in order to unify the competition principles and positions of SOEs based on the new international investment rules.The third chapter is mainly about the legal issues concerning social responsibility of SOEs in foreign direct investment.SOEs has their special features to a certain degree in fulling social responsibility in foreign direct investment,mainly including:first,SOEs have more extensive social responsibility to bear and put on stricter requirement;second,SOEs suffer more adverse impact from legal institutional distance in fulfilling social responsibility;third,SOEs’ special identity is more likely to be misunderstood in fulfilling social responsibility.As the largest developing country and one of the few socialist countries,China in the new era have brought about some new content to foreign direct investment social responsibility,especially in the areas of extraterritorial corruption and accountability,human rights and labor service export of migrant workers.Having gone through the developments from the initial emergence,development till maturity via international law-making movements,CSR has formed a relatively mature normative system among the international community and well-received binding laws,but there is also room for further legal improvement.In order to avoid the legal risks of SOEs in fulfilling CSR in foreign investment activities,it is recommended that they strictly abide by constraints and limitations of both laws and society and morality.Meantime,states should actively participate in building a new rule system for CSR international investment,strengthen and improve the extraterritorial regulation.It is also recommended that more Chinese philosophy and propositions be incorporated into the new international investment rules,and adopt advanced concepts as its ideological guidance.The fourth chapter mainly deals with the subjectivity of SOEs in foreign direct investment in international arbitration.The jurisdiction of SOEs is no different from that of private enterprises either in form of subject,temporal or consensual jurisdiction.However,in terms of personal jurisdiction,international investment tribunals,beyond examining whether the investor is a foreign investor,would also investigate whether the investor is a private investor.The state-owned enterprises may be identified as agents of the state or government due to their state-owned nature and thus be excluded from international investment arbitration jurisdiction,which would seriously affect them to claim rights through international investment arbitration.In actual international investment arbitration,most cases adopt a combination of the Broches standard and the state attribution rule to determine whether a SOE is eligible as an arbitration applicant.Yet neither the Broches standard nor the national attribution rule provides a very clear standard for how to define the identity of SOEs as commercial investors.Therefore,to solve the problem of the subjectivity of SOEs in international investment arbitration,we should first uphold the neutrality of the ownership of SOEs,and then continue to improve bilateral and multilateral investment treaties.We should strengthen cooperation with enterprises in host country to avoid investment disputes and weaken state-owned identity,and construct scientifically a dispute prevention system for SOEs.To sum up,the special identity of SOEs is the main sources of a series of legal issues,and a dialectical view of SOEs is a prerequisite for scientifically building SOE investment rules and equal right in rule-making is of great significance in protecting native SOEs in international investment.