A Study On Compulsory Arbitration Between Foreign Investor And Host Country

Settlement of disputes between foreign investors and hostcountries is always one of the most difficult issues in thelegal system of international investment. As the trend ofglobalization becomes obvious, more and more countries adoptthe mechanism of compulsory arbitration to improve their legalenvironment of investment and to increase foreign investors'confidence to invest and found their undertakings when theydesign the mechanism of disputes settlement between foreigninvestors and them. Compulsory arbitration is based on thepremise which a host country agrees to arbitrate in advance,and it is a kind of self-limits to its own sovereignty. Butsometimes the limits will conflict to the host country'spublic policies or significant interests. Consequently,analyzed features, backgrounds, operation model and effects ofthe mechanism of compulsory arbitration, this articleconducted an introspection on the mechanism and put forwardsome suggestions to our country' legislation of internationalarbitration on investment.Firstly, this article analyzed the features of compulsoryarbitration and concluded the concept of compulsoryarbitration based on above analysis, and made a profoundanalysis on "compulsory" manifestations of it. In present,international community regulates the mechanism of compulsory arbitration from three levels: multilateral investmenttreaties, bilateral investment treaties and domestic laws ofhost countries. More and more countries agreed in advance thata foreign investor can choose international tribunal toarbitrate the disputes between a host country and a foreigninvestor in the light of these legal files. These countries whomade such arrangement in advance mainly based followingconsiderations: backgrounds of politic and economy, hostcounties' change of attitude to foreign investment and theadvantages of compulsory arbitration. And the article analyzedseveral nuclear issues: initiation of compulsory arbitration,fixation of jurisdiction and recognition and enforcement ofarbitration awards, etc. The mechanism of compulsoryarbitration not only affects foreign investors' strategy ofinvestment and the flow direction of international investment,but also influences the policies of host counties and homecountries and the development of the legal system of disputessettlement on international investment. Lastly, the articlerethought the mechanism of compulsory arbitration and pointedout its defects, and provided some references to our country'legislation on investment.