The Recent Development Of Investment Dispute Settlement And Treatment Standards In BITs

The Bilateral Investment Treaty (BIT) is the official agreement between capital import and export countries to protect and promote international direct investment by defining the responsibilities and rights between the countries. The 1800's Treaty of Friendship, commerce and Navigation can be considered as the beginning of such kind of agreement. After 1970's, the BITs become more popular, in the decade of 1990, the number of BITs reach 2495, and the content tend to standardized. The BITs functions on both promoting and protecting the investment, the developed and developing countries focus on different purposes based on their motivations, the developed countries, as the capital export counties, focus on protection terms as their purpose for BITs is to ensure the security of its overseas investment and the high profit and to enhance international competitiveness.The developing countries, on the other hand, as the capital import countries, focused on investment friendly environment in order to absorb and make use of foreign investment to develop domestic economy and local regulatory of foreign investment and local laws enforcement.With the evolution of dispute settlement and treatment standard of BITs, the developing countries should not only pay more attention on the terms but also try the work together to balance the unbalanced power between developed and developing countries.In term of dispute settlement, the U.S.and Canada BITs templates prescribe that after the event of a investment dispute between foreign investors and the host and after a period of time,the foreign investors obtain the rights to submit case to ICSID for arbitration will violate the local judicial jurisdiction power. The U.S. and Canada BITs templates has great influential power on dispute settlement of BITs.Because on the one hand,they have powerful economic strength and rich experience in negotiations,their BITs templates have detailed content which help to contracting negotiations. In a negotiation, the developed countries usually make use of defects of the developing countries, for example,lacking of bargaining power,lacking of experience of the negotiations in order to make negotiators of the developing countries to make concessions during the negotiation,accepting favourable terms for the developed countries;on the other hand,after some developing countries such as Singapore,South Korea conclude high standards of BITs,those developing countries will adopt the higher standards when they conclude BITs with other developing countries.In order to better attract foreign investment,Argentina completely accept the arbitration jurisdiction of ICSID,from2001 to 2005,Argentina was indicted to ICSID 36 times. Those developing countries that are rashly accepting arbitration jurisdiction of ICSID and those developing countries that will rashly accepting arbitration jurisdiction of ICSID should pay attention to Argentina's lessons.China signed the Convention of Washington in 1990 and approved in 1993, in order to attract more investment, in 1998, the way China accepted the ICSID arbitration jurisdiction changed dramatically, from consent case by case, limited consent shifted to complete consent, as those BITs did not rule out those terms related to country's economy stability, and some governmental officials did not practice the management based on laws, the complete consent might result the huge number of foreign investors'lawsuit, China should rethink the better way in the later negotiations,we should sum up the experiences and lessons and on the basis of actual situation of China,integrating with the international practice.We also should analyze the advantages and disadvantages produced by the dispute settlement terms,and then to find ways how to seek advantages and avoid disadvantages.BITs include the Absolute Treatment Standards from the beginning, such as the Fair and Equitable Treatment, International Standard, Full Protection and Security. Absolute Treatment Standard had emerged in the early Treaty of Friendship,Commerce and Navigation, these treaties often require a party gives"special protection"or"full protection and security"to the other party each other.The U.S.1983,1984&2004 BITs templates offer us wonderful materials to research the treatment system of U.S.The traditional BITs normally offer the Most- Favored-Nation Treatment on investment post establishment, We can see the U.S. 1983, 1984 & 2004 BITs templates expand the Citizenship Treatment and the Most- Favored-Nation Treatment to the whole life-cycle of investment establishment, such a practice indeed rule out the capital import's decision on investment enter permission.Some regional treaties, such as North American Free Trade Agreement goes a step further than BITs in treatment system, for example, treatment standards in North American Free Trade Agreement,especially the CitizenshipTreatment and the Most-Favored-Nation Treatment are able to apply to the whole life-cycle of investment establishment,and all of these treatments not only apply to the central government, but also apply to the provincial government,which have the obligations to guarantee implementation.There is no common definition on Fair and Equitable Treatment in the world and there are some arguments between developed and developing countries based on their different interests, the gap can not be reduced in a short term.The developing countries may think that if offer the same treatments as the treatments they have offered to their own country or any other countries to the other party, these treatments are fair and equitable. Actually, the Fair and Equitable Treatment is Non-Discriminatory Treatment that include Citizenship Treatment and the Most-Favored-Nation Treatment.However,the developed countries think the Fair and Equitable Treatment should consist of Non-Discriminatory Treatment,International Minimum Standards and Obligations to protect foreign property. As to"Full Protection and Security"the developing countries think:if the right of operation, use, management, acquisition, enjoyment, disposal of investment can be protected,investor's investment and interests can free transfer,when their rights are violated, the investors can resolve problems through judicial and administrative procedures,the investors and their investment have obtained"Full Protection and Security", however, the U.S.1983 BITs templates think:the treatments that the host nation have offered must accord with the host nation's domestic law and not less than the treatments that should obtain in accordance with international law,but the standards itself are full of ambiguity and vague.As to the"International Standards"which means the international law of"Civilized Countries"at the same time, but the"Civilized"in"Civilized Countries"refer to modern European civilization, nobody can explain its specific meanings.so , how the vague"International Standards"can be standards to judge if the host nation have offered"Full Protection and Security"and"Fair and Equitable"to the foreign investors? To pursue the clarity, stability, and predictablibity of treaties is an inevitable trend of development of international economic treaties.As an important form of international economic treaties, the development of BITs cannot deviate from the trend.Therefore, the direction of China's future BITs practice should be the predictability, stability and clarity.