Research On Overseas Investment Insurance Scheme

Overseas investment is able to bring high profits and to promote the development of domestic economy in capital-exporting countries, but as a multinational investment, it is also faced with numerous risks, among which the precaution and control of political risks is the most critical. Overseas investment insurance scheme is an important scheme for the capital-exporting countries to protect and encourage their overseas investment. The scheme which initiated in the United States in 1948 was widely adopted by major capital-exporting countries, due to its remarkable achievements. After more than semi-century's practical operations and theoretical exploration, it has now become the most effective means for capital-exporting countries to protect their overseas investments. In recent years, China's overseas investment has experienced a rapid development, however, overseas investment legislation seriously lagged behind and the veritable overseas investment insurance scheme has not yet been set up. Based on the analysis of overseas investment insurance scheme of some developed countries, recommendations are put forward on the establishment of China's overseas investment insurance scheme in the thesis.There are four parts in the thesis.The first part is an overview of overseas investment insurance scheme. The concept of overseas investment is defined through distinguishing foreign direct investment from indirect investment. Compared with domestic investment, overseas investment is faced with one particular risk, the political risk. The formation of political risks is directly related to the host government's actions. Once political risks which are beyond the control of investors occur, it will lead to enormous damage. In order to solve this problem, overseas investment insurance scheme came into being. As the most important capital-exporting country after World War II, the United States was the first to establish overseas private insurance corporations to guarantee their overseas investors against political risks. It gave a strong impetus to the development of overseas investment. And it was widely emulated in western developed countries, because of its significant effects. In recent years, developing countries are also competing for the establishment of the scheme.Overseas investment insurance scheme is a special political risk insurance scheme, whose essence is"state guarantee"or"government guarantee". In this part, it will be analyzed from the following three perspectives: the purpose of the scheme, scheme implementation and scheme realization.In the second part, the study starts from the overseas investment insurance schemes of the United States, Japan and Germany which are relatively representative, and then the author makes a comparative analysis on some major legal issues, such as scheme models, insurance institutions, coverage, insurance conditions and subrogation. When it comes to the scheme model, the United States is for bilateral model, Japan for unilateral model and Germany for hybrid model. Different model selection reasons depend on the international and domestic situations faced by the three countries. As to the insurance agency, the United States and Japan have experienced the process of switching insurance agency from government agency to government corporation, while the implementation of insurance was shared by government and state-owned insurance company in Germany. Regarding the legislative style, the United States and Japan adopted"the uniform system"and Germany of"isolation system". From the coverage, the three traditional political risks (inconvertibility, expropriation and war risk) are all coverage in the three countries. In addition, each country has some insurance of peculiarity. In terms of insurance conditions, each country has different provisions, including an eligible investment, eligible investors and the eligible host country. As for subrogation, it is the basis of the overseas investment insurance scheme. In view of its core status, a separate chapter is to be the focus of analysis.In the third part, a comprehensive analysis is conducted on the issue of subrogation in the overseas investment insurance scheme. The subrogation of overseas investment insurance scheme derived from the domestic insurance subrogation in insurance law. But there exists differences in many aspects. Upon the analysis of the relationship between the insurers, the insured and the host country, it is easy to see that the subrogation which occurs between the insurers and the host country is beyond the borders of a country. According to the overseas investment insurance scheme, the insurer obtains the subrogation on a basis of domestic laws, under which one should not advocate the rights of another sovereign country. Even if the host country admits the legal status of the insurer's subrogation, it is still able to defend the insurer as it is to the investor. It is what makes an obstacle to the realization of overseas investment insurance subrogation. In order to remove the obstacle, the subrogation should be linked to the international legislation to obtain the effectiveness of international law. The way of linking is the basis of the exercise of the subrogation. It includes Bilateral Investment Treaties and Diplomatic Protection which diverse in many aspects when to exercise the subrogation. Through analysis, it is easy to find that international investment disputes are easier to be settled on the basis of Bilateral Investment Treaties. Of course, the importance of the Diplomatic Protection,"the last resort", should also not be neglected. In fact, under the circumstances of the bilateral model, unilateral model and hybrid model, the Bilateral Investment Treaties and the diplomatic protection are interactive during the realization of the subrogation. As different means to realize the right of subrogation, the two co-exist in a country's overseas investment insurance scheme.Part four is about the consideration of the establishment of China's overseas investment insurance scheme from the perspective of law. At present, the scale of China's foreign investment rapidly expands, and both Bilateral Investment Treaties and MIGA are not able to provide effective protection to our overseas investment, therefore, it is essential to establish China's overseas investment insurance scheme. Recommendations on the establishment of the scheme are put forward as follows: on the insurance model, the bilateral model is to be chosen; as to insurance agency, government corporation with"the uniform system"are to be set up; current coverage should include expropriation,inconvertibility,war risk and the risk of breach of contract by the government, other political risks are not to the scope of insurance coverage for the time being; with regard to eligible investors,"capital control theory"is able to be taken as the criterion; meanwhile, natural persons should be identified as eligible investors.