On Perfect And Foreign Bit International Arbitration Mechanism To Solve The Disputes Of Investors - The Host Country

With the rapid and constant economic globalization and the active flow of international investment, the investment disputes between host state and foreign investors are increasing. It is very crucial that all the disputes could be settled properly in order to maintain the investment environment in host state so that the rights of investors can be protected. International Arbitration is believed to be very helpful for the investors to protect their rights and for the host state to build open, internationalized, investment-encouraging environments due to its unique function of de-politicizing the disputes and advantages such as relative impartiality. So, International Arbitration is becoming a main way for state-investor dispute settlement and a lot of BITs between China and other sovereign states take it as a way to settle investment disputes between host states and foreign investors.The rules that are related to International investment arbitration in BITs between China and other sovereign states have changed a lot in the past ten years. To stress the importance of protecting the investor's rights for both the foreign investors and the host state, the International Arbitration manner especially the ICSID mechanism is extraordinarily valued in the state-investor dispute settlement system. Old practices such as placing restrictions on scope of arbitrable disputes were disappeared in the newly signed BITs; The foreign investors were granted the right to make choice freely between local judicial remedies and International Arbitration and in some circumstances the investors even got privileges to resort to international arbitration directly and detour the local administrative remedies offered by host states.Changes in the external policies and foreign-related policies have greatly contributed to such a new, open and internationalized mechanism. Theoretically, the mechanism will benefit both the foreign investment- encouraging climate of our country and the foreign investors. But as the inherent characteristics and shortcomings of international investment arbitration are unable to overcome, excessively stress or dependence on it sometimes may lead to sovereign erosion of the host state. Some developing countries have paid heavy cost for negligence on such problems. Even some developed counties as the active proposer of this mechanism have felt the crisis in front of more and more motions presented by the foreign investors in which they were listed as respondents. In the light of such kind of circumstances, governments in many countries are setting about the adjustments of this mechanism and related rules, some famous International Organizations published their advices and program on it, even the International Arbitration tribunals such as ICSID are considering improving the arbitration rules. All the above efforts aim at seeking some kind of balance between the sovereign of host countries and rights of foreign investors.In consideration of the above circumstances, big hidden dangers really exist if China, a main investment taker in the world, stresses too much on international arbitration in state-investor dispute settlement. Such practices should not be blindly copied in future BIT between China and other states, especially when China is estimated to sign more BITs with other countries in the near future. It is time for China to set about her adjustment of the prevailing International Investment Arbitration policies. Adjustments such as taking the sustainable development of investment as its goal, narrowing the range of the jurisdiction of the International Arbitration tribunal, restating the importance of local remedies, etc. should be taken. With proper adjustments, the advantages of International Arbitration over investment dispute settlement could be brought into full play and the risks that the foreign investors taking the International Arbitration as a tool to challenge the state's authorities and the sovereign erosion by irrational findings of international arbitration could be effectively prevented.