A Study On Stabilization Clause In State Contract

The presence of State Contract made the worldwide production factors connected smoothly and complied with the international trend, however the world situation and relations among countries are complex and volatile, thus the State Contract will face many risks and uncertainties which includes political risks, legal risks and cultural risks, of which the political risks lead to the most concerned and threatening effects for the investors. In order to prevent the above mentioned risks and study the remedy measurements in case the risks occur,the investors and the host country created the Stabilization Clause after compromise and consultations.The Stabilization Clause aims to guarantee the implementing conditions and requirements and ensure the smooth implementation of the State Contract.It is in essence to restrain the host countries’ arbitrariness actions and prevent the host country from breaking the promise which issued in the Stabilization Clause on the basis of principle,which is later laws prevail over those which preceded them. Its purpose is to protect the investor’s property interests and expected return on investment from the modification or the changes by the host government.It is the legal measurements for the transnational investment and is also substantially a legal tool for risk allocation and risk aversion which is created through the interests balance and compromise among the investors and the host country.Nowadays the argumentation on the legal validity of Stabilization Clause is fierce both in practical and theoretical circles.The thesis demonstrates that any extreme scheme on the issue of Stabilization Clause is partial through comparison among Stabilization Clause and other protection clauses, at same time deconstructing the definition,,validity,function,and remedy straits construction of the regulations of the Stabilization Clause.The true sense of rule of law in modern society is rule of good law.The Stabilization Clause shall be implemented under the framework of fairness and equity and on the basis of the clear evidence.Only by this approach can we avoid the misconduct of Stabilization Clause.The thesis obtains the conclusion from the comparison among the Stabilization Clause,reopener clause,umbrella clause,that is to establish the Stabilization Clause,reopener clause,umbrella clause in one State Contract at the same time.By this approach the function of legal stabilizer of Stabilization Clause shall be realized and the triggering conditions and requirements of the reopener clause shall be stabilized by the principle and validity of the Stabilization Clause.The validity and function of Stabilization Clause can be governed under the investment treaty and guaranteed by the same principle and routine of umbrella clause.Under such circumstances the obligation and responsibilities of the host country are mandatory. Under above mentioned arrangement the effectiveness and validity of each clause can be integrated and organically combinated, furthermore the validity of the Stabilization Clause and the investment interests and rights can be protected at the maximum manner. So that we can provide the legal support for Chinese enterprises overseas’investment...