A Research On Transfer Clause Of Bilateral Investment Treaty

Transfer clause of bilateral investment treaty focuses on the rights and obligations between host country and the foreign investor. It is the main embodiment of the contradiction of free transfer degree between the capital export country and the capital import country. From analyses to the China-Japan-Korea BIT and the China-Canada BIT we can find something new, the expansion to the transfer scope and the restrictions to the domestic regulation may make the host country face more risks. What’s more, it is hard to use the traditional exceptions, balance-of-payment safeguard clause and the essential security interest, the former’s standard is not clear and the latter’s standard is too high. In addition, the host country’s improper measure on the foreign exchange and the tax may also result in the breach of treaty obligation. Start with the analysis to the transfer clause itself and base on the development of China, this essay give some suggestions on how to solve the problem.The text comprises five chapters except foreword.The first chapter is regarding the legal bases and the textual analysis. The legal base part is about the validity of private property right protection and the legitimacy of the states’ economic sovereignty. Take the Model Bilateral Investment Treaties Draft of China as example, the textual analysis part is about the scope, convertibility requirement, temporary derogation and the others.The second chapter concentrates on the other exceptions. First one is the cooling-off provision, which restrict the transfer for one year, it has been raised by Chile in the bilateral investment field and applied successfully. The second one is the essential security interests which used by Argentina when it face to the ICSID tribunal, since the tribunals have different explanations to the “essential security interests”, Argentina may also face different arbitral awards. The prudential carve-out is taken into bilateral investment treaty field from the annex on financial service of GATS by Canada. By comparison with the essential security interests, the standard for prudential carve-out is lower than it.The third chapter is focus on the violation and the regulation of the transfer clause of BIT. On the one hand, the transfer clause has the detail rules, on the other hand, it also has some exceptions, but there are still some violations in the practice, such as the improper exchange rate measures or tax policies, it may lead to the government responsibility.The forth chapter is analyses the China’s new development of the transfer clause in BIT. From the analyses to the China-Japan-Korea BIT and China-Canada BIT we can find there are four new developments:(1) the scope of transfer extend to the returns-in-kinds,(2) the transfer clause start to contain the WTO rules, which is about the restriction to the transfer of goods,(3) the restriction to the balance-of-payment safeguard clause,(4) the limits to the scope of the “related laws and regulations”.The fifth chapter is about the problems and the suggestions for China when the negotiation of transfer clause of BIT. This chapter is composed by four parts. First, according to the current trend in bilateral investment agreements, the scope of transfer clause could be opened appropriately. Second, base on the development of the RMB, we can expand the scope of the currency to some extent. Third, Because of the investment policy continues to open up, we’d better keep the term of “subject to its laws and regulations” in the transfer clause to control the risks. The last one is about the prudential carve-out measure, we should use it flexibility depends on the different economic development of the different country.