Sovereign Debt Dispute Resolution In International Investment

The occurrence of the U.S. subprime crisis and the outbreak of the European sovereign debt crisis have caused people’s high attention all over the world. Problems as how to evaluate a country’s sovereign debt situation, how to avoid the sovereign debt crisis and how to solve the sovereign debt issues have become primary research topics. The research theme of this paper is the dispute resolution mechanism of sovereign debt under international investment law, especially bilateral investment treaties. With reference to ICSID arbitration practice on sovereign debt, this paper aims to provide our country, as the host country and foreign investors as well, strategies in potential sovereign debt disputes in the future. Based on this, this paper is divided into the following four chapters:The first chapter generally introduces sovereign debt and related concepts, including the meaning and characteristics of sovereign debt and the development and settlement mechanism of sovereign debt disputes. It also introduces the Principles on Promoting Responsible Sovereign Lending and Borrowing issued by the United Nations Conference on Trade and Development, which provides a framework of rules for appropriate performance of sovereign debt.The second chapter carries out studies on the interaction between bilateral investment treaties and sovereign debt disputes. This chapter firstly introduces the basic concept and development of bilateral investment treaties and the relationship between sovereign debt disputes. Secondly, from the aspects of theory and arbitration cases, this chapter focuses on the specific analysis of four clauses related to sovereign debt disputes in bilateral investment treaties:investment definition clause, investment treatment clause (including national treatment, most-favored-nation treatment and fair and equitable treatment), expropriation clause and essential security exception clause.The third chapter analyzes ICSID sovereign debt dispute cases:Abaclat v Argentina, CMS v Argentina and LG&E v Argentina. Abaclat case determined sovereign debt as within the ICSID jurisdiction for the first time, and accepted the "mass claims" approach of arbitration without any precedents. On the other hand, CMS case and LG&E case mainly discussed ICSID’s opinion on the application of essential security exception clause in bilateral investment treaties.The fourth chapter provides China with suggestions to solve sovereign debt disputes under bilateral investment treaties in the future. It begins with the introduction of China’s bilateral investment treaties concluding practice and its ongoing negotiations with the U.S. Based on this, this chapter then provides an overview of China’s sovereign debt, including the basic introduction of Ping An v. Belgium, which has attracted much attention recently. Finally, by combining previous analysis with the reality of China, this chapter proposes suggestions for China to deal with potential sovereign debt disputes from the perspective of host state and overseas investors under the bilateral investment treaties, including suggestions for Ping An to make strong arguments in its case before ICSID tribunal.