Research The Legal Issues Of The Essential Security Interest Clause In The US BIT

In 2012, the U.S. promulgated it modified model BIT, which, similar to its preceding versions, contains an essential security interest clause that aims to protect the interest of the Parties in the bilateral investment relationships. This Thesis firstly studied empirically the essential security interest clauses in the U.S. BITs and other treaties to which the U.S. is a party, and concluded that almost each of the clauses studied is identical that in the then-announced U.S. model BIT, which casts no explanation on the three major legal issues:the definition of "essential security interest", the interpretation of "necessary" measures and the arbitrability of such clauses.According to the analysis of the interpretation made by the U.S. and the arbitration awards in ICSID, this Thesis concluded that the definition of "essential security interest" shall be broad to include material economic security interest, etc., not limited to tradition military or political security. For the second issue, the ICSID awards and the scholars cannot reach a consensus both on the connection between such clauses and customary international law known as "necessity" as a preclusion to the responsibility of the unlawful conduct by the states, and the concrete standards when interpreting such clauses. This Thesis analyzed the above opinions and believed that the legitimate interpretation shall be achieved in the context within the BIT. For the third issue, it has been concluded that the substantive issues in "non self-judging" clause can be arbitrated, while the arbitrability of "self-judging" clause shall be subject to only a review of the whether the parties have applied such clause in a "good faith". At last, this Thesis suggested that in the negotiation between China and the U.S., we may try to input a list of "essential security interest" in the treaty, and a understanding the preparatory instruments of the BIT concerning the interpretation of "necessary" measures as well as the role of the "necessity" in customary international law, and the procedure requirement of the determination of the bona fide application of such clause.