Development And Current Situation Of Investor-State Arbitration

Investor-State Arbitration, as an important measure for a state to attract international investments and protect international investors, has already been an important mechanism to resolve investment disputes. This arbitration mechanism not only makes it possible for an investor to directly make a claim against a state, but also enables dispute resolved through tribunal independent from both disputing parties and without bias or ineffectiveness a domestic court may possesses. China, as the second biggest economic body in the world, also adopted this dispute settlement mechanism in almost all bilateral investment treaties where China has being a contracting party. Now, after a period of practice and development, Western countries are trying to promote and refine Investor-State Arbitration through its use in bilateral/multilateral trade and investment arrangement. It is necessary to exam the current situation and development trend of this mechanism to help China deal with the development and evolution of this mechanism.The first section illustrate the advantages Investor-State Arbitration possesses compared to the traditional investment dispute settlement measures, and introduced the history of the rise of Investor-State Arbitration, the contribution of International Centre for Settlement of Investment Disputes(ICSID) in its development and its wide adoption in bilateral and multilateral investment treaties.The second section introduced the main frame clauses of Investor-State Arbitration, which include consent to arbitration clause, limitation to the consent to arbitration clause and the arbitration rule clause. To discuss the rules of Investor-State Arbitration in a more detailed manner, the second part of this section compared the mostly adopted arbitration rules in the world in investor-state arbitrations, which is the arbitration rule of ICSID and United Nations Commission on International Trade Law (UNCITRAL). It is to show the current situation of the Investor-State Arbitration and the differences of the rules of the two arbitration administrations by comparing the mostly accepted rules in the world.The third section of this article discusses the refinements to the Investor-State Arbitration, which are transparency of the arbitration and the consistency of the results and awards of tribunals. The discussion includes the motivation of the two refinements to the arbitration and main practices of the refinements. As to the transparency of the arbitration, this article compared the different strategies adopted by ICSID and UNCITRAL in face of the transparency trend. The high transparency standard Trans-Pacific Partnership Agreement (TPP) adopted is also introduced hereunder. It is to present a general image of the standards and rules adopted to meet the transparency trend by comparing main practices in the world. In respect of the consistency of the result of arbitration, this article summarizes two main approaches:consolidation and establishment of appellate mechanism. This article also introduced the main rules and practices of the two approaches stated above, and concluded that consolidation is the more widely accepted and cheaper approach.The fourth section summarizes and concludes China’s practice of Investor-State Arbitration and proposed several advices to China’s practice in the future. This article concludes and summarizes that the overall attitude China holds to this arbitration mechanism is from concretive to openness. However, there are some back and forth and inconsistency of the standards China adopted during its practice in the recent decade. The second part of this section proposes several suggestions as to the features of China’s practice, which include: China shall hold an open mind toward Investor-State Arbitration and prepare a bilateral investment model teary. This article also proposes China to enhance the transparency of arbitration, adopts consolidation in future practice and establish a primary exam mechanism as suggestions to the specific rule of Investor-State Arbitration.