The Criteria For The Identification Of Indirect Expropriation And The Study Of China's Countermeasures

Indirect Expropriation related issues had frequently been the focus of international arbitration centers since the end of 20th Century, which has arouse extensive concern among countries and gradually instead of direct expropriation been the hottest topic in international investment area as well as the contention of arbitration. Among all causes, the most significant one is the dramatic change of the world's economic and political background. More specifically, before the World War II, developing countries and least developed countries were dominated by western colonial countries which lead to serious financial and technical shortage to them, they can only provide attractive policy to draw foreign capitals mainly from developed countries. During which period problems generated, such as overexploitation of national resources, polluted environment, damage to residents'health, disrupted national financial order, oppressed young industry development etc. When host countries manage to regulate foreign capitals, which cause damage to foreign investors and their properties, strong conflicts emerged.However, BITs or MITs do not have a clear definition on indirect expropriation as well as the principle on how to distinguish indirect expropriation, which makes international arbitration institutes obtain an exaggerated discretionary power. As various types indirect expropriation cases keep changing, definition and principle generated among arbitration awards is the basis of the formation and development of indirect expropriation jurisprudence. As to the identification of indirect investment, there are two factors to consider:"effect" and "purpose", how to distribute them in order to keep the balance between foreign investors and host countries is the key point of this thesis. In recent few years, there are new factors entered into. This thesis based on the history and connotation of indirect expropriation, discuss the limits of legality, the distinction with regulatory power as well as application of indirect expropriation principle and new principle, put writer's personal understanding regarding the issue related to China.This thesis contains four Chapters as follow:The first Chapter illustrates the basic theories of indirect expropriation, introducing history of indirect expropriation through historical research, follow with the typical arbitration cases differentiate it with regulatory power, laying foundation for further discussion; the second Chapter discuss the core issue of this thesis which is identification of indirect expropriation. This issue constitutes of two major elements:"effect" and "purpose", which therefore conduct three standards, namely:Sole Effect Doctrine, Sole Purpose Doctrine as well as Effect and Purpose Doctrine. The third Chapter analyzes new factors appeared recent years on indirect expropriation, including substance and procedural principle like Principle of Proportionality, Legitimate Expectation and Due Process; The forth Chapter is the final Chapter, which conclude the risks related to indirect expropriation. As China currently has a double identity of importing and exporting country, the risks we have to face are doubled as well. We have to look both sides and so that to protect ourselves as much as possible.