Study On Denial Of Benefits Clause In International Investment Agreements

Denial of Benefits Clause in the international investment treaty can effectively resist the behavior applicable to transnational investors' choice of treaty brought about by the broad investor definition in the treaty.Its main value is that it can prevent international investment agreements from being used by "mailbox companies" by non-contracting parties.With the development of world trade,the investment field is also expanding.More and more countries are participating in investment in order to obtain more economic benefits.In recent years,interest rejection clauses in international investment agreements have become more and more important,and more and more investment agreements have absorbed the Denial of Benefits Clause.This article will start with the four major parts and analyze the Denial of Benefits Clause as deeply as possible.In the first part,we first clarify the specific scope of International Investment Agreement.Within this scope,we further analyze the definition of the Denial of Benefits Clause.Then trace back to the source to understand how the Denial of Benefits Clause developed step by step.After having a general understanding of the preliminary clause,analyze the applicable reasons for the clause.Most countries are based on considerations of diplomatic considerations and nationality factors,and include Denial of Benefits Clause in investment agreements.In the second part,after having a holistic understanding of the Denial of Benefits Clause,the specific elements of the clause are analyzed.This article analyzes the entity requirements and procedural requirements in detail.The "substantive commercial activities","all or control" under the entity's requirements adopt newly-occurring cases,and the case of Ampal-U.S.-Israel Company v.Egypt is studied as an example.The procedural requirements mainly involve “pre-notice” and “consultation”.This article believes that whether it is a prior notice or consultation,it should be improved as much as possible when signing the Denial of Benefits Clause.If the treaty was not signed at the time of signing,then the arbitral tribunal for resolving investment disputes should not impose additional obligations on the contracting parties.In the third part,after the analysis of the overall concept and concrete constituent elements,it is not difficult to find that the Denial of Benefits Clause is also a clause in development and there must be imperfections.The controversial issues in arbitration practice so far have mainly been reflected in the issue of jurisdiction,the distribution ofburden of proof,and retroactivity.This article further agrees that when signing a treaty,these controversial issues should be specifically written as comprehensively as possible to reduce the conflicts in the future.In the fourth part,considering that the Denial of Benefits Clause occupies an important place in international investment treaties,coupled with China's continued expansion of trade and investment as a major trading nation in recent years,it is necessary to study the practice of Denial of Benefits Clause in China.In addition,this paper proposes perfect suggestions for the problems existing in this article,combining with China's actual conditions.This article believes that when accepting this clause,China may consider using certain terms and methods of the “Limitation on Benefits” rule in International Tax Treaties to make the clause text more clear.