Deterring Frivolous Claims Mechanisms In Investor-State Dispute Settlement

Investor-State Dispute Settlement(ISDS)has become the main method to resolve the disputes between investors and host states because of its de-politicization,perception of speed,and lower expenses.However,due to over-protection of investors under international investment agreements(IIAs)and investors' unfair pursuit of investment profits,frivolous claims appear.In other words,investors take advantage of the ISDS systems to file an arbitration request without legal basis in order to obtain illegal treaties interests or intend to affect the host countries' public policy.Meanwhile,arbitral tribunal's expanding interpretation right of IIAs stimulates investors to file such frivolous pleadings.However,frivolous filings have bad effects on both host countries and tribunals.First,frivolous filings would drag host states into long time arbitration proceedings and make them burden high arbitration costs.Second,such filings would force the host states to reduce or abandon public interests' protection,and proper regulation to the investors' bad behaviors.Third,tribunals' laissez-faire behaviors to investors'frivolous claims could impair their credibility.Therefore,host states and tribunals should adopt a series of measures to deal with investors'frivolous claims.This thesis puts forward three suggestions to deal with investors' frivolous claims.First,adopt the expedited procedure into the arbitration rulings in order to dismiss the investors' frivolous claims in the initial of the arbitration proceedings.Second,adopt the denial of benefits clause into IIAs in order to empower the host states to withdraw the treaties benefits to investors who make treaty shopping utilizing the broad and ambiguous definitions of the treaties,and then file the frivolous pleadings.Third,expand the host states' interpretation right of IIAs in order to constrain tribunal's discretion.Meanwhile,it is necessary to make strict time limits and procedure requirements for expedited procedures and denial of benefits clause to protect the legal rights of investors.In addition,giving rational interpretation right to arbitral tribunals could enhance their credibility.Thus,it is important to balance the interpretation right between tribunals and host states.Huge FDI simultaneously flows into and out of China.It means that China could affect the global investment development and investment policy-decision.Under such circumstances,China needs to face the risks of investors' frivolous claims.Based on analyzing China's investment treaty-making practice,there are three methods forChina to cope with investors' frivolous claims including adopting expedited procedure,adopting and amending denial of benefits clause,and strengthening its IIAs' interpretation right.