Research On State-Owned Enterprises As Claimants In International Investment Arbitration

As other international dispute settlement institutions,in International Investment Arbitration,the jurisdiction of a case is the first and independent problem.The eligibility of the claimant serves as the basis of the jurisdiction of International Investment Arbitration which is limited by the scope of the definition of investor defined in the Investment Treaty and the ratione personae request of a certain arbitral institution.The existence of State-owned enterprises(SOE)is a worldwide phenomenon.Although definitions and characteristic of SOE are different in every country,there still exist some similarities.Possessing the nature of political and economic,SOE is actually a mixed entity.And accordingly,the investment activity can be divided into governmental conduct and commercial conduct.With the complete development of mix-economy system,the mix of private capital and public capital and the trend of SOE's entering competition fields and participating in international trade and investment,the distinction between public and private within a SOE is becoming more and more obscure,which also leads to the difficulty of determining the boundary of governmental conduct and commercial conduct.Therefore,it is of great importance to establish a test to distinguish governmental conduct and commercial conduct of SOE.In an International Investment Treaty,the eligibility as a claimant of SOE is determined by the definition clause.Different ways of definition may have influence on the eligibility of SOE.As a general matter,most SOEs can be qualified as investors under the treaty.However,as investments conducted by SOE can be divided into two categories:governmental conduct and commercial conduct,the application of attribution rules and the issue of state immunity may arise when the SOE was acting in governmental capacity.And whether SOE can be qualified as a claimant in an investment arbitration may depend on the provisions of the treaty.The International Center for Settlement of Investment Disputes(ICSID)is so far the most important institution of investment dispute settlement.Article 25 of the ICSID Convention sets out the requirement of ratione personae,i.e.national of another Contracting State,including both natural person and juridical person.Therefore,if a SOE that initiates an investment arbitration has a qualification of juridical person,it can meet the requirement of Article 25.However,limited by the purpose of ICSID Convention,SOE as the claimant must also be 'private' During the ICSID Arbitrations have developed a test named 'Broches Test':SOE claims against States under the ICSID Convention should be permissible unless the SOE was 'acting as an agent for the government' or 'discharging an essentially governmental function'.But the expression of Broches Test is quite simple which may result in some problems in application.However,Broches Test closely resembles customary international law attribution rules which can be applied to make the test more explicit.Therefore,the two factors of Broches Test can be applied as:(1)whether the SOE has been empowered to discharge governmental function,if so,whether its investment activity relates to the governmental function,factors to consider what constitute governmental function can refer to Article 5 of Draft Articles on Responsibility of States for Internationally Wrongful Acts(ARSIWA),with commentaries;(2)whether SOE was controlled by its country during the process of investment,and such 'control'has a strict test that must produce some substantive impact.Moreover,the purpose of the activity is also an important factor.Suggestions for Chinese SOEs are as follows:(1)make explicit the definition of'investor' in the investment treaty;(2)deepen the reform of SOE,including the reform between special SOEs and general SOEs and use principles of competitive neutrality for reference;(3)as the development of a certain unified standard in different international law fields,it is necessary for China to unify its positions in different fields regarding the nature of SOE.