Research On The Application Of The Full Reparation Standard In Cases Of Non-expropriatory Breaches Of International Investment Law By Host States

Protecting foreign investment and investors is one of the basic goals of international investment law.Therefore,BITs and investment chapters in FTAs established standards of treatment for foreign investment,such as fair and equitable treatment,national treatment,full protection and security.Professor Wang Guiguo pointed out that when the host state violates these standards,the host state should be liable for the damage caused to the investor by its actions.Such cases also known as cases of non-expropriatory breaches of international investment law or non-expropriation cases.At present,BITs and investment chapters in FTAs have established compensation standard for legal expropriation,but lacked compensation standard for non-expropriation cases.Hence,the arbitral tribunals have discretion to choose compensation standards in non-expropriation cases.In such cases,the arbitral tribunals may apply two kinds of compensation standards,one is the compensation standard for expropriation,the Hull formula,and the other is the full reparation standard in customary international law.The factor affecting the choice of compensation standard is whether the consequences of the host state's behaviour resulted in the total loss of investment or expropriation.If the answer is affirmative,the Hull formula will be the choice.Otherwise,the full reparation standard is applied.The thesis focuses on the latter cases.In order to explore the application of the full reparation standard in non-expropriation cases,the research route is how the arbitral tribunals apply the full reparation standard to solve the problem of whether the host state is obliged for compensation,how to compensate the investors and determine the amount of compensation,in the hope of providing inspiration for overseas investors how to cope with non-expropriation cases.This paper will study the application of the full reparation standard in non-expropriation cases from the following five parts.The contents are as follows:The first part is the basic theory of the full reparation standard in non-expropriation cases.Based on the study of origin and meaning of the full reparation standard,this section clarifies the content of full reparation standard by analyzing the specific rules in the United Nations International Law Commission Draft Articles on Responsibility of States for Internationally Wrongful Acts.In addition,this part explains the reasons why arbitral tribunals choose the full reparation standard.The second part is the premise of the application of the full reparation standard in non-expropriation cases.This part first emphasizes the importance of causality in non-expropriation cases,clarifies the origin of causation approach,and confirms that causation approach is the premise and necessary condition for applying full reparation standard.Based on the study of causation standard contained in full reparation standard and theories of causality used by arbitral tribunals,combined with the research of specific practice in the international investment arbitration,this part aims to explore how the arbitral tribunals employ the causation approach to determine the causality between the host state's behaviour and investor's loss,solving the issue of whether the host state is liable for compensation.The third part is the determination of compensation under full reparation standard in non-expropriation cases.This part mainly studies the determination of compensation from three aspects,including the choice of compensation method,the calculation method and the type of compensation.In the first aspect,in order to solve the problem of how the host state compensate investors,this part discusses the choice of compensation method under full reparation standard which tribunals will apply in non-expropriation cases,such as restitution,monetary compensation,etc.Since monetary compensation is the mainstream method in the practice of international investment arbitration,this part secondly studies the method used by the arbitral tribunals to calculate the amount of compensation when applying the full reparation standard,and explores the type of compensation that the arbitral tribunals may decide.The fourth part is the limits on the full reparation standard in non-expropriation cases.This section mainly explores the principle and circumstances under full reparation standard used by arbitral tribunals to reduce or limit the amount of compensation awarded.Regardless of whether the host state or investors has any behavior that aggravates or mitigates the liability,the prohibition of double recovery principle is the limit contained in the full reparation standard.When the investor's behavior causes specific situations,the arbitral tribunals may apply principles of investor's contributory fault and mitigation of damages to reduce the amount of compensation,when the host state's behaviour causes the limitation,it refers to the situation that host state employs the state of necessity clause to reduce compensation.The fifth part is the enlightenment for Chinese overseas investors.Driven by the “Belt and Road Initiative”,a new wave of overseas investments has started.Based on the research on the application of full reparation standard in non-expropriation cases,this section aims toprovide inspiration for Chinese overseas investors how to deal with non-expropriation cases.In such cases,investors should not only positively and correctly assume the burden of proof in causality and the determination of the amount of compensation,but also avoid triggering the limits on the full reparation standard.For example,investors should take reasonable measures to minimize loss when they have already suffered damage.In addition,in order to nip the damage in the bud,investors should estimate investment risks in overseas investments,so as to avoid paying for unwise business decisions in the future.