Legal Regulation Of "Treaty Shopping" In International Investment

The "treaty shopping" has existed in practice and has become a"hidden rule" known to investors in the field of international investment.On one hand,investors who strive to maximize profits always expect to enjoy the most rights and assume the least obligations.On the other hand,the broad definition and generalization of the conception of“investors" in investment treaties have also created conditions for the selection of treaties.In addition,the differences in the substantive and procedural aspects of rights in investment treaties are uneven,which has created the possibility of selecting treaties.However,investment treaties are,after all,special arrangements for investment between the parties.The "treaty shopping" violates the principle of reciprocity and is not easily foreseen by the host country of the contracting party.It is not conducive to the sustainable development of the host country's economy and leads to the imbalance between the management rights of the host country and the interests of investors.So it is therefore necessary to regulate it.In practice,the "treaty shopping" is mainly achieved through the planning of nationality and Citing MFN clause.Nationality planning mainly includes the following three methods:"third country transfer investment","return investment" and“company reorganization".In addition to this,the concept of "nationality" as the key can also be achieved by invoking dual or multiple nationality or transfer of claims.The citing of the MFN Clause refers to the fact that the investor,in accordance with the most favored nation clause in the bilateral investment treaty,invokes the more favorable terms of the bilateral investment treaty between the host country and the third country.The issue of nationality planning can be regulated by restricting the definition of“investment" and "investors" as well as clarifying the true intentions of national planning and the entry of benefits rejection clauses.On the one hand,investors have a qualified nationality is the premise for their realization of the "treaty shopping",so investors' nationality standards are particularly important.The adoption of substantive links and control standards can restrict the behavior of foreign investors in selecting the treaty to some extent,and at the same time make up for the defects in the standard of registration and the standard of domicile.On the other hand,it is possible to clarify the investor's intentions by distinguishing between the pre-and post-event nationality plans,and to eliminate the“select afterwards" with the help of "Unveiling the company's veil principles" and the "goodwill principles".Finally,a benefit-rejection clause may be entered into so that the host country reserves the right to defend its own interests at the crucial moment of the dispute.For the invocation of most-favoured-nation clauses,the occurrence of selection treaty acts can be reduced by physical and procedural restrictions on the MFN clause.Finally,on the premise of clarifying the status quo of China's investment treaty and related cases,it is proposed that China,as the host country of investment,can not only choose to limit the definition of"investors" in the bilateral investment agreement,enter a clause of refusal to benefit,and specify whether the principle of most-favoured-nation treatment can be applied.In dispute settlement procedures,adopting different positions in accordance with the conditions of the c ontracting parties,stipulating that MFN status in bilateral investment treaties is not retroactive,and it is also possible to guide the parties to pre-arrange in the contract,and then jointly making restrictive interpretations with the parties to the selected treaty.By concluding“exchange of letters",it is necessary to clarify strategies such as the scope of most-favored-nation treatment and effectively reduce the adverse effects brought about by the "treaty shopping".