| China implements the basic national policy of ‘one country,two systems' and reserves the original system of the two special administrative regions of Hong Kong and Macao.There are overlapping parts of the bilateral investment treaties signed between the Chinese government and foreign governments and the treaties signed between Hong Kong or Macao governments and foreign governments.There may be conflicts between those treaties.This special national condition makes the application of bilateral investment treaties signed by China more special and complicated than that of ordinary countries.With China's reform and opening-up and the current "the Belt and Road" strategy,China takes active part in investment,cooperating with other countries.China has gradually shifted from the image of a large foreign capital-receiving country to a capital-exporting country.At the international level,investment disputes involving the Chinese government and Chinese investors have emerged one after another,and there are more and more disputes brought to the international investment dispute settlement mechanism.By the end of 2017,among the international investment disputes regarding to China,there are 6 cases in which Chinese investors(including Hong Kong and Macao investors)invoked bilateral investment treaties to sue foreign governments and 3 cases in which the Chinese government was sued.And2 of these 6 cases relate to the question of whether or not BITs between China and foreign countries can be applied to Hong Kong and Macao.And the inconsistencies between the two cases' arbitration results indicate that there is uncertainty in this issue.This paper carries on the thorough research to this question,in order to further understand the insufficiency in the practice of the Chinese government and Chinese investors.That will provide reference for the future case and safeguard the Chinese government and Chinese investors' legitimate rights.It is of great benefit to fully protect the interests of Hong Kong and Macao investors and Mainland investors who have reinvested through companies established in Hong Kong and Macau.This paper is divided into three parts:The first part is the discovery of the issue.It starts from the status quo of the "One Country,Two Systems" basic state policy implemented by China,the treaties between the Chinese government,the Hong Kong and Macao Special Administrative Region Governments and foreign government,and cases of current international investment disputes citing bilateral investment treaties between Chinese and foreign governments.There are two related cases,namely,Mr.Tza Yap Shum v.Peru case and Sanum v.Lao case.It introduces the factual background of the two cases related to the issues to be studied and points out different opinions have appeared during the arbitration process in these two cases,which shows that the problem is uncertain during the arbitration.The second part analyzes the commonalities and differences of arbitration results of the two cases,and then analyzed the general legal principles applicable to the issue whether bilateral investment treaties between China and foreign governments should be applied to Hong Kong and Macao.The main reasons why this issue has not yet been fundamentally resolved are: the special legal status of the Hong Kong and Macao Special Administrative Region,the relationship between the Hong Kong and Macao Basic Law and the bilateral investment agreement between China and foreign countries is not clear,the arbitral tribunal favors the value orientation of investors,and there are deficiencies in the settlement model of foreign exchanges.The third part analyzes the issue from the perspective of international law,focusing on the disputed points in the arbitration of Sanum Investments Limited v.Lao People's Democratic Republic case and discusses separately: 1.Reasonable explanation of Article 29 of the Vienna Convention on the Law of Treaties.When the arbitral tribunal uses this clause to interpret bilateral investment treaties,it shall abide by the provisions of Articles 31 and 32 of the Convention and take the political environment and situation into consideration when it is signed.2.Applicability of the‘the Moving Treaty Frontier Rule'.The return of Hong Kong and Macao does not belong to the change of territory.This rule does not apply.It is also difficult to confirm the nature of its customary international law and China should not be bound by it.3.The relevance of ‘the Critical Date Theory'.This theory was mainly used in territorial disputes and did not affect the interpretation of treaties.4.The relationship between the bilateral investment treaties between China and foreign countries and the bilateral investment treaties signed by Hong Kong and Macao.Bilateral investment treaties between China and foreign countries are not automatically applied to Hong Kong and Macao.If there is a case where the same country signs bilateral investment treaties with the Chinese government and the Hong Kong and Macao governments,then the treaty between China and foreign countries will not apply to Hong Kong and Macao.In conjunction with China's contracting status and the attitude of the Chinese government,after the analysis of various issues,this paper makes corresponding suggestions on China's contracting practices and on how to respond to investment disputes.In general,taking China's national conditions,investors' interests,and the advantages of bilateral investment treaties of China into account,it is recommended that the Chinese government should give priority to handling disputed treaties by signing supplementary treaties,and try to include Hong Kong and Macao regions in the protection of bilateral investment treaties.As to whether the treatment is to be excluded or explicitly applied to Hong Kong and Macao,it is based on whether Hong Kong and Macao have signed a bilateral investment treaty with the country.If they have signed the treaty,it should be excluded from application to Hong Kong and Macao.If they have not signed the treaty,the treaty between Chinese government andthe country should be applied to Hong Kong and Macao. |
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