"The Compliance With The Law Requirement Of Host Country" In International Investment Law

As the cooperation of transnational economies continues to deepen,countries attach more importance to international investment,which also brings about the prosperity of international investment treaties based on bilateral investment agreements.However,the conclusion of an investment and investment treaty is also a process of cooperation and compromise of interest between countries.One same provision is different in different investment treaties.This led to the fact that in the practice of investment arbitration,the arbitral tribunal also made different understandings of the referee because of different expressions.“The Compliance with the Law Requirement of Host Country” clause has received increasing attention in recent years,because the application of this clause is closely related to the jurisdiction of the arbitral tribunal.Based on this clause,the arbitral tribunal may refuse jurisdiction if the investor violates the laws of the host country and such illegal investment is not protected by the treaty.First of all,it should be concerned with the provisions of the existing investment treaties that “conform to the provisions of the host country's legal requirements.Not all investment treaties have this provision.When the treaty is clearly defined,compliance with the host country's legal requirements may be stipulated in different articles,such as the investment definition clause,which is the way most treaties choose.The rest may be stipulated in different clauses such as investment access clause,investment promotion protection clause,dispute settlement clause,special form requirement clause,etc.For better regulation of investors behavior,investment treaties tend to adopt a combination of provisions to restrict investors' behavior in recent years.To comply with the legal requirements of the host country,it is more important to pay attention to the criteria of the tribunal's determination of violations of the legalrequirements of the host country in the practice of arbitration.The time standard refers to that when the arbitral tribunal determines whether the investor's behavior is illegal,an arbitrator first needs to clarify at the stage of jurisdiction,whether it should be the behavior of the investor at the time of investment establishment or the behavior of the investor during the whole period of establishment and operation.The conduct standard refers to the types of illegal activities that investors have.According to the existing jurisprudence,investor's illegal investment is mainly an investment that is essentially illegal,an investment obtained through illegal means,or an investment that restricts ownership.It is should be noted that the investor's illegal behavior must have sufficient causal relationship with the investment.The scope standard is the legal basis for arbitral tribunal in evaluating whether investor's behavior is applicable to the specific legal provisions of the host country or the general legal principles,or both.More referees still explain the laws of the host country in a broad sense,and whether the investor's behavior violates the specific legal provisions of the host country or the general legal principles,both will trigger the legality clause.The arbitral tribunal evaluates investor's behavior in terms of time,behavior and scope.The referee of the case will naturally have corresponding legal consequences for the participants of the case.For arbitral tribunal,the most important legal consequence is the jurisdiction of the case.The investor's illegal act in establishing the investment phase directly deprives the treaty protection of the investor and the jurisdiction of the arbitral tribunal.Behavior during the investment operation may affect the admissibility of the investment or the amount claimed.For investors,regardless of whether the treaty has a clear requirement to comply with the legal requirements of the host country,there are implied invisible legitimate requirements,and investment must comply with these legal requirements.However,there are still differences on the legal consequences of implied legality requirements.Nevertheless,not all illegal behavior will lead to the consequences of deprivation of substantive treaty protection and the tribunal's jurisdiction.A minor violation of the administrative procedures does not affect the legality of the investment.For the host country,it is necessary to prove the illegality of investor's behavior and to avoid estoppel in the process of defense.China is both a capital importing country and a capital exporting country.As ahost country,we should actively improve the content of the investment treaties,in accordance with the legal requirements of the host state and improve the link between the various branches of domestic law and Foreign Investment Law.As the home country of investors,the Chinese government should strengthen the supervision of investors and the improvement of laws governing the behavior of overseas investors.As an investor,it is necessary to strengthen self-discipline and self-protection,and make full use of the investment arbitration mechanism to safeguard its own interests.