The Application Of Cultural Exception Clause In Indirect Expropriation

With the large amount of transnational capital flow brought by economic globalization,the influence of foreign investment on the host states extend from the economic field to the cultural field.The investment disputes between investors and host states caused by cultural protection involving many legal issues,such as fair and just treatment and security obligation.Indirect expropriation is one of the most important legal issues for investors.The cultural exception clause provides a new way of thinking for the cultural protection proposition in international investment disputes,but whether it can be applied in the determination and compensation of indirect expropriation is controversial.It's necessary to clarify the cultural exception clause in the application of indirect expropriation and the position of China on this issue to protect the interests of investors and the cultural interests of our country.The first part of this paper,on the basis of defining the cultural exception and indirect expropriation under the international investment law,discusses the conflict between cultural protection and international investment in indirect expropriation,and then puts forward the application of cultural exception clause in the determination and compensation of indirect expropriation.In the second part,three paradigms of cultural exception clauses are summarized by enumerating and analyzing the cultural exception clauses in investment and trade agreements.The third part firstly analyzes the merits and demerits of three kinds of indirect expropriation criteria: sole effect doctrine,sole purpose doctrine and both purpose and effect doctrine,and then analyzes the applicability of cultural exception clause in the indirect expropriation criterion based on typical cases.The fourth part firstly analyzes the necessity and feasibility of compensation for indirect expropriation in culture-related investment disputes,analyzes the compensation standards in different arbitration cases,and clarifies the relationship between indirect expropriation compensation standards,recognition standards and cultural exception clauses.The fifth part,based on the above research and from China's point of view,puts forward the limitation of cultural exception clause in indirect expropriation and the applicable legal path.Through the analysis of the paradigm of cultural exception clauses,we can see that the definition of cultural exception clauses in various investment agreements is not clear and the current dispute settlement mechanism is easy to cause the clause to be abused in the identification of indirect expropriation.In the determination and compensation of indirect expropriation,the arbitration tribunal has difficulties in the interpretation and application of this clause.In the determination of indirect expropriation,the arbitral tribunal will draw different conclusions through the application of different standards and the protection measures for cultural purposes of the host country,whether indirect expropriation or legal government control measures.In the determination of indirect expropriation compensation,there are some problems,such as the lack of corresponding arbitration jurisdiction basis,the difficulty in determining the amount of indirect expropriation specific compensation,and the difficulty in determining the reasonable expectation of investors,especially through the application of cultural exception clauses,which may,of course,exempt the host country from the performance of the compensation liability arising from its indirect expropriation,which gives the arbitral tribunal in the judgment The host country's liability for compensation has created difficulties.In different cases,the arbitral tribunal makes different decisions on the compensation collected based on the purpose of heritage protection.In view of this,China should choose the paradigm of cultural exception clause which is in line with China's cultural and economic interests based on China's position.Set up "clear" expropriation clause in the expropriation clause,in which the exception of " cultural protection purpose" is made clear,the scope of application of the cultural exception clause is reasonably defined,and the recognition and compensation standard of indirect expropriation are clear.In this regard,it is necessary to set up a multi-factor identification standard including "cultural protection purpose","procedural legitimacy","non-discrimination" and "reasonable expectation".At the same time,the multi-factor standard is included in the expropriation clause to draw a clear line between indirect expropriation and legal cultural regulatory measures.