Research On Legal Regulations Of Treaty Shopping In International Investment Arbitration

In the practice of international investment arbitration,treaty shopping is a relatively common phenomenon,and the problems caused are also prominent.On the one hand,the host state needs to deal with investment arbitration brought by originally unqualified investor,and may ultimately bear huge economic compensation.On the other hand,treaty shopping often targets the host state's public policies,which seriously affects the host state's economic development plan and the right to regulate foreign investment.The arbitral tribunal,which has jurisdiction over the investment arbitration filed by investor,provides a solution through interpretation,which is to distinguish between legal treaty shopping and treaty abuse based on nationality,and then decide whether to have jurisdiction.The problem is that the explanation given by the arbitral tribunal does not form a unified and clear standard,which fails to balance the relationship between investment protection and host state's regulating right,and even causes a crisis in the legitimacy of the investment arbitration mechanism itself.This requires to conduct a detailed analysis of treaty shopping,clarify the process of this behavior,and explore the source of the problem.In fact,treaty shopping is a dynamic process,and disputes at the jurisdictional stage are only a manifestation of problems.All these stages are closely linked from the definition of investors in investment treaties,the preparations made by investors for treaty shopping,the application of the denial of benefit clause in the treaties,and the interpretation of relevant terms and factors by the arbitral tribunal,which combines the entire process of treaty shopping.And the basis of the entire process is the current investment arbitration mechanism.This requires further exploration of theproblems faced by the current international investment arbitration mechanism in order to find a fundamental solution to the problem of treaty shopping or different ways to regulate.The first chapter introduces the basic concept of treaty shopping and several methods for investors to do this.In international investment arbitration,the behavior of treaty shopping has caused suspicion of excessive litigation,which is mainly reflected on the violation of fundamental purpose of investment agreements and reducing the effectiveness of investment treaty reforms.In response to the jurisdictional objection raised by the host state,the arbitral tribunal mainly distinguished treaty shopping into legal action and treaty abuse,with jurisdiction over the former and rejection over the latter.The second chapter discusses the arbitral tribunal's criteria for distinguishing treaty shopping.Based on the relevant cases of ICSID and other arbitration institutions,it summarizes and analyzes the factors that determine legal treaty shopping and treaty abuse.The arbitral tribunal could provide clear guide through this way,but there are still some problems.One problem is the inconsistency of the standard itself.In similar cases,the issue of inconsistent award by the arbitral tribunal is prominent.The other problem is that the arbitral tribunal tends to protect investors on the grounds of promoting international investment,with lacking respect for the right to formulate public policies in the host state,and does not balance the promotion of international investment with the right to regulate of the host state.The direct consequence of these problems is that the current ISDS mechanism has fallen into a�legitimacy crisis�.The third chapter analyzes the current practice of the international community's regulation of treaty shopping,which can be divided into treaty approaches and ISDS mechanism reform approaches.On the one hand,the measures to regulate treaty shopping through treaty updating mainly include: limiting the definitions of "investment" and "investor",adding denial of benefit clause,limiting the scope of application of the most-favored-nation treatment clause.On the other hand,the reform of the ISDS mechanism can be divided into two angles.One is to make targeted changes to the existing investment arbitration mechanism,such as establishing an appeal mechanism for arbitration.Another is establishing a new international investment tribunal mechanism,such as the investment court system which EU is pursuing through investment agreement negotiations.The fourth chapter summarizes the status of China's investment treaties and the investment dispute cases involved,and points out the risks of treaty shopping in China.And suggests that it is necessary for China to take regulatory measures.The regulatory approach should mainly consider two aspects,which contains the improvement of investment treaties and active participation in the reform of the ISDS mechanism.The improvement of China's investment treaties should be based on contracting practices and an analysis of the current investment environment,with reference to the practice of new international investment agreements.With regard to the reform of the ISDS mechanism,and in light of China's complex international political and economic environment,we should continue to promote the development of a diversified dispute settlement mechanism.