Research On The Indirect Expropriation Clause In China’s Bilateral Investment Treaty

With the development of the times,the economic ties between countries in the international community have become increasingly close,and their dependence has increased.Large-scale direct expropriation is no longer the main threat to international investment,but indirect expropriation has been replaced.In recent years,indirect expropriation cases have occurred frequently,and indirect expropriation involves a huge amount of expropriation compensation,so this issue has increasingly attracted the attention of the international investment law circles.At present,the issue of indirect expropriation is a very important and sensitive issue in the field of international investment law.The international community still does not have a specific definition and standard for indirect expropriation.Although China has involved indirect expropriation in its legislation and practice,on the one hand,the "Foreign Investment Law" in its domestic legislation does not provide for indirect expropriation.On the other hand,there is indirect expropriation in bilateral investment agreements signed with foreign countries.The concept of expropriation is ambiguous,and the recognition and compensation standards are inconsistent.China has now become the world’s second largest importer of foreign capital after the United States,and as a major foreign investment country,it is playing an increasingly important role in the development of the world economy.Involving my country’s foreign investment facing indirect expropriation,my country needs reasons for indirect expropriation in order to protect the interests of the host country and overseas investors.Through legal review,it is found that the indirect expropriation clauses in China’s current bilateral investment agreements have the following four deficiencies: First,the definition of indirect expropriation is not explicitly mentioned in the bilateral investment agreement and there are inconsistencies in the provisions of the bilateral investment agreements in different periods.Second,there is no clear basis for the determination of indirect expropriation,and there is no distinction between "cannibalistic expropriation" and "regulated expropriation." Third,the compensation standard for indirect expropriation is the compensation provided in the bilateral investment agreement in different periods.The standards are inconsistent and different compensation standards have not been established for the difference between "cannibalistic expropriation" and "regulated expropriation".At the same time,in terms of the starting time of expropriation and compensation,there are differences in the description of different bilateral investment agreements,which makes the calculation of expropriation and compensation not uniform;Finally,most BITs lack the public welfare exception for indirect expropriation.Correspondingly,the indirect expropriation clause in the bilateral investment agreement can be improved from the above four aspects,so as to meet the needs of my country’s domestic and foreign investment.First of all,when clearly expressing the definition of indirect expropriation,the2006 China-India Bilateral Investment Agreement should be used as the standard,and clear and specific regulations should be made to make it feasible.Secondly,the “effect and purpose” standard is uniformly adopted in the identification standard of indirect expropriation,and the principle of proportionality is introduced while taking into account the nature of the host country’s measures,the economic impact on foreign investment and the degree of intervention reasonably expected by investors.At the same time,the types of indirect expropriation are differentiated.Above,taking the reasons for the indirect expropriation as the starting point,and considering whether the measures can promote government goals and whether the promotion of government goals is reasonable and necessary as clues,the distinction is made between "cannibalistic expropriation" and "regulated expropriation".Third,with regard to the compensation standard for indirect expropriation,the "Hull compensation" rule should be treated with caution,different compensation standards should be set for "cannibalistic expropriation" and "regulated expropriation",and the starting calculation of expropriation compensation in different bilateral investment agreements should be unified.Time in order to uniformly collect compensation calculation caliber.Finally,an exception to the public welfare of indirect expropriation will be added when improving and upgrading or signing bilateral investment agreements in the future.This article discusses the problems of indirect expropriation clauses in my country’s bilateral investment treaties,and studies the practice of indirect expropriation arbitration outside the territory and the model bilateral investment agreements of multilateral,regional and related countries.The indirect expropriation clause in the investment agreement has been improved to meet the needs of my country’s foreign investment.