Research On The Strengthening Of The Right To Regulate Of Host States In ISDS Reform

The operation of ISDS inevitably involves multiple interests and multiple legal reviews.In view of this,the concept of the right to regulate should be considered in a comprehensive manner and defined as a right of a state to deviate from its investment commitments for public purposes without incurring a compensatory obligation.The exercise of the right to regulate should comply with minimum standards of conduct and not constitute expropriation.The underlying connotation should be that the host states enjoy the legal compliance space for foreign investment and the exemption space for violating investment commitments.Whether it is the original design or the applicable procedure,the ISDS mechanism,which is mired in a "legitimacy crisis",has a distinct asymmetry,and the right to regulate of host states is unreasonably restricted,which makes the investor’s investment income and the public interest of the host states obviously conflict,and gradually presents an imbalance.The lack of substance in the ISDS process also leaves a hidden danger for imbalances.Driven by the dynamic of the attempted return of the sovereign status of the host states and the high hopes for sustainable development of the ISDS mechanism,all parties began to pay attention to the issue of embedded regulatory rights while discussing the path of ISDS reform,and thus began to explore the scheme of appropriately strengthening the right to regulate of host states.Different entities have proposed reforms to strengthen the right to regulate of host states at different stages of the ISDS process.In the early stage of the procedure,the scope of application of the ISDS mechanism is limited to reduce the abuse of the mechanism by investors.In the middle of the proceedings,public law control mechanisms were added to correct the arbitral tribunal’s "investor-friendly" tendency,thereby ensuring and maintaining consistency in the host states’ regulatory policies and regulatory conduct.Later in the procedure,a permanent appeal mechanism will be established to broaden the remedy path for the right to regulate after the arbitral tribunal’s ruling is rendered.This kind of the right to regulate enhancement scheme,which makes up for the lack of the right to regulate through procedural rules,is equivalent to placing the same weight of weight at both ends of the mechanism scale,and jointly outlines the contour of the right to regulate in which private rights and public interests are interrelated and balanced in the ISDS process of public-private cooperation.For its part,China supports the promotion and improvement of the basic position of ISDS,and supports specific measures such as the introduction of mandatory arbitrator appointment lists in the reform of strengthening the right to regulate.In the future,China needs to continue to pay attention to the dynamics of disputes related to the right to regulate,play a promoting role in procedural reforms,promote the parallel path of strengthening the right to regulate bilaterally and multilaterally,prudently guard against secondary risks of the right to regulate strengthening,and actively participate in and guide ISDS reform discussions and practices on strengthening the right to regulate in host states.