Adjudication of Investor-State Investment Disputes in the ‘One Belt, One Region’: Is the China-EU Bilateral Investment Treaty a Likely Model?

Abstract

The prospect of an enhanced relationship between China and the European Union as resulting from, first, their future bilateral investment treaty and, second, the closer interconnection produced by China’s Belt and Road Initiative holds exhilarating possibilities for the global investment regime. Given that the United Nations Commission on Trade Law is currently working on reforming the harshly criticized instrument of investor-state dispute settlement, the foreseeable China–EU treaty might represent a model for a new generation of bilateral investment treaties, which also paves the way to a new fashion of settling investment disputes. Upon assessing China’s investment treaty practice and with a view to the various dispute settlement mechanisms in place, it seems likely that China, consistent with its flexible treaty-making manner, will find common ground with its European counterpart on the innovative establishment of a permanent bilateral investment court – as desired by the EU. The author, however, deems compromise on the implementation of a unified appellate mechanism, as opposed to a two-tiered standing court system, much more feasible, leaving the first instance of investor-state dispute settlement to the institutions chosen by the parties. Thus, the Investment Court System might just be a complementary dispute resolution option in the Belt and Road Region, at least in the medium term.