The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS 

Cai Congyan: Outward Foreign Direct Investment Protection and the Effectiveness of Chinese Bit Practice

Traditionally, China has been a major capital importer in the field of international investment. Following the implementation of the so-called Going Abroad strategy in 1998, China has had more and more national international interest in capital export. Various particularities of Chinese outward foreign direct investment (Ofdi) makes it imperative for China to establish an Ofdi protection system in which bilateral investment treaties (Bits) would play an important role. In fact, recent Chinese Bit practice has manifested its determination to offer Ofdi protection. In the opinion of the author of this article, however, the current Chinese Bit practice, which reflects Chin’s new Ofdi policy rather than Chinese Ofdi activities, is wholly ineffective to protect its Ofdi. The author also suggests that Chinese Bit practice should strike a balance between the protection of inward Fdi and Ofdi and make Sino-foreign Bits more targeted, controllable and predictable.

Cai Congyan is a Doctor and Associate Professor of International Law at Xiamen University Scholl of Law in the People’s Republic of China; and Executive Editor of the Journal of International Economic Law (in Chinese).

Stephan W. Schill: Arbitration Risk and Effective Compliance—Cost-Shifting in Investment Treaty Arbitration

             The article analyzes the allocation of costs in investment treaty arbitration under the Icsid and Uncitral rules of arbitration and argues that the prevailing practice in distributing both costs of the proceedings and legal expenses of the parties in investment treaty arbitration can be described as a one-way, pro-investor cost-shifting approach.  According to this scheme, a losing investor only has to bear half of the costs of the proceedings and its own attorney's fees, while a successful investor can in principle recover both positions from the losing government.  In a second step, the article provides a normative justification for such an allocation of costs which seemingly favors foreign investors over respondent governments.  The justification relies on the perspective of law and economics and analyzes the nexus between incentives to initiate arbitration and the compliance of host states with international investment treaties. 

Stephan W. Schill, LL.M. in European and International Economic Law (Universität Augsburg, 2002);  LL.M. International Legal Studies (New York University, 2006), completed the First and Second Legal State Exam (Bavaria, 2001, 2003) and is Hauser Global Scholar at New York University School of Law, 2005/2006, and Scholar of the European Recovery Prgram/Studienstiftung des deutschen Volkes..

Walid Ben Hamida: The First Arab Investment Court Decision

            The 1980 Unified Agreement for the Investment of Arab Capital in the Arab States established an Arab Investment Court having jurisdiction to settle investment disputes. Although established in 1985, the Arab Investment Court only became operational in 2003 when a Saudi company, Tanmiah for Consultancy Management & Marketing, decided to sue the Tunisian government. The Court rendered its first decision on 12 October 2004. This article analyses the Arab investment system and comments on the first decision of the Arab Investment Court.

Walid Ben Hamida is Maître de Conférences, University of Evry Val-d’Essonne and Sciences Po, Paris, France. Dr. Ben Hamida advises on Arab laws, international law, investor–State dispute settlement and arbitration.

Irmgard Marboe: Compensation and Damages in International Law—The Limits of “Fair Market Value”

            The present article tries to identify the most important principles which should be observed in the process of calculation of compensation and damages in international legal proceedings. It concentrates on claims of individuals against foreign States before international courts or international arbitral tribunals, be it directly or by the home State in the exercise of diplomatic protection. The main causes of valuation in such proceedings are expropriations, violations of international obligations (State responsibility) and breaches of contract.

Irmgard Marboe is Assistant Professor in the Department of European, International and Comparative Law of the University of Vienna.

Nick Gallus: State Enterprises as Organs of the State and Bit Claims

            As entities “clothed with the power of government but possessed of the flexibility and initiative of a private enterprise”, as former United States President Franklin Roosevelt once put it, State enterprises can perform government functions with the efficiency of a private enterprise. This same combination of features that makes State enterprises so appealing also makes them liable to act inconsistently with a State’s obligations under bilateral investment treaties. The independence that enables State enterprises to perform government functions efficiently also enables the enterprises to perform those functions without scrutiny. The competition to which State enterprises are often subject provides them with an incentive to abuse their government functions to gain competitive advantages. The same combination of governmental and private features that makes State enterprises liable to act inconsistently with Bit obligations also generates difficulties for Bit tribunals trying to determine if State enterprises’ conduct is attributable to the State. Tribunals have encountered particular difficulties at the threshold question of whether the enterprise is sufficiently part of the State that the enterprise’s every action is attributable to the State. This article examines these difficulties and argues that, in certain circumstances, State enterprises are sufficiently close to the State that their every action should be attributable for the purposes of a Bit claim.

Nick Gallus is an Associate of Appleton & Associates.

Alisa DiCaprio and Kevin P. Gallagher: The Wto  and the Shrinking of Development Space—How Big is the Bite?

             The authors examine the extent to which the core development policies deployed by late industrializing nations in the second half of the 20th Century are permissible under the current World Trade Organization (Wto) regime. Although it is well established that Wto rules constrain development space, they examine the extent to which Wto rules have resulted in actual policy change.  They assess whether the Wto is constraining “development space” in three ways. First, building on previous literature, they examine the extent to which Wto rules restrict the ability to establish certain development policies. Second, they measure unilateral compliance with Wto rules as reported in Trade Policy Reviews—reports that Wto Members are required to file on their trade policies. Third, they examine dispute-encouraged compliance with the Wto rules by analyzing Wto case law related to the core policies. The authors find that the institutional crossover from the Gatt to the Wto system in 1994 contracted the set of industrial policies available to its Member territories.

Alisa DiCaprio is with the Department of Urban Studies at the Massachusetts Institute of Technology, Cambridge, Massachusetts. 

Kevin P. Gallagher is Assistant Professor in the Department of International Relations at Boston University, Boston, Massachusetts.

Both authors are researchers with the Global Development and Environment Institute at Tufts University.

Seth M.M. Stodder and Ryan J. Orr: Understanding Renegotiation and Dispute Resolution Experience in Foreign Infrastructure Investment

            Proceedings of the 2nd General Counsels’ Roundtable, held at Stanford University, California, 10–11 February 2006.