The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS

Wenhua Shan: Umbrella Clauses and Investment Contracts under Chinese Bits: Are the Latter Covered by the Former?  

The umbrella clause has become one of the most challenging provisions in bilateral investment treaties, which is most closely associated with investment contracts, namely state contracts or “concession agreements.” This article examines the umbrella clauses in Chinese BITs and investment contracts in China by referring to mainly jurisprudence in arbitration and court cases. It argues that despite the broad language adopted in the standard format of most BITs, the umbrella clause should not cover purely commercial contracts, or generally applied legislative measures that do not target at specific investments. After a careful examination of the main issues relating to investment contracts in China, including their nature, governing law, stabilisation clause, governmental guarantees and dispute settlement, it concludes that whilst joint venture contracts normally are not state contracts, joint exploitation and BOT contracts, contrary to what has been commonly held, are likely to be considered as state contracts subject to the protection of umbrella clause under applicable investment treaties. Given that there have already been some cases in China ’s domestic courts and tribunals, China should keep alert of the potential of such cases in international forums.

Wenhua Shan is Ministry of Education Changjiang Chair Professor of International Law, Dean of Xi’an Jiaotong University School of Law, and Professor of International Law at Oxford Brookes University .

Matthew Parish: On Neccesity

Recent discussions of the public international law of necessity and the other emergency defences have focused upon the treatment of the subject in the International Law Commission’s draft Articles on State Responsibility. But those Articles do not reflect prior case law, draw ungrounded distinctions, and mandate legal tests impossible to apply to complex factual scenarios, particularly in the economic sphere. It is therefore no surprise that modern investment treaty tribunals have struggled to apply the ILC’s prescriptions coherently, and one recent case has even tacitly abandoned them. Economic analysis of law supports the existence of a defence of necessity, but the doctrine must be fundamentally reconsidered. The article concludes by tracing some of the principles that might be pertinent to a reinvigorated emergency defence in international law.

Dr. Matthew Parish, M.A. (Cantab), LL.M., J.S.D. (University of Chicago) is a solicitor-advocate (England & Wales), attorney at law (New York), a barrister and a member of the Honourable Society of Lincoln’s Inn. He practises with the firm of Hogan & Hartson LLP in Geneva , and is a Visiting Fellow of the British Institute of International and Comparative Law, London .  

David Caruso: Prosperity in Co-Operation: The Asean-Australia-New Zealand Free Trade Agreement (Aanzfta)

This article examines how and the extent to which the ASEAN-Australia-New Zealand FTA (AANZFTA) liberalises and integrates trade within the Asia Pacific region. It examines the economic growth of ASEAN and the development of trilateral negotiations between ASEAN, Australia and New Zealand to establish a free trade area. The politics, framework, scope, operation, benefits and effect of the AANZFTA are considered. Trade in goods, services and off-shore investment are analysed. The importance of co-operation to the AANZFTA is revealed in Australia and New Zealand’s recognition of Viet Nam as a market economy, and the Economic Co-operation Work Programme (ECWP) through which the parties work together to realise the potential benefits of the AANZFTA.

David R A Caruso, BA (Politics), LL.B. (Hons) ( Adelaide ), GDLP ( South Australia ) is a  Lecturer at the School of Law of The University of Adelaide, Australia.

Wei Shen: Is Safe Safe Now?—Foreign Exchange Regulatory Control over Chinese Outbound and Inbound Investments and a Political Economy Analysis of Policies

The undervaluation and appreciation of Renminbi, the Chinese currency, is probably the most controversial monetary, economic and legal issue between China and its major trading partners, in particular, the United States and the European Union. Along with the pegged Renminbi, Chinese rules and policies on both Chinese outbound and inbound investments are contradictory to each other from time to time. While the Chinese government is trying to implement its “go globally” strategy by pushing Chinese companies to grow globally, Chinese foreign exchange regulatory regime in these respects appears conservative and restrictive. This article focuses on the foreign exchange regulatory regime over both Chinese outbound and inbound investments with the aim to interpreting these conflicting rules and policies from a political economy perspective. Although an economic or legal review of these rules and policies may not disclose any sound rationality, they may make political sense.

Wei Shen, PhD (London School of Economics and Political Science); LLM (University of Cambridge); LLM (University of Michigan); LLB & LLM (East China University of Political Science and Law) is Assistant Professor of Law at the School of Law of City University of Hong Kong. 

Rafael Leal-Arcas: China’s Attitude to Multilateralism in International Economic Law and Governance: Challenges for the World Trading System

This paper argues that China ’s attitude to multilateral trade is unclear. Moreover, China assumes little responsibility to maintain international order in global economic governance. China poses a major challenge to the world economy by virtue of being a new global economic superpower. For the past decade, its position as a strong player in international trade has been remarkable. In 2010, China has become the world’s second largest trader. Yet, China has been playing at best a passive role and at worst a disruptive role with respect to the global trading system. This poses challenges for the world trading system.

Rafael Leal-Arcas, B.A., J.D. ( Granada University ); M.Phil. ( London School of Economics and Political Science); LL.M. ( Columbia Law School ); JSM ( Stanford Law School ); M.Res., Ph.D. (European University Institute, Florence) is Senior Lecturer in International Economic Law & European Union Law, and Deputy Director of Graduate Studies, Queen Mary University of London (Centre for Commercial Law Studies), UK, a member of the Madrid Bar, and author of the books International Trade and Investment Law: Multilateral, Regional and Bilateral Governance ( Edward Elgar Publishing, 2010) and Theory and practice of EC External Trade Law and Policy (Cameron May, 2008).

Manuchehr Irandoust: A Survey of Recent Developments in the Literature of Fdi-led Growth Hypothesis

FDI-led growth hypothesis asserts that FDI may play an important role for economic growth through capital accumulation, technology transfer, and knowledge spillovers.  The concept was introduced by Singer (1950) and since then, two groups of empirical studies have emerged. While one group has employed cross-sectional and panel data analysis, the other has used country by country time series approach and panel cointegration technique. This paper provides a survey of the recent progress in the literature of FDI and economic growth and criticizes each group separately. The overall evidence is best characterized as mixed and there are some methodological reservations about the results from these empirical studies. A number of key issues regarding methodological issues in the empirical literature are highlighted. The paper also points to a few directions for future research.

Dr. Manuchehr Irandoust , MS and PhL ( Uppsala University , Sweden ), PhD ( Gothenburg University , Sweden ) is a Professor & Chairman, Deptartment of Economics and Finance, UAE University , UAE.

Md. Rizwanul Islam: A Diagnosis of the Crawling Trade Liberalisation under the Auspices of the South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is approaching its silver jubilee as an inter-state organisation for advancing co-operation in the South Asian Sub-Region. Promotion of intra-regional trade is a significant focus of the SAARC. Nonetheless, intra-regional trade has not substantially expanded in the sub-region. This article critically analyses the background of the organisation and some facets of its first preferential trade agreement, the South Asian Preferential Trade Arrangement to illustrate what underlying factors have hindered progress in the sub-regional trade expansion. It demonstrates that above and beyond the dynamics of economic determiners, socio-political factors have been big stumbling blocks to the progress of trade co-operation within the SAARC.

Md. Rizwanul Islam, PhD candidate, Macquarie Law School, Macquarie University, Australia; LLM (Intellectual Property & Technology Law), National University of Singapore; LLB (Honours), University of Dhaka.