Explaining China's approach to investor-state dispute settlement reform: A contextual perspective

Abstract

China's approach to ISDS reform is widely perceived as undecided and ambiguous. This paper provides the first detailed analysis of China's submission to the UNITRAL Working Group III and situates China's approach in the context of global dialogue of ISDS reform and competing reform proposals. The paper shows that China's open, flexible, and evolving approach to ISDS reform could be better understood by a contextual evaluation of the pertinent factors which have contributed to its formation. Moreover, this paper explains why China did not sign up to the EU's investment court system (ICS) proposal in the EU-China Comprehensive Agreement on Investment (CAI). Lastly, the paper argues that China should reconsider its attitude towards the ICS in the CAI context and that the EU's recent suggestion that the envisaged multilateral investment court may adopt an ‘open architecture’ is likely to enhance its appeal to China.