TY - JOUR
AU - Wei,, Shen
AB - Abstract Inconsistency has been said to be one of the most severe shortcomings the existing investor–State dispute settlement (the ISDS) system possesses. Inconsistency, if not cured, is likely to affect the legitimacy of the ISDS. Partly in response to the claims of inconsistency and illegitimacy of the ISDS, the EU has proposed to have a permanent investment court to replace the ISDS while the US proposed to have an appellate body for the current ISDS along with a large camp of undecided states having no firm position on the ISDS reform. China, on the other hand, has not issued an official response to the concept of a permanent investment court, partially because of its less active role in the use of the existing ISDS. More recent years have witnessed China’s increasing involvement in ISDS cases. The purpose of this article is to review these China BIT-related ISDS cases, in particular, the awards on jurisdiction, and the tribunals’ varying techniques in interpreting the ISDS clauses in China’s BITs with a focus on the jurisprudential analyses of these cases and the tribunals’ treaty interpretive techniques. Not surprisingly, the interpretative tendency has been quite uniform. In brief, the tribunals have tended to be more expansive when they were called upon to determine the jurisdictional issues. Although this article is largely jurisprudential, a sense of the tribunals’ arbitral techniques may help shape some foundational underpinnings for China’s policy response to the proposals to reform the ISDS system made by the EU, the US, and others. KEY REFERENCES • Tza Yap Shum v Republic of Peru, ICSID Case No ARB/07/6. • Ping An Life Insurance Company of China v Kingdom of Belgium, ICSID Case No ARB/12/29. • Sanum Investments Limited v Lao People's Democratic Republic, PCA Case No 2013-13. • Ekran Berhad v People's Republic of China, ICSID Case No ARB/11/15. • Ansung Housing Co, Ltd v People's Republic of China, ICSID Case No ARB/14/25. • Beijing Urban Construction Group Co, Ltd v Republic of Yemen, ICSID Case No ARB/14/30. • China Heilongjiang International Economic & Technical Cooperative Corp, Beijing Shougang Mining Investment Company Ltd, Qinhuangdaoshi Qinlong International Industrial Co Ltd v Mongolia, PCA Case No 2010-20. There is an apparent so-called ‘China disequilibrium’ in international investment arbitration arena.1 While China is the second largest signatory state signing 139 bilateral investment treaties (BITs)2 and 21 treaties with investment provisions such as trade agreements including investment chapters and has robust outbound investment flows, the number of investor–state arbitration cases involving China or Chinese BITs is remarkably low no matter whether China is a respondent state or a Chinese investor is a claimant. There were two opposite schools of thought explaining this ‘China disequilibrium’. One explanation is to argue that the Chinese government has already been offering sufficient investment protection to foreign investors.3 As a result, there were few cases involving the Chinese government as a respondent. This explanation could not justify the very few number of investor–state arbitration cases in which Chinese investors are claimants especially in the context that China has become the second capital exporting state while Chinese outbound investment often encounters legal, political, and economic difficulties in host states. The other school of thoughts attribute the low utility rate of Chinese BITs to the restrictive BIT terms, especially such terms as investor, investment, dispute, fork-in-the road, among others.4 The argument is based on the fact that the early-generation Chinese BITs often incorporate narrowly-defined terms of investor, investment and dispute, which basically disallow foreign investors to easily initiate investor–state arbitration against the Chinese government even if the Chinese government or its local governments did harm foreign investors’ interests. An interconnected argument on this side is China’s preference for settling disputes informally through diplomatic consultations5 and foreign investors’ possibility of gaining more benefits through negotiations.6 While the accuracy of these two opposite schools of thought is beyond the scope of this article, it does bring out a closely interconnected question—how foreign investors can better protect themselves under the restrictive Chinese BIT regime. It was then argued that the home states of foreign investors, especially those major capital exporting states should bargain for better substantive and procedural terms and sign a new-generation BITs with the Chinese government thereby upgrading the rights protection standards and offering more favourable rights to foreign investors.7 In his seminal article, Stephen Schill therefore made a call for tearing down the Great Wall by more rigorous negotiations between Western European countries, in the interest of their outbound investment, and the Chinese government for a more liberal and investor-oriented BIT.8 Almost a decade thereafter, there have been less than a dozen of Chinese BITs-related investor–state arbitration cases, a sharp contrast to the increasingly growing number of investor–state arbitration cases world-wide. Figure 1 indicates this sharp contrast. Surprisingly, most of these Chinese BITs were old-generation BITs with restrictive terms of investor, investment, dispute, and fork-in-the road. The general consensus is that capital exporting states such as Western European countries may need to tear down the Great Wall through treaty negotiations with China by bargaining for more preferential treatments in favour of their investors. Nevertheless, as far as foreign investors or home states are concerned, a more effective way, as this article indicates, is to rely on sophisticated treaty interpretative methodologies adopted by the investor–state arbitral tribunals to achieve an expansive scope of jurisdiction for the investor rights protection. The purpose of this article therefore is to focus on the treaty interpretative methodologies applied by various tribunals in these Chinese BIT-related cases. There are at least two points of significance related to the key theme of the article. Figure 1. Open in new tabDownload slide ICSID cases and China-related ICSID cases Figure 1. Open in new tabDownload slide ICSID cases and China-related ICSID cases First, it is important to see how vaguely worded terms in Chinese BITs were interpreted and what treaty interpretative devices were deployed by tribunals. This is relevant to the efficacy and sustainability of investor rights protection when foreign investors have to rely upon these treaty terms as well as their persuasive (though non-binding) authority (through interpretation) to initiate arbitration claims. The interpretative approaches employed by tribunals not only have a constraining effect on the future tribunals in resolving gaps and ambiguities in existing BITs but also on China as well as its counterparties in formulating future treaties through internalization of pros and cons of different treaty interpretations. Secondly, inconsistency and incoherence have been argued to be the major defects of the current BIT regime and investor–state arbitration system.9 Given the severity of these defects, the EU, the US, Australia, and other states have put forward various proposals calling for a larger and deeper scale of reforms so that the efficiency and legitimacy of the investor–state arbitration system can be improved or restored.10 For the time being, China is silent on these proposals and has not formed its official policy towards these various reformative movements.11 Part of China’s policy is supposed to be built upon the fact whether China has suffered from any inconsistency and incoherence of the current BIT regime and investor–state arbitration system or any unbearable imbalance of power between itself as a treaty party (that creates the law) and tribunals (that apply the law in relevant cases). Against these backdrops, a review of treaty interpretative approaches and their consistency and coherence is of importance not only to investment protection but also consistency, coherence and legitimacy of investor–state arbitration system. Treaty interpretation is the major but controversial adjudicative device the tribunals have relied upon to enhance its legitimacy and authoritativeness. The way the tribunals interpret Chinese BITs is supposed to be aligned with the objective China, being a treaty party, tries to achieve through its BITs. Otherwise, there is a gap between the rule-maker and rule-appliers and the gap of interpretative imbalance needs to be filled by some instruments such as treaty terms with explicitly defined limits, extent and specificity leaving little space to tribunals for expansive treaty interpretation and choices of analogies borrowing concepts, doctrines, and principles from other legal fields for greater certainty.12 The rest of this article proceeds as follows. Section 1 briefly lists major Chinese BIT cases. A review of the treaty interpretative tools outlined in the Vienna Convention and the use of these interpretative tools are contained in Section 2. The usual jurisdictional objections are raised on the issues of ‘investor’, ‘investment’, ‘dispute’, fork-in-the-road provision, limitation period and most-favoured nation (MFN) treatment of procedural rights, which often appeared in Chinese BIT cases.13 These issues will be discussed in Sections 3–8 in the context of China-related BIT cases with a focus on treaty interpretative devices applied by tribunals. As far as China is concerned, a unique question in investment arbitration jurisprudence is the application of Chinese BITs to investors from Hong Kong or Macau. To date, two cases have touched upon this territorial issue and Section 3 explores the uncertainty surrounding this territorial issue. The conclusion follows in Section 9 summarizing the application of key treaty interpretative approaches deployed by various tribunals in Chinese BIT cases. The conclusion we may draw on from this jurisprudential review of treaty interpretation approaches, like others observed elsewhere, conforms to the general view that the tribunals are likely to lean towards an expansive treaty interpretation approaches with a pre-set purpose of expanding their jurisdictional scope in order to move arbitration cases ahead especially at the jurisdictional stage14 where the tribunals need to confirm their jurisdiction first. 1. OVERVIEW OF CHINESE BIT CASES The investor–state dispute settlement (ISDS) is a common feature in the 129 BITs concluded by China. Under current records, Chinese companies are claimants in four cases before the ICSID, including Beijing Urban Construction Group Co., Ltd v Republic of Yemen, Ping An Life Insurance Company of China, Limited and Ping An Insurance (Group) Company of China, Limited v Kingdom of Belgium, Standard Chartered Bank (Hong Kong) Limited v Tanzania Electric Supply Company Limited, Tza Yap Shum v Republic of Peru. China is the respondent in only three cases, that is, Ansung Housing Co, Ltd v China, Ekran Berhad v People’s Republic of China, and Hela Schwarz GmbH v China (which is still ongoing and pending).15 Chinese investors have been more proactive in outbound investment while taking advantage of China’s extensive network of investment treaties in protecting their investment in the host states. The claims raised by Chinese investors is a tangible reminder of the fact that Chinese investors have become a significant source of foreign direct investment in the world. This economic reality not only explains why China has entered into a large number of BITs in the past several decades but also rationalizes China’s switching position in optimizing its BITs in its interest. The first ICSID arbitration under a China BIT was Tza Yap Shum v Republic of Peru16 that concerned Tza Yap Shum, a Hong Kong resident and People's Republic of China (PRC) national, and his dispute arising out of taxes imposed by the Peruvian authorities on a fish flour manufacturing and export company owned by Tza. The award on merits supported Tza’s claim and granted Tza compensation in the amount of US$786,000 in July 2011. A hearing on Peru’s application for annulment of the award was held in March 2014 and the Committee’s decision was not to reverse the award on merits. The second ICSID arbitration under a China BIT was Ping An Life Insurance Company of China v Kingdom of Belgium.17 Ping An, a major Chinese insurance and financial services company, sought compensation in relation to a US$2.3 billion write off on its investment in Fortis, a Belgian-Dutch financial institution that was bailed out by Belgium in 2008. The tribunal rejected Ping An’s claim due to a lack of jurisdiction. China Heilongjiang International Economic & Technical Cooperative Corp., Beijing Shougang Mining Investment Company Ltd., Qinhuangdaoshi Qinlong International Industrial Co. Ltd. v Mongolia is also an international investment arbitration case in which Chinese investors brought investment claims into ad hoc proceedings administered by the Permanent Court of Arbitration (the PCA). The dispute concerned the Mongolia government’s cancellation of licenses held by PRC investors in the Tumurtei iron ore mine in 2012. The claim was also rejected by the tribunal due to the lack of jurisdiction. The PCA tribunal declined to exercise jurisdiction over the claims that Mongolia had expropriated their investments without compensation in violation of the China–Mongolia BIT. The Claimants later filed a petition to the US District Court Southern District of New York in order to vacate the arbitral award. In the most recent case of Sanum Investments Limited v Lao People’s Democratic Republic,18 an ad hoc UNCITRAL tribunal held that it had jurisdiction to hear claims by a Macau entity under the China–Laos BIT. The award was set aside by the High Court in Singapore but was then reversed by the Appellate Court of Singapore. Although the PRC is a signatory to 129 BITs and more than a dozen free trade agreements incorporating investment chapters, compared to those cases in which Chinese investors brought claims against host state governments, international investment arbitration cases brought by foreign investors against the Chinese government are still rare. China was only the respondent in two BIT arbitration cases under the ICSID Convention. The first publicly known investment claim against China was brought by a Malaysian construction and development company in May 2011. In the case of Ekran Berhad v People’s Republic of China, the dispute concerned the revocation of Ekran Berhad’s Chinese subsidiary’s 70-year lease of 900 hectares of land in China’s Hainan province.19 The arbitration was suspended by agreement a month after being registered and discontinued on unknown terms. In the case of Ansung Housing Co., Ltd. v People’s Republic of China, Ansung, a South Korean property developer became the second ever investor to request ICSID arbitration against China.20 The case was about a development project for a golf country club and condominiums in Sheyang County, Jiangsu Province. Ansung made investments in late 2006. Due to the various arbitrary and illegal actions and omissions of the Sheyang County government, Ansung has been deprived of the use and enjoyment of its investment as its investment plan has been impeded. As a result, in October 2011, Ansung was forced to dispose of its entire investment to a Chinese purchaser at a price significantly lower than the amount Ansung had invested. Ansung suffered losses of more than Renminbi 100 million and sought an award for damages. 2. TREATY INTERPRETATION APPROACHES—AN OVERVIEW There has been an improvement in the frequency and systematic use of the Vienna Convention on the Law of Treaties (VCLT)21 in the treaty interpretation by the investor–state arbitration tribunals (ISATs),22 and the majority of which primarily relied upon Article 31(1) of the VCLT.23 The four main criteria contained in Article 31(1) of the VCLT are good faith, ordinary meaning, context, and object and purpose.24 Studies of Foreign Investment Arbitral Tribunal (FIAT) awards and decisions reveal how ISATs referred to some norms and terms from the VCLT to support their reasoning and conclusions in a systematic manner.25 The starting point of interpretation is to establish the ordinary meaning of an investment treaty provision,26 since the signed text is presumed to be the written record and authentic expression of the common consent of the parties.27 To accomplish this, ISATs frequently refer to the dictionary to search out the ordinary meaning of legal terms.28 Although certain ISATs have seen no need for further interpretation if the terms to be interpreted are clear and their ordinary meaning is beyond doubt,29 recourse to a contextual analysis and an examination of the object and purpose are often required to confirm the textual meaning of the terms.30 More often, an inquiry into the ordinary meaning of a treaty term may not yield conclusive results,31 either because of the generality and vagueness of the term used in nature,32 or there are more than one ‘ordinary meaning’ attached to the term.33 In such cases, the context or the object or purpose criterion, though subsidiary to the ordinary meaning criterion,34 may have a decisive impact on an interpretation.35 The contextual criterion assists the concerned tribunal in qualifying the meaning of terms in a treaty to prevent a random literal interpretation or selecting an ordinary meaning where more than one such meaning exists.36 It is common practice to many ISATs that the criteria of ordinary meaning and context are conflated into one interpretative step in search of the ‘ordinary contextual meaning’ of the treaty term.37 ISATs awards refer to a wide array of contextual factors including both the context of the particular treaty terms and the context of the treaty as a whole.38 Albeit less determinative, the context is essential to the interpretation of terms in the entire structure of the treaty.39 Reliance on the object and purpose of the treaty arises where the asserted interpretation is incompatible with the object and purpose of the treaty or its provisions,40 or justifies a broader or more expansive rather than restrictive interpretation of the tribunal’s jurisdiction.41 The treaty’s preamble has on a number of occasions assisted ISATs to elucidate a treaty’s object and purpose.42 Less frequently, light has been cast on the object and purpose by the title of a treaty;43 the preparatory work;44 or, in the case of the ICSID Convention’s interpretation, the Executive Director’s Report.45 The object and purpose of an investment treaty referred to by ISATs includes but not limited to the protection of foreign investment,46 promotion of economic cooperation and flow of capital and technology between states,47 all of which often call for a balanced approach to the interpretation.48 ISATs’ references to the good faith criterion when carrying out the treaty interpretation are scarce,49 largely due to the broad and undefined nature of good faith places considerable discretion to the arbitrators.50 The term good faith, as an overly subjective interpreting notion, is likely to be used to justify a certain predetermined desired result.51 Despite its rare application, the good faith criterion affects the interpretative process by correcting interpretations obviously contrary to general principles,52 or when the parties have reasonably and legitimately envisaged the consequences of their undertakings.53 In summary, the four main criteria of treaty interpretation contained in Article 31(1) of the VCLT, that is, good faith, ordinary meaning, context, and object and purpose, should be read and utilized as a whole, though they are often applied in sequence, with emphasis placed on certain criteria depending on the circumstances of each individual case. It is also important to note that the ordinary meaning, the context, and the object and purpose should by and large come from the text of the treaty54 instead of an investigation into the intention of the parties,55 so that the interpretation can mainly be a rather objective one based on the text of the treaty. 3. DEFINITION OF ‘INVESTOR’ In the ISDS cases involving China, the tribunals kept an expansive approach to determine the scope of ‘investor’ under Chinese BITs. One focal issue is whether and when state-owned enterprises (SOEs) from mainland China can be protected under BITs in the ISDS cases, which appears now quite relevant to Chinese investors and their host states given the ongoing trade war between China and the US. The role of SOEs in Chinese outbound investment is likely to draw more attention while Chinese SOEs are becoming the major force in outbound investment. Some Chinese BITs such as the China–New Zealand FTA 2008 explicitly includes SOEs in the scope of investors covered by the FTA.56 Given the importance of SOEs in BIT practice, some of Chinese BIT cases are particularly relevant and deserve careful analysis. In the case of Beijing Urban Construction Group Co., Ltd. v Republic of Yemen,57 to define the scope of ‘investor’ was the main issue of the case. Beijing Urban Construction Group (BUCG), a SOE in China, won a tender process for the selection of a construction contractor for a new international terminal at Sana’s International Airport in Yemen, and entered into a construction contract (in the value of more than US$110 million) with the Yemen Civil Aviation and Meteorology Authority (CAMA) in 2006. The Claimant commenced ICSID arbitration proceedings alleging that Yemen had unlawfully deprived it of its investment by employing military forces and security apparatus to assault and detain the Claimant’s employees and to forcibly deny its access to the construction site, thereby rendering the Claimant incapable of performing its contractual obligations. Yemen, claimed by BUCG, used this incident as an excuse for CAMA to terminate BUCG’s contract. In its request for arbitration and subsequent submissions, BUCG claimed that it was expropriated, and Yemen was in violation of Article 4 of the China–Yemen BIT. One of the jurisdictional objections raised by Yemen was that BUCG, being an SOE, should not be regarded as a ‘national of another Contracting State’ as required by Article 25(1) of the ICSID Convention58 for the reasons: (i) BUCG was under the direction and control of the Chinese government in carrying out its activities, and (ii) BUCG was empowered to exercise elements of governmental authority in China. BUCG contended that the question of whether or not it qualified under Article 25(1) must be considered in the specific context of the investment that had given rise to the dispute. It argued that its investment in Yemen was made while acting as a commercial enterprise, after participating in a competitive tender, and did not involve the exercise of governmental or public powers. According to BUCG, its structural links to the Chinese government and public functions inside China were irrelevant to its standing as an investor under the ICSID Convention. The tribunal held that, notwithstanding the fact that BUCG was an SOE, the evidence demonstrated that the Claimant was, in carrying out this work, acting as a commercial contractor and was neither an agent of the Chinese government nor fulfilling governmental functions in the fact-specific context.59 In this regard, the tribunal found it particularly noteworthy that: BUCG participated in the airport project as a general contractor following an open tender in competition with other contractors. Its bid was selected on its commercial merits. Its contract was terminated, Yemen contends, not for any reason associated with the PRC’s decisions or policies but because of BUCG’s failure to perform its commercial services on the airport site to a commercially acceptable standard.60 Yemen further argued that, under Chinese law, SOEs act effectively under the direction and control of the Chinese government and the Chinese Communist Party (the CCP), and that this meant that the Chinese government was the ultimate decision-maker for BUCG’s operational, management, and strategic decisions. In support of its position, Yemen invoked certain features of Chinese law applicable to SOEs generally and BUCG specifically. The tribunal further found that ‘the assertion that ‘the Chinese State is the ultimate decision maker’ for BUCG is too remote from the facts of the Sana’a International Airport project to be relevant’.61 In the case of Beijing Shougang Mining Investment Company Ltd. et al. v Mongolia, both sides submitted the arguments over the term of ‘investor’ related to SOEs, the Claimants asserted that they are ‘qualifying investors’ under Article 1(2) of the BIT because they are ‘economic entities’ that are ‘established and domiciled in the territory of the PRC in accordance with the PRC’s laws’.62 In denying Beijing Shougang and China Heilongjiang are ‘agencies’ of the Chinese government or exercise ‘any element of governmental authority’,63 the Claimants made an emphasis on the fact that the BIT does not exclude SOEs from qualifying as investors.64 Mongolia, however, claimed that Beijing Shougang and China Heilongjiang are not investors as they cannot be classified as ‘economic entities’ under Article 1(2) of the BIT.65 Mongolia suggested applying a narrow formulation of ‘economic entities’. As the tribunal focused on the ‘involving’ formulation and fork-in-the-road provision to deny jurisdiction, it did not elaborate on the standing of SOEs in the BIT. Another keyspot issue is who qualifies for protection as a ‘Chinese investor’. The wording of PRC investment treaties typically protects PRC nationals or companies, without elaborating on the criteria for establishing such nationality. The main controversy is whether individuals or companies from ‘special administrative regions’ of China, Hong Kong, and Macau, can be covered by this definition. Two arbitral tribunals have answered this in the affirmative. In Tza Yap Shum v. Peru, an ICSID tribunal held that a Hong Kong resident was entitled to claim damages under the China-Peru BIT. The 2009 case later resulted in an award of damages to Tza, the Hong Kong resident, as compensation for expropriating a fish-ball manufacturing factory he owned in Peru. More recently, in the case of Sanum v Lao Republic, an UNCITRAL tribunal held in 2013 that a Macau-incorporated company could take advantage of the China–Laos BIT. Sanum was the subject of a main challenge by the Laos government in the courts of Singapore where the arbitration was based. In 2015, a single judge of the Singapore High Court annulled the jurisdictional ruling, holding that Macau investors could not avail themselves of the BIT because ‘the PRC-Laos BIT does not apply to Macau’. But in September 2016, the Court of Appeal, Singapore’s highest court (the SGCA), restored the award, holding, on its own independent review of the China–Laos BIT, that its terms covered Macau investors. The SGCA’s ruling does not quell the controversy over this issue. In October 2016, the PRC’s Ministry of Foreign Affairs reacted by stating that it disagreed with this decision, that only mainland Chinese investors are entitled to treaty protection, and Hong Kong and Macau investors should not be allowed to take advantage of Chinese nationality for such purposes. The issue is complicated by the fact that Macau and Hong Kong still have their own independent investment treaties with some countries—as highlighted recently by Philip Morris v Australia, in which Philip Morris Asia Limited, the Claimant, attempted to use the Hong Kong–Australia BIT and, more specifically, its UNCITRAL arbitration clause as a basis for challenging Australia’s Tobacco Plain Packaging Act, a tobacco control legislation that removed brands from cigarette packs, which, as the Claimant argued, amounted to an expropriation of its intellectual property rights. The case was dismissed by a tribunal established under the auspices of the Permanent Court of Arbitration on non-jurisdictional grounds,66 without any discussion of the status of Hong Kong. Peru argued in Tza Yap Shum v Peru that, by virtue of Tza’s residency in Hong Kong, he lacked standing to assert a claim under the Peru–China BIT. Peru made two objections to Tza’s nationality. First, the Claimant failed to prove his Chinese nationality. Procedurally, the Claimant bore the burden of proof to produce a certified copy of his birth certificate as documentary evidence of his Chinese nationality and such a failure during the stage of production of documents led to a failed establishment of such nationality. Secondly, a copy of the passport issued by the government of the Hong Kong Special Administrative Region (SAR), as Peru claimed, was not sufficient evidence of the Claimant’s nationality.67 The Claimant produced his Hong Kong passport and identification card indicating that Fujian province was his place of birth even though he was not able to produce a birth certificate as requested by the Tribunal due to the succession of sovereignty by the Communist Party of China in 1949.68 More importantly, an investment, as the Claimant argued, made by a Hong Kong resident was not excluded from the investment protected under the Peru–China BIT because China did not file a notice with the ICSID according to Article 70 of the ICSID Convention to limit the territorial application to China.69 Similarly, the definition of ‘investor’ in the Peru–China BIT does not attach any domicile or residence qualifier.70 The Tribunal ruled that the Claimant prima facie validly holds the Chinese nationality71 on the grounds that: (i) the PRC Nationality Law confers the Chinese nationality to natural persons of Chinese descent born in the Chinese territory72 and forbids Chinese nationals from having any nationality other than the Chinese one; and (ii) Tza’s residency does not change the fact that Hong Kong residents of Chinese descent and born in the Chinese territories (including Hong Kong) are Chinese nationals as the PRC Nationality Law applies equally in Hong Kong.73 The Tribunal accepted Tza’s Hong Kong passport as sufficient evidence to demonstrate Tza’s Chinese nationality. The Tribunal technically relied upon both Article 25 of the ICSID Convention and the Peru–China BIT to establish its jurisdiction for ‘disputes arising out of an investment between a Contracting State and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the ICSID’.74 As Article 25 does not explicitly exclude Chinese nationals resident in Hong Kong, and ‘China has not excluded Hong Kong by written notice from the application of the ICSID Convention’ in accordance with Article 70 therein,75 all Chinese nationals including Hong Kong residents are therefore included in the scope of Article 25 of the ICSID Convention. In connection with the Peru–China BIT, the definition of ‘investor’ in respect to China refers to ‘natural persons who have nationality of the PRC in accordance with its laws … .’ Neither this definition nor any other provisions exclude Hong Kong residents from the scope of application thereof. In applying Article 31 of the VCLT, the Tribunal is bound to interpret the Peru–China BIT ‘in good faith and in accordance with the ordinary meaning to be given to the terms of the treaty in its context and in the light of its object and purpose’. In other words, the Tribunal underscores the explicit intention expressed by China and Peru in the BIT which did not impose any additional requirements to the term ‘investor’. The Tribunal’s position is clear that the nationality is fundamentally a question of domestic law and the Tribunal must strictly apply domestic laws. Thus, the Tribunal took an expansive approach of interpreting the term ‘investor’ in the BIT and stayed clear of the nationality problem. Similarly, in response to the Respondent’s analysis of the legislation governing any other particular in Hong Kong, the Tribunal stuck to the BIT language and concluded that the legislation other than those strictly determining the nationality of its residents is of little relevance to the jurisdiction.76 This was also the approach taken by the Tribunal in considering the fact that Hong Kong itself entered into BITs with some countries. The Tribunal’s approach to interpreting the BIT term is consistent: strictly confining itself to the BIT term without considering any other elements raised by the Respondent to narrow the scope of ‘investors’ under the BIT so as to strike out the Tribunal’s jurisdiction. The Tribunal’s ultimate dismissal of Peru’s objections to the Claimant’s Chinese nationality effectively established the jurisprudence that a Hong Kong resident holding Chinese nationality, depending on the language of the BIT in question, is not only able to bring an investment treaty claim under a Hong Kong BIT but also a Chinese BIT. In contrast, a Hong Kong resident who is not a Chinese national would not be able to invoke Chinese BITs, while a Chinese national who is not a resident of Hong Kong could not invoke Hong Kong BITs. This is confirmed by the Hong Kong BIT which usually protects ‘physical persons who have the right of abode in its area’.77 However, the Tza Yap Shum case only addressed the nationality of a natural person, not all issues surrounding legal persons, corporate ownership or nationality. It is not clear whether a Hong Kong incorporated entity is entitled to treaty protections under a Chinese BIT. Different from the Chinese nationality which is conferred by Chinese law onto natural persons, the incorporation of a Hong Kong company is based on Hong Kong law, which is fundamentally and conceptually different from Chinese law. In theory, a Hong Kong-incorporated company should not be regarded as the same company incorporated in China and then should not have standing to pursue claims under Chinese BITs.78 This line of distinction between a Hong Kong resident and Hong Kong company (unless it is effectively controlled by a Chinese national or entity79) may lead to a dramatically different treatment. Some Chinese BITs clearly exclude Hong Kong from their coverage. Therefore, investors from Hong Kong should carefully review any such BITs to ensure that they include sufficiently broad language before relying on them for investment protections. The Sanum v Laos award arose from an international arbitration brought by Macau-based Sanum Investments Limited (‘Sanum’) against the Government of the Lao People’s Democratic Republic (the ‘Lao Government’) in 2012 under a 1993 PRC–Laos BIT for claims of expropriation of gaming investments. One of the main issue is centred on the scope of ‘Chinese investor’ under the China–Laos BIT. This is particularly relevant and special to China as Macau and Hong Kong have their own BITs and the investors from Macau and Hong Kong are supposed to be protected by the BITs signed by Macau and Hong Kong with their counterparties. In Sanum, not only the ICSID tribunal but also courts in Singapore dealt with this troubling issue from various legal perspectives. Thus, Sanum would be a landmark case on the legal issue of applying Chinese BITs to the investors from Macau and Hong Kong, and would have a great impact on the similar issue in the future Chinese BIT cases. In essence, the arbitral tribunal seated in Singapore found that the China–Laos BIT applied to Macau SAR, and ruled that it had jurisdiction to determine Sanum’s expropriation claims. The Lao Government filed a jurisdictional challenge to the Singapore High Court, which overturned the tribunal’s ruling and halted the arbitration. On 29 September 2016, Sanum prevailed in its appeal against the High Court’s decision before a 5-judge Court of Appeal. The SGCA also appointed two amicus curiae, Mr Christopher Thomas QC and Professor Locknie Hsu, to opine on various novel and complex issues concerning public international law and international investment law. In a 74-page judgment delivered by the Chief Justice Sundaresh Menon, the SGCA held that the High Court ‘was wrong to conclude that the Tribunal lacked the jurisdiction to hear the claims’, finding that the PRC–Laos BIT did apply to Macau and that the Tribunal had subject-matter jurisdiction over Sanum’s expropriation claims. The question the SGCA had to struggle with was whether the PRC–Laos BIT, which had been signed and entered into force in 1993, became applicable to Macau following the handover from Portugal to PRC in 1999. According to the Vienna Convention on the Succession of States in respect of Treaties, the SGCA held that ‘the PRC-Laos BIT will be presumed to automatically apply to the territory of Macau upon restoration of Chinese sovereignty with effect from 20 December 1999’. The SGCA found that there was ‘nothing in the text, the objects and the purposes of the PRC-Laos BIT, or in the circumstances of its conclusion that points to an intention to displace the [moving treaty frontier] rule such that it would lead to the conclusion that the BIT does not apply to Macau’. This followed from an extensive review of the evidence, including the 1987 PRC–Portugal Joint Declaration on the question of Macau, the PRC’s dealings with the UK in relation to Hong Kong, and various publications from the United Nations and the World Trade Organization (WTO). Notably, even though the Lao Government produced formal diplomatic correspondence between itself and the PRC in 2014 and 2015 expressing both governments’ views that the PRC–Laos BIT was not applicable to Macau, the Court declined to place any weight on such evidence, which was only adduced after Sanum’s commencement of the arbitration proceedings. Also, the SGCA addressed a number of international law concepts in this case, including the interpretation of treaties, rules of evidence in international law and the critical date doctrine. Dealing with the justiciability of the jurisdictional issue, the SGCA observed that the Singapore courts are not only competent, but also obliged to interpret and apply treaties, as the parties had designated Singapore as the seat of arbitration.80 The court laid down that it would undertake a de novo review of the Tribunal’s award on jurisdiction, and added that in reviewing the Tribunal’s ruling on jurisdiction, ‘there is no basis for deference to be awarded to the Tribunal’s findings’.81 The de novo review standard for deciding the jurisdictional question has been a consistent view taken by the Singapore courts.82 The issue of jurisdiction in this case was not only limited to interpreting the scope and application of the PRC–Laos BIT, but also involving a fundamental question of whether the PRC–Laos BIT extended to the territory in question. The inquiry into the applicability of the PRC–Laos BIT to a particular territory, necessitated the application of principles of treaty interpretation and other customary international law rules. Of particular importance is the emphasis by the court on Article 31 of the Vienna Convention,83 which encapsulates the principles relating to the interpretation of treaties in international law. In deciding whether the PRC–Laos BIT applied to Macau, the court examined the rule on state succession under Article 29 of the Vienna Convention84 and Article 15 of the Vienna Convention on Succession of States in respect of Treaties.85 The court further noted that the aforementioned provisions represent the ‘moving treaty frontier’ rule (the ‘MTF Rule’) in customary international law.86 The Court of Appeal relied on the opinions of experts in international law while assessing the relevance and effect of the MTF Rule and observed that the MTF Rule being a presumptive one, would automatically apply to Macau, upon restoration of Chinese sovereignty.87 The court next went on to examine the exceptions to the MTF Rule88 and held that none of the exceptions to the MTF Rule applied in this case as the extension of the PRC–Laos BIT to Macau: (i) could not be said to be incompatible with the object and purpose of the BIT (ii) would not radically change the conditions of its operation and (iii) there was nothing in the text, objects or purpose of the PRC–Laos BIT that pointed to an intention that the BIT was not intended to apply to Macau.89 A significant issue which arose for consideration regarding the relevance of evidence was the ‘critical date doctrine’,90 in public international law. The SGCA affirmed that the critical date was ‘the date on which the dispute was crystallized (14 August 2012), when the arbitration proceedings were initiated’.91 Laos sought to admit new evidence before the High Court in the form of two Notes Verbales (the NVs) and two further NVs before the SGCA. The SGCA noted that while the broad principles of Ladd v Marshall92and Lassiter93 would be helpful in determining the admissibility of new evidence. When the dispute engages questions of public international law, the court must consider the evidence, within the framework of applicable principles of international law, like the critical date doctrine. The SGCA held that the burden of proof was on Laos, to prove its assertion that it had otherwise established that the MTF Rule was displaced by the evidence arising before the critical date94 as the new evidence could be adduced only to confirm the pre-existing position. However, the SGCA found that the pre-critical date evidence did not establish that the MTF Rule had been displaced, and hence the NVs were ultimately not relevant to the issues before it.95 The SGCA adopted a finely nuanced line of reasoning that relied upon the ‘critical date’ doctrine to discount the weight to be applied to the 2014 NVs. The overall reasoning and result were correct, given the particular facts of the case, including a complete absence of any evidence to show that the PRC and Laos ever addressed the territorial scope of application of the BIT in any of its bilateral engagements prior to the 2014 NVs. Although the SGCA was placed in the difficult position of having to deal with an exchange of diplomatic correspondence by the contracting state parties to a BIT that purported to agree on the territorial scope of their BIT. The exchange of diplomatic correspondence was made after the arbitral award was rendered but before the filing of the court challenge. The implications for future determinations of the applicability of PRC BITs to Chinese SAR remain clear. In both of aforementioned two cases, the Tribunals held that the investors from China’s Special Administrative Region(s) still be protected by Chinese BITs. While clarifying that post hoc documents that retroactively alter the scope of those treaties will not be given effect, the Court also confined its findings to the features of the particular PRC–Laos BIT. The Court appeared to accept obiter that, had the PRC–Laos BIT, like North America Free Trade Agreement (NAFTA), permitted the States to issue binding interpretive statements, the 2014 NVs might have resulted in a different outcome. The effect of binding interpretive statements are far from non-controversial, having on occasion sparked rebuke from Tribunals that have seen it as a way for Contracting States to avoid liability.96 Commentators have also noted that some interpretative statements are tantamount to retroactive amendments, which may undermine the rule of law.97 Given the increasing number of newer generation investment treaties that permit Contracting States to issue binding interpretive statements, this will continue to be a fertile topic for debate. Notably, the PRC Ministry of Foreign Affairs has recently issued a statement criticizing the judgment and repeating its position that PRC treaties do not apply to Macau and Hong Kong. Given how much of the Sanum judgment was focused on the particular facts of the case, it remains unclear how future tribunals or courts will approach the territorial scope of different PRC treaties in different contexts, in light of the state practice of the PRC, and the conduct of other states in response even though the Court’s careful forensic analysis of the various pieces of extrinsic evidence will no doubt be of considerable influence. 4. DEFINITION OF ‘INVESTMENT’ Another major issue in international investment arbitration cases is the definition of ‘investment’. It must be pointed out that Article 25 of the ICSID Convention does not provide for any specific definition of investment which technically leaves certain room to develop this generic notion.98 Naturally, this flexibility may lead to an expansive jurisdiction the tribunals may exert in cases. In China related investor–state disputes, there were three cases touching upon this critical term. In BUCG v Yemen, Yemen argued in arbitration that BUCG was purely a paid contractor that had to provide a performance guarantee, and this did not qualify as an ‘investment’.99 BUCG contended that its investment consisted of rights acquired under the contract which falls under the definition of ‘investment’ under Article 1(1) of the BIT.100 As a result, its claim arose out of a qualifying investment in Yemen. As claimed by Yemen, investment needs to be registered in order to gain protection under the BIT. However, BUCG had failed to register its investment ‘in accordance with the laws and regulations of Yemen’, which rendered BUCG’s investment as unqualified for the purposes of the BIT.101 BUCG discounted the registration requirement under Yemeni law, given the irrelevance of Yemeni law to BUCG’s claim and the lack of illegality attached to the failure to register the investment.102 The tribunal held that the registration requirement could not expressly be inferred from the BIT. The tribunal seemed to keep a distance from the widely held but not uniform view that a qualified investment does not have to satisfy the required element of investment under both the BIT and the ICSID Convention.103 Nevertheless, it did hold that there was ‘no difficulty’ in concluding that there was an ‘investment’ both under the ICSID Convention and the BIT104 in circumstances where BUCG had made a contribution (in a contract for works extending over a substantial time period and, therefore, involving a risk) to Yemen’s economic development105 that clearly exposed it to risks posed by the sovereign power.106 Relying on the definition of ‘investment’ in Article 1 of the BIT,107 the tribunal clearly saw BUCG’s commitment under a contract being performed in Yemen explicitly qualified as an investment108 as it constitutes ‘claims to any performance having an economic value’ not only satisfying the Salini test but also within the meaning of Article 1 of the BIT.109 In the case of Beijing Shougang Mining Investment Company Ltd. et al. v Mongolia, three claimant companies incorporated under the laws of China, invested in a joint venture called Tumturei Ltd. with BLT LLC, a Mongolian company holding a license to exploit certain iron ore deposits, to commercially develop an iron ore mine in Mongolia. This license was duly transferred from BLT LLC to Tumturei in 2005 and iron ore production commenced in early 2006. Largely due to the then-higher price of iron ore, the new Mongolia government began efforts in 2006 to find a way to take back their now-valuable mining concession. The license was later revoked and claimed by Mongolia to belong to a domestic SOE. Three Chinese companies served their Request for Arbitration on 12 February 2010 and claimed that Mongolia unlawfully expropriated their investment and sought recourse through arbitration pursuant to the 1991 China–Mongolia BIT. An ad hoc tribunal was duly constituted and the Permanent Court of Arbitration (the PCA) was selected to administer the proceedings. A 153-page long award declining to exercise jurisdiction over the essential question was rendered on 30 June 2017. The award was not made public. Three Chinese companies later brought the case to the District Court of Southern New York petitioning for an order to vacate the award. Mongolia objected to the jurisdiction on a series of grounds. One objection was that Chinese companies have not made a qualifying investment, insofar as they have not incurred investment risk, which, as Mongolia argued, is a ‘situation in which an investor cannot be sure of a return on his investment, and may not know the amount he will end up spending’.110 Mongolia also made a distinction between investment risk and policy risk—the investment risk concerns a likelihood of profitability while policy risk refers to a likelihood of accruing benefit to the State.111 In Mongolia’s view, Chinese claimants in this case faced ‘state policy risk’ instead of ‘investment risk’.112 In addition, Mongolia submitted that Chinese claimants did not make any contribution to Mongolia’s economic development.113 Chinese claimants submitted that their investment comprises their shares in the joint venture and their indirect interest in the license. These interests fall within the definition of ‘investment’ in Article 1(1) of the BIT. The Claimants argued for an ordinary meaning of Article 1(1) as any recourse to supplementary means of interpretation is not supported by the VCLT.114 Chinese claimants were also of the opinion that they undertook investment risk as ‘shareholdings in a mining company and concessions over natural resources carry with them the inherent risk that no return (or no sufficient return) be received on the investment made’.115 The tribunal did not elaborate on the concept of ‘investment’ in the award while completely relying upon the narrow interpretation of ‘dispute’ in declining its jurisdiction. In Tza Yap Shum v Peru, the claim was brought by Tza who is the ultimate shareholder of a holding company that further invested in Peru. In other words, Tza does not directly own the local company incorporated in Peru. Rather Tza owns the shareholding in a holding company incorporated in a third-party jurisdiction which in turn owns the local company. Tza’s investment in Peru constituted ‘indirect investment’. The Tribunal interpreted the intention of the contracting parties to the BIT in a strict manner that is, protecting all kinds of investments through an ample formulation.116 The strict and expansive manners are the two sides of the same coin—relying on treaty interpretation to achieve better investor protection. In this sense, the strict manner here is technically the same as an expansive approach the tribunals may select to lean towards for more favourable treaty interpretation. Indirect investment, based on the BIT, is not excluded ‘in accordance with the laws and regulations’ of Peru from the scope of treaty protection in particular when the investor exerts the property and control over such investment.117 In the case that the parties to the BIT were intended to exclude indirect investments from the treaty protection, the treaty parties may have already done so by explicitly listing the indirect investment channelled through a third party country in the exclusion provision. As the Tribunal rightly pointed out, ‘it would expect that such a limitation would have been included explicitly in the BIT’.118 The definition of ‘investment’ in the Peru–China BIT includes a requirement that the categories of assets admitted as ‘investments’ must be made ‘in accordance with the laws and regulations of the other Contracting Party’. The plain meaning of this phrase is that investments which would be illegal upon the territory of the host state are disqualified from the protection of the BIT. The Tribunal’s way of interpreting and applying the formula ‘in accordance with host state law’ is consistent with the general case law jurisprudence. The Tribunal did not use this formula to justify an exclusion of ‘indirect investment’ by reference to the host state law. In the same vein, the tribunals usually rejected the argument that this formula meant that the concept of ‘investment’ and the reach of the protection under the treaty had to be determined on the basis of domestic laws.119 The rationale is that the reference to the host state’s domestic law concerned the legality of the investment other than the term of ‘investment’.120 The tribunal which made use of this phrase to deny jurisdiction also focused on the legality of the investment in order not to run counter to the general principle that a claimant should not be able to benefit from its own wrongdoing.121 It is apparent that the Tribunal was unwilling to exclude the indirect investment from the treaty protection as doing so would effectively amend the BIT’s definition of ‘investor’ or ‘investment’ arbitrarily. However, it is less apparent that the Tribunal was ready to extend investment protections to an ultimate shareholder who channelled the investment through a company incorporated in a third-party jurisdiction. 5. DEFINITION OF “DISPUTE” The phrase ‘involving the amount of compensation for expropriation’ was a heavily contentious issue between Tza and Peru in the case of Tza Yap Shum v Peru. The objection concerned the Tribunal’s jurisdiction over Tza’s claims other than those substantive issues relating to expropriation, fair and equitable treatment, and full protection and security. According to Article 8(3) of the Peru–China BIT, ‘a dispute involving the amount of compensation for expropriation may be submitted at the request of either party to the international arbitration of the ICSID’. Peru interpreted ‘involving’ as meaning ‘limited to’ or ‘exclusively’. Based upon such a restrictive interpretation, the dispute that can be arbitrated merely covers ‘disputes related to the determination of the value of the investment’ but excludes such ‘potentially important matters’ as ‘whether expropriation has taken place’ and ‘whether any compensation must be paid’.122 Therefore, Peru made the most significant challenge to jurisdiction: Tza’s claims fell outside of the scope of Article 8(3) of the BIT; and the Tribunal did not have jurisdiction over liability of expropriation to determine if Peruvian tax authority’s actions constitute an expropriation of Tza’s investment in TSG Peru SAC. The Claimant, on the contrary, expanded to ‘the other end of the interpretation spectrum’ so that ‘a determination of other important matters related to the alleged expropriation’ is also allowed.123 While acknowledging that ‘such wording seemed to seek certain limitations’, the Tribunal tried to ascertain the ‘exact scope of such limitations’.124 In resolving such a ‘core interpretation issue’,125 the Tribunal followed the guidance outlined in Article 31 of the Vienna Convention, namely, to interpret it ‘in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’.126 Instead of viewing the phrase as imposing some ‘limitations’, the Tribunal agreed that the phrase ‘may have a great variety of possible meanings’.127 The Tribunal, in applying its ‘ordinary meaning’ approach, relied upon the Oxford Dictionary, which defines the word ‘involving’ as meaning ‘to enfold, envelope, entangle, include’.128 This led the Tribunal to endorse the Claimant’s ‘broadest interpretation’ as the ‘most appropriate’ approach.129 The Tribunal found that a narrow interpretation of ‘involving the amount of compensation’ would ‘invalidate’ the arbitration clause. This narrow interpretation, the Tribunal contended, would make the host state’s consent to arbitration illusory since the investor could not actually have access to arbitration unless the host state agreed to allow it.130 As a result, given the sub-elements (of expropriation) listed in Article 4 of the BIT131 and the inclusive nature of the phrase ‘involving’, the Tribunal drew the broadest spectrum and permitted arbitration of claims concerning all aspects of expropriation: such as whether (i) an instance of expropriation, nationalization, or similar measure has taken place; (ii) the same has met the requirement of public interest; (iii) the same has followed an appropriate domestic legal procedure; (iv) there has been discrimination; (v) compensation will be paid; (iv) such compensation has been equivalent to the value of investments expropriated, paid in a convertible and freely transferable currency and without unreasonable delay.132 The Tribunal further resorted to ‘the wording of the Preamble of the BIT’ as the supplementary means of interpretation, partly to lay down more supportive grounds for its ‘broadest interpretation’ approach. The Tribunal was well aware that the ‘purpose of including the entitlement to submit certain disputes to ICSID arbitration is that of conferring certain benefits to promote investments’.133 Considering the surrounding context, inter alia, the importance of granting the investor the benefits of submitting an expropriation-related dispute to ICSID arbitration, the Tribunal felt satisfied that the right of submission to arbitration should not be excluded by the phrase ‘involving the amount of compensation for expropriation’. Otherwise, the Tribunal would be sceptical about the real purpose of the Article 8 mechanism in ‘attracting foreign investors’.134 This interpretative methodology is applied from time to time in shaping the Tribunal’s textual analysis in rendering the award. In the case of Sanum v Laos, one of Laos’ major jurisdictional objections were that Sanum’s claims fell outside the scope of the dispute resolution clause in Article 8(3) of the PRC–Laos BIT on the ground that the clause only permits arbitration where the issue in dispute is the amount of compensation payable upon on expropriation but not the liability itself. Sanum argued for a broader reading of Article 8(3) so as to allow arbitration as long as the claims include a dispute over the amount of compensation. As to jurisdiction ratione materiae, Sanum sought to rely on Article 8(3) of the China–Laos BIT which provided for ‘a dispute involving the amount of compensation for expropriation’ to be submitted to international arbitration. While Sanum argued for a broad interpretation of Article 8(3) such that any claim which includes a dispute over the amount of compensation for expropriation may be submitted to arbitration, the Lao Government contended that a narrow interpretation should be adopted such that recourse to arbitration may be had where the only issue in dispute is the amount of compensation for expropriation. The Tribunal concluded that the arbitration clause made the existence of an expropriation arbitrable.135 The first instance court in Singapore disagreed. SGCA accepted the broad reading approach. According to Article 31 of the VCLT, the SGCA considers the interpretation of Article 8(3) in light of its ordinary meaning, context, object, and purpose. The ordinary meaning approach is capable of supporting both interpretations. SGCA then considered the context, object, and purpose of Article 8(3) of the China–Laos BIT. The Court held that ‘the Lao Government’s interpretation of Art 8(3) of the China-Laos BIT is not tenable’ in the context of the PRC–Laos BIT, which contained a ‘fork-in-the-road’ provision to the effect that once an expropriation claim is referred to the national court, no aspect of that claim can then be brought to arbitration. In this regard, the Court was mindful that cases of direct expropriation were becoming increasingly rare, and even in those rare cases with only amounts of compensation being in dispute, host States could effectively avoid arbitration by simply denying that they had engaged in expropriatory acts. Echoing the arbitral tribunal’s sentiments in the highly published decision of Tza Yap Shum v Peru, the Court observed that this ‘would lead to an untenable conclusion – namely that the investor could never actually have access to arbitration’. In addition, the Court agreed with Sanum that the broad interpretation of Article 8(3) ‘is also consistent with the BIT’s objective of protecting investments’. This is the first time the SGCA has issued a decision on a jurisdictional challenge concerning an investor–state arbitration. This decision is an unprecedented triumph for investors in Macau (and Hong Kong), who may potentially rely on its favourable outcome in order to take advantage of the benefits and protections accorded under the 130 other bilateral investment treaties to which the PRC is a party. The next aspect of the jurisdictional question was whether the Tribunal had jurisdiction ratione materiae over Sanum’s claims. The analysis of this issue involved the interpretation of Article 8 of the China–Laos BIT136 and the fork-in-the-road provisions. While Laos argued for a narrow interpretation of the phrase ‘dispute involving the amount of compensation’ in Article 8(3) as covering only the dispute with reference to the amount of compensation, Sanum argued for a broad interpretation that any dispute, which includes a dispute over the amount of compensation may be submitted to arbitration. SGCA found that issues of quantum and liability for expropriation were incapable of segregation and it is not possible for a tribunal to arbitrate the question of quantum without looking into the issue of liability. SGCA found that the fork-in-the-road provision in Article 8(3) meant that if the investor cannot bring any aspect of the same dispute to arbitration if ‘any dispute’ is brought to national courts. SGCA also held that, if the narrow interpretation approach is taken, it would be open to the host state to avoid arbitration by not submitting the liability dispute to its courts, which would render investor protection under Article 8(3) illusory and run counter to the principle of effective interpretation under international law. SGCA ruled that taking a narrow interpretation would lead to ‘an untenable conclusion – namely that the investor would never actually have access to arbitration’. SGCA found that the specific context surrounding Article 8(3) of the BIT supported a broad interpretation. SGCA held that the primary object and purpose of the BIT was to promote investment and protect investors albeit subject to ‘the principles of mutual respect for sovereignty’, which was consistent with a broad interpretation of Article 8(3).137 With respect to the ‘amount of compensation’ clause, the SGCA read Article 8(3) purposively in light of the principle of effective interpretation, and was careful to give Article 8(3) a meaning that would not render nugatory the investor protections under the BIT. The Court did not find the ordinary meaning of the words in the BIT to be dispositive, as the PRC–Laos BIT was at best ambiguous. This approach may be contrasted to the decision of the Svea Court of Appeal in Juan Ignacio and others v Russia, Case No T 9128-14, 18 January 2016, which, in setting aside the award in the Renta 4 case, took a highly textual approach to interpreting a similar clause in the Russia–Spain BIT. In contrast, the SGCA focused more comprehensively on the object, purposes, and other provisions of the BIT (in particular its fork-in-the-road clause), while being careful to limit its conclusions to the China–Laos BIT. The Tribunal in the case of BUCG v Yemen followed the suit of Tza Yap Shum v Peru and Sanum v Laos. In the award handed down on 31 May 2017, the Tribunal held in BUCG v Yemen that it had jurisdiction on the basis that a clause in the China–Yemen BIT granting jurisdiction over ‘any dispute relating to the amount of compensation for expropriation’ covered both quantum and liability issues arising out of alleged expropriation.138 Similar to other treaties negotiated by China prior to 1998, the BIT in its Article 10 contemplates ICSID arbitration for ‘any dispute relating to the amount of compensation for expropriation’. Yemen argued that the tribunal’s jurisdiction was limited to disputes concerning the calculation of ‘the amount of compensation’ where there is admitted liability by the host state. Yemen’s narrow reading of Article 10 would lead to the tribunal’s lack of jurisdiction if liability is not conceded by the host state or the investor complains about anything other than the host state’s monetary assessment of its alleged loss. In contrast, BUCG advocated for a broad interpretation to extend the jurisdiction to both the liability of a claim for expropriation and an assessment of compensation. BUCG argued that without determining the issue of liability there could be no consideration of quantum. The Tribunal accepted BUCG’s position and found that Article 10 allows an investor to bring expropriation claims relating to issues of both liability and quantum. In this regard, the Tribunal found that the ordinary meaning of the words ‘amount of compensation’ was not conclusively in favour of either party’s position. As the ordinary meaning of the BIT was not conclusive either in favour of the broad interpretation or the narrow interpretation, the Tribunal’s task of interpretation moved to consider the context, object, and purpose of the BIT. The Tribunal found that a narrow interpretation that excluded disputes over liability for expropriation would lead to an ‘internal contradiction’ and allow the host state unilaterally to deny an investor’s access to investment arbitration simply by refusing to concede liability.139 The narrow interpretation urged by Yemen, as pointed out by the Tribunal, ‘would lead to an untenable conclusion, namely, that the investor would never actually have access to arbitration’ unless Yemen agreed. This ‘would undermine the achievement of the BIT’s object and purpose’. The conclusion drawn by the Tribunal is that ‘the Contracting Parties intended to confer a real choice, not an illusory choice, on investors from their respective countries, and that the words “relating to the amount of compensation for expropriation” must, in context, be read to include disputes relating to whether or not an expropriation has occurred’.140 The Tribunal held that a proviso to Article 10(2) of the BIT, which provided, in relation to ICSID arbitration, for the Contracting Parties ‘irrevocable consent to the submission of any dispute relating to the amount of compensation for expropriation’, had to be interpreted in line with the object and purpose of Article 10 in the context of the BIT as a whole. Such an approach favoured a broad interpretation of the proviso of Article 10(2) to cover issues of liability—as a necessary condition precedent to any assessment of compensation for expropriation. The Tribunal in the case of Beijing Shougang Mining Investment Company Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdao Qinlong International Industrial Co., Ltd. v Mongolia, the question is whether Article 8(3) of the China–Mongolia BIT (1991) applies to a particular type of controversy, that is, a dispute over whether an expropriation has occurred. The Tribunal in this case adopted an extremely narrow construction. In its view, the only matter that is arbitrable is the ‘disputes which involve the amount of compensation for expropriation’ only. Furthermore, it is held by the Tribunal that it is the allegedly offending state that can determine whether it expropriated property.141 As a result, the Tribunal dismissed the case on jurisdictional grounds. The Claimants then submitted a petition to the District Court of New York South District in order to vacate the arbitral award. The Court disagreed with the Tribunal’s interpretation as this would leave an investor in the perverse position that only if the state’s executive or legislature admits that it has expropriated the investment, or if the state’s own courts can be persuaded so to declare, can that investor then proceed to international arbitration.142 The Court held that the arbitration clause in the China–Mongolia BIT, based on the conclusion of other tribunals and courts, is to give tribunals jurisdiction to determine, inter alia, whether an expropriation has occurred and whether it was effected legally. Therefore, the Court vacated the award and held that Article 8(3) supports the arbitrability of questions of whether expropriation occurred. 6. FORK-IN-THE-ROAD PROVISION The tribunal in Beijing Shougang Mining Investment Company Ltd. et al. v Mongolia analysed the specific wording and overall structure of Article 10. The tribunal noted that Article 10.2 ‘clearly indicates a fork in the road’, which means that when confronted with an unresolved ‘legal dispute’, the concerned BIT grants investors ‘the choice between taking its dispute to a competent court of the Contracting Party, in this case Yemen, or to ICSID arbitration, but not both’. In the tribunal’s view, ‘an interpretation that nullifies either of the choices granted to the investor is to be avoided’. The interconnected heavily contentious procedural issue in Tza Yap Shum is related to the ‘fork-in-the-road’ (electa una via) provision in the Peru–China BIT. More specifically, the contention was how the Tribunal should adjudicate multiple proceedings before national and international fora, that is, the domestic court and ICSID arbitration, both of which are available to the investor under Article 8 of the BIT. Peru made an argument that Article 8 outlines a three-step process: (1) negotiation during a six-month period; (2) investor’s choice to submit the dispute to the courts of the State accepting the investment if the dispute cannot be settled; and (3) only after such a court has decided on the matter and if the dispute cannot still be settled with regard to the amount of compensation, investor’s entitlement to have access to international arbitration.143 A simple reading of Article 8 does create an impression that the domestic court and ICSID arbitration are organized in chronological order and on a ‘first come first exhausted’ basis. The Peru–China FTA confirms this sequence by stipulating that ‘… if the disputing investor has not submitted the dispute for resolution to the competent court or any other binding dispute settlement mechanism of the Party receiving the investment, it may be submitted to ICSID … ’.144 If this three-step process stands, the jurisdictional interaction between the domestic remedy and ICSID arbitration is an either-or choice or ‘vertical configuration’. In other words, simply based on the plain meaning of Articles 8(2) and 8(3), as a matter of treaty interpretation, where the investor chooses to submit the dispute to the courts in the host state, the investor’s right to international arbitration will be lost.145 As a matter of textual analysis, the Tribunal looked into the ‘ordinary meaning’ of Articles 8(2) and 8(3) but reached an opposite conclusion on two grounds. First, as the Tribunal pointed out, the wording ‘may’ in Article 8(2) suggests that the submission of the dispute to the competent court of the Contracting Party is ‘permissive’ rather than ‘compelling’ so that Peru’s argument for an ‘obligatory’ three-step process is ‘weaker’.146 The Tribunal’s analysis of ‘may’ in Article 8(2) seems problematic as the English version of the BIT indeed uses ‘shall’ instead and, as the witness on the Peruvian side stressed147 and the BIT itself confirmed,148 the English text prevails in case of divergence of interpretation. Secondly, the Tribunal did not emphasize the estoppel nature of the ‘fork-in-the-road’ provision striking out the ICSID arbitration merely with the choice of the local court. Instead, the Tribunal reasoned that Article 8(3) ‘seems to establish an exception to the procedure established in Article 8(2), namely, the determination of a dispute of expropriation by the courts of the State accepting the investment’.149 Effectively, the Tribunal characterized the jurisdictional relation of the domestic court and international arbitral tribunal as a ‘horizontal configuration’. Thus, as the Award spells out, the Claimant is entitled to institute arbitration directly without first exhausting the remedies offered by local courts. This mode of interaction between the local court and ICSID arbitration was confirmed by both ICSID150 and non-ICSID tribunals151 in various cases. A similar fork-in-the-road provision appears in the China–Laos BIT. Article 8(2) of the China–Laos BIT gave an option to the investor for submission of the dispute to a competent court of the contracting state accepting the investment, while, Article 8(3) provided for a dispute involving the amount of compensation for expropriation to be submitted to an ad hoc arbitral tribunal, and further provided that Article 8(3) would be inapplicable if the investor had resorted to the procedure in Article 8(2). As noted by the SGCA, a fork-in-the road provision requires a party to make an election, and once the election is made, the other remedy would not be available. As contended by Sanum and as accepted by the SGCA, a narrow interpretation of Article 8(3) would have meant that, an investor would first have to approach a court to determine whether an impermissible expropriation has occurred. Once the investor approached the court under Article 8(2), the remedy of arbitration in Article 8(3) would no longer be available, thus rendering Article 8(3) otiose. The SGCA agreed with the Tribunal that a narrow interpretation would be against the principle of effet futile (effective interpretation).152 The SGCA noted that a similar conclusion was reached in the ICSID decision in Tza Yap Shum v Republic of Peru153 while interpreting a similarly worded BIT between PRC and Peru. The court distinguished the cases cited by Laos, favouring a narrow interpretation154inter alia, on the language and structure of the BITs in question, and that they did not involve similar fork-in-the-road provisions. The court concluded in favour of a broad interpretation to Article 8(3). Singapore courts have consistently ruled in favour of broad, effective interpretation of arbitration clauses. This re-emphasizes the pro-arbitration stance of the judiciary in Singapore. 7. LIMITATION PERIOD Ansung Housing Co., Ltd. v China is the second registered case and the first published ICSID case in which China is the Respondent. It is the first case at ICSID involving China as a respondent State that has proceeded to a substantive hearing and led to an award. This is also the first case to be brought at ICSID by a South Korean investor. The Claimant, Ansung Housing Co Ltd, was a privately owned company incorporated under the laws of South Korea. It invested in a golf course and condominium development project in Sheyang County, Jiangsu Province, China. On 12 December 2006, Ansung entered into an investment agreement with the Sheyang Harbor Industrial Zone Administration Committee (the Committee). Ansung was unable to start its construction work due to the failure to transfer all the land needed for the construction of the project under the investment agreement. Ansung had no alternative options but to dispose of all its assets in the golf business on October 2011 and finally make an agreement on transferring the shares on 17 December 2011. Ansung on 7 October 2014 filed a claim against China for serious financial losses and damages on the basis of the China–Korea BIT. China, as the Respondent, raised several objections concerning jurisdiction and the most debated one is the limitation period. The Respondent’s objection on jurisdiction was based on Article 9(7) of the China–Korea BIT (2007) which states as follows: Notwithstanding the provision of paragraph 3 of this Article, an investor may not make a claim pursuant to paragraph 3 of this Article if more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge that the investor had incurred loss or damage. The Respondent submitted that Ansung’s claim was time-barred under Article 9(7) of the BIT as it instituted the proceedings more than three years after the date on which it had acquired the knowledge that it had incurred loss or damage. Ansung countered that its claim was timely on the grounds that (i) it first acquired the knowledge that it had incurred loss or damage only around 17 December 2011, more than one year after the government had failed to provide the additional land promised for a second phase of the project; (ii) it had made a claim through submission of its Notice of Intent on 17 May 2014 or on filing its Request for Arbitration on 7 October 2014. The Respondent asserted that the Claimant ‘necessarily knew of the fact that it had incurred loss or damage on the same date prior to the disposal of its investment in October 2011’, the date on which the Claimant sold its investment ‘in order to avoid further losses’. This should be the start date for such a temporal limitation period, known as dies a quo. The Respondent stated that the three-year period commenced when the Claimant knew ‘of the fact that some loss has occurred, not upon its full realization’.155 Turning to the dies ad quem, the end date for the three-year limitation period, the Respondent argued that the end date must be 4 November 2014, the date on which ICSID registered the Claimant’s Request for Arbitration. The Claimant argued that it could ascertain its loss or damage only after its expectations and plan for the construction had been completely frustrated. The Claimant stated that the continuing loss was a consequence of government inaction and that it had tried to resolve the problem with the government.156 Therefore, the Claimant explained that the dies a quo must be 17 December 2011,157 when the deal to sell its entire investment in the project was closed and the losses became unavoidable for the purposes of Article 9(7). Pursuant to the ICSID Arbitration Rule 41(5),158 China requested the tribunal to dismiss Ansung’s claim because the claim was time-barred and manifestly lacked legal merit. The Tribunal agreed with China’s request and could not accept the Claimant’s arguments by listing all the facts as pleaded by the Claimant. From the perspective of the Tribunal, the Claimant ignored the plain meaning of the determinative words ‘first’ and ‘loss or damage’ in Article 9(7). The limitation period began with the investor’s first knowledge of the fact that it had incurred loss or damage, not at the date on which it gained knowledge of the quantum of that loss or damage. The Claimant’s actual sale of its shares on 17 December 2011, marked the date on which it could finalize or liquidate its damage, not the first date on which it had to know it was incurring damage.159 The Tribunal also acknowledged that the Claimant’s legal argument that a continuing omission by a host State and damages for such a continuing breach may be measured from different times after the first incident of that omission. But this could not change the date which was before October 2011, when the Claimant first knew it had incurred damage. In the Tribunal’s view, the Claimant was neither required nor permitted to wait and observe the complete extent of the damage for purposes of Article 9(7). Accordingly, the Tribunal determined the dies a quo, that is, the start date for the limitation period to be October 2011 or earlier.160 Here, the Tribunal emphasized that the limitation period started on the first date on which the investor knew there was loss or damage, even if there was a continuing breach. This technical emphasis means that the investor need only be aware that loss or damage has or may have occurred, and need not require full knowledge of the parties’ loss or damage in order to bring a claim. Turning to the dies ad quem for the applicable three-year limitation period, the Tribunal found that, on the basis of the plain language in Article 9(7) of the China–Korea BIT, the end date was the date on which an investor deposited its request for arbitration with the ICSID161 which was electronically 7 October 2014 and physically on 8 October 2014, which must occur before three years have elapsed from the date on which the investor first acquired knowledge that it had incurred loss or damage.162 The Claimant also contended that the dies ad quem should be 19 May 2014 when it sent a ‘notice of intent’ to the Respondent and the latest date can be 7 October 2014 when the Claimant filed a claim with the ICSID.163 Therefore, the Claimant submitted that it had met the limitation period under the BIT. The Tribunal held that the ‘notice of intent’ was not submitted to the ICSID and it was also not reasonable to fix the date as the uncertain date of registration of a request for arbitration. Consequently, the Claimant had submitted its dispute to the ICSID and made its claim for the purposes of the Article 9(3) and (7) of the BIT more than three years after the date on which the Claimant first acquired knowledge of loss or damage. The Tribunal found that the effect of Article 9(7) was that the investor must commence the arbitration by depositing a request for arbitration with ICSID prior to the expiry of the limitation period. The Tribunal further pointed out that neither providing the Respondent State with a written notice of intent to submit the dispute to ICSID nor the registration of the request for arbitration is sufficient for the purpose of Article 9(7). Therefore, the Tribunal upheld that the claim was time-barred and, as such, was manifestly without legal merit164 since the Claimant submitted its dispute before the ICSID and made its claim for purposes of Article 9(3) and (7) of the BIT after more than three years had elapsed from the date on which the Claimant first acquired knowledge of loss or damage. As a result, the Tribunal found that it lacked jurisdiction ratione temporis and dismissed the case.165 The instant case suggests that the scope of the time-bar provisions often turns on its precise wording, and the clear wording of the time-bar provisions will often be given full effect and can form the basis of any early dismissal where the relevant arbitration rules permit this for claims which are manifestly without merit.166 8. MFN TREATMENT OF PROCEDURAL RIGHTS There has been significant controversy over to what extent MFN clauses should apply to substantive rights or procedural rights, or both. As the MFN treatment clauses in the BITs usually grant investors, as regards ‘management, maintenance, use, enjoyment or disposal of their investment’, no less favourable treatment, it is always controversial if the investor can invoke the MFN obligation to enjoy the more favourable dispute resolution provisions in other BITs, which may include consent to ICSID arbitration as an option for all disputes. Arbitration practice indicates that the broader the language used, the more likely that the tribunal will extend the MFN standard to cover procedural rights. For instance, the investors may make use of the MFN treatment in some cases to bypass procedural impediments, i.e. the requirement to resolve the dispute in the local courts first.167 It has been confirmed in other cases that the MFN treatment may be relied upon to broaden the tribunal’s jurisdiction,168 from disputes relating to the amount or payment of compensation as under the basic treaty, to all disputes including the existence of expropriation under a third party BIT.169 The case law in this respect, however, is divergent.170 Unlike other earlier cases171 which have seen a substantial contradiction in the reasoning of the tribunals adjudicating the extension of the MFN treatment to procedural rights in BIT cases, the tribunals in China–BIT-related cases indicate some consistency not only in rejections but also in interpretative techniques. In Tza Yap Shum v Peru, the Tribunal was faced with the Claimant’s concerned attempts to extend the scope of jurisdiction to issues not covered by the arbitration clauses in the disputed China–Peru BIT according to the Peru–Columbia BIT172 without limited jurisdiction ratione materiae. The MFN clause in the China–Peru BIT provides: ‘The treatment and protection referred to in Paragraph 1 of this Article [fair and equitable treatment] shall not be less favourable than that accorded to investments and activities associated with such investments of investors of a third State’. It is clear from the language that the MFN clause merely applies to fair and equitable treatment and constant protection but not to all matters under the BIT. Furthermore, the MFN clause in Article 3 of the BIT applies only to investment but not to dispute settlement rights accruing to investors as arbitration is a procedural right of an investor and a right to invoke arbitration is a personal right that must be held by an investor but not an investment. The Tribunal found that the submission to investor–state arbitration in Article 8(3) reflected the parties’ agreement on two fundamental issues—agreement to submit expropriation disputes to ICSID arbitration and that specific agreement would be needed to submit other types of disputes to ICSID arbitration.173 The Tribunal therefore determined that the specific wording of Article 8(3) should prevail over the general wording of the MFN clause in Article 3.174 The Tribunal was self-disciplined, largely by sticking to the ‘best indicator’ of the ‘intention of the parties expressed in the text’,175 not to over exaggeratedly broaden its discretion without having any clear indications in the disputed BIT.176 In the case of Beijing Urban Construction Group Co Ltd. v Republic of Yemen, one defence raised by the respondent was that the Yemen–China BIT’s MFN clause could not be used to circumvent the limited jurisdiction of its dispute resolution clause.177 The Tribunal dismissed the respondent’s most jurisdictional objections but agreed that the wording of the MFN clause tied it to activities that took place ‘in the territory’ associated geographically with the investment. Thus the MFN clause could not be used by the tribunal to import a broader dispute resolution clause from the Yemen–UK BIT to expand the scope of jurisdiction (which itself is not an activity inherently linked to the respondent’s territory) over non-expropriation BIT claims, which are beyond Article 10 of the Yemen–China BIT.178 The Tribunal’s focus is unique when it came to the issue of applying the MFN provisions to dispute resolution provisions. Instead of addressing in the abstract this jurisprudential issue or relying on other investment tribunal decisions extending to the terms of the access to international arbitration based on an MFN provision, the Tribunal focused on the issue of whether the text of the BIT lends itself to such an application.179 More precisely, the territorial limits imposed on the treatment in Article 3.1 of the Yemen–China BIT restrains the Tribunal from extending more favourable procedural rights (in the form of international arbitration) to the Claimant.180 The Tribunal’s approach demonstrates its tendency to interpret BIT clauses in line with the object, context and purpose of the dispute resolution clauses and the BIT as a whole. In Ansung Housing Co., Ltd. v China, Ansung sought to invoke the MFN clause in Article 3(3) of the China–South Korea BIT to save its claim from being time-barred as other Chinese BITs do not prescribe a three-year limitation period within which an investor is required to initiate an arbitration claim against the host state.181 Relying upon a plain reading of the MFN clause,182 the Tribunal held that the MFN clause did not extend to a state’s consent to arbitrate with investors nor to the temporal limitation period for investor–state arbitration in Article 9(7).183 Furthermore, the Tribunal pointed out that the BIT offers specific MFN protection in relation to an investor’s ‘access to courts of justice, administrative tribunals and authorities,’ without making any reference to international dispute resolution such as arbitration under the BIT.184 Accordingly, the Tribunal dismissed the case due to the application of the limitation period in Article 9(7).185 The instant case appears to suggest that MFN provisions are not to provide a way to escape limitation periods even though this may turn on the precise wording of the MFN provisions in question. In response to the debate on MFN clauses and procedural rights, recent Chinese BITs have tried to eliminate all potential controversies by making clear that the MFN treatment does not cover the procedural rights. The relevant provision in the New Zealand–China FTA reads: For greater certainty, the obligation in this Article does not encompass a requirement to extend to investors of the other Party dispute resolution procedures other than those set out in this Chapter.186 There is a clarification in the EU–Canada CETA that MFN treatment not be extended to dispute settlement provisions,187 which effectively avoids any Maffezini-like interpretations of the MFN clause.188 9. RATIONALIZING THE INTERPRETATION OF CHINESE BIT TERMS The very notion of investment, non-discriminatory provisions, MFN treatment of procedural rights, among others, are the key controversial terms in BIT practices. Investor–state investment arbitration has a significant public international law dimension. Among others, one key perspective is the treaty interpretation of these key controversial terms. Chinese BITs have been characterized with relatively high bars to access, which are intentionally made so by the Chinese treaty drafters. Many issues discussed in the article such as the juristic way of applying the fork in the road, limitation period and MFN clause indicate some conflicting features of Chinese BITs that have barred foreign investors’ access to ISDS in the past. On the one hand, narrow interpretations such as the one adopted in Heilongjiang could limit access to arbitration to cases in which the occurrence of expropriation has been already declared or determined. On the other hand, the broad interpretation adopted in Tza Yap Shum, followed in Sanum and Beijing Urban Construction, rebuffed the view that the restrictive dispute resolution clause found in China’s earlier BITs limits arbitration to disputes regarding the amount of compensation in case of expropriation, providing Chinese or foreign investors with more room to arbitrate expropriation claims. A number of tribunals have showed a tendency of relying on a more expansive treaty interpretation approach that is, though despised by the Chinese government, technically in line with the international norms aimed at promoting and protecting cross-border investments. Reliance upon broader arbitration clauses and more expansive interpretation approaches is in the interest of Chinese investors who need a more vibrant ISDS regime to protect their rights while investing overseas. The abstractly and vaguely worded text of the Chinese BITs left the question of how to adopt an appropriate treaty interpretation method explaining vague treaty terms. Almost all ISDS cases already establish the hurdle that Chinese or foreign investors must overcome when bringing claims under first-generation BITs that provided for limited consent to international arbitration. Most investor–state arbitration is treaty-based. The rules of treaty interpretation in the Vienna Convention on the Laws of Treaties therefore play a guiding role in determining the meaning of applicable provisions in BITs. Section 3 of Part III of the VCLT governs the interpretation of treaties and comprises Article 31 (General Rule of Interpretation), 32 (Supplementary Means of Interpretation) and 33 (Interpretation of Treaties Authenticated in Two or More Languages). Section 3 of Part III of the VCLT has been elaborated upon in a considerable body of BIT jurisprudence evidenced by a large number of investor–state arbitral awards which cited Article 31. However, the references to the VCLT in investor–state arbitral awards is, at least in some cases, purposive and, in others, often pro forma.189 Article 31(1) of the VCLT instructs the Tribunal to look to the text, context as well as the object and purpose of the treaty to ascertain the exact and correct meaning of treaty terms, in conjunction with the other elements set out in subsections (2), (3) and (4) of Article 31.190 Although there is explicitly no hierarchical order of the canons of treaty interpretations, that is, text, context, object and purpose, the general rule of interpretation creates a sequence of these interpretative tools. The Vienna Convention states that ‘a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’.191 Looking at the ordinary meaning of the terms to be interpreted is the starting point of the treaty interpretation usually by way of referring to the dictionary and comparing the meaning with other similar words for distinction.192 Some tribunals took the view that the terms to be interpreted were clear by reference to the meanings or criteria set out in the precedents, and therefore there was no need for further interpretation.193 Notwithstanding the initial search for the ordinary meaning of the text, a narrow but purely linguistic exercise is often not appropriate for the interpretation of an international treaty194 and thus the task of interpretation moves to the context, and, if necessary, the object and purpose of the treaty.195 It is widely acknowledged by the tribunals that the interpretation of a term shall also take into account its context because terms and provisions of a treaty cannot be read in isolation.196 A wide variety of contextual factors need to be considered by the tribunals, such as the sentence that follows the provision,197 other articles in the treaty,198 and the context of the treaty generally.199 While the immediate context of a term may help determine or distinguish its meaning accordingly,200 it is the broad context of the whole BIT that leads the tribunals to an interpretation. A major example is whether the expression ‘any dispute relating to the amount of compensation for expropriation’ in Chinese BITs201 grant to the ICSID tribunal full jurisdiction over the issue of liability as well as quantum in connection with the expropriation.202 Many cases supported a wider interpretation which is more consistent with the disputed provisions of the BITs.203 Likely, a narrower interpretation would compel the investors to national courts and preclude a claim in arbitration due to a fork-in-the-road clause,204 which often creates an internal contradiction of the treaty.205 A number of arbitral awards have made an explicit reference to the ‘object and purpose’ of a treaty or a particular provision in the treaty, and such criterion often plays a dominant role in the treaty interpretation process.206 Due to the need for a dynamic balance between the protection of foreign investments and the development of economic cooperation between the sovereign states,207 it does not mean one aspect of the object and purpose should be given preponderance over the meaning of a particular clause or justify leaving without effect a clause of the treaty.208 At this juncture, the principle of effet utile or ‘effective interpretation’209 is relied upon to give a treaty its fullest weight and effect consistent with the normal sense of the words of the text and in such a way that a reason and meaning can be attributed to every part of the text.210 Against this background, a treaty interpretation that nullifies or invalidates the choice or protection granted to the investor and allows the state to avoid its responsibility for breaches of the BIT is unjustified for irreconcilable with the object and purpose of the treaty.211 If literary interpretation is clear enough, there is no need to rely on other interpretative methods. Only when literary interpretation is unclear, Articles 31 and 32 of the VCLT provide an ‘interpretative framework’. The treaty interpretative matrix is quite flexible allowing arbitrators to structure different configurations of interpretative tools on a case-by-case basis. As the general rule of treaty interpretation comprises several subnorms and there is no uniform way of applying these subnorms, the flexibility of the interpretative matrix leads to conflicting trends in arbitral jurisprudence concerning a variety of procedural and substantive provisions in BITs. Consequently, the lack of coherence of the system is an inherent defect in treaty interpretation thereby affecting the legitimacy of the BIT regime and investor–state arbitration as a whole. The VCTL also leaves space for evolutionary treaty interpretation meaning certain norms have to be interpreted in a dynamic and changing context so as to reflect the changes in formulating BITs over time.212 The evolutionary approach makes sense in interpreting Chinese BITs as BIT terms are evolving while China is changing its role from a capital importing state to a capital exporting state. The observation has been made that the focus on the investment protection may create favourism towards investors while policy goals may be weighed against investment protections if public welfare is the focus of BITs. The interpretative balance between treaty parties and tribunals could be upset if either body dictates to, or ignores, the other.213 As the statistics have indicated, the tribunals have tended to expansively interpret BIT terms while they were called upon to determine the scope of jurisdiction. This also seems to be the case, at least evidenced by the majority of Chinese BIT cases, when the tribunals are asked to interpret Chinese BIT terms. A brief summary can be found in Table 1 in the end. Table 1. Comparison of interoperating techniques in China-related investment arbitration cases Case . Significance . Key jurisdictional issue . Relevant BIT and clauses . Interpretative approach . Jurisdiction . Tza Yap Shum v Republic of Peru The first known ISDS case involving China as home state ‘Investor’ ‘Investment’ ‘Dispute’ Fork-in-the-road China–Peru BIT, Art 12(a) Art 1(1) Art 8(3) Article 8 Is a Hong Kong resident qualified as an investor for the BIT purpose? The Tribunal viewed it beyond the dispute at issue. The Tribunal relied upon Article 25 of the ICSID Convention to grant jurisdiction. Peru claimed that Tza’s investment was ‘indirect investment’ made through a BVI holding company. The Tribunal extended its jurisdiction via Article 25(1) of the ICSID Convention which does not impose any restriction on jurisdiction of the ICSID tribunals. The definition of ‘investment’ is very broad. The Tribunal followed Article 31 of the Vienna Convention and interpreted it in ‘good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. The broadest interpretation is the most appropriate approach to recognize the inclusive nature of the phrase ‘involving’. Besides, the ‘wording of the Preamble of the BIT’ is the supplementary means of interpretation. The Tribunal looked into the ‘ordinary meaning’ to conduct textual analysis and characterized the jurisdictional relation of the domestic court and international arbitral tribunal as a horizontal configuration. Thus, the Claimant is entitled to institute arbitration directly without first exhausting the remedies offered by local courts. Yes. BUCG v Yemen Is BUCG, an SOE, a qualified investor? Subject matter jurisdiction (ratione materiae) China–Yeman BIT, Art 10 (‘any dispute relating to the amount of compensation for expropriation’) ICSID Convention, Art 25(1) Beyond the ordinary meaning—moving to consider the context (fact-specific context), object and purpose of the BIT ‘Contextual approach’ Jurisdiction established over expropriation claims regarding both liability and compensation Based on a broad interpretation of the dispute settlement clause of the BIT as it promotes the BIT’s overall purpose and objective. Structural links to the Chinese government and public functions inside China were irrelevant to BUCG’s standing as an investor at ICSID Sanum v Laos The first investor–state tribunal asked to determine the application of Chinese IIAs to legal entities incorporated and established in Macao; The first judgment by Singapore’s highest court involving the curial review of an investment award The first time the Singapore Court of Appeal issued a decision on a jurisdictional challenge concerning an investor–state arbitration ‘territorial scope of the China-Laos BIT’ Qualification of an investor Subject matter jurisdiction: scope of ‘dispute’ Customary international law + the fulfilment of the goals of the BIT (para 295) PRC–Laos BIT, Article 1(2)(b) PRC–Laos BIT, Art 8(3): ‘a dispute involving the amount of compensation for expropriation’ to be submitted to international arbitration The folk-in-the-road provision China–Laos BIT applies to Macau: a broad approach SGHC adopted a restrictive approach SGCA did not find a different intention—the moving treaty frontier rule presumptively applied The balance of probabilities as the relevant standard of proof—the critical date doctrine SGCA accepted a broader reading of Art 8(3) proposed by the claimant; SGCA considered the interpretation of Art 8(3) in light of its ordinary meaning, context, object and purpose. Ordinary meaning was equivocal and capable of supporting both interpretations, and then focused on the context, object and purpose of Art 8(3). Adopted a broader approach (purposively in light of the principle of effective interpretation instead of a highly textual approach to interpreting a similar clause). A narrow interpretation of Art 8(3) would have meant that, an investor would first have to approach a court to determine whether an impermissible expropriation has occurred. Once the investor approached the court under Art 8(2), the remedy of arbitration in Art 8(3) would no longer be available, thus rendering Art 8(3) otiose. The Court of Appeal agreed with the tribunal that a narrow interpretation would be against the principle of effet utile (effective interpretation). The broad interpretation of Art 8(3) ‘is also consistent with the BIT’s objective of protection investment’ Jurisdiction is confirmed by the Tribunal No jurisdiction: rejected the applicability of the BIT to Macau and the tribunal’s broad interpretation of the treaty’s dispute settlement clause Jurisdiction, but the implications for future determinations of the applicability of PRC BITs to Chinese SAR remain unclear. Singapore courts have consistently ruled in favour of broad interpretation of arbitration clauses. This is a pro-arbitration stance of the judiciary in Singapore. Beijing Shougang Mining Investment Co., Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdao Qinlong International Industrial Co., Ltd. v Mongolia First ad hoc BIT case administered by the Permanent Court of Arbitration Art 8, China—Mongolia BIT 1991 Art 8(3): subject matter of the claim (ratione materiae) folk-in-the-road; Art 4(1) Art 1(2)(b), ‘Investor’ Art 1(1), ‘Investment’ The Tribunal interpreted the BIT, the purpose of which was to provide incentives for investment from the PRC into Mongolia, to require that the national courts of Mongolia first declare that other arms of the government of Mongolia had expropriated the assets of Chinese investors; only then could there be arbitration, and the only arbitrable question would be the amount of compensation for the taking. The Tribunal—it could have jurisdiction only if Mongolia admitted that it had expropriated the investment, and the Tribunal would have jurisdiction only to resolve any controversy over the amount of compensation Mongolia should pay. The District Court of New York: ‘Indeed, every other tribunal to address this question under PRC BITs has rejected the narrow interpretation adopted by this Tribunal.’ The question is whether the arbitration clause in Art 8(3) of the BIT applies to a particular type of controversy—namely a dispute over whether an expropriation has occurred—a question of arbitrability. Mongolia–China BIT is distinguishable from many other BITs, which do commit the question of arbitrability to the arbitrators. But the disputed BIT does not commit the question of arbitrability to the arbitrators. The Tribunal in this case adopted an extremely narrow construction, in which the only matter that is arbitrable is the amount of compensation for an expropriation. According to the Tribunal, only the alleged offending state itself can determine whether it expropriate property. If it denies having done so, the independent tribunal established by the BIT can never come into existence. Thus, an investor is left in the perverse position that only if the state’s executive or legislature admits that it has expropriated the investment, or if the state’s own courts can be persuaded so to declare, can that investor then proceed to international arbitration. The interpretation defeats the purpose of investor–state arbitration and deprives the investor of much of the benefit of the Treaty. Citing Tza Yap Shum v Peru Tribunal—narrow interpretation Court—taking into account of object, purpose of the BIT—wide interpretation Ansung Housing Co., Ltd. v PRC The first published ICSID case in which China was the respondent; the first claim to be brought at ICSID by a South Korean investor and the first claim at ICSID to involve China as a respondent State that has proceeded to a substantive hearing and led to an award. Limitation period Whether an MFN clause applies to dispute settlement provisions (in this case, to a limitation period in the dispute resolution provision of the BIT) Art 9(7) China–South Korea BIT 2007 Art 3(3) Plain meaning; interpretation on the basis of the plain language—the tribunal emphasized that the limitation period begins with an investor’s first knowledge of the fact that it has incurred loss or damage, not with the date on which it gains knowledge of the quantum of that loss or damage (para 110) The possibility of invoking the MFN clause to apply more favourable dispute settlement depends on the precise wording of the MFN clause No jurisdiction; time-barred as the investor initiated arbitration more than three years after acquiring knowledge of the loss or damage Ekran Berhad v China First filed and known case against China Malaysia–China BIT 1990 Suspended Philip Morris v Australia China–Australia BIT No opinion rendered in the award on the issue of applying China BIT to Hong Kong No jurisdiction Case . Significance . Key jurisdictional issue . Relevant BIT and clauses . Interpretative approach . Jurisdiction . Tza Yap Shum v Republic of Peru The first known ISDS case involving China as home state ‘Investor’ ‘Investment’ ‘Dispute’ Fork-in-the-road China–Peru BIT, Art 12(a) Art 1(1) Art 8(3) Article 8 Is a Hong Kong resident qualified as an investor for the BIT purpose? The Tribunal viewed it beyond the dispute at issue. The Tribunal relied upon Article 25 of the ICSID Convention to grant jurisdiction. Peru claimed that Tza’s investment was ‘indirect investment’ made through a BVI holding company. The Tribunal extended its jurisdiction via Article 25(1) of the ICSID Convention which does not impose any restriction on jurisdiction of the ICSID tribunals. The definition of ‘investment’ is very broad. The Tribunal followed Article 31 of the Vienna Convention and interpreted it in ‘good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. The broadest interpretation is the most appropriate approach to recognize the inclusive nature of the phrase ‘involving’. Besides, the ‘wording of the Preamble of the BIT’ is the supplementary means of interpretation. The Tribunal looked into the ‘ordinary meaning’ to conduct textual analysis and characterized the jurisdictional relation of the domestic court and international arbitral tribunal as a horizontal configuration. Thus, the Claimant is entitled to institute arbitration directly without first exhausting the remedies offered by local courts. Yes. BUCG v Yemen Is BUCG, an SOE, a qualified investor? Subject matter jurisdiction (ratione materiae) China–Yeman BIT, Art 10 (‘any dispute relating to the amount of compensation for expropriation’) ICSID Convention, Art 25(1) Beyond the ordinary meaning—moving to consider the context (fact-specific context), object and purpose of the BIT ‘Contextual approach’ Jurisdiction established over expropriation claims regarding both liability and compensation Based on a broad interpretation of the dispute settlement clause of the BIT as it promotes the BIT’s overall purpose and objective. Structural links to the Chinese government and public functions inside China were irrelevant to BUCG’s standing as an investor at ICSID Sanum v Laos The first investor–state tribunal asked to determine the application of Chinese IIAs to legal entities incorporated and established in Macao; The first judgment by Singapore’s highest court involving the curial review of an investment award The first time the Singapore Court of Appeal issued a decision on a jurisdictional challenge concerning an investor–state arbitration ‘territorial scope of the China-Laos BIT’ Qualification of an investor Subject matter jurisdiction: scope of ‘dispute’ Customary international law + the fulfilment of the goals of the BIT (para 295) PRC–Laos BIT, Article 1(2)(b) PRC–Laos BIT, Art 8(3): ‘a dispute involving the amount of compensation for expropriation’ to be submitted to international arbitration The folk-in-the-road provision China–Laos BIT applies to Macau: a broad approach SGHC adopted a restrictive approach SGCA did not find a different intention—the moving treaty frontier rule presumptively applied The balance of probabilities as the relevant standard of proof—the critical date doctrine SGCA accepted a broader reading of Art 8(3) proposed by the claimant; SGCA considered the interpretation of Art 8(3) in light of its ordinary meaning, context, object and purpose. Ordinary meaning was equivocal and capable of supporting both interpretations, and then focused on the context, object and purpose of Art 8(3). Adopted a broader approach (purposively in light of the principle of effective interpretation instead of a highly textual approach to interpreting a similar clause). A narrow interpretation of Art 8(3) would have meant that, an investor would first have to approach a court to determine whether an impermissible expropriation has occurred. Once the investor approached the court under Art 8(2), the remedy of arbitration in Art 8(3) would no longer be available, thus rendering Art 8(3) otiose. The Court of Appeal agreed with the tribunal that a narrow interpretation would be against the principle of effet utile (effective interpretation). The broad interpretation of Art 8(3) ‘is also consistent with the BIT’s objective of protection investment’ Jurisdiction is confirmed by the Tribunal No jurisdiction: rejected the applicability of the BIT to Macau and the tribunal’s broad interpretation of the treaty’s dispute settlement clause Jurisdiction, but the implications for future determinations of the applicability of PRC BITs to Chinese SAR remain unclear. Singapore courts have consistently ruled in favour of broad interpretation of arbitration clauses. This is a pro-arbitration stance of the judiciary in Singapore. Beijing Shougang Mining Investment Co., Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdao Qinlong International Industrial Co., Ltd. v Mongolia First ad hoc BIT case administered by the Permanent Court of Arbitration Art 8, China—Mongolia BIT 1991 Art 8(3): subject matter of the claim (ratione materiae) folk-in-the-road; Art 4(1) Art 1(2)(b), ‘Investor’ Art 1(1), ‘Investment’ The Tribunal interpreted the BIT, the purpose of which was to provide incentives for investment from the PRC into Mongolia, to require that the national courts of Mongolia first declare that other arms of the government of Mongolia had expropriated the assets of Chinese investors; only then could there be arbitration, and the only arbitrable question would be the amount of compensation for the taking. The Tribunal—it could have jurisdiction only if Mongolia admitted that it had expropriated the investment, and the Tribunal would have jurisdiction only to resolve any controversy over the amount of compensation Mongolia should pay. The District Court of New York: ‘Indeed, every other tribunal to address this question under PRC BITs has rejected the narrow interpretation adopted by this Tribunal.’ The question is whether the arbitration clause in Art 8(3) of the BIT applies to a particular type of controversy—namely a dispute over whether an expropriation has occurred—a question of arbitrability. Mongolia–China BIT is distinguishable from many other BITs, which do commit the question of arbitrability to the arbitrators. But the disputed BIT does not commit the question of arbitrability to the arbitrators. The Tribunal in this case adopted an extremely narrow construction, in which the only matter that is arbitrable is the amount of compensation for an expropriation. According to the Tribunal, only the alleged offending state itself can determine whether it expropriate property. If it denies having done so, the independent tribunal established by the BIT can never come into existence. Thus, an investor is left in the perverse position that only if the state’s executive or legislature admits that it has expropriated the investment, or if the state’s own courts can be persuaded so to declare, can that investor then proceed to international arbitration. The interpretation defeats the purpose of investor–state arbitration and deprives the investor of much of the benefit of the Treaty. Citing Tza Yap Shum v Peru Tribunal—narrow interpretation Court—taking into account of object, purpose of the BIT—wide interpretation Ansung Housing Co., Ltd. v PRC The first published ICSID case in which China was the respondent; the first claim to be brought at ICSID by a South Korean investor and the first claim at ICSID to involve China as a respondent State that has proceeded to a substantive hearing and led to an award. Limitation period Whether an MFN clause applies to dispute settlement provisions (in this case, to a limitation period in the dispute resolution provision of the BIT) Art 9(7) China–South Korea BIT 2007 Art 3(3) Plain meaning; interpretation on the basis of the plain language—the tribunal emphasized that the limitation period begins with an investor’s first knowledge of the fact that it has incurred loss or damage, not with the date on which it gains knowledge of the quantum of that loss or damage (para 110) The possibility of invoking the MFN clause to apply more favourable dispute settlement depends on the precise wording of the MFN clause No jurisdiction; time-barred as the investor initiated arbitration more than three years after acquiring knowledge of the loss or damage Ekran Berhad v China First filed and known case against China Malaysia–China BIT 1990 Suspended Philip Morris v Australia China–Australia BIT No opinion rendered in the award on the issue of applying China BIT to Hong Kong No jurisdiction Open in new tab Table 1. Comparison of interoperating techniques in China-related investment arbitration cases Case . Significance . Key jurisdictional issue . Relevant BIT and clauses . Interpretative approach . Jurisdiction . Tza Yap Shum v Republic of Peru The first known ISDS case involving China as home state ‘Investor’ ‘Investment’ ‘Dispute’ Fork-in-the-road China–Peru BIT, Art 12(a) Art 1(1) Art 8(3) Article 8 Is a Hong Kong resident qualified as an investor for the BIT purpose? The Tribunal viewed it beyond the dispute at issue. The Tribunal relied upon Article 25 of the ICSID Convention to grant jurisdiction. Peru claimed that Tza’s investment was ‘indirect investment’ made through a BVI holding company. The Tribunal extended its jurisdiction via Article 25(1) of the ICSID Convention which does not impose any restriction on jurisdiction of the ICSID tribunals. The definition of ‘investment’ is very broad. The Tribunal followed Article 31 of the Vienna Convention and interpreted it in ‘good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. The broadest interpretation is the most appropriate approach to recognize the inclusive nature of the phrase ‘involving’. Besides, the ‘wording of the Preamble of the BIT’ is the supplementary means of interpretation. The Tribunal looked into the ‘ordinary meaning’ to conduct textual analysis and characterized the jurisdictional relation of the domestic court and international arbitral tribunal as a horizontal configuration. Thus, the Claimant is entitled to institute arbitration directly without first exhausting the remedies offered by local courts. Yes. BUCG v Yemen Is BUCG, an SOE, a qualified investor? Subject matter jurisdiction (ratione materiae) China–Yeman BIT, Art 10 (‘any dispute relating to the amount of compensation for expropriation’) ICSID Convention, Art 25(1) Beyond the ordinary meaning—moving to consider the context (fact-specific context), object and purpose of the BIT ‘Contextual approach’ Jurisdiction established over expropriation claims regarding both liability and compensation Based on a broad interpretation of the dispute settlement clause of the BIT as it promotes the BIT’s overall purpose and objective. Structural links to the Chinese government and public functions inside China were irrelevant to BUCG’s standing as an investor at ICSID Sanum v Laos The first investor–state tribunal asked to determine the application of Chinese IIAs to legal entities incorporated and established in Macao; The first judgment by Singapore’s highest court involving the curial review of an investment award The first time the Singapore Court of Appeal issued a decision on a jurisdictional challenge concerning an investor–state arbitration ‘territorial scope of the China-Laos BIT’ Qualification of an investor Subject matter jurisdiction: scope of ‘dispute’ Customary international law + the fulfilment of the goals of the BIT (para 295) PRC–Laos BIT, Article 1(2)(b) PRC–Laos BIT, Art 8(3): ‘a dispute involving the amount of compensation for expropriation’ to be submitted to international arbitration The folk-in-the-road provision China–Laos BIT applies to Macau: a broad approach SGHC adopted a restrictive approach SGCA did not find a different intention—the moving treaty frontier rule presumptively applied The balance of probabilities as the relevant standard of proof—the critical date doctrine SGCA accepted a broader reading of Art 8(3) proposed by the claimant; SGCA considered the interpretation of Art 8(3) in light of its ordinary meaning, context, object and purpose. Ordinary meaning was equivocal and capable of supporting both interpretations, and then focused on the context, object and purpose of Art 8(3). Adopted a broader approach (purposively in light of the principle of effective interpretation instead of a highly textual approach to interpreting a similar clause). A narrow interpretation of Art 8(3) would have meant that, an investor would first have to approach a court to determine whether an impermissible expropriation has occurred. Once the investor approached the court under Art 8(2), the remedy of arbitration in Art 8(3) would no longer be available, thus rendering Art 8(3) otiose. The Court of Appeal agreed with the tribunal that a narrow interpretation would be against the principle of effet utile (effective interpretation). The broad interpretation of Art 8(3) ‘is also consistent with the BIT’s objective of protection investment’ Jurisdiction is confirmed by the Tribunal No jurisdiction: rejected the applicability of the BIT to Macau and the tribunal’s broad interpretation of the treaty’s dispute settlement clause Jurisdiction, but the implications for future determinations of the applicability of PRC BITs to Chinese SAR remain unclear. Singapore courts have consistently ruled in favour of broad interpretation of arbitration clauses. This is a pro-arbitration stance of the judiciary in Singapore. Beijing Shougang Mining Investment Co., Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdao Qinlong International Industrial Co., Ltd. v Mongolia First ad hoc BIT case administered by the Permanent Court of Arbitration Art 8, China—Mongolia BIT 1991 Art 8(3): subject matter of the claim (ratione materiae) folk-in-the-road; Art 4(1) Art 1(2)(b), ‘Investor’ Art 1(1), ‘Investment’ The Tribunal interpreted the BIT, the purpose of which was to provide incentives for investment from the PRC into Mongolia, to require that the national courts of Mongolia first declare that other arms of the government of Mongolia had expropriated the assets of Chinese investors; only then could there be arbitration, and the only arbitrable question would be the amount of compensation for the taking. The Tribunal—it could have jurisdiction only if Mongolia admitted that it had expropriated the investment, and the Tribunal would have jurisdiction only to resolve any controversy over the amount of compensation Mongolia should pay. The District Court of New York: ‘Indeed, every other tribunal to address this question under PRC BITs has rejected the narrow interpretation adopted by this Tribunal.’ The question is whether the arbitration clause in Art 8(3) of the BIT applies to a particular type of controversy—namely a dispute over whether an expropriation has occurred—a question of arbitrability. Mongolia–China BIT is distinguishable from many other BITs, which do commit the question of arbitrability to the arbitrators. But the disputed BIT does not commit the question of arbitrability to the arbitrators. The Tribunal in this case adopted an extremely narrow construction, in which the only matter that is arbitrable is the amount of compensation for an expropriation. According to the Tribunal, only the alleged offending state itself can determine whether it expropriate property. If it denies having done so, the independent tribunal established by the BIT can never come into existence. Thus, an investor is left in the perverse position that only if the state’s executive or legislature admits that it has expropriated the investment, or if the state’s own courts can be persuaded so to declare, can that investor then proceed to international arbitration. The interpretation defeats the purpose of investor–state arbitration and deprives the investor of much of the benefit of the Treaty. Citing Tza Yap Shum v Peru Tribunal—narrow interpretation Court—taking into account of object, purpose of the BIT—wide interpretation Ansung Housing Co., Ltd. v PRC The first published ICSID case in which China was the respondent; the first claim to be brought at ICSID by a South Korean investor and the first claim at ICSID to involve China as a respondent State that has proceeded to a substantive hearing and led to an award. Limitation period Whether an MFN clause applies to dispute settlement provisions (in this case, to a limitation period in the dispute resolution provision of the BIT) Art 9(7) China–South Korea BIT 2007 Art 3(3) Plain meaning; interpretation on the basis of the plain language—the tribunal emphasized that the limitation period begins with an investor’s first knowledge of the fact that it has incurred loss or damage, not with the date on which it gains knowledge of the quantum of that loss or damage (para 110) The possibility of invoking the MFN clause to apply more favourable dispute settlement depends on the precise wording of the MFN clause No jurisdiction; time-barred as the investor initiated arbitration more than three years after acquiring knowledge of the loss or damage Ekran Berhad v China First filed and known case against China Malaysia–China BIT 1990 Suspended Philip Morris v Australia China–Australia BIT No opinion rendered in the award on the issue of applying China BIT to Hong Kong No jurisdiction Case . Significance . Key jurisdictional issue . Relevant BIT and clauses . Interpretative approach . Jurisdiction . Tza Yap Shum v Republic of Peru The first known ISDS case involving China as home state ‘Investor’ ‘Investment’ ‘Dispute’ Fork-in-the-road China–Peru BIT, Art 12(a) Art 1(1) Art 8(3) Article 8 Is a Hong Kong resident qualified as an investor for the BIT purpose? The Tribunal viewed it beyond the dispute at issue. The Tribunal relied upon Article 25 of the ICSID Convention to grant jurisdiction. Peru claimed that Tza’s investment was ‘indirect investment’ made through a BVI holding company. The Tribunal extended its jurisdiction via Article 25(1) of the ICSID Convention which does not impose any restriction on jurisdiction of the ICSID tribunals. The definition of ‘investment’ is very broad. The Tribunal followed Article 31 of the Vienna Convention and interpreted it in ‘good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. The broadest interpretation is the most appropriate approach to recognize the inclusive nature of the phrase ‘involving’. Besides, the ‘wording of the Preamble of the BIT’ is the supplementary means of interpretation. The Tribunal looked into the ‘ordinary meaning’ to conduct textual analysis and characterized the jurisdictional relation of the domestic court and international arbitral tribunal as a horizontal configuration. Thus, the Claimant is entitled to institute arbitration directly without first exhausting the remedies offered by local courts. Yes. BUCG v Yemen Is BUCG, an SOE, a qualified investor? Subject matter jurisdiction (ratione materiae) China–Yeman BIT, Art 10 (‘any dispute relating to the amount of compensation for expropriation’) ICSID Convention, Art 25(1) Beyond the ordinary meaning—moving to consider the context (fact-specific context), object and purpose of the BIT ‘Contextual approach’ Jurisdiction established over expropriation claims regarding both liability and compensation Based on a broad interpretation of the dispute settlement clause of the BIT as it promotes the BIT’s overall purpose and objective. Structural links to the Chinese government and public functions inside China were irrelevant to BUCG’s standing as an investor at ICSID Sanum v Laos The first investor–state tribunal asked to determine the application of Chinese IIAs to legal entities incorporated and established in Macao; The first judgment by Singapore’s highest court involving the curial review of an investment award The first time the Singapore Court of Appeal issued a decision on a jurisdictional challenge concerning an investor–state arbitration ‘territorial scope of the China-Laos BIT’ Qualification of an investor Subject matter jurisdiction: scope of ‘dispute’ Customary international law + the fulfilment of the goals of the BIT (para 295) PRC–Laos BIT, Article 1(2)(b) PRC–Laos BIT, Art 8(3): ‘a dispute involving the amount of compensation for expropriation’ to be submitted to international arbitration The folk-in-the-road provision China–Laos BIT applies to Macau: a broad approach SGHC adopted a restrictive approach SGCA did not find a different intention—the moving treaty frontier rule presumptively applied The balance of probabilities as the relevant standard of proof—the critical date doctrine SGCA accepted a broader reading of Art 8(3) proposed by the claimant; SGCA considered the interpretation of Art 8(3) in light of its ordinary meaning, context, object and purpose. Ordinary meaning was equivocal and capable of supporting both interpretations, and then focused on the context, object and purpose of Art 8(3). Adopted a broader approach (purposively in light of the principle of effective interpretation instead of a highly textual approach to interpreting a similar clause). A narrow interpretation of Art 8(3) would have meant that, an investor would first have to approach a court to determine whether an impermissible expropriation has occurred. Once the investor approached the court under Art 8(2), the remedy of arbitration in Art 8(3) would no longer be available, thus rendering Art 8(3) otiose. The Court of Appeal agreed with the tribunal that a narrow interpretation would be against the principle of effet utile (effective interpretation). The broad interpretation of Art 8(3) ‘is also consistent with the BIT’s objective of protection investment’ Jurisdiction is confirmed by the Tribunal No jurisdiction: rejected the applicability of the BIT to Macau and the tribunal’s broad interpretation of the treaty’s dispute settlement clause Jurisdiction, but the implications for future determinations of the applicability of PRC BITs to Chinese SAR remain unclear. Singapore courts have consistently ruled in favour of broad interpretation of arbitration clauses. This is a pro-arbitration stance of the judiciary in Singapore. Beijing Shougang Mining Investment Co., Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdao Qinlong International Industrial Co., Ltd. v Mongolia First ad hoc BIT case administered by the Permanent Court of Arbitration Art 8, China—Mongolia BIT 1991 Art 8(3): subject matter of the claim (ratione materiae) folk-in-the-road; Art 4(1) Art 1(2)(b), ‘Investor’ Art 1(1), ‘Investment’ The Tribunal interpreted the BIT, the purpose of which was to provide incentives for investment from the PRC into Mongolia, to require that the national courts of Mongolia first declare that other arms of the government of Mongolia had expropriated the assets of Chinese investors; only then could there be arbitration, and the only arbitrable question would be the amount of compensation for the taking. The Tribunal—it could have jurisdiction only if Mongolia admitted that it had expropriated the investment, and the Tribunal would have jurisdiction only to resolve any controversy over the amount of compensation Mongolia should pay. The District Court of New York: ‘Indeed, every other tribunal to address this question under PRC BITs has rejected the narrow interpretation adopted by this Tribunal.’ The question is whether the arbitration clause in Art 8(3) of the BIT applies to a particular type of controversy—namely a dispute over whether an expropriation has occurred—a question of arbitrability. Mongolia–China BIT is distinguishable from many other BITs, which do commit the question of arbitrability to the arbitrators. But the disputed BIT does not commit the question of arbitrability to the arbitrators. The Tribunal in this case adopted an extremely narrow construction, in which the only matter that is arbitrable is the amount of compensation for an expropriation. According to the Tribunal, only the alleged offending state itself can determine whether it expropriate property. If it denies having done so, the independent tribunal established by the BIT can never come into existence. Thus, an investor is left in the perverse position that only if the state’s executive or legislature admits that it has expropriated the investment, or if the state’s own courts can be persuaded so to declare, can that investor then proceed to international arbitration. The interpretation defeats the purpose of investor–state arbitration and deprives the investor of much of the benefit of the Treaty. Citing Tza Yap Shum v Peru Tribunal—narrow interpretation Court—taking into account of object, purpose of the BIT—wide interpretation Ansung Housing Co., Ltd. v PRC The first published ICSID case in which China was the respondent; the first claim to be brought at ICSID by a South Korean investor and the first claim at ICSID to involve China as a respondent State that has proceeded to a substantive hearing and led to an award. Limitation period Whether an MFN clause applies to dispute settlement provisions (in this case, to a limitation period in the dispute resolution provision of the BIT) Art 9(7) China–South Korea BIT 2007 Art 3(3) Plain meaning; interpretation on the basis of the plain language—the tribunal emphasized that the limitation period begins with an investor’s first knowledge of the fact that it has incurred loss or damage, not with the date on which it gains knowledge of the quantum of that loss or damage (para 110) The possibility of invoking the MFN clause to apply more favourable dispute settlement depends on the precise wording of the MFN clause No jurisdiction; time-barred as the investor initiated arbitration more than three years after acquiring knowledge of the loss or damage Ekran Berhad v China First filed and known case against China Malaysia–China BIT 1990 Suspended Philip Morris v Australia China–Australia BIT No opinion rendered in the award on the issue of applying China BIT to Hong Kong No jurisdiction Open in new tab It has been argued that an MFN clause has a multilateralizing effect214 as it is operated in a way to extend the greatest protection offered by a state in a single BIT to the beneficiaries of all of its BITs. As a matter of fact, treaty interpretation devices deployed in ISDS cases also have a similar but quite weak multilateralizing effect as the tribunals usually pay a certain level attention to previously rendered arbitral awards and treaty interpretations made in these previous awards have persuasive authority arguably binding later tribunals facing similar factual scenarios and/or interpretation tasks. In this sense, the awards and their interpretation methodologies analysed here are of relevance to our understanding and application of vaguely-worded Chinese BIT terms. The treaty interpretative approaches can be the major means the treaty parties rely on to defend the treaty purposes they are meant to realize in the first place. In other words, by borrowing the metaphor used by Schill, treaty interpretive devices are the means to guarding (or tearing down) the Great Wall. Footnotes 1 Wei Shen, ‘The Good, The Bad, or The Ugly? A Critique of the Decision on Jurisdiction and Competence in Tza Yap Shum v. The Republic of Peru’ (2011) 10(1) Chinese Journal of International Law 55, 55. 2 According to UNCTAD, China signed 128 BITs and 109 BITs are effective. Taking into other international investment treaties (IIAs) such as free trade agreements which incorporate a chapter on foreign investment protection, China signed 150 IIAs in total and 128 IIAs are effective. UNCTAD, Investment Policy Hub, <http://investmentpolicyhub.unctad.org/IIA> accessed 7 July 2019. 3 Yuqing Zhang, ‘The Case of China’ in Michael Moser (ed), Investor-State Arbitration – Lessons for Asia (Juris Publishing 2008) 159. 4 Stephan W Schill, ‘Tearing Down the Great Wall: The New Generation Investment Treaties of the People’s Republic of China’ (2007) 15(1) Cardozo Journal of International and Comparative Law 73–118. 5 Axel Berger, ‘China’s New Bilateral Investment Treaty Programme: Substance, Rational and Implications for International Investment Law Making’ (2008) <https://www.die gdi.de/uploads/media/Berger_ChineseBITs.pdf> accessed 7 July 2019; Qingjiang Kong, ‘Bilateral Investment Treaties: The Chinese Approach and Practice; in K Sik and others (eds), Asian Yearbook of International Law 1998/1999 (Martinus Nijhoff 2003); Wenhua Shan and Jinyuan Su (eds), China and International Investment Law: Twenty Years of ICSID Membership (Brill Nijhoff 2015). 6 Leon Trackman, ‘Geopolitics, China and Investor–State Arbitration’ in Lisa Toohey, Colin B Picker and Jonathan Greenacre (eds), China in the International Economic Order: New Directions and Changing Paradigms (CUP 2015). 7 ibid. 8 ibid. 9 Giovanni Zarra, ‘The Issue of Incoherence in Investment Arbitration: Is There Need for a Systemic Reform?’ (2018) 17(2) Chinese Journal of International Law 127–85. 10 The EU switched from the traditional mode to an Investment Court System (ICS) in its free trade agreements with Canada, Singapore, and Vietnam. The ultimate goal of the EU is to establish a Multilateral Investment Court. The US insists to take an incrementalist approach and favours retaining the existing system with modest reforms. Australia distrusts the ISDS at all. See UNCITRAL Working Group III Investor–State Dispute Settlement Reform documents. 11 Anthea Roberts, ‘ The Shifting Landscape of Investor-State Arbitration: Loyalists, Reformists, Revolutionaries and Undecideds’ (15 June 2017) <www.ejiltalk.org/the-shifting-landscape-of-investor-state-arbitration-loyalists-reformists-revolutionaries-and-undecideds/>. 12 See generally Valentina Vadi, Analogies in International Investment Law and Arbitration (CUP 2016). 13 Some uncommon issues did appear in Chinese BIT cases. For instance, the case of Ping An was about the black hole or a gap created by two successive BITs which deprived valid claims of a jurisdictional basis. Sebastian Green Martinez, ‘ Case Comment: Ping An Life Insurance Company of China, Limited and Ping An Insurance (Group) Company of China, Limited v. Kingdom of Belgium – A Jurisdictional Black Hole Between Two BITs?’ (2015) Transnational Dispute Management. As the applicability and potential effects of the inter-temporal rule of international law was a unique legal issue in Ping An case, this article does not specifically analyse this issue and the Ping An case. 14 Susan D Franck, ‘Development and Outcomes of Investment Treaty Arbitration’ (2009) 50(2) Harvard International Law Journal 435–89. 15 See Table 1 below. 16 Tza Yap Shum v Republic of Peru, ICSID Case No ARB/07/6. 17 Ping An Life Insurance Company of China v Kingdom of Belgium, ICSID Case No ARB/12/29. 18 Sanum Investments Limited v Lao People’s Democratic Republic, PCA Case No 2013-13. 19 Ekran Berhad v People’s Republic of China, ICSID Case No ARB/11/15. 20 Ansung Housing Co, Ltd v People’s Republic of China, ICSID Case No ARB/14/25. 21 Vienna Convention on the Law of Treaties, 23 May 1969, 1155 UNTS 331; (1969) 8 ILM 679. 22 Ole Kristian Fauchald, ‘ The Legal Reasoning of ICSID Tribunals—An Empirical Analysis’ (2008) 19(2) European Journal of International Law 301, para 314. 23 Romesh Weeramenatry’s study of 258 FIAT awards and decisions reveals that 53% of those awards and decisions (ie 136 out of 258) referred to art 31(1) of the VCLT, 19% (ie 49 out of 258) referred to art 31(2), 5% (ie 12 out of 258) referred to art 31(3), and 1% (ie 2 out of 258) referred to art 31(4). This trend is confirmed by the Fauchald’s empirical analysis, which reveals that out of the 98 ICSID decisions reviewed in that study, 35 referred to the Vienna Convention interpretation rules but only 16 (ie 16%) of these decisions extended their examination beyond the art 31(1) criteria. J Romesh Weeramenatry, Treaty Interpretation in Investment Arbitration (OUP 2012), para 3.07. 24 Contrast the ILC’s position that art 31 was comprised of ‘three separate principles’: (1) ‘interpretation in good faith’; (2) ‘parties are to be presumed to have that intention which appears from the ordinary meaning of the terms used by them’; (3) ‘the ordinary meaning of a term must not be determined in the abstract but in the context of the treaty and in the light of its object and purpose’. YILC (1966-II), at 221, para 12. This section of the ILC’s commentary is quoted with approval in Methanex v US, UNCITRAL, Partial Award, para 98. 25 Thomas W Wälde, ‘ Interpreting Investment Treaties: Experiences and Examples’ in Christina Binder and others (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (OUP 2009)724, para 746. 26 Wintershall Aktiengesellschaft v Argentine Republic, ICSID Case No ARB/04/14, paras 79–80; Czech Republic v European Media Ventures SA [2007] EWHC 2851 (Comm), para 16 (‘the proper approach to the interpretation of Treaty wording is to identify what the words mean in their context (the textual method), rather than attempting to identify what may have been the underlying purpose in the use of the words (the teleological method)’). See also Elihu Lauterpacht and Daniel Bethlehem, ‘The Scope and Content of the Principle of non-refoulement: Opinion’ in Erika Feller, Volker Türk and Frances Nicholson (eds), Refugee Protection in International Law: UNHCR’s Global Consultations on International Protectio (CUP 2003) 104 (observing that in interpreting the terms of a treaty ‘the text of a treaty will be the starting point’); Ian Robertson Sinclair, The Vienna Convention on the Law of Treaties (Manchester University Press 1984), para 115; Andrew Newcombe and Lluis Paradell, Law and Practice of Investment Treaties (Kluwer Law International 2009) 111, para 2.28. (‘according to Article 31 of the [Vienna Convention], a treaty must be interpreted first on the basis of its plain language’). 27 Salini Costruttori S.p.A. and Italstrade S.p.A. v The Hashemite Kingdom of Jordan, ICSID Case No ARB/02/13, Decision on Jurisdiction, para 79 (‘[t]he common intention of the Parties is reflected in this clear text that the Tribunal has to apply’); Methanex Corporation v US, UNCITRAL, Final Award, Part IV, Chap B, para 37 (‘[i]nternational law directs this Tribunal, first and foremost, to the text; here, the text and the drafters’ intentions, which it manifests, show that trade provisions were not to be transported to investment provisions’), Part II, Chap B, para 5, and Part IV, Chap B, para 35; citing Yearbook of the International Law Commission, 1966, Vol II, p 223, para 18; Wintershall Aktiengesellschaft (n 26), para 78, 86–8; Czech Republic v European Media Ventures SA, [2007] EWHC 2851 (Comm) (Eng High Crt), para 16 (‘The search for a common intention is likely to be both elusive and unnecessary. Elusive, because the contracting parties may never have had a common intention: only an agreement as to a form of words. Unnecessary, because the rules for the interpretation of international treaties focus on the words and meaning and not the intention of one or other contracting party.’). See also John P Gaffney and James L Loftis, ‘The “Effective Ordinary Meaning” of BITs and the Jurisdiction of Treaty-Based Tribunals to Hear Contract Claims’ (2007) 8(1) Journal of World Investment & Trade 5, para 20; Max Huber (1952) 45 Annuaire de l’Institut du Droit international 199. 28 Alasdair Ross Anderson et al v Republic of Costa Rica, ICSID Case No ARB(AF)/07/3, paras 48 and 57 (Oxford English Dictionary, Webster’s Deluxe Unabridged Dictionary (2nd edn), and Webster’s Third New International Dictionary); American Manufacturing, Arbitrator Golsong’s separate opinion, at 40, para 12 (Webster’s Third International Dictionary); Marvin Roy Feldman Karpa v United Mexican States, ICSID Case No ARB(AF)/99/1, Award, para 96 (Webster’s New Collegiate Dictionary); Methanex Corporation v US, UNCITRAL, Partial Award, paras 135–36 (American Heritage Dictionary, The Oxford English Dictionary and Funk & Wagnalls New Comprehensive International Dictionary of the English Language); MTD Equity Sdn. Bhd and MTD Chile S.A. v Republic of Chile, ICSID Case No ARB/01/7, para 113 (Concise Oxford Dictionary of Current English); Ronald S Lauder v The Czech Republic, UNCITRAL, para 221 (Black’s Law Dictionary). 29 Autopista Concesionada de Venezuela, CA v Bolivarian Republic of Venezuela, ICSID Case No ARB/00/5, Decision on Jurisdiction, para 87; Middle East Cement Shipping and Handling Co SA v Arab Republic of Egypt, ICSID Case No ARB/99/6, Award, paras 100–02; Duke Energy Electroquil Partners & Electroquil SA v Republic of Ecuador, ICSID Case No ARB/04/19, Award, paras 318 and 324; Asian Agricultural Products Ltd v Republic of Sri Lanka, ICSID Case No ARB/87/3, Final Award, para 40, Rule (A), quoting Vattel’s The Law of Nations or the Principles of Natural Law Applied to the Conduct and to the Affairs of Nations and of Sovereigns (1758), Vol III, Chap XVII, para 263. 30 Ronald S Lauder v The Czech Republic, UNCITRAL, Final Award, para 35. 31 eg in interpreting the word ‘fair and equitable treatment’ in a bilateral investment treaty, the tribunal in Saluka v Czech observed that the ordinary meaning can only be defined by terms of equal vagueness and therefore referring to international approaches of previous tribunals. 32 eg the ‘fair and equitable treatment’, ‘full protection and security’, and ‘expropriation and measures tantamount to expropriation’, which are rarely defined in the treaty text and which reasonable persons may interpret differently. Jeswald W Salacuse, The Law of Investment Treaties (OUP 2010) 139. 33 Weeramenatry (n 23), para 3.36. 34 Ole Kristian Fauchald, ‘The Legal Reasoning of ICSID Tribunals—An Empirical Analysis’ (2008) 19(2) European Journal of International Law 301, para 314. 35 Asian Agricultural Products Ltd v Republic of Sri Lanka, ICSID Case No ARB/87/3, Final Award, para 51; Ceskoslovenska Obchodni Banka, AS v The Slovak Republic, ICSID Case No ARB/97/4, Decision on Jurisdiction, para 57; Jeswald W Salacuse, The Law of Investment Treaties (OUP 2010) 146; Saluka Invs v Czech Republic, Partial Award, UNCITRAL, para 255; SD Myers, Inc v Government of Canada, UNCITRAL, Partial Award, para 229; Wena Hotels Ltd v Arab Republic of Egypt, ICSID Case No ARB/98/4, Decision on Jurisdiction, paras 81 and 84. 36 Richard K Gardiner, Treaty Interpretation (OUP 2008) 177. 37 Plama Consortium Limited v Republic of Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction, para 147. 38 ibid, para 191; Pope & Talbot Inc v The Government of Canada, UNCITRAL, Merits, phase 2, para 37; Methanex Corporation v US, UNCITRAL, Final Award, Part IV, Chap B, para 29 and Part IV, Chap C, para 15; Loewen Group, Inc and Raymond L Loewen v United States of America, ICSID Case No ARB(AF)/98/3, Decision on Jurisdiction, para 40. 39 ADF Group Inc v United States of America, ICSID Case No ARB (AF)/00/1, Award, para 149. 40 Compañia del Desarrollo de Santa Elena SA v Republic of Costa Rica, ICSID Case No ARB/96/1, Award, para 64; Mondev International Ltd v USA, ICSID Case No ARB(AF)/99/2, Award, para 91; Aguas del Tunari, SA v Republic of Bolivia, ICSID Case No ARB/02/3, Decision on Jurisdiction, para 153; Emilio Agustín Maffezini v The Kingdom of Spain, ICSID Case No ARB/97/7, Decision on Jurisdiction, para 31; Tokios Tokelés v Ukraine, ICSID Case No ARB/02/18, Dissenting Opinion (Chairman Prosper Weil), paras 2 and 19; Vacuum Salt Products Ltd v Republic of Ghana, ICSID Case No ARB/92/1, Award, paras 32, 46, 77, and 86. 41 Tokios Tokelés v Ukraine, ICSID Case No ARB/02/18, Opinion, paras 2 and 19; Vacuum Salt Products Ltd ibid, para 46 (in this case the object and purpose of a specific provision (art 25(2)(b) of the ICSID Convention) was utilized); Marvin Roy Feldman Karpa v United Mexican States, ICSID Case No ARB(AF)/99/1, Award, para 35. 42 Amco Asia Corporation and others v Republic of Indonesia, ICSID Case No ARB/81/1, Decision on Jurisdiction, para 23-4; LG&E Energy Corporation and ors v the Republic of Argentina, Decision on Liability, ICSID Case No ARB/02/1, para 124; Metalclad Corporation v The United Mexican States, ICSID Case No ARB(AF)/97/1, Award, para 71; Philippe Gruslin v Malaysia, ICSID Case No ARB/99/3, ICSID Case No ARB/99/3, para 13.8; Saluka Invs (n 35), para 299; Vacuum Salt Products Ltd (n 40), para 39. See also Rudolf Dolzer and Margrete Stevens, Bilateral Investment Treaties (Martinus Nijhoff Publishers 1995), para 20 (observing that even though preambles rarely contain binding obligations, they may serve as ‘useful aids to interpretation of the treaty’). 43 Plama Consortium Limited (n 37), para 193. 44 Banro American Resources, Inc and Société Aurifère du Kivu et du Maniema S.A.R.L. v Democratic Republic of the Congo, ICSID Case No ARB/98/7, para 16; Continental Casualty Company v The Argentine Republic, ICSID Case No ARB/03/9, Decision on Jurisdiction, para 80; Saluka Invs (n 35), para 299. 45 Tokios Tokelés (n 41), paras 2 and 19; Vacuum Salt Products Ltd (n 40), para 39. 46 Compañia del Desarrollo de Santa Elena (n 40) para 64; Tokios Tokelés (n 41), paras 2 and 19; Vacuum Salt Products Ltd (n 40), para 32; Loewen Group, Inc (n 38), para 53. Even when interpreting domestic law that consents to the submission of a claim by a foreign investor to ICSID, it has been said that relevant legislation should be interpreted in favour of the objectives of investor protection and ICSID Convention; Amco Asia Corporation (n 42), para 18; Kaiser Bauxite Company v Jamaica, ICSID Case No ARB/74/3, Decision on Jurisdiction, para 17. 47 Aguas del Tunari (n 40), paras 153 and 241; Tokios Tokelés (n 41), paras 2 and 19; Vacuum Salt Products Ltd (n 40), para 31. As to the ICSID Convention, the executive directors of the World Bank have stated that its primary purpose is to ‘stimulate a larger flow of private international investment into its territories’. Executive Directors’ Report, at para 12. 48 Saluka Invs (n 35), para 300. On this issue, see generally Omar E. García-Bolivar, ‘ The Teleology of International Investment Law: The Role of Purpose in the Interpretation of International Investment Agreement’ (2005) 6(5) Journal of World Investment and Trade 751. 49 Weeramenatry (n 23), para. 3.22. 50 Wintershall Aktiengesellschaft (n 26), para 88. 51 Hrvatska Elektroprivreda d.d. v Republic of Slovenia, ICSID Case No ARB/05/24, Jan Paulsson Individual Opinion, para 51. 52 For instance, the decision in Plama v Bulgaria indicates that the tribunal considered an interpretation contrary to good faith as one that results in a ‘gross manipulation’ of the language of the treaty; or one that would deprive the investor of any certainty as to its rights and the host country’s obligations. According to the award of Tecmed v Mexico, conduct that transgresses the principle of good faith need not be intentional, manifestly damaging or fraudulent. The Phoenix v Czech tribunal considered the concept of good faith to be related to honesty, truthfulness, and restraint from taking unfair advantage. Weeramenatry (n 23), para 3.26. 53 Société Ouest Africaine des Bétons Industriels v Senegal, ICSID Case No ARB/82/1, Award, para 4.10; Amco Asia Corporation (n 42), para 14(i); Ceskoslovenska Obchodni Banka, AS v The Slovak Republic, ICSID Case No ARB/97/4, Decision on Jurisdiction, para 34, and Further Decision on Jurisdiction, para 25. 54 Asian Agricultural Products Ltd v Republic of Sri Lanka, ICSID Case No ARB/87/3, paras 51 and 61; Ronald S Lauder v The Czech Republic, UNCITRAL, para 219; Tradex Hellas SA v Republic of Albania, ICSID Case No ARB/94/2, Award, para 59; Yukos Universal Limited (Isle of Man) v The Russian Federation, UNCITRAL, PCA Case No AA 227, Interim Award, para 411. 55 Wintershall Aktiengesellschaft (n 26), paras 88. 56 Sheng Zhang, ‘The Status of State-owned Enterprises in ISDS from a Chinese Perspective’ in Yuwen Li and others, China, the EU and International Investment Law: Reforming Investor-State Dispute Settlement (Routledge 2019) 198–210. 57 Beijing Urban Construction Group Co, Ltd v Republic of Yemen, ICSID Case No ARB/14/30. The Decision on Jurisdiction, 31 May 2017, <http://www.italaw.com/sites/default/files/case-documents/italaw8968.pdf> accessed 7 July 2019. 58 The ICSID Convention provides a forum for the settlement of investment disputes brought by foreign investors against host states but excludes state-to-state disputes. The ICSID Convention, however, does not specifically address the standing of SOEs. 59 Beijing Urban Construction Group (n 57), para 39. 60 ibid, para 40. 61 ibid, para 43. 62 China Heilongjiang International Economic & Technical Cooperative Corp, Beijing Shougang Mining Investment Company Ltd, Qinhuangdaoshi Qinlong International Industrial Co Ltd v Mongolia, PCA Case No 2010-20, para 228. 63 ibid, para 276. 64 ibid, para 274. 65 ibid, para 269. 66 The decisive objection was that the claimant’s claim configured an abuse of right as the claimant changed its corporate structure to obtain BIT protection for an existing or foreseeable dispute, and therefore constituted abuse of rights and was inadmissible. The award is available at <http://www.italaw.com/sites/default/files/case-documents/italaw7303_0.pdf> accessed 7 July 2019. 67 Tza Yap Shum v Peru, Award, para 44. 68 ibid, para 49. 69 ibid, para 50. 70 ibid, para 51. 71 ibid, para 61. 72 ibid, paras 58, 61. 73 ibid, paras 54, 60. 74 ibid, para 70. 75 ibid, (n 29). 76 ibid, para 75. 77 Thailand–Hong Kong BIT, art 1(4)(b)(i). 78 eg art 126 of the Peru–China FTA provides that ‘investor’ for China means ‘economic entities established in accordance with the laws of the PRC and domiciled in the territory of the PRC … ’. 79 eg art 126 of the Peru–China FTA provides that ‘investor’ for China means ‘…; or legal entities not established under the law of the PRC but effectively controlled, by natural persons [who have nationality of the PRC in accordance with its law] or by economic entities [established in accordance with the laws of the PRC and domiciled in the territory of the PRC]’. 80 Sanum v Laos, para 38. 81 ibid, para 41. 82 PT First Media TBK v Astro Nusantara International BV and others and another appeal [2014] 1 SLR 372, PT Tugu Pratama Indonesia v Magma Nusantara Ltd [2003] 4 SLR (R) 257, AQZ v ARA, [2015] 2 SLR 972. 83 Article art 31, VCLT - General rule of interpretation A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty; any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. There shall be taken into account, together with the context: any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; any relevant rules of international law applicable in the relations between the parties. A special meaning shall be given to a term if it is established that the parties so intended. 84 art 29—Territorial scope of treaties Unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory. 85 When part of the territory of a State, or when any territory for the international relations of which a State is responsible, not being part of the territory of that State, becomes part of the territory of another State: treaties of the predecessor State cease to be in force in respect of the territory to which the succession of States relates from the date of the succession of States; and treaties of the successor State are in force in respect of the territory to which the succession of States relates from the date of the succession of States, unless it appears from the treaty or is otherwise established that the application of the treaty to that territory would be incompatible with the object and purpose of the treaty or would radically change the conditions for its operation. 86 Sanum v Laos, para 47. 87 ibid, para 49. 88 The exceptions are as follows: ‘(a) It appears from the PRC-Laos BIT, or is otherwise established, that the application of the PRC-Laos BIT would be incompatible with the object and purpose of the BIT (Art 15(b) of the VCST) (b) It appears from the PRC-Laos BIT, or is otherwise established, that the application of the BIT to Macau would radically change the conditions of its operation (Art 15(b) of the VCST) (c) An intention appears from the PRC-Laos BIT, or is otherwise established, that the BIT does not apply in respect of the entire territory of the PRC (Art 29 of the VCLT)’, Sanum v Laos, para 50. 89 Sanum v Laos, paras 50–55. 90 ‘In all cases, there is a point in time in the factual chronology of the dispute beyond which the conduct of the parties and other events can no longer affect the decision of the case. This time is called the critical date’, (Robert Pietrowski, ‘ Evidence in International Arbitration’ (2006) 22(3) Arbitration International 373–410, at 399), Sanum v Laos, para 65. 91 Sanum v Laos, para 67. 92 [1954] 1 WLR 1489—‘(1) The evidence could not have been admitted with reasonable diligence for use in the lower court (2) the evidence would probably have an important influence on the result of the case (3) the evidence must be apparently credible’, Sanum v Laos, para 27. 93 Lassiter Ann Masters v To Keng Lam [2004] 2 SLR(R) 392. 94 Sanum v Laos, para 103. 95 ibid, para 112. 96 Pope & Talbot v Canada, Award in Respect of Damages, 31 May 2002. 97 Gabriella Kaufmann-Kohler, ‘Interpretive Powers of the Free Trade Commission and the Rule of Law’, in Gaillard and Bachand (eds), Fifteen Years of NAFTA Chapter 11 Arbitration (JurisNet LLC 2011) 190–92. 98 Abaclat and Others v Argentina, ICSID ARB/07/05, Jurisdiction and Admissibility, 28 October 2011, para 347(ii). 99 BUCG v Yemen, The Decision on Jurisdiction, para 122. 100 ibid, para 123. 101 ibid, para 122. 102 ibid, para 123. 103 ibid, para 128. 104 ibid, para 138. 105 ibid, para 137. 106 ibid, para 136. 107 art 25 of the ICSID Convention left the term ‘investment’ undefined. The Salini test contemplates investment a contribution, a certain duration of performance of the contract and a participation in the risks of the transaction. Salini Constructtori S.p.A. and Italstrade S.p.A. v Kingdom of Morocco, ICSID Case No ARB/00/4, Decision on Jurisdiction, 23 July 2001, para 52. 108 BUCG v Yemen, The Decision on Jurisdiction, para 135. 109 ibid, para 136. 110 Beijing Shougang Mining Investment Company Ltd et al v Mongolia, PCA Case No 2010-20 Award, para 278. 111 ibid, para 279. 112 ibid, para 280. 113 ibid, para 281. 114 ibid, para 281. 115 ibid, para 284. 116 Tza Yap Shum v Republic of Peru, Award, para 106. 117 ibid, para 106. 118 ibid, para 107. 119 Inceysa Vallisoletana SL v Republic of El Salvador, ICSID Case No ARB/03/26, Award of 2 August 2006, paras 190–207; Saluka Investments BV v Czech Republic, UNCITRAL Partial Award of 17 March 2006, paras 183, 202–221; Bayindir Insaat Turizm Ticaret VeSanayi AS v Islamic Republic of Pakistan, ICSID Case No ARB/03/29, Decision on Jurisdiction of 14 November 2005, paras 105–110; Gas Natural SDG SA v Argentina, ICSID Case No ARB/03/10, Decision on Preliminary Questions on Jurisdiction of 17 June 2005, paras 33, 34; PSEG Global, Inc and others v Republic of Turkey, ICSID Case No ARB/02/5, Decision on Jurisdiction of 4 June 2004, paras 109, 116–20. 120 Salini Construttori SpA and Italstrade SpA v Morocco, ICSID Case No ARB/00/4, Decision on Jurisdiction of 23 July 2003, para 46; Consortium RFCC v Morocco, ICSID Case No ARB/00/6, Award; Bayindir Insaat Turizm Ticaret VeSanayi AS v Islamic Republic of Pakistan, ICSID Case No ARB/03/29, Jurisdiction, para 109. 121 Inceysa Vallisoletana SL v Republic of El Salvador, ICSID Case No ARB/03/26, Award of 2 August 2006, paras 190–207. 122 Tza Yap Shum v Republic of Peru, Award, para 150. 123 Award, para 150. 124 Award, para 145. 125 Award, para 149. 126 Award, para 146. 127 Award, para 150. 128 Award, para 151. 129 Award, para 150. 130 Award, para 148. 131 Article art 4 of the Peru–China BIT states the following:“ 1. Neither Contracting Party shall expropriate, nationalize or take similar measures (“expropriation”) against investments of investors of the other Contracting Party in its territory, unless the following conditions are met: for the public interest; under domestic legal procedure; without discrimination; against compensation. 2. The compensation mentioned in Paragraph 1(d) of this Article shall be equivalent to the value of the expropriated investments at the time when expropriation is proclaimed, be convertible and freely transferable. The compensation shall be paid without unreasonable delay.” 132 Award, para 152. 133 Award, para 153. 134 Award, para 153. 135 Sanum v Laos, Award, paras 3 and 42. 136 art 8—1. Any dispute between an investor of one Contracting State and the other Contracting State in connection with an investment in the territory of the other Contracting State shall, as far as possible, be settled amicably through negotiation between the parties to the dispute. 2. If the dispute cannot be settled through negotiation within six months, either party to the dispute shall be entitled to submit the dispute to the competent court of the Contracting State accepting the investment. 3. If a dispute involving the amount of compensation for expropriation cannot be settled through negotiation within six months as specified in paragraph 1 of this Article, it may be submitted at the request of either party to an ad hoc arbitral tribunal. The provisions of this paragraph shall not apply if the investor concerned has resorted to the procedure specified in the paragraph 2 of this Article. 137 SGCA distinguished a number of arbitral awards relied upon by the Lao government, where arbitral tribunals had arrived at narrow interpretations of dispute resolution clauses that also referred to ‘the amount of compensation’. SGCA paid particular attention to the differences in language and architecture of the various BITs under consideration, as well as the interpretative context, placing particular emphasis on whether the BITs under expressly demarcated the determination of the legitimacy of the expropriation from the amount of compensation, and whether there was a fork-in-the-road provision. 138 Para 87. 139 BUCG v Yemen, Award, paras 78–87. 140 idid, para 87. 141 Beijing Shougang et al v Mongolia, Award, paras 435–54. 142 Beijing Shougang Mining Investment Company, Ltd v Mongolia (1:17-cv-07436-ER), paras 424–36. 143 Tza Yap Shum v Peru, Award, para 158. 144 Peru–China FTA, art 139(2). 145 Binder and others (n 25) 724, paras 102, 364; Pamela B Gann, ‘ The US Bilateral Investment Treaty Program’ (1985) 21 Stanford Journal of International Law 373, 437–38; Antonio R Parra, ‘ Provisions on the Settlement of Investment Disputes in Modern Investment Laws, Bilateral Investment Treaties and Multilateral Instruments on Investment’ (1997) 12 ICSID Review – Foreign Investment Law Journal 334–35, 351–52. 146 Tza Yap Shum v Peru, Award, fn 85. 147 ibid, para 168. 148 The sentence immediately before the signature blocks of the Peru–China BIT. 149 ibid, para 149. 150 Amco Asia Corporation and others v Indonesia, ICSID Case No ARB/81/1, Decision on Annulment of 16 May 1986, para 63; Lanco International v Argentina, ICSID Case No ARB/97/6, Decision on Jurisdiction of 8 December 1998, para 39; Generation Ukraine, Inc v Ukraine, ICSID Case No ARB/00/9, Award of 16 September 2003, paras 13.1–13.6. 151 CME v Czech Republic, Final Award, 14 March 2003, 9 ICSID Reports 264, para 412; Yaung Chi Oo v Myanmar, ICSID Case No ARB/01/1, Award of 31 March 2003, 42 ILM 540 (2003), para 40; Nycomb Synergetics Technology Holding AB v Latvia, SCC Case No 118/2001, Award of 16 December 2003, s 2.4, (2005) 1 Stockholm International Arbitration Review, p 53. 152 Sanum v Laos, para 128. 153 Tza Yap Shum v Peru, ICSID Case No ARB/07/06, Decision on Jurisdiction and Competence, 19 June 2009. 154 Plama Consortium Limited v Republic of Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction, 8 February 2005, Austrian Airlines v Slovakia, UNCITRAL Final Award, 9 October 2009, ST-AD GmbH v The Republic of Bulgaria, PCA Case No 2011-06, Award on Jurisdiction, 18 July 2013, Vladimir Berschader and Moise Berschader v The Russian Federation, SCC Case No 080/2004, Award, 21 April 2006; RoInvest Co UK Ltd v The Russian Federation, SCC Case No V079/2005, Award on Jurisdiction, 1 October 2007. 155 Ansung Housing Co, Ltd v China, para 76. 156 ibid para 93. 157 ibid, para 94. 158 art 41(5) provides that a claim may be dismissed by the Tribunal on the basis that it is manifestly without legal merit if such an objection is raised by one of the parties. The Tribunal must give the parties an opportunity to present their observations on the objection and then issue a decision on the objection. 159 ibid, para 110. 160 ibid, paras 107–14. 161 ibid, para 115. 162 ibid, para 110. 163 ibid, para 99. 164 ibid, para 115. 165 ibid, paras 73, 92. 166 In other investment arbitration cases, the guidance on early dismissal of claims which are manifestly without merit may also extend beyond the interpretation of the ICSID rules. The SCC commercial arbitration and SIAC commercial arbitration and investment arbitration rules contain similar provisions allowing for the early dismissal of unmeritorious claims. 167 Emilio Agustin Maffezini v Kingdom of Spain, ICSID Case No ARB/97/7, Decision on Objections to Jurisdiction of 25 January 2000. 168 The case law evinces a growing inclination on the part of tribunals to formulate the exhaustion of local remedies clauses as conditions to be satisfied before jurisdiction can be established. In some cases the tribunals applied a more deferential arbitral treatment of local remedy first provisions. Matthew C Porterfield, ‘Exhaustion of Local Remedies in Investor-State Dispute Settlement: An Idea Whose Time Has Come?’ (2015) 41 Yale Journal of International Law Online, <https://ssrn.com/abstract=2735036> accessed 7 July 2019. 169 RosInvestCo UK Ltd v Russian Federation, SCC Case No Arb V079/2005. 170 Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi v Turkmenistan, ICSID Case No ARB/10/1; Joseph C Lemire v Ukraine, ICSID Case No ARB/06/18; Amboiente Ufficio S.p.A. and others v Argentine Republic, ICSID Case No ARB/08/9. 171 Plama v Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction, 8 February 2005; Maffezini v Spain, ICSID Case No ARB/97/7, Award on Jurisdiction, 25 January 2000; Salini et al v Morocco, ICSID Case No ARB/00/4, Decision on Jurisdiction, 23 July 2001, (2003) 42 ILM 609. 172 Tza Yap Shum v Republic of Peru, ICSID Case No ARB/07/6, Decision on Jurisdiction and Competence of 19 June 2009, paras 189–90. 173 Under art 8(3) of the BIT, the tribunal’s jurisdiction is limited to expropriation. Jurisdiction over all other matters is subject to specific agreement. Those ‘other matters’ include the interpretation of the MFN clause in the first place. This means that the tribunal actually lacks the subject matter jurisdiction to consider whether MFN can be applied to expand subject matter jurisdiction. 174 Tza Yap Shum v Peru, para 216. 175 ibid, para 206. 176 However, the tribunal appeared to be mistaken in its reasoning. The tribunal took an effect utile approach by differentiating between the application of the MFN clause based on an a priori categorization of general and specific provisions. This is unsound as the purpose of the MFN clause is to establish and maintain at all times fundamental equality without discrimination among all the countries concerned. 177 para 110. 178 BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 120, <http://www.italaw.com/sites/default/files/case-documents/italaw8968.pdf> accessed 7 July 2019. 179 ibid, para 114. 180 ibid, para 117. 181 Ansung Housing Co, Ltd v China, Award, paras 125–26. 182 China–Korea BIT (2007), art 3(3). 183 Ansung Housing Co, Ltd v China, Award, paras 140–41. 184 China–Korea BIT (2007), art 3(5). 185 Ansung Housing Co Ltd v China, Award, paras 136–41. 186 New Zealand–China FTA, art 139(2). 187 art X.8(4). 188 Maffezini v Spain, ICSID Case No ARB/97/7, Decision on Jurisdiction, 25 January 2000, paras 38–64. See, among others, Martins Paparinskis, ‘MFN Clauses and International Dispute Settlement: Moving Beyond Maffezini and Plama?’ (2011) ICSID Review-Foreign Investment Law Journal 14–58; Yannick Radi, ‘The Application of the Most-Favoured-Nation Clause to the Dispute Settlement Provisions of Bilateral Investment Treaties: Domesticating the “Trojan Horse”’ (2007) 18 European Journal of International Law 757–74. 189 Joanna Jemielniak, Laura Nielsen and Henrik Palmer Olsen, Establishing Judicial Authority in International Economic Law (CUP 2016) 133; Tarcisio Gazzini, Interpretation of International Investment Treaties (Hart Publishing 2016) 7 (citing EC-Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, 12 September 2005, para 176). Ian Sinclair, The Vienna Convention on the Law of the Treaties (2nd edn, MUP 1984) 153. 190 BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 54. 191 VCLT, art 31.1. 192 In Tza Yap Shum v Peru, art 8(3) of the BIT uses the word ‘involving’ which, according to the Oxford Dictionary means ‘to enfold, envelope, entangle, include’. The Tribunal held that a bona fide interpretation of these words indicates the only requirement established in the BIT is that the dispute must ‘include’ the determination of the amount of a compensation, and not that the dispute must be restricted thereto because despite other wording available, such as ‘limited to’ or ‘exclusively’, the wording used in this provision reads ‘involving’. See Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6, Award (Original in Spanish), para 151. See also Sanum Investments Limited v Laos People’s Democratic Republic, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction, para 329; Ping An Life Insurance Company, Limited and Ping An Insurance (Group) Company, Limited v The Government of Belgium, ICSID Case No ARB/12/29, Award, paras 214–18. 193 In Ansung Housing v China, the tribunal referred to the Interim Award of Spence v Costa Rica that the time-limitation clause does not require full or precise knowledge of the loss or damage … such knowledge is triggered by the first appreciation that loss or damage will be (or has been) incurred. It neither requires nor permits a claimant to wait and see the full extent of the loss or damage that will or may result. So the meaning was clear without looking into the context or the treaty’s object and purpose. See Ansung Housing Co, Ltd v People’s Republic of China, ICSID Case No ARB/14/25, Award, para 111. 194 Ping An Life Insurance Company, Limited and Ping An Insurance (Group) Company, Limited v The Government of Belgium, ICSID Case No ARB/12/29, Award, para 218. 195 In the case BUCG v Yemen, the tribunal concludes that the ‘ordinary meaning’ and scope of the words ‘amount of compensation’ is not conclusive either in favour of the ‘broad’ interpretation or the ‘narrow’ interpretation. The task of interpretation therefore moves to context, object and purpose. See BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 77. See also Sanum Investments Limited (n 193), SGCA, para 126. 196 Sanum Investments Limited, ibid, Award on Jurisdiction, para 330; Beijing Shougang et al v Mongolia, UNCITRAL, PCA, Award, para 425. 197 BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 78. 198 In Ping An v Belgium, the Tribunal held that Tribunal considers that there can be no doubt, that the essential question is one of interpretation of art 8(1). arts 8(2) and 10(2) of the 2009 BIT are to be read together with art 8(1), and in the light of the 2009 BIT as a whole. art 8(2), in particular, cannot be read in isolation from art 8(1), since art 8(2) expressly refers to ‘the dispute’, which is plainly a reference back to ‘a legal dispute’ in art 8(1) and could not be anything else. See Ping An Life Insurance Company Limited and Ping An Insurance (Group) Company, Limited v The Government of Belgium, ICSID Case No ARB/12/29, Award, para 212; Sanum Investments Limited (n 193), Award on Jurisdiction, para 330. 199 In the case Beijing Shougang et al v Mongolia, to interpret the dispute provision of the BIT, the Tribunal considered the context of the evolution of the Chinese treaty practice since 1998 which shows that the PRC’s more recent desire to expand the level of protection accorded both to foreign investors investing in the PRC and to Chinese investors investing in other countries. 200 In the case BUCG v Yemen, the context of the words ‘in the territory’ differs between the paragraph of Fair and Equitable Treatment (FET) and the paragraph of Most Favoured Nation (MFN) in art 3.1 of the BIT. In relation to FET, the words ‘in the territory’ modify ‘the investments’—which plainly must be in the territory to attract BIT protection in the first place. In the context of FET, accordingly art 3.1 does not limit itself to matters of substance and can apply to the dispute resolution mechanisms of other BITs to which Yemen is a party. In respect of the MFN Clause, however, the words ‘in the territory’ are contained within the provision concerning ‘treatment accorded to investors of the other Contracting party in its territory with respect to activities relating to their investments’. These words, in the Tribunal’s view, tie the MFN to activities that take place ‘in the territory’ associated geographically with the investment. This limitation is not consistent with the Parties giving their consent to the use of the MFN to expand the scope of international arbitration beyond the provisions of art 10 because international arbitration is not itself an activity ‘inherently linked to the territory of the Respondent’. See BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, paras 118–20. 201 China–Yemen BIT (1998), art 10.2; China–Peru BIT (1998), art 8(3); China–Laos BIT (1993), art 8(3); China–Mongolia BIT (1993), art 8(3). 202 Beijing Shougang et al v Mongolia, UNCITRAL, PCA, Award; Sanum Investments Limited (n 193), Award on Jurisdiction; BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction; Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6, Award (Original in Spanish). 203 Sanum Investments Limited (n 193), Hearing Transcript (Day 1, 14 September 2015) 47:18 to 48:13. Also see Tokios Tokelés v Ukraine, ICSID Case No ARB/02/18, Decision on Jurisdiction (29 April 2004), paras 21–70 (A Ukrainian publisher nominally owned by a Lithuanian company brought a claim under the Lithuania–Ukraine BIT. The tribunal accepted jurisdiction, even though the Lithuanian company was apparently 99% owned by Ukrainian nationals); Saluka Investments v Czech Republic, UNCITRAL Partial Award, (17 March 2006), at 46–50 (A dispute between a Czech bank and the Czech government. The Czech bank had been purchased by a Japanese financial firm and its shares transferred to Saluka, a Netherlands corporation, created for the sole purpose of holding those shares in the Netherlands to gain the protection of the Netherlands–Czech BIT. The tribunal accepted jurisdiction); Noble Ventures, Inc v Romania, ICSID Case No ARB/01/11, Award (12 October 2005), paras 46–62 (The US–Romania BIT says that ‘Each party shall observe any obligation it may have entered into with respect to investments’. The Tribunal held that this language converts contractual obligations into treaty obligations and afforded the Tribunal jurisdiction over contract claims); Pope & Talbot v Canada, Award on the Merits of Phase 2 (UNCITRAL 10 April 2001) and Metalclad v Mexico, ICSID Case No ARB(AF)/97/1, Award (30 August 2000) (which expansively interpreted the fair and equitable treatment). 204 The Beijing Urban Construction Group v Yemen tribunal held that the result of the Respondent’s argument would be that the ‘choice’ granted to an investor by para 2 would be reversed by the proviso into a ‘choice’ granted to the Respondent. The narrow interpretation would lead to an untenable conclusion that the investor would never actually have access to arbitration unless the Respondent agreed. See BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 84. The Tza Yap Shum Tribunal interpreted the fork in the road provision on the China–Peru BIT to necessitate an interpretation of the equivalent provision to art 10 to grant to the ICSID tribunal full jurisdiction over the issue of liability as well as quantum, because contrary conclusion would invalidate the provision related to ICSID arbitration since according to the final sentence of art 8(3), turning to the courts of the State accepting the investment would preclude definitely the possibility of choosing arbitration under the ICSID Convention. See Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6, Award (Original in Spanish), para 188. See also Beijing Shougang et al v Mongolia, UNCITRAL, PCA, Award, para 340. 205 Renta 4 S.V.S.A. et al v Russian Federation, SCC Case No V 024/2007, Award on Preliminary Objections, para 56, cited in Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6, Award (Original in Spanish), para 188. 206 Ping An Life Insurance Company, Limited and Ping An Insurance (Group) Company, Limited v The Government of Belgium, ICSID Case No ARB/12/29, Award, para 149; Beijing Urban Construction Group Co Ltd v Republic of Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 78; Sanum Investments Limited v Lao People’s Democratic Republic, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction, para 86; Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6, Decision on Jurisdiction, para 128; Beijing Shougang Mining Investment Company Ltd, et al v Mongolia, UNCITRAL, PCA, Award, para 425. 207 Beijing Urban Construction Group Co Ltd v Republic of Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 90-1. See also RosInvestCo UK Ltd v Russian Federation, SCC Case No V 079/2005, Award on Jurisdiction, 5 October 2007, para 83. 208 Sanum Investments Limited v Laos People’s Democratic Republic, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction, para 338; BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, paras 338–39. 209 BUCG v Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, para 72; Sanum Investments Limited v Lao People’s Democratic Republic, UNCITRAL, PCA Case No 2013-13, para 128. 210 See, eg the report of the Claimant’s argument in respect of the China–Laos BIT before the Singapore Court of Appeal in Sanum v Laos: ‘Sanum contends that if the submission of the Lao Government is correct and if an investor must first go to a competent national court to determine whether an impermissible expropriation has occurred (on the basis of the Narrow Interpretation of Art 8(3)), it would very likely find itself precluded from then submitting any dispute, on the amount of compensation it claims is due to it, to arbitration since the national court would already have determined the issue of compensation. This would render Art 8(3) wholly ineffective since, practically speaking, investors would never be able to bring a dispute to investor-state arbitration under the PRC-Laos BIT’. Sanum Investments Limited v Government of the Laos People’s Democratic Republic, [2016] SGCA 57, Judgment, 29 September 2016, para 128. 211 Beijing Urban Construction Group Co Ltd v Republic of Yemen, ICSID Case No ARB/14/30, Decision on Jurisdiction, paras 72 and 92; Beijing Shougang Mining Investment Company Ltd, and Qinhuangdao Qinlong International Industrial Co Ltd v Mongolia, UNCITRAL, PCA, Award, para 156. 212 VCTL, art 31(1)(c). 213 Anthea Roberts, ‘ Power and Persuasion in Investment Treaty Interpretation: The Dual Role of States’ (2010) 104 American Journal of International Law 179, 225. 214 Stephen Schill, The Multilateralization of International Investment Law (CUP 2009) 65–106, 121–96. © The Author(s) 2020. 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TI - Guarding the Great Wall?—jurisprudential review of treaty interpretative tools in Chinese BIT-based arbitration cases
JF - Arbitration International
DO - 10.1093/arbint/aiaa008
DA - 2009-09-01
UR - https://www.deepdyve.com/lp/oxford-university-press/guarding-the-great-wall-jurisprudential-review-of-treaty-MKB00xzLFV
DP - DeepDyve
ER -