Table Of ContentChina, the EU and International
Investment Law
This book provides an original and critical analysis of the most contentious subjects being
negotiated in the China–EU Comprehensive Agreement on Investment (CAI). It focuses
on the pathway of reforming investor-state dispute settlement (ISDS) from both Chinese
and European perspectives in the context of the China–EU CAI and beyond. The book is
divided into three parts. Part I examines key and controversial issues of the China–EU CAI
negotiations, including market access, sustainable development and human rights, as well
as comparing distinct features between the China–EU CAI and the China–US BIT. Part
II concentrates on the institutional reform of investor-state arbitration with an extensive
analysis of the EU’s approach to replacing the private nature of investment arbitration with
the public nature of an investment court. Part III addresses the core substantive and pro-
cedural issues concerning ISDS, such as the role of domestic courts in investment dispute
settlement, the status of state-owned enterprises (SOEs) as investors, transparency and the
protection of victims in investment dispute resolution.
This book will be of interest to scholars and practitioners in the field of international
investment and trade law, particularly investment dispute settlement.
Yuwen Li is a professor of Chinese law and the director of the Erasmus China Law Centre
at the Erasmus School of Law, Erasmus University Rotterdam, the Netherlands.
Tong Qi is a professor of international economic law and the director of the Centre of
Overseas Investment Law at the Law School of Wuhan University, China.
Cheng Bian is a researcher at the Erasmus School of Law, Erasmus University Rotterdam,
the Netherlands.
The Rule of Law in China and Comparative Perspectives
Series Editors: Yuwen Li, Erasmus University Rotterdam,
The Netherlands and Fu Hualing, University of Hong Kong,
Hong Kong
There is no doctrine more effective than the rule of law in portraying the complex transfor-
mation of Chinese society from the rule of men towards the rule of law – a process inaugu-
rated in post-Mao China which is continuing to advance legal reforms to the present day.
In other parts of the world, striving for the rule of law is also evident: countries in transition
face a similar mission, while the developed democratic countries are forced to tackle new
challenges in retaining the high benchmark of the rule of law that has been established.
Research on the legal system in China and in comparison with other countries in the frame-
work of the rule of law covers broad topics of public and private law, substantive law and pro-
cedural law, citizens’ rights and law enforcement by courts. Based on this broad understanding
of the rule of law, the series presents international scholarly work on modern Chinese law,
including comparative perspectives, interdisciplinary approaches, and empirical studies.
For a full list of titles in this series, please visit: https://www.routledge.com/law/series/
CHINARULEOFLAW
China, the EU and International
Investment Law
Reforming Investor-State Dispute Settlement
Edited by Yuwen Li, Tong Qi
and Cheng Bian
First published 2020
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 selection and editorial matter, Yuwen Li, Tong Qi and Cheng Bian;
individual chapters, the contributors
The right of Yuwen Li, Tong Qi and Cheng Bian to be identified as the
authors of the editorial material, and of the authors for their individual
chapters, has been asserted in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Li, Yuwen, 1962-editor. | Qi, Tong, 1972-editor. | Bian, Cheng
(Legal researcher), editor.
Title: China, the EU and international investment law: reforming
investor-state dispute settlement / Yuwen Li, Tong Qi, Cheng Bian.
Description: Abingdon, Oxon; New York, NY: Routledge, 2010. |
Series: The rule of law in china and comparative perspectives |
Includes bibliographical references and index.
Identifiers: LCCN 2019031342 | ISBN 9780367338466 (hardback) |
ISBN 9780429322334 (ebook)
Subjects: LCSH: Investments, Foreign–Law and legislation–China. |
Investments, Foreign–Law and legislation–European Union countries. |
Investments, Foreign (International law) | China–Foreign economic
relations–European Union countries. | European Union countries–Foreign
economic relations–China.
Classification: LCC K3830.C486 2020 | DDC 346.24/092–dc23
LC record available at https://lccn.loc.gov/2019031342
ISBN: 978-0-367-33846-6 (hbk)
ISBN: 978-0-429-32233-4 (ebk)
Typeset in Galliard
by Deanta Global Publishing Services, Chennai, India
Contents
Contributors vii
Foreword by Wenhua Shan xiii
Foreword by Julien Chaisse xv
Acknowledgements xvi
Abbreviations xviii
1 Introduction: opportunities and challenges towards a China–EU
Comprehensive Agreement on Investment 1
YUWEN LI AND CHENG BIAN
PART I
China–EU Comprehensive Agreement on Investment: core issues 9
2 The China–EU investment agreement negotiations: rationale,
motivations, and contentious issues 11
AXEL BERGER
3 Convergences and divergences in the China–EU and the China–US
BIT negotiations 26
HONGYU FU AND MENG WAN
4 Elements of public policy in the making of the China–EU
Comprehensive Agreement on Investment 40
CHENG BIAN AND YUWEN LI
5 Bridging the gap between investments and human rights protection:
prospects and challenges for the China–EU CAI 54
MATTHIEU BURNAY
PART II
Reforming ISDS: institutional aspects 69
6 Judicialization of ISDS: the European Union’s approach to
multilateral reform of investment dispute settlement 71
COLIN M. BROWN AND ELIO GAARTHUIS
vi Contents
7 Concrete issues in instituting an international investment court 87
JUN XIAO
8 Reforming ISDS: a Chinese perspective 100
HUIPING CHEN
9 China’s policy on ISDS reform: institutional choice in a diversified era 112
TONG QI
10 Investor-state arbitration: an economic and empirical perspective 124
MICHAEL FAURE AND WANLI MA
PART III
Reforming ISDS: substantive and procedural aspects 139
11 European perspectives on the role of national courts in the
resolution of investor-state disputes 141
VID PRISLAN
12 Is (in)consistency a problem? A close look at juridical techniques in
interpreting jurisdiction clauses in Chinese BIT cases 156
WEI SHEN
13 Transparency of ISDS in the making of a China–EU CAI: consensus
and differences 170
MANJIAO CHI
14 The status of state-owned enterprises in ISDS from a European
perspective 184
ALESSANDRO SPANO
15 The status of state-owned enterprises in ISDS from a Chinese
perspective 198
SHENG ZHANG
16 Protection of victims in international investment dispute resolution:
juxtaposing different topics? 212
MARTIJN SCHELTEMA
17 A comprehensive chapter on anti-corruption in the China–EU CAI:
a progressive or an unnecessary step? 227
YUEMING YAN
Index 243
Contributors
Axel Berger is a renowned expert on EU-China investment relationships and China’s
bilateral investment treaty practice. He works at the German Development Institute
(Deutsches Institut für Entwicklungspolitik – DIE), Department for World Economy
and Development Finance, Bonn, Germany. He is the head of the G20 Policy Research
Group at DIE and leads the Think 20 (T20) Task Force on Trade, Investment and Tax.
Axel Berger holds a doctorate in political science from the University of Duisburg-Essen
and a master’s degree from Ludwig-Maximilians-University Munich in political science,
economics, and modern history. He works on the design, effects, and diffusion patterns
of international trade and investment agreements, with a focus on emerging markets and
developing countries. Other areas of his current research include the impact of FTAs on
upgrading within global value chains and the role of the G20 in global governance. He
regularly advises developing countries, development agencies, and international organi-
zations on trade and investment matters. Axel Berger’s publications cover a wide range of
topics in IIAs, FTAs, China–EU relations, and the G20.
Cheng Bian is a researcher at the Erasmus School of Law, Erasmus University Rotterdam,
the Netherlands. His research interests focus on international investment law, Chinese
foreign investment law, and comparative law. He holds a PhD in law from the Erasmus
School of Law, Erasmus University Rotterdam, the Netherlands. His PhD thesis is titled
National Security Review Regimes of Foreign Investment – A Comparative Study in China,
the US and the EU.
Colin M. Brown is deputy head of the Dispute Settlement and Legal Aspects of Trade
Policy Unit in the Directorate General for Trade (DG Trade), European Commission.
He leads a team working on ISDS in the trade and investment policy of the EU. He
has been responsible for developing the EU’s approach to ISDS and led the negotia-
tions on this issue with Canada. He was the EU delegate to UNCITRAL during the
preparation of the ‘UNCITRAL Rules on Transparency in Treaty-based Investor-State
Arbitration’. In his career with DG Trade, he has worked on all legal aspects of the work
of the European Commission in the field of trade, in particular on EU-related FTAs.
He also leads a team working on the EU-US TTIP negotiations. He holds an LLB (first
class Honours) from the Faculty of Law of the University of Edinburgh, Scotland; a
diploma in international relations from the Bologna Centre of the School of Advanced
International Studies (SAIS), Johns Hopkins University, Bologna, Italy; and an LLM in
European Law from the College of Europe, Bruges.
viii Contributors
Matthieu Burnay is an assistant professor in global law at Queen Mary University of
London. He has an interdisciplinary background in law, political science, and history.
He holds a PhD in law from the University of Leuven and a double MSc degree in
international affairs from Peking University and the London School of Economics. At
Queen Mary, Dr Burnay teaches courses on law and globalization as well as Chinese law
and institutions. His recent works include Chinese Perspectives on the Rule of Law and the
International Rule of Law (Edward Elgar, 2018); ‘Soft Legal Transplants: EU-China
Relations at a Glance’, in The EU and China: Reform and Governance (Routledge,
2017); ‘Zooming out of a Triangle: The Chinese Perspectives on the Rule of Law,
Democracy, and Human Rights’, in Global Constitutionalism from European and East
Asian Perspectives (CUP, 2017); ‘The Rule of Law as a Strategic Priority in EU External
Action – Conceptualization and Implementation of EU Law and Policies’, Asia-Europe
Journal, Vol. 14 (2016); and ‘The Case for an EU-China Rule of Law Dialogue: The
Squaring of a Circle?’ Asia-Europe Journal, Vol. 14 (2016).
Huiping Chen is a professor of international law at Xiamen University School of Law,
China, where she teaches international investment law, public international law, and
international human rights law. She received her PhD degree in International Law
from Xiamen University in 1999. Prof. Chen has authored a variety of publications
in both Chinese and English. Her selected English publications include a mono-
graph titled OECD’s Multilateral Agreement on Investment: A Chinese Perspective
(Kluwer Law International, 2002) and Transboundary Water Cooperation: Principles,
Practice and Prospects for China and Its Neighbours (ed.) (Routledge, 2017). Her
published English journal articles include ‘China’s Innovative ISDS Mechanisms
and Their Implications’, American Journal of International Law Unbound, Vol. 112
(2018); ‘China’s “One Belt, One Road” Initiative and Its Implications for Sino-
African Investment Relations’, Journal of Transnational Corporations Review, Vol. 8
(2016); ‘The Expansion of Jurisdiction by ICSID Tribunal: Approaches, Reasons and
Damages’, The Journal of World Investment & Trade, Vol. 12 (2011); ‘The China-
Korea FTA: the Investment Issue’, Korean Journal of International Economic Law,
Vol. 9 (2011); ‘Investor-State Dispute Settlement Mechanism: Where to Go in the
21st Century?’ The Journal of World Investment & Trade, Vol. 9 (2008); and ‘China-
ASEAN Investment Agreement Negotiations – The Substantive Issues’, The Journal
of World Investment & Trade, Vol. 7 (2006).
Manjiao Chi is a professor at the School of Law University of International Business and
Economics, Beijing. His research fields cover international trade and investment policy
and law, natural resource law, dispute settlement, and global governance. Manjiao Chi’s
publications relate to a wide range of legal topics in relation to international investment
and trade law, dispute resolution, and global governance, both in English and Chinese.
His recent English publications include Sustainable Development Provisions in Investment
Treaties: An Empirical Exploration of the Sustainable Development Provisions in BITs
of Asia-Pacific Least Developed Countries and Land-Locked Developing Countries (UN
Publication, 2018); ‘How Chinese Investment Treaties Address Sustainable Development
Concerns?’ in China’s International Investment Strategy: Bilateral, Regional and Global
Law and Policy (OUP, 2018); Integrating Sustainable Development into International
Investment Law: Normative Incompatibility, System Integration and Governance
Implications (Routledge, 2017); ‘The China–EU BIT as a Stepping Stone towards a
China–EU FTA’, in European Yearbook of International Economic Law (Springer, 2017),
Contributors ix
‘From Europeanization to Americanization: The Shift of China’s Dichotomic Investment
Treaty-Making Strategy and Its Implications’, Canadian Foreign Policy Journal, Vol. 23
(2017); ‘A Long March towards Compatibility, Coherence and Consistency: The Future
of China’s Investment Agreements’, Die Zeitschrift für Europarechtliche Studien, Vol. 18
(2015); and ‘The Evolution of Investor-State Arbitration Clauses in Chinese IIAs and
Its Implications: The Admissibility of Disputes for Investor-State Arbitration’, Journal of
World Investment & Trade, Vol. 16 (2015).
Michael Faure is a professor of comparative private law and economics and the direc-
tor of the Rotterdam Institute of Law and Economics at the Erasmus School of Law,
Erasmus University Rotterdam. He is also a professor of comparative and international
environmental law at Maastricht University, the Netherlands. Michael Faure’s core
research is on international environmental law and environmental criminal law. He is also
an expert on law and economics analysis, and particularly accident law. He has published
and edited over 200 books and book chapters and has published over 500 journal articles
and other academic outputs in top international academic journals in English, German,
Dutch, and French. His most recent selected English publications include Environmental
Governance of Common-Pool Resources. A Comparison of Fishery and Forestry (Routledge,
2018); Carbon Capture and Storage. Efficient Legal Policies for Risk Governance
and Compensation (The MIT Press, 2017); Civil Liability and Financial Security for
Offshore Oil and Gas Activities (ed.) (CUP, 2017); ‘Litigating Federalism: An Empirical
Analysis of Decisions of the Belgian Constitutional Court’, European Constitutional Law
Review, Vol. 13 (2017); and ‘Does the Environmental Kuznets Curve Hold for China?
An Empirical Examination’, in Regulatory Reform in China and the EU. A Law and
Economics Perspective (Edward Elgar, 2017).
Hongyu Fu is an associate professor at Beijing Foreign Studies University School of Law,
China. His research focuses on international investment law, anti-trust law, intellectual
property law, and international financial law. He served as a delegate in the China–US
BIT negotiations and is currently a legal adviser to the Ministry of Finance of China.
Elio Gaarthuis is currently an LLM candidate at Harvard Law School, where he is pur-
suing research on trade and investment law and corporate law. He has worked for the
European Commission as a trainee in the Dispute Settlement and Legal Aspects of Trade
Policy Unit and, prior to that, for the international arbitration department of Eversheds
Sutherland in Paris.
Yuwen Li is a professor of Chinese law and the director of the Erasmus China Law Centre at the
Erasmus School of Law, Erasmus University Rotterdam, the Netherlands. Yuwen Li’s area of
expertise includes Chinese law in general, with a special focus on Chinese foreign investment
law, company law, and the judicial system in China. Her current research also covers compara-
tive investment law, international investment law, and the EU-China trade and investment
policy and treaty practice. She holds a BA in Chinese law from Peking University; an MA in
international law and international relations from the Institute of Social Studies, the Hague;
and a PhD in international law from Utrecht University, the Netherlands.
Wanli Ma is currently a PhD candidate at Erasmus School of Law, Erasmus University
Rotterdam. His PhD topic is the role of domestic courts in investor-state dispute resolu-
tion. He obtained his Bachelor and Master degree in law at China University of Political
Science and Law.
