International Investment Law at a Crossroads: What role for China?

The document outlines a 2013 workshop focused on reforming international investment law. Participants argued that China, as both a home and host state, is well-positioned to lead a shift toward a 'balanced approach' that integrates sustainable development. Key recommendations include refining the 'Fair and Equitable Treatment' (FET) standard to be more specific, revising compensation for indirect expropriation, and addressing the 'three-hat problem' where individuals act as arbitrator, counsel, and witness in the same proceedings. The workshop concluded that the current investor-state dispute settlement system incorrectly applies commercial dispute mechanisms to issues of public interest.

• Participants argued that China's dual status as both a home state and a host state provides a strong foundation for the country to support a balanced approach to international investment law and sustainable investment, suggesting China should actively reform the system rather than abandon it.
• To integrate sustainable development, experts suggested that investment laws and treaties should enhance environmental protection and that host states should 'select' rather than simply 'attract' inward investment to avoid weakening domestic laws for unsustainable projects.
• The 'Fair and Equitable Treatment' (FET) provision is criticized for being too broad and vague, which challenges a state's policy space; participants proposed that China develop its own FET formulation based on an exhaustive list including non-discrimination, due process, and denial of justice.
• Regarding expropriation, one expert proposed replacing the 'fair market value' compensation standard with one based on what is 'appropriate' in light of the circumstances, particularly for indirect expropriation involving public welfare measures.
• The current investor-state dispute settlement system is viewed as flawed because it uses commercial dispute mechanisms to resolve issues of public interest. Proposed reforms include addressing the 'three-hat problem' (where one person acts as arbitrator, legal counsel, and expert witness), introducing an appeal mechanism, and establishing a permanent investment court.
• Participants suggested that transparency and consistency in dispute settlement should be improved and that a distinction should be made between the mechanisms used for investment liberalization versus investment protection.

APA

International Institute for Sustainable Development (2013). International Investment Law at a Crossroads: What role for China? https://www.iisd.org/system/files/publications/china_investment_law_at_a_crossroads.pdf

Chicago

International Institute for Sustainable Development. International Investment Law at a Crossroads: What role for China? 2013. https://www.iisd.org/system/files/publications/china_investment_law_at_a_crossroads.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=International Investment Law at a Crossroads: What role for China? |date=24 April 2013 |url=https://www.iisd.org/system/files/publications/china_investment_law_at_a_crossroads.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2013international, author = {{International Institute for Sustainable Development}}, title = {{International Investment Law at a Crossroads: What role for China?}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = apr, url = {https://www.iisd.org/system/files/publications/china_investment_law_at_a_crossroads.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }