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

This briefing reports on a roundtable workshop held in Beijing on April 24, 2013, convened by the International Institute for Sustainable Development (IISD) and the Global Environmental Institute (GEI). The event brought together representatives from the Chinese government, academia, and enterprises to discuss reforming the international investment treaty framework to better balance investor protections with the policy space of host states and the goals of sustainable development.

• Participants argued that China is well-positioned to support a balanced approach to international investment law because it functions as both a home state and a host state. The consensus among attendees was that China should actively participate in reforming the existing system rather than abandoning it.
• To integrate sustainable development into investment law, participants suggested enhancing environmental protections through treaties, home state laws, and soft law. They noted that exception clauses are supplementary and that the primary focus should be on drafting limited and targeted substantive obligations for host states. One expert emphasized that sustainable development is only possible when host states 'select' rather than simply 'attract' inward investment, committing not to lower domestic laws to lure unsustainable projects.
• The Fair and Equitable Treatment (FET) provision was identified as a major challenge due to its vague meaning, which often limits a state's policy space. Participants found that existing FET formulations in Chinese treaties were too broad. While the U.S. 2012 Model Bilateral Investment Treaty links FET to customary international law, experts found this standard also lacked clarity. Consequently, it was proposed that China create its own FET formulation based on an exhaustive list including non-discrimination, due process, and denial of justice.
• Regarding expropriation, participants discussed the risks of 'indirect' expropriation, where government public welfare measures negatively affect investors without transferring ownership. One expert proposed replacing the 'fair market value' compensation standard with one based on what is 'appropriate' given the circumstances.
• The current investor-state dispute settlement system was criticized for using commercial dispute mechanisms to resolve issues involving public interests. Proposed reforms include 're-politicizing' the system through greater state involvement, increasing transparency, and addressing the 'three-hat problem' where individuals act as arbitrator, legal counsel, and expert witness. Other suggestions included establishing a permanent investment court, introducing an appeal mechanism, and encouraging Alternative Dispute Resolution (ADR).

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} }