The past decade has witnessed a growing number of investor-state arbitration (ISA) cases based on China’s bilateral investment treaties (BITs). Given that China hosts many BITs that allow ISA and is a leading state in investment-exporting and investment-importing, China and its investors are likely to face more ISA cases. China’s ISA cases are not substantively different from others, but they give rise to a few systematic issues, relating to the applicability of Chinese BITs in the special administrative regions (SARs), state-owned enterprises (SOEs), and the interpretation of typical BIT provisions. China’s position paper on investor-state dispute settlement (ISDS) reform suggests that it prefers ISA as a major ISDS option and supports the inception of a WTO-style appeal mechanism for ISDS. China’s position is based on its ISA and WTO litigation experiences and conforms to its development strategy.

The future of ISDS is at a historic crossroads. In this final chapter we provide an overview of the ISDS reform process in the UNCITRAL and discuss the EU proposal for a Multilateral Investment Court in the context of this reform. First, we contextualise the current ISDS reform against earlier attempts to negotiate multilateral international investment agreements to explain how the current reform is different. Second, we discuss the scope of the reform and its process in the framework of UNCITRAL, particularly focusing on the identified ISDS concerns. Third, we outline the reform options that have emerged in the discussion and explain their correlation to the EU’s MIC proposal. In the final part of this chapter, we consider the potential contributions that an MIC could make to the rule of law and the legitimacy of international investment law. While the negotiations are set to conclude in 2025, the aim of this chapter is to place the EU’s proposal in the broader ISDS reform context and reflect on its external challenges in this reform process.

The influence of the EU and EU law on investment arbitration is one of the hotly debated topics in today’s arbitration world. Since the EU obtained the competence for the regulation of foreign (direct) investment on behalf of its Member States through the 2009 Lisbon Treaty, the European Commission’s efforts have brought about much change for both the EU’s internal and the EU’s external investment law relations. On the EU-internal level, the Commission – since 2018 backed by the European Court of Justice’s Achmea judgment and since early 2019 also by the EU Member States – has worked towards the elimination of investment arbitration. It seeks to have these disputes litigated before EU Member State courts instead. On the EU-external level, the Commission has successfully negotiated a new dispute settlement model in the EU’s free trade and investment agreements: an investment court system, the compatibility of which with EU law the Luxembourg court confirmed in 2019. This chapter seeks to set out these developments in a structured manner. It is necessarily incomplete, since the interaction between the Commission, investment tribunals, courts and other actors continues to develop – despite the fact that this interaction to a considerable degree remains determined by mutual ignorance.

Since its first bilateral investment treaty (BIT) with Sweden in 1982, China has signed BITs with more than 130 countries.In the earlier stage, China's BITs mainly follow the template or style as set by western countries.Yet with the development of economic growth, China is more willing to establish its own discourse.The Belt and Road Initiative, and the separate BIT negotiations with the US and the EU, reveal China’s proactive approach to participate in global economic governance.The experience in dealing with the cases filed by foreign investors against China has also enabled China to review its BIT policy and practice.Against this background, this chapter presents a stocktake of China’s practice in international investment law, and tries to find whether China could establish its discourse in this regime.By revealing the approach of utilitarianism and flexibility that underpins China’s BITs negotiations, it concludes that China is not simply copying or adopting in a wholesale manner the treaty texts presented by the EU or the US, but is making the necessary adjustments to craft agreements that take into account its own political system and economic realities.

The international community realizes the possible benefits and contributions of mediation as a means of settling international investment disputes, most notably, its unique trait to deal with sensitive claims relating to national regulatory authority.Discussions to introduce and facilitate mediation in addition to or in lieu of present ISDS proceedings are taking place in various fora at the moment including UNCITRAL and ICSID.These discussions are not intended to replace the ISDS regime with a non-binding mechanism. Rather, the purpose is to supplement the existing system with the addition of a new avenue, where the disputing parties can pursue an amicable resolution. The focal point in the current discussions is how to introduce mediation into international investment agreements in a more structured and systematized manner.Various experiments are being undertaken at the moment.Traditionally, Asian countries have been regarded as being more receptive of the harmonious resolution of disputes and less litigious in settling disputes. This traditional legal culture stands in line with the recent focus on mediation as a means of settling international disputes and, in particular, international investment disputes. Mediation is one of the ISDS reform subjects where Asian countries can contribute their experience and legal culture.

This chapter reviews China’s 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 jurisprudential analysis of these cases and the tribunals’ treaty interpretive techniques. In brief, the tribunals have tended to take an expansive approach when called upon to determine jurisdictional issues. Albeit largely jurisprudential, a sense of the tribunals’ treaty interpretation 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 USA and others. This chapter also touches on two unique procedural rules in Chinese BITs: (1) those relating to the legal standing of investors originated from Hong Kong and Macau, and (2) those relating to SOEs. Chinese SOEs are often involved in public international law as the governmental instrument triggering state responsibility for breaches of international law due to the rules of state attribution.