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are not limited to provisions on expropriation and investments protected under the BIT signed between
compensation, rights to exchange funds and proceeds, their country of citizenship or business domicile
compensation for war losses, and subrogation rights. before investing in the partner country.
The specific protections and guarantees provided The Guide points out that some BITs mention that
vary between contracts, and therefore may not only investments that comply with the host country’s
contain all of the provisions detailed above. Investors laws are protected. This has previously been brought
are advised to consult the BIT documents signed up in some arbitration tribunals.
with their country to evaluate which protections they
are guaranteed. A full list of the active China BIT Who is covered by a China BIT?
documents can be found on the UNCTAD website.
In general, any natural person or company from one
What kind of investments are protected by China BITs? of the two contracting countries is covered by a BIT.
BITs normally include clauses defining who qualifies
The scope of investments protected under a BIT will as an ‘investor’ and thereby who has the legal right to
vary depending on the specific agreement signed initiate arbitration. In most cases, the investor must
between the contracting countries. They generally be a citizen of one contracting country, but some BITs
cover movable and immovable property, equity, also extend rights to permanent residents.
monetary claims, intellectual property, and franchise
and contract rights. The provisions for which enterprises are covered
may also differ, with some BITs simply defining it as
For example, the China-Nigeria BIT defines “corporations, firms, and associations incorporated
investments as: or constituted under the law in force in the territory
of the Contracting Party”. Other BITs clarify specific
• “Movable and immovable property as well types of legal entities and cover both for-profit and
as any property rights, such as mortgages, liens, and nonprofit organizations, as well as their subsidiaries.
pledges;
• Shares, debentures, stock, and any other Investors are advised to read the applicable BIT
kind of participation in companies; and, where necessary, seek legal counsel to ensure
• Claims to money or to any other that their company is guaranteed protections and
performance having [sic] an economic value litigation rights under the agreement.
associated with an investment;
• Intellectual property (IP) rights, in particular How can investors use the dispute settlement clauses?
copyrights, patents, trade-marks, trade-names,
technical process, know-how, and good-will [sic]; and If an investor or company has reason to claim that a
• Business concessions conferred by law or host country has failed on its obligations to protect
under contract permitted by law, including concessions their investments or violated their rights, they can
to search for, cultivate, extract or exploit natural do one of two things: negotiate directly with the
resources.” host country government or submit the dispute to a
neutral international arbitration tribunal.
In the above example, no mention is made of
investments that are excluded from protection. If an investor chooses to submit a dispute to an
However, some BITs include provisions on excluded international tribunal, they must first ensure that
investments, such as in the China-Canada BIT: the claims meet the conditions for international
arbitration outlined in the relevant BIT. This means
“‘Investment’ does not mean: establishing that their investments are protected
by the BIT, that the investor is eligible to initiate an
• claims to money that arise solely from international arbitration, and that the host country
(i) commercial contracts for the sale of goods or services, has indeed failed on its obligations under the BIT to
or protect the rights of the investor.
(ii) the extension of credit in connection with a
commercial transaction, such as trade financing, Some BITs stipulate investors must first seek to
other than a loan covered by subparagraph (d) [a loan resolve disputes through the host country’s judicial
to an enterprise: system. Only when a dispute cannot be settled
(i) where the enterprise is an affiliate of the investor, directly with the host country’s government can an
or investor initiate an international tribunal.
(ii) where the original maturity of the loan is at least
three years]” For example, the BIT signed between China and
Nigeria stipulates disputes “shall, as far as possible,
BITs may define investments very broadly or very be settled amicably through negotiations between
narrowly. Investors are advised to check the scope of the parties to the dispute”. Only if the dispute is not
SOUTH CHINA BUSINESS JOURNAL 4
compensation, rights to exchange funds and proceeds, their country of citizenship or business domicile
compensation for war losses, and subrogation rights. before investing in the partner country.
The specific protections and guarantees provided The Guide points out that some BITs mention that
vary between contracts, and therefore may not only investments that comply with the host country’s
contain all of the provisions detailed above. Investors laws are protected. This has previously been brought
are advised to consult the BIT documents signed up in some arbitration tribunals.
with their country to evaluate which protections they
are guaranteed. A full list of the active China BIT Who is covered by a China BIT?
documents can be found on the UNCTAD website.
In general, any natural person or company from one
What kind of investments are protected by China BITs? of the two contracting countries is covered by a BIT.
BITs normally include clauses defining who qualifies
The scope of investments protected under a BIT will as an ‘investor’ and thereby who has the legal right to
vary depending on the specific agreement signed initiate arbitration. In most cases, the investor must
between the contracting countries. They generally be a citizen of one contracting country, but some BITs
cover movable and immovable property, equity, also extend rights to permanent residents.
monetary claims, intellectual property, and franchise
and contract rights. The provisions for which enterprises are covered
may also differ, with some BITs simply defining it as
For example, the China-Nigeria BIT defines “corporations, firms, and associations incorporated
investments as: or constituted under the law in force in the territory
of the Contracting Party”. Other BITs clarify specific
• “Movable and immovable property as well types of legal entities and cover both for-profit and
as any property rights, such as mortgages, liens, and nonprofit organizations, as well as their subsidiaries.
pledges;
• Shares, debentures, stock, and any other Investors are advised to read the applicable BIT
kind of participation in companies; and, where necessary, seek legal counsel to ensure
• Claims to money or to any other that their company is guaranteed protections and
performance having [sic] an economic value litigation rights under the agreement.
associated with an investment;
• Intellectual property (IP) rights, in particular How can investors use the dispute settlement clauses?
copyrights, patents, trade-marks, trade-names,
technical process, know-how, and good-will [sic]; and If an investor or company has reason to claim that a
• Business concessions conferred by law or host country has failed on its obligations to protect
under contract permitted by law, including concessions their investments or violated their rights, they can
to search for, cultivate, extract or exploit natural do one of two things: negotiate directly with the
resources.” host country government or submit the dispute to a
neutral international arbitration tribunal.
In the above example, no mention is made of
investments that are excluded from protection. If an investor chooses to submit a dispute to an
However, some BITs include provisions on excluded international tribunal, they must first ensure that
investments, such as in the China-Canada BIT: the claims meet the conditions for international
arbitration outlined in the relevant BIT. This means
“‘Investment’ does not mean: establishing that their investments are protected
by the BIT, that the investor is eligible to initiate an
• claims to money that arise solely from international arbitration, and that the host country
(i) commercial contracts for the sale of goods or services, has indeed failed on its obligations under the BIT to
or protect the rights of the investor.
(ii) the extension of credit in connection with a
commercial transaction, such as trade financing, Some BITs stipulate investors must first seek to
other than a loan covered by subparagraph (d) [a loan resolve disputes through the host country’s judicial
to an enterprise: system. Only when a dispute cannot be settled
(i) where the enterprise is an affiliate of the investor, directly with the host country’s government can an
or investor initiate an international tribunal.
(ii) where the original maturity of the loan is at least
three years]” For example, the BIT signed between China and
Nigeria stipulates disputes “shall, as far as possible,
BITs may define investments very broadly or very be settled amicably through negotiations between
narrowly. Investors are advised to check the scope of the parties to the dispute”. Only if the dispute is not
SOUTH CHINA BUSINESS JOURNAL 4
