Page 8 - THE SOUTH CHINA BUSINESS JOURNAL
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PTH arbitration. In addition, institutions such as the
ICSID have specific processes and requirements for
settled within six months can the claimant submit filing arbitration requests.
the dispute to a court under the jurisdiction of either
contracting party or choose to set up an ad hoc International arbitration is a complicated legal process,
tribunal (but not both). and both parties hire lawyers to provide counsel and
litigate on their behalf. For ICSID tribunals, each party
Some BITs have provisions for time limits for is required to appoint one arbitrator each. A third
international dispute litigation, and investors must presiding arbitrator, normally from a third country
therefore ensure the initiation is carried out within with diplomatic ties to both countries involved in the
the stipulated time limit. arbitration, is then appointed by agreement of both
disputing parties. In cases where the disputing parties
Settling disputes at international arbitration tribunals cannot agree upon the third arbitrator within a certain
timeframe, the Secretary General of the ICSID will
To aid dispute settlement between an investor and appoint the arbitrator on their behalf.
a host country, known as investor-state dispute
settlements (ISDS), BITs normally outline provisions Some BITs also stipulate specific requirements for
for dispute settlement mechanisms through a neutral the expertise of the arbitrators, which may differ
international arbitration tribunal. depending on the nature or industry from which the
dispute arises.
Disputes can normally be submitted to one of two
international tribunals: Both parties will be required to gather and submit
evidence to the arbitration tribunal and participate in
• The International Center for Settlement hearings. Legal processes are lengthy and it may take
of Investment Disputes (ICSID). An institution several years for a dispute to be settled.
of the World Bank, the ICSID settles disputes
under the 1965 Washington Convention, ratified Disparities between BITs
by 155 countries, including China. This is the most
commonly used ISDS mechanism. The requirements It bears mentioning that China began signing BITs over
of the Washington Convention must be satisfied in three decades ago, the first one with Sweden in 1982.
order to initiate arbitration with the ICSID. Many of these treaties are still in force and have not
been amended since (although the Sweden-China BIT
• An ad hoc tribunal set up under the Arbitration was amended in 2004 to include provisions permitting
Rules of the United Nations Commission on International the use of international arbitration tribunals). In
Trade Law (UNCITRAL) for ISDS arbitrations. addition, the provisions of each BIT are negotiated
individually by the two contracting countries.
It is important to note that not all BITs mention both
of these ISDS mechanisms. Investors are advised For this reason, the contents of BITs vary greatly
to check the relevant BIT documents for details on from contract to contract, with some enjoying a
which tribunals are permitted under the contract. broader scope of protected investments, more clearly
defined conditions for arbitration, and a wider choice
Besides, the selection of different arbitration rules leads of ISDS mechanisms. Some of China’s BITs, on the
to differences in time limits, rules of proof, transparency, other hand, have narrow definitions of scenarios in
arbitration fees, and execution of awards. which an international tribunal can be initiated for
ISDS, such as exclusively in the case of expropriation.
Execution of awards
It is important for investors to be aware of
If an investor wins an arbitration, the host country the disparities between BITs and have a clear
will generally take the initiative to implement the understanding of the contents of the BIT, both before
arbitral award. If the arbitration is carried out by entering the China market and during operations,
the ICSID, the host country is obliged under the paying particular attention to which settlement
Washington Convention to provide the investor with mechanisms are available to them.
monetary awards from the arbitration.
What if a country has no China BIT?
The outcomes of international arbitrations conducted
under UNCITRAL are enforced by the rules laid out Although China has established investment ties
in the 1958 New York Arbitration Convention, which with large swathes of the world, there are still many
has been signed by 168 countries, including China. countries and regions that remain uncovered.
The US, for instance, has not signed any bilateral
Preparing for litigation agreements protecting investor rights with China,
despite several attempts to negotiate such a treaty
Many BITs contain clauses stipulating the conditions
and steps for submitting disputes and initiating
5 AMCHAM SOUTH CHINA
ICSID have specific processes and requirements for
settled within six months can the claimant submit filing arbitration requests.
the dispute to a court under the jurisdiction of either
contracting party or choose to set up an ad hoc International arbitration is a complicated legal process,
tribunal (but not both). and both parties hire lawyers to provide counsel and
litigate on their behalf. For ICSID tribunals, each party
Some BITs have provisions for time limits for is required to appoint one arbitrator each. A third
international dispute litigation, and investors must presiding arbitrator, normally from a third country
therefore ensure the initiation is carried out within with diplomatic ties to both countries involved in the
the stipulated time limit. arbitration, is then appointed by agreement of both
disputing parties. In cases where the disputing parties
Settling disputes at international arbitration tribunals cannot agree upon the third arbitrator within a certain
timeframe, the Secretary General of the ICSID will
To aid dispute settlement between an investor and appoint the arbitrator on their behalf.
a host country, known as investor-state dispute
settlements (ISDS), BITs normally outline provisions Some BITs also stipulate specific requirements for
for dispute settlement mechanisms through a neutral the expertise of the arbitrators, which may differ
international arbitration tribunal. depending on the nature or industry from which the
dispute arises.
Disputes can normally be submitted to one of two
international tribunals: Both parties will be required to gather and submit
evidence to the arbitration tribunal and participate in
• The International Center for Settlement hearings. Legal processes are lengthy and it may take
of Investment Disputes (ICSID). An institution several years for a dispute to be settled.
of the World Bank, the ICSID settles disputes
under the 1965 Washington Convention, ratified Disparities between BITs
by 155 countries, including China. This is the most
commonly used ISDS mechanism. The requirements It bears mentioning that China began signing BITs over
of the Washington Convention must be satisfied in three decades ago, the first one with Sweden in 1982.
order to initiate arbitration with the ICSID. Many of these treaties are still in force and have not
been amended since (although the Sweden-China BIT
• An ad hoc tribunal set up under the Arbitration was amended in 2004 to include provisions permitting
Rules of the United Nations Commission on International the use of international arbitration tribunals). In
Trade Law (UNCITRAL) for ISDS arbitrations. addition, the provisions of each BIT are negotiated
individually by the two contracting countries.
It is important to note that not all BITs mention both
of these ISDS mechanisms. Investors are advised For this reason, the contents of BITs vary greatly
to check the relevant BIT documents for details on from contract to contract, with some enjoying a
which tribunals are permitted under the contract. broader scope of protected investments, more clearly
defined conditions for arbitration, and a wider choice
Besides, the selection of different arbitration rules leads of ISDS mechanisms. Some of China’s BITs, on the
to differences in time limits, rules of proof, transparency, other hand, have narrow definitions of scenarios in
arbitration fees, and execution of awards. which an international tribunal can be initiated for
ISDS, such as exclusively in the case of expropriation.
Execution of awards
It is important for investors to be aware of
If an investor wins an arbitration, the host country the disparities between BITs and have a clear
will generally take the initiative to implement the understanding of the contents of the BIT, both before
arbitral award. If the arbitration is carried out by entering the China market and during operations,
the ICSID, the host country is obliged under the paying particular attention to which settlement
Washington Convention to provide the investor with mechanisms are available to them.
monetary awards from the arbitration.
What if a country has no China BIT?
The outcomes of international arbitrations conducted
under UNCITRAL are enforced by the rules laid out Although China has established investment ties
in the 1958 New York Arbitration Convention, which with large swathes of the world, there are still many
has been signed by 168 countries, including China. countries and regions that remain uncovered.
The US, for instance, has not signed any bilateral
Preparing for litigation agreements protecting investor rights with China,
despite several attempts to negotiate such a treaty
Many BITs contain clauses stipulating the conditions
and steps for submitting disputes and initiating
5 AMCHAM SOUTH CHINA
