Government investment treaties that allow investors to seek arbitration in fiscal disputes will help China attract more foreign capital, a leading international arbitration specialist claimed at the weekend.
"The fact that there have been so many treaties signed over the past 10 to 15 years is an indication that the countries who signed them believe they will attract foreign investment because they make it (investment) safer and offer some guarantees," said William Laurence Craig, partner of the law firm Coudert Brothers.
He added the treaties will invite an increasing amount of foreign funds.
China has signed around 100 bilateral agreements allowing businesses from relevant countries to seek arbitration to resolve investment disputes.
The International Centre for Settlement of Investment Disputes (ICSID) estimates there are currently up to 2,000 bilateral investment treaties in force throughout the world, providing degrees of protection and arbitration procedures.
Craig said many capital exporting states, such as the United States, France and Germany, have developed model investment treaties whose terms they seek to be accepted throughout the world.
"Governments hope to guide investors to resort to arbitration when disputes arise via these treaties because arbitration is a good way out and is more trustworthy," said Wang Chengjie, deputy secretary-general of the China International Economic and Trade Arbitration Commission (CIETAC).
Differing from disputes that end in court, parties can choose from a contingent of experts to form an arbitration panel to hear their disputes.
CIETAC statistics revealed its panels handled a record number of 731 cases involving 10.5 billion yuan (US$1.7 billion) last year.
As a member of the 1958 New York Convention, China recognizes and carries out foreign arbitration awards.
Regarding it as an important part of the investment environment, Wang said China has tried to ensure these foreign awards are enforced.
The Supreme People's Court has worked out a number of judicial interpretations concerning the enforcement of foreign awards. Local courts should report to the Supreme People's Court if they rule against the enforcement of any foreign awards.
But local protectionism spurred by a fear of a financial loss locally has hindered the enforcement of these awards in many places. "I know there have been some difficulties and there is an apparent lack of progress at local and regional levels," said Craig.
"I think at the central level and higher level, the authorities are aware of the New York Convention's obligations and wish to see them implemented," Wang added.
(China Daily November 18, 2002)
