The Research On Application Of Fork-in-the-road Clause In Bilateral Investment Treaties

The so-called Fork-in-the-road Clause which is usually set in the Investor-State Dispute Settlement part is one of the most normal clauses in recent bilateral investment treaties. It usually provides that investors can make the choice between the host state’s court and the international arbitral tribunal. The choice provided is only and final. Investors cannot turn back for the other road once they have made a choice. This kind of provision is designed to preclude parallel proceedings between domestic court and international arbitral tribunal. Furthermore it can be used to protect investors through authorizing the right of forum choice.However, this kind of clause is easily to be evaded by investors by breaking down the claims into pieces. Claimants can bring claims to a domestic court at first and then turn to an international arbitral tribunal with claims based on the same fact. International arbitral tribunals will examine the application of the Fork-in-the-road clause by proceeding triple-identity test. International arbitral tribunals usually hold that the Fork-in-the-road Clause cannot be triggered. Their reasons are for example, parties before the domestic proceeding and the tribunal are not completely the same, or the cause of actions in the two forums are different. The interpretation of international arbitral tribunals is so strict that the Fork-in-the-road Clause cannot be triggered. Thus parallel proceedings happen frequently and the function of the clause is suffering doubt. There are still a lot of bilateral investment treaties containing this Fork-in-the-road Clause, so it is meaningful to think about ways to make the clause more functional. And this is the theme of this dissertation.The object of this thesis is the application of Fork-in-the-road Clause in bilateral investment treaties. Based on the reasoning of tribunals in investment arbitral cases, this paper summarized problems during the application of the Fork-in-the-road Clause. After that, a research is made in order to find out ways to revise the Fork-in-the-road Clause to make it more effectively.There are four parts in this thesis except from introduction part and the epilogue part.The first part gives a brief introduction of the origin of the Fork-in-the-road Clause in bilateral investment treaties. The birth of the Fork-in-the-road Clause reflects the change of dispute settlement between investors and states. Investors have gained independent claims against host states and gained the dominant power in choosing dispute settlement forums. Although the Fork-in-the-road Clause is not owned by bilateral investment treaties exclusively, the Fork-in-the-road Clause in bilateral investment treaties is the most representative, so this thesis focuses mainly on the Fork-in-the-road Clause contained in bilateral investment treaties.The second part summarizes problems in international investment arbitral cases. The international arbitral tribunals apply triple-identity test to examine whether the Fork-in-the-road Clause has been triggered. There are two main problems: the problem of formalism in identifying the same parties and the problem of formalism in identifying the same cause of actions. This kind of strict interpretation results in denying of the application of Fork-in-the-road Clause which further causes trust crisis in the Fork-in-the-road Clause and international arbitral tribunals.The third part tries to submit some beneficial advice by learning some experience of European Court of Justice dealing with positive jurisdiction conflicts in civil cases. Then it analyzes the waiver provision in the North American Free Trade Agreement in order to adjust the Fork-in-the-road Clause in some way. After that, this part emphasizes the cooperation with the definition provisions and the so-called umbrella clause.The last part analyzes the statistics of bilateral investment treaties signed by China and tries to find feasible ways to adapt the Fork-in-the-road Clause. First it’s important to add limiting contents to the Fork-in-the-road Clause in order to control the discretion of the tribunals. Second, we should insist the contents of exhausting administrative remedies. Last but not least, the application of the most favored national treatment clause should not be applied in procedural issues. Penalty mechanism can also be introduced to prevent frivolous litigations.