Study On Corporate Nationality Of Chinese Companies Invested Overseas From The Perspective Of Diplomatic Protection

With China’s high-speed economic development, more and more enterprises go abroad to explore overseas market to seek opportunities and development. Chinese total foreign investment increased year by year, in 2013 its total foreign investment has been ranked third in the world. But behind this prosperity, there are always a variety of risks and challenges. Recently, China’s overseas enterprises have been lost a lot caused by the events, such as the Spanish shoes burning event, the Russian "gray customs clearance" and so forth.As an important method to protect rights and interests of Chinese overseas companies, diplomatic protection plays a critical role. There are two premises for a nation to provide diplomatic protection: the 1st is continuous nationality; the 2nd is domestic remedies exhausted. The 1st prerequisite also includes 2 rules. One is that the protected belongs to China; the other is he/she/it continuously holds nationality of China. As for the 1st rule, Chinese current laws only identify an enterprise as Chinese enterprise if it is set up in China according to Chinese laws. However, a lot of Chinese companies invested overseas directly or indirectly control a company that is set up in foreign land, but it is not considered as a Chinese company. On the other hand, Chinese legislative body has not made any provisions about the continuity of nationality. Therefore, contrasted with international judgment, international practice and other countries’ judicial practice, this paper gives some suggestions to how to revise provisions of corporate nationality of China.In regards of corporate nationality identification,Barcelona Traction concluded that a company belongs to a country where it is established according to the country’s law. But so many scholars questioned about this standard, claiming that there is no genuine link between a company and a country. So special rapporteur Dugard put up with seven solutions to identify corporate nationality. Some solutions support establishment standard, some solutions favor genuine link, others claims combination of these two factors. Draft Articles on Diplomatic Protection considers establishment standard as a principle for identifying corporate nationality, and provides genuine link as an exception.In terms of continuous nationality, many countries especially U.S. believe that it has not become an international practice. In addition, some disputes about the end time when a company holds a nationality of a certain country: it shall hold until the date of final award or the date when a claim is put forward. There are still arguments about actual continuance of nationality. Some believe the definition of continuous nationality requires a company continuously holds a nationality until the date of final award, while others favors presumption of continuous nationality.Above all, Chinese stipulations for identifying corporate nationality may put establishment standard as a basis, and introduce some genuine link factors such as economic control to consider as a Chinese company such a company directly or indirectly controlled by Chinese investors but established in foreign land. Since there are no rules for continuous nationality, such provisions may be followed: a company shall hold a nationality of China until the date when the claim is present by Chinese government; in case a company holds the nationality on both date of damage occurrence and date of claim presentation, it is presumed that the company actually continuously holds a nationality.