The Latest Development On The Right To Regulate Of Host States For International Investment Agreements

The regulatory right is derived from domestic constitutional or administrative law,which acts as the embodiment of the principle of economic sovereignty in international investment law.However,host government often fall into the dilemma of regulatory chill during the investment practice,so the regulatory right has long been ignored and eroded.In the face of the "legitimacy crisis" of international investment law,many countries began to restart the attention and protection on the right to regulate.With the revival of right for host country to regulate at different degree in international investment practice,it has become the key to the development of international investment laws and policies.The reasons are not only the result of the dynamic development of international investment law system,but also the influence of the multi-polarization trend of international investment power and the investment policies based on public interests.Besides,the right to regulate plays the role of Safety Valve and Buffer.The negotiations or signature for the U.S.and EU on innovatory investment agreements and investment chapters are the latest representative practice,including the United States model BIT in 2012,TPP,CETA and TTIP investment chapter draft.Among them,the substantive rules give different degrees of recognition to the regulatory power,which not only establishes legal provisions for the right to regulate,but also gives some consideration to treatment provisions,indirect expropriation and exception clauses.Furthermore,the procedure rules are designed to limit arbitration tribunal to make undue restrictions on the right to regulate,for example,the restraint application to ISDS,an increase of transparency in proceeding,the establishment of special procedures to deal with the abuse of litigation and invalid claims,as well as the creation of reform measures for investment arbitration appellate mechanism.All the rules contribute to essential advances for the regulatory right and provide the overall arrangement of the investment agreements,which is of great significance for reference.Influenced by the theory of international investment,the host country's regulatory right shows the characteristics of "embedded liberalism" and expands the scope of public interests with the development of sustainable development in depth.Actually,the right to regulate can be taken as the balance mechanism with higher standards characteristics,from which one side is to maintain the regulatory freedom of the host country,the other is to promote the liberalization and facilitation of investment.Nowadays,China has become the main destination of foreign investment and overseas investment,while the domestic rule of law is not high.In order to promote the healthy development of the host country's regulatory right,China shall actively participate in the global investment governance.By making good use of the historical opportunity of BIT negotiations with the United States and EU,China could effectively cooperate with the reform of domestic investment law system.