Research On The Return Of Host States' Right To Regulate In Recent ISDS System

Since the establishment of the "International Center for Settlement of Investment Disputes" in 1965,the ISDS mechanism has been highly valued by various investment agreements,making it a typical feature of international investment agreements.Due to the tendency of neo-liberalism in early international investment agreements,the initial design of the ISDS mechanism also tended to protect the private interests of investors,while largely ignoring the right to regulate of host states.As this mechanism is widely used in the settlement of international investment disputes,its shortcomings have gradually become prominent.Investors master unilaterally the right to sue host states before a tribunal,which finally led to the phenomenon of “abuse of vexatious actions”.In addition,The investment protectionism of ISDS mechanism has also encouraged tribunals to overly favor the interests of investors during the arbitral process.These two factors interact with each other,causing the "chill effect",which makes the host state's regulatory power even unable to exert its inherent functions of controlling foreign investment and protecting public interest.Recognizing the extreme value orientation of ISDS mechanism,the international community has successively proposed different roadmaps of ISDS reform,and countries have also adopted reform plans that suit for their national situations in the process of treaty modernization.In brief,these schemes can be grouped into five categories: no ISDS,limited ISDS,improved ISDS procedure,standing ISDS tribunal,and unreformed ISDS mechanism.The specific measures in the first three types of reform programs that have a greater impact on the host country 's regulatory power focus specifically on investor's right to sue and the role of host states' in ISDS.That is,host states' right to regulate in ISDS finally returns through limiting investor 's right to sue and also through strengthening host states' role.However,withdrawing from ISDS seems too extreme,which cannot solve the actual conflicts and is not conducive to uniform international investment legal system neither.What really counts,is improving the existing ISDS mechanism to achieve a high level mechanism under the guiding principle of sustainable development so that to balance the "public" and "private" between host states and private investors.China,as a capital exporting country and also a capital importing country,should also learn from the advanced concepts behind these paths and follow the guidance of sustainable development in the subsequent investment agreement negotiations(especially for the ongoing Sino-US and Sino-European BITs negotiations).