Indirect Expropriation Under Environmental Regulation In Host Country

The tide of economic globalization is still in the ascendant,but the wave of anti-globalization cannot be underestimated.As a result,the way in which international capital flows has changed.In order to promote the free flow of capital,countries have introduced or revised a series of international and domestic laws and regulations to create a business-friendly environment.However,in addition to the economic benefits brought by the investment liberalization wave,there are also increasingly serious environmental problems.The negative effects make countries have to pay attention to the loopholes of investment rules.The host country generally tightens its foreign capital control policies and imposes a variety of foreign capital management measures,including environmental requirements.The impact of different environmental regulations caused by the addition of environmental requirements in international investment rules may actually lead to indirect expropriation of investment,which also makes the indirect expropriation problem more obvious when the host country government adopts environmental regulation measures.Therefore,it is faced with the problem of how to balance the relationship between the public interests of the host government and the private property rights of foreign investors and to what extent the environmental regulation will lead investors to believe that there is indirect expropriation.At present,China’s status in the investment field is an “import-export” country of capital,and it is no longer a single host country.It needs to consider the realization of the public interests of the host country and the investment property interests of the investors.In addition,there is also a need to consider the setting of environmental taxes,which may be perceived by investors as a form of indirect taxation.The provisions on environmental protection in international investment agreements will also affect the identification of indirect expropriation.In the early arbitration practice,the indirect collection rules between the host country and the investors tended to protect the private rights of the investors,and ignored the legitimacy of the host country to safeguard the environmental rights,which hindered the implementation of the rights of the host country.In addition,the international investment agreements on indirect expropriation do not have a clear definition of it,and do not provide good guidance for the balance between the environmental regulation of the host country and the property rights of private wealth investors,leading to many problems in arbitration practice and difficult to implement.In the face of this phenomenon,it is more necessary to carefully and reasonably define the extent to which the regulatory measures of the host country will lead to disputes of indirect expropriation,so as to further balance the interests of the host country and investors.This paper starts with the different forms of environmental regulations at home and abroad,and then analyzes the extent to which indirect expropriation disputes will be caused.By analyzing international arbitration practices caused by environmental regulations of host countries,this paper tries to find out the balance between environmental regulations and investors’ interests as well as the avoidance of indirect expropriation.