| With the continuous deepening of cross-border economic cooperation,international investment is rapidly promoted.International Investment not only benefits investors a lot,but also contributes to the prosperity of the host state’s economy.But at the same time,bribery,fraud and other illegal activities in international investment are also emerging.For this reason,most countries tend to consider " in conformity with the host state law " clause when entering into foreign investment treaties,to create a safer investment environment.The treaty practice of " in conformity with the host state law " clause is diverse,and there are some differences in the formulation and regulation mode of the clause in different treaties.There are three kinds of regulation modes of " in conformity with the host state law " : definition clause mode,non-definition clause mode and juxtaposition mode,of which the definition clause mode is the main one.The " in conformity with the host state law " clause which is under definition clause is usually considered to be a limitation on the scope of "investment" in investment treaties,and a violation of that requirement would exclude jurisdiction in arbitration.The " in conformity with the host state law " clause which is under non-definition clause only influences physical protection of investment treaties.On the meaning of the " in conformity with the host state law " clause,the arbitral tribunal has reached a consensus in practice that "in conformity with the host state law " clause is a requirement for legality of investment rather than a definition of "investment" in the host state law.However,arbitral tribunals have different points of view when interpreting the term "investment".Some arbitral tribunals interpret "investment" as static investment assets,while others interpret it as dynamic investment behavior.A large number of arbitration practices have shown that the ICSID arbitral tribunal always refuse to exercise jurisdiction when investors breach the "in conformity with the host state law" clause.Therefore,before exploring the link between "in conformity with the host state law" clause and the jurisdiction of arbitral tribunal,it is necessary to analyze the arbitral tribunal’s cognizance standard of the violation of the host country’s law in arbitration practice,including time standard,behavior standard and scope standard.Through the study of cases,the author finds that the arbitral tribunal mostly limits the time standard of " in conformity with the host state law " to the "investment admission stage",then the "investment" under the bilateral investment treaty is established,and the arbitral tribunal cannot refuse the jurisdiction over this case because investors violated the host state law during the course of the investment operation;The criteria of conduct for breach of the host state law is limited to "serious breaches",with the view that minor violations do not lead to a violation of the host state law,and thus do not affect the arbitral tribunal jurisdiction.With regard to the scope of the host state law,it is generally believed in practice that "host state law" refers to the domestic law of the host state as well as the general legal principles.However,not all breaches of the host state law are excluded from the jurisdiction of the arbitral tribunal and,except for minor breaches,investors may also advocate the principle of Estoppel on the basis of the conduct of the host state,that is,the host state may no longer enter a defense on the knowledge that the investor has violated the host state law without objecting.In practice,the " in conformity with the host state law " clause has a very close relationship with ICSID jurisdiction.For investments that violate the host state law,the arbitral tribunal usually finds that it does not have jurisdiction on the ground that the investments are not lawful.However,the practice of the ICSID arbitral tribunal lacks a solid legal basis whether from the perspective of the ICSID arbitral tribunal’s jurisdictional elements or from the perspective of the independence of the arbitration clause.In the case of illegal investment,the arbitral tribunal’s erring refusal of jurisdiction will not only violate the principle of procedural justice,but also break the balance of interests between investors and host states.Thus,at the stage of review of jurisdictional,the arbitral tribunal is necessary to carefully screen illegal investment acts and distinguish between unilateral violations and multiple violations,general violations and serious violations.According to the 2019 China Foreign Direct Investment Statistics Bulletin,at present,the scale of China’s going out and foreign investment attraction is almost equivalent.China has the dual status of home country and host country of investment.Therefore,both Chinese government and overseas investors should take the "in conformity with the host state law" requirement seriously.On the one hand,China should actively refine the content of "in conformity with the host state law" clause in investment treaties and strictly supervise the behavior of our overseas investors;on the other hand,china can build a collaborative interaction mechanism with ICSID to combat illegal investment behaviors,to create and maintain a safer investment environment.Chinese overseas investors should also take the initiative to comply with legal requirements of host state and make good use of arbitration mechanism. |
