The Problem Of "treaty Selection" In International Investment Arbitration And Its Response

Under the background of legal and economic globalization,the treaty shopping in international investment arbitration has gradually become a well-known "hidden rule" for investors in various countries.In order to maximize investment protection,investors will apply bilateral investment agreements signed between the host country and the third country through nationality planning or invoking the MFN clause.It is worth noting that the nature of treaty shopping has been controversial in both academic and practical circles.We cannot simply infer whether treaty shopping in international investment law is ‘legitimate nationality planning' or ‘treaty abuse'.However,from the existing international law system,treaty shopping is not explicitly prohibited by relevant laws in principle.Therefore,we should understand the concept of treaty shopping with an objective and neutral attitude and have to judge case by case whether it is ‘legal planning' or ‘treaty abuse'.As for the nationality planning,the nationality of investors is the core content,which determines whether investors can enjoy investment protection and can initiate arbitration after disputes occur.Under normal circumstances,the arbitration tribunal will strictly judge the nationality of investors in accordance with article 25 of the ICSID Convention and the provisions on investors in the bilateral investment treaties.However,under certain special circumstances,the arbitration tribunal will break through its general rules and adopt the ‘principle of lifting the corporate veil' or ‘principle of good faith' to adjudicate jurisdiction disputes.The application of the principle of lifting the corporate veil mainly revolves around capital control standards.The arbitration tribunal may apply this principle if there are control standards stipulated in the bilateral investment treaties,or if the investor meets the "foreign control" stipulated in article 25(2)(b)of the ICSID Convention,or if there are cases of investor fraud,abuse of rights,etc.Furthermore,the principle of good faith is also an important consideration.The specific criterion is whether the dispute between the investor and the host country has occurred or can be foreseen when the nationality of the investor changes.According to this,it is generally divided into pre-selection and post-selection,but the arbitration tribunal generally hesitates or even denies the post-selection.As for the method of invoking the MFN clause,it essentially involves the scope of application of the MFN clause.The main causes of this problem are the diversity of dispute resolution procedure and the ambiguity of the scope of application of MFN clauses in basic treaties.Therefore,when dealing with relevant issues,the treaty interpretation is critical.Generally speaking,when the intended effects have been the waiver of mere preliminary requirements,the MFN clause has been given its effect;by contrast,when the intended effects have been more ambitious,such as a modification on the scope of jurisdiction,the MFN clause has not been applied.However,it is undeniable that some treaty-shopping practices actually trample on the sovereignty of the host country and even damage the international investment environment.In this regard,we should take specific measures to limit it.For treaty shopping through nationality planning,we can take measures such as clarifying the definition of investment and investors or formulating the denial of benefits clause.As for the way of invoking the MFN clause,we can adopt the way of making exceptions to the application of the MFN clause.The more radical countermeasures are mainly to reform the fundamental system,including the establishment of a global multilateral investment agreement and the reform of the existing ISDS mechanism,in order to fundamentally solve the problem of treaty shopping.