A Preliminary Study On The Identification Of State-owned Enterprises In International Investment Agreements

The purpose of this paper is to establish a framework for the definition of SOEs that is acceptable to all countries and to define SOEs in the light of the interests of the contracting parties,so as to facilitate the drafting and negotiation of investment agreements.By examining existing international investment agreements,the author finds that many bilateral investment agreements do not define SOEs with sufficient precision,or even without a definition.Since ICSID arbitration settles investment disputes between nationals of contracting states and host states,rather than disputes between states,and as a result,Western countries may challenge the status of Chinese SOEs as eligible investors in ICSID arbitrations and thus challenge jurisdiction in investment dispute cases involving Chinese SOEs.The Comprehensive and Progressive Trans-Pacific Partnership Agreement limits the scope of SOEs to those entities that are "primarily engaged in commercial activities" and "for profit",which is a strong reference.In the author’s view,there are four elements that can be referred to when defining a "state-owned enterprise" :(1)independent legal personality;(2)subject to government control or effective influence;(3)commercial nature of activities;and(4)purpose of activities.In the process of signing future bilateral agreements,Chinese negotiators may refer to the Broches Criteria,the Draft State Responsibility and the Comprehensive and Progressive TransPacific Partnership Agreement,etc.,and directly provide for "investors in state enterprises" in the definition of "investors".The Chinese negotiators may refer to the Broches criteria,the draft State Responsibility Agreement and the Comprehensive and Progressive Trans-Pacific Partnership Agreement,etc.,and directly stipulate the term "SOE investor" in the definition of "investor",and make detailed provisions on issues such as "government agent" and "exercise of governmental authority",with a view to better safeguarding the rights of SOEs in outbound investment and better realising "going out".The Law also provides detailed regulations on issues such as "government agents" and "exercise of government powers",with a view to better safeguarding the rights of SOEs in foreign investment and better realizing the "going out".