Research On The Application Of The Principle Of Proportionality In Arbitration Cases Involving Fair And Equitable Treatment

Because of the surge of investment arbitration cases in recent years and the challenges to the fairness and reasonableness of many arbitral tribunal awards,arbitral tribunals have begun to seek a balance between the public interests of the host country and the protection of investors’ rights and interests.Due to the inherent fuzziness,abstraction and uncertainty of fair and equitable treatment,it has changed from the "signal" of attracting foreign investment to the clause with the highest success rate quoted by investors.In view of this,the investment arbitration tribunals began to use the principle of proportionality with the function of balancing interests to analyze arbitration cases involving fair and equitable treatment.The principle of proportionality provides a more rigorous analytical framework for investment tribunals to evaluate conflicting legal claims,weigh alternatives and rule impartially.Currently,China has completed its transformation from a capital-importing country to a capital-exporting country,and the bilateral investment agreements are gradually shifting to a more mature balancing model.This determines that China’s interests in the international investment arena are complex and dual,and fair and equitable treatment is an important safeguard to protect the dual rights and interests.Therefore,it is necessary to analyze the application trend of the principle of proportionality in arbitration cases involving fair and equitable treatment,and provide suggestions for improving fair and equitable treatment in China’s bilateral investment agreements.Firstly,the thesis analyzes the problems and reasons of arbitration in solving cases involving fair and equitable treatment.The ambiguity of fair and equitable treatment gives investment tribunals a certain degree of discretion in interpreting the content of the clause,which leads investment tribunals to indulge in "legislative activities" and expansively interpret fair and equitable treatment to maximize the rights of foreign investors.In addition,the arbitral tribunal has different views and standards,which leads to inconsistent or even contradictory arbitral awards,and undermines the objectivity,seriousness,and stability of international investment arbitration.At present,the arbitral tribunals ignore the public interests of the host country and destroy the social and economic order and legal order of the host country has also become one of the important issues.On this basis,the thesis makes a targeted analysis on the causes of the above practical problems.Secondly,the thesis analyses the necessity and legal basis for the application of the principle of proportionality in arbitration cases involving fair and equitable treatment.The legal basis for the application of the principle of proportionality in investment arbitration is the prerequisite for the thesis’ s argument.The thesis discusses the legal basis for the application of the principle of proportionality in investment arbitration,analyses the application of the principle of proportionality by domestic courts and international judicial institutions,and demonstrates that the principle of proportionality can be applied to arbitration cases involving fair and equitable treatment as a general legal principle.At the same time,the thesis takes into account the latest trends in international investment law and demonstrates that the application of the principle of proportionality can help to examine the predictability of the judicial environment,the factors of reasonable expectations of investors and the balance of interests between investors and host country.Then,combined with the investment arbitration practice,the thesis analyzes the application trend of the four elements of the principle of proportionality in arbitration cases involving fair and equitable treatment.In the practice of the principle of legitimate objectives in arbitration cases involving fair and equitable treatment,arbitral tribunals are autonomous in determining the legitimacy of objectives,but also respect the host country’s determination of the legitimacy of objectives.The arbitral tribunal’s autonomous determination of the legitimacy of the objectives can seriously affect the host country’s determination of the public objectives and seriously undermine the host country’s initiative to conclude the bilateral investment agreements.Thus,the arbitral tribunals will respect the host country’s determination of the target in most cases.There are also two trends in the practice of the principle of appropriateness in arbitration cases involving fair and equitable treatment.Arbitral tribunals are both autonomous in reviewing the appropriateness of measures and respecting the host country’s determination of appropriateness.Different from the examination of the legitimacy of the target by the arbitral tribunals,the arbitral tribunals are more proactive in the determination of the appropriateness of measures and tend to independently examine the appropriateness of measures.For the practice of the principle of necessity in arbitration cases involving fair and equitable treatment,the arbitral tribunals determine the necessity of the measures taken by the host country mainly through procedural and substantive reviews,mainly examining whether there are less restrictive alternative measures and whether the alternative measures are equally effective.As for the application of the principle of narrow proportionality in arbitration cases involving fair and equitable treatment,the arbitral tribunals mainly use their discretion to examine whether the purpose and means of the host country’s measures are proportional.Finally,the thesis analyses the 128 bilateral investment agreements that have been signed and entered into force in China,and clarifies the deficiencies of the provisions of fair and equitable treatment in China’s bilateral investment agreements.Combined with the trend of application of the principle of proportionality by investment tribunals,the thesis proposes a path to improve the fair and equitable treatment in China’s bilateral investment agreements in the new era.Firstly,the institutional design of fair and equitable treatment should be flexible,and the formulation of fair and equitable treatment should be unified as well as the independence of fair and equitable treatment should be respected;secondly,an exception clause that takes into account the protection of public interest should be added;Thirdly,the threshold of violation of fair and equitable treatment should be raised.Fourth,enhance the legality and appropriateness of regulatory measures in the host country.