Research On The Prohibition Of Performance Requirements In International Investment Agreements

Performance requirements are regulatory measures imposed on foreign investors at the host country’s discretion,with the main purpose of promoting foreign investment in the host country’s own economic and social development.Due to the inherently discriminatory nature of performance requirements on foreign investment,developed countries,led by the United States,have proposed to prohibit some of the performance requirements imposed by host countries in order to restrict host country regulation of foreign investment,and have incorporated the prohibition on performance requirements into the international investment agreements concluded.This provision has tended to expand in IIAs due to the increase in the types of performance requirements prohibited,the expansion of the scope of application of the performance requirement prohibition regulation,and the influence of other provisions in IIAs.However,due to the lack of uniformity in the interpretation of the concept of performance requirements by arbitral tribunals,inconsistent decisions have been made in arbitration cases involving the performance requirement prohibition rule.In recent years,influenced by China’s economic development and the trend of investment liberalisation,the attitude of China’s investment agreements towards the prohibition on performance requirement has changed from caution to openness,and the two newly concluded high-level international investment agreements have included a more comprehensive prohibition on performance requirement rule.However,it should be noted that the content of the performance requirement prohibition rule and its related exceptions in the investment agreements concluded by China still have certain shortcomings,such as the lack of clarity on the concept of the performance requirement for compulsory technology transfer and the lack of perfection in the setting of incompatible measures for the performance requirement prohibition rule.By examining the regulation of performance requirements and its exceptions in China’s latest investment agreements,we can better improve the relevant provisions and better balance the interests between China and foreign investors.