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Erschienen in:
Legal Status of Remote Operator in Maritime Autonomous Surface Ships (MASS) Under International Law: Who Can be a Ship Master? Kapitel lesen Erstes Kapitel lesen

2023 | OriginalPaper | Buchkapitel

3. The Past, Present, and Future of Investor-State Arbitration in East Asia

verfasst von : Dae Un Hong, Ju Yoen Lee

Erschienen in: Revolutionary Approach to International Law

Verlag: Springer Nature Singapore

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Abstract

It is not easy to detect East Asia’s presence in the field of investor-state dispute settlement (ISDS), despite its large economy. In addition to having less active foreign direct investment (FDI) relative to gross domestic product (GDP) and fewer investment treaties, East Asian economies and societies seem to possess certain characteristics that have contributed collectively to the dearth of ISDS cases in East Asia. Examples are its short history of international arbitration, the avoidance of litigation, the high proportion of state-owned enterprises in outward FDI from China, and the concentration of FDI in industries in which investor-state disputes are less likely to occur. This trend, however, is likely to change gradually with the ongoing socioeconomic changes in the region, including the increase in both outward and inward FDI, the increasing number of investment treaties, the growing familiarity with international (investment) arbitration among legal experts, the diversification of FDI, and the decreasing fear of administrative litigation.

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Vorheriges Kapitel Why Will China’s Belt and Road Initiative Bring a Bright Future to the World? An International Lawyer’s Perspective
Nächstes Kapitel Unveiling the Imperative of Distributive Justice in Science, Technology, and Development: A Legal Analysis
Fußnoten
1
‘China’ generally refers to mainland China in this paper.
 
2
UNCTAD (2022c).
 
3
UNCTAD (2022d).
 
4
Hong Kong and Macau, the two special administrative regions of China, are independent from mainland China in terms of economy so that they are treated as separate economies in this paper. For more on the economic links between China and Hong Kong and between China and Macau, see Lei and Yao (2008).
 
5
‘Korea’ refers to South Korea in this paper.
 
6
Not all six economies are covered with the same weight in this paper. China is given special attention due to the relatively large size and the importance of its economy. In addition, some economies are not covered in parts of this paper due to a lack of available data.
 
7
UNCTAD (2015).
 
8
UNCTAD (Investment Dispute Settlement Navigator), op. cit.
 
9
UNCTAD (2022e).
 
10
UNCTAD (Investment Dispute Settlement Navigator), op. cit.
 
11
UNCTAD (UNCTAD Stat: Foreign direct investment), op. cit.
 
12
OECD (2022a).
 
13
UNCTAD (Unctad Stat: Foreign direct investment), op. cit.
 
14
‘Investment treaty’ in this paper refers to bilateral investment treaties (“BITs”) and other types of investment agreements, such as free trade agreements and the Energy Charter Treaty. It is a general trend to include an investment chapter in free trade agreements.
 
15
2,207 BITs and 336 treaties with investment provisions (“TIPs”). See UNCTAD (2022a).
 
16
Ibid.
 
17
Brazil signed fourteen BITs that were later withdrawn in 2002, apparently because treaty provisions for ISDS were unconstitutional. See Hawes (2017). None of the TIPs in force in Brazil provided for ISDS until June 2019.
 
18
UNCTAD (Investment Dispute Settlement Navigator), op. cit.
 
19
Ibid.
 
20
Gallagher (2015).
 
21
Wang (2009), p 577.
 
22
Li (2015).
 
23
Wang (2009), op. cit. 577.
 
24
Li (2007). Li also notes that large-scale nationalization will not occur in China unless governmental institutions undergo a fundamental political change.
 
25
Greenberg (2011).
 
26
Li (2002).
 
27
Ali (2013); China International Economic and Trade Arbitration Commission, Statistics. http://​www.​cietac.​org/​index.​php?​m=​Page&​a=​index&​id=​40&​l=​en. Accessed 1 Oct 2022.
 
28
Cole (2007).
 
29
Tezuka and Kawabata (2018). See also Nakamura and Nottage (2013), op. cit. 223–7.
 
30
The Korean Commercial Arbitration Board (“KCAB”) hears both domestic and international business disputes in Korea. However, it reported administering only 405 arbitration cases (336 domestic cases and 69 international cases) in 2020, although the KCAB is de facto the only arbitration institution in Korea, and more than 1 million civil lawsuits are brought to court in Korea each year. See KCAB (2022).
 
31
Lin and Li (2013) Arbitration in Taiwan, the Republic of China. In: Ali and Ginsburg, op. cit. 534–5.
 
32
Japan and Korea transformed their legal education systems and established US-style law school systems in 2004 and 2009, respectively. Prior to that, both featured highly selective national bar exams, which less than five percent of applicants typically passed.
 
33
Kim and Chang, e.g., based in Korea and the largest Asian law group outside of China with more than 1,100 attorneys, had only one overseas office in Hong Kong until September 2018. Nishimura and Asahi, Japan’s largest law firm with more than 700 attorneys, did not begin to establish its overseas offices until June 2010.
 
34
Kim (2007), pp 34-6.
 
35
Professor An Chen, although he later resigned from both cases, was the first Chinese co-arbitrator in two ICSID cases, Bernhard von Pezold and others v. Republic of Zimbabwe (ICSID Case No. ARB/10/15) and Border Timbers Limited, Timber Products International (Private) Limited, and Hangani Development Co. (Private) Limited v. Republic of Zimbabwe (ICSID Case No. ARB/10/25).
 
36
Hong and Lee (2018).
 
37
In 2011, Teresa Cheng, a Hong Kong-based arbitrator, was appointed president of the tribunal for Bawabet Al Kuwait Holding Company v. Arab Republic of Egypt. Professor Shin Hi-Taek was the first Korean ICSID arbitrator appointed in 2013 as the president of the tribunal for Fábrica de Vidrios Los Andes, C.A. and Owens-Illinois de Venezuela, C.A. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/12/21). Yasuhei Taniguchi is the only Japanese arbitrator to participate in ICSID cases and was appointed in 2013 as an ad hoc committee member by the chairman of the ICSID Administrative Council in the annulment proceeding of EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. v. Argentine Republic (ICSID Case No. ARB/03/23).
 
38
Administrative litigation commonly refers to lawsuits filed by individuals or companies against decisions of governments and governmental officials that allegedly infringe upon the rights and interests of the individuals or companies involved. In the common law system, the term ‘judicial review’ is used instead and generally refers to review of governmental actions by the judiciary. See Li and Ma (2014).
 
39
Hamamoto (2014).
 
40
Ginsburg (2001).
 
41
Li (2013).
 
42
Peerenboom (2009).
 
43
Ushijima (2009).
 
44
Uga (2011).
 
45
Kim (2009).
 
46
E.g., Article 14 (1) of the Administrative Case Litigation Act of Japan (amended in 2007) states that no action to revoke an administrative disposition may be filed when a period of six months has elapsed from the day on which the person who seeks revocation became aware of the fact that the original administrative disposition or administrative disposition on appeal was made. However, this shall not apply if there are justifiable grounds for failing to meet the time limit. Article 20 (1) o the Korean Administrative Litigation Act has a similar provision, but it is even more restrictive and requires the plaintiff to initiate an action within ninety days from the date a disposition is made known to the plaintiff.
 
47
Yeh (2009).
 
48
Hong and Lee, op. cit. 42–43.
 
49
Szamosszegi and Kyle (2011).
 
50
Ibid.
 
51
International Business Publications (2013).
 
52
Ali, op. cit. 14.
 
53
Ibid.
 
54
Ibid.
 
55
Kaufmann-Kohler and Kun (2008). This may be coupled with the improving—but still relatively uncertain—rule of law and the resultant distrust of the court system in China.
 
56
Nottage (2014). For a social-cultural analysis of why arbitration has not been widely used in Japan, see Cole, op. cit.
 
57
Yang (2008).
 
58
Nottage, op. cit.
 
59
Ibid.
 
60
Wu (2012).
 
61
Kim (2007), op. cit. 28–31.
 
62
The Ministry of Commerce of the People’s Republic of China (MOFCOM) (2022). Other types of companies, such as limited liability companies, account for the rest.
 
63
Song (2011).
 
64
The Chinese government often holds a significant stake in non-SOE companies, as classified by the Chinese government, and thus exerts a considerable influence on them.
 
65
Knoerich (2015).
 
66
Gill and Reilly (2007).
 
67
Ibid. 38–9 and 47–8.
 
68
Ibid. 44.
 
69
Ibid. 48–9.
 
70
Yackee (2010).
 
71
Ibid.
 
72
ICSID (2022a).
 
73
Hong and Lee, op. cit. 46.
 
74
Hoesel (2013).
 
75
Megyeri (2014).
 
76
OECD (2022b). Data on Latvia, Mexico, and New Zealand are not available for 2006 and data on Mexico and the United Kingdom are not available for 2019.
 
77
Hong and Lee, op. cit. 47–48.
 
78
Zhang (2011), p 226.
 
79
Wolff (2011), p 22.
 
80
Ibid. Other goals of routing investment to China through Hong Kong include utilizing the Mainland and Hong Kong Closer Economic Partnership Arrangement or keeping investors’ identities secret.
 
81
Wolff (2011), op. cit. 22.
 
82
Poncet (2010).
 
83
Hong and Lee, op. cit. 49.
 
84
UNCTAD (2007).
 
85
United Nations Economic Commission for Africa (2006).
 
86
Zhang (2011), op. cit. 231.
 
87
Liu (2011).
 
88
Hong and Lee, op. cit. 49.
 
89
See Taiwan: Foreign Investment, Santander Trade. https://​en.​portal.​santandertrade.​com/​establish-overseas/​taiwan/​foreign-investment. Accessed 1 Oct 2022.
 
90
Bath (2011). The Catalog was divided into three parts: (1) encouraged industry, (2) restricted industry, and (3) prohibited industry. The last one was promulgated in 2017, and previous amendments were made in 1997, 2002, 2004, 2007, 2011, and 2015. See Catalogue of Industries for Guiding Foreign Investment (2017 Revision).
 
91
MOFCOM Catalogue for the Guidance of Foreign Investment Industries (外商投资产业指导目录). http://​english.​mofcom.​gov.​cn/​article/​policyrelease/​aaa/​201203/​20120308027837.​shtml. Accessed 1 Oct 2022. In practice, there were a number of cases in which foreign investors made investments in China via a nominal shareholder for various reasons, such as circumventing the industry restrictions of the Catalog, foreign exchange rules, government formalities, etc. See Tian (2011). In such cases, investors were not eligible for standing in investment arbitration.
 
92
Wacaster (2016a).
 
93
HKSAR Census and Statistics Department (2022).
 
94
Wacaster (2016b).
 
95
Shi (2016).
 
96
Givens (2012).
 
97
Ibid. 9.
 
98
Santoro (2009), p 113.
 
99
Ibid.
 
100
Luo (2007).
 
101
Norton (2007).
 
102
Ibid.
 
103
Santoro (2009), op. cit. 114.
 
104
See Nikkei Asian Review (2016).
 
105
Voss (2011).
 
106
UNCTAD (Unctad Stat: Foreign direct investment), op. cit.
 
107
Wu, op. cit. 8. In Korea, ISDS emerged as such a hot political issue in 2011 that even taxi drivers often talked about it.
 
108
Osman (2017).
 
109
Zhu (2014).
 
110
The number of arbitration cases reached 415,889 in 2021. See Global Times (2022).
 
111
Nakamura and Nottage (2013), op. cit. 225.
 
112
As of October 1, 2022, ten arbitration experts from East Asia have participated in ICSID proceedings as panels: Three from China, one from Hong Kong, four from South Korea, and two from Japan. ICSID (2022b).
 
113
Vis East Moot (2022).
 
114
Foreign Direct Investment Moot (2022).
 
115
Korea Citation Index (2022).
 
116
Hong and Lee, op. cit. 43.
 
117
Ibid. 54.
 
118
Ibid.
 
119
Ibid.
 
120
Zhao and Du (2013).
 
121
Powell (2016).
 
122
Park (2017).
 
123
Yu and Miller (2003).
 
124
G:HUB (2014); Textor (2021).
 
125
Zhang (2017).
 
126
In 2018, the Catalog was replaced by the Negative Lists, which set out restrictive measures or bans with respect to access of foreign investment in certain special business sectors in China. Foreign investment in sectors not specified in the negative lists is subject to the same administrative measures as Chinese domestic investment. Garrigues (2022).
 
127
UNCTAD (2022b).
 
128
According to data from UNCTAD, 145 out of 1190 known cases were based on the Energy Charter Treaty. The second most frequently invoked treaty was the North American Free Trade Agreement, which was invoked in 76 cases. See UNCTAD (Investment Dispute Settlement Navigator), op. cit.
 
129
Bernasconi-Osterwalder (2017).
 
130
Florini (2017).
 
131
Inajima and Urabe (2017).
 
132
Broadman and Sun (1997).
 
133
Noland (2012).
 
134
Ibid.
 
135
Wu (2016).
 
136
Jin and Li (2016).
 
137
Hong and Lee, op. cit. 55.
 
138
Ibid.
 
139
Kyoji (2010).
 
140
Phan and Jeong (2013).
 
141
Veeck (2011).
 
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Metadaten
Titel
The Past, Present, and Future of Investor-State Arbitration in East Asia
verfasst von
Dae Un Hong
Ju Yoen Lee
Copyright-Jahr
2023
Verlag
Springer Nature Singapore
Buch
Revolutionary Approach to International Law

Print ISBN: 978-981-19-7966-8

Electronic ISBN: 978-981-19-7967-5

Copyright-Jahr: 2023

DOI
https://doi.org/10.1007/978-981-19-7967-5_3

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