International Settlement of Trade and Investment Disputes Over Chinese ‘Silk Road Projects’ Inside the European Union

Abstract

China's Belt and Road Initiative (BRI) and promotion of BRI investments in more than 60 countries along the ancient territorial and maritime 'Silk Roads' may give rise to (1) trade disputes and WTO dispute settlement procedures; (2) investment disputes settled through China's more than 130 BITs, ICSID or UNICITRAL arbitration proceedings; (3) financial disputes settled through bilateral negotiations, arbitration courts and other jurisdictions in China rather than through multilateral treaty institutions like the Asian IIB; (4) intellectual property disputes settled through Chinese jurisdictions (like China's Patent office and Chinese courts) or through WTO, WIPO and other multilateral dispute settlement procedures; (5) commercial disputes settled through Chinese courts and commercial arbitration procedures, subject to various limitations of the legal admissibility of ad hoc arbitration inside China; as regards (6) maritime disputes, China refused participating in the UNCLOS arbitration initiated by the Philippines and rejected the UNCLOS arbitration award of 2016 concerning the South China Sea; as regards (7) energy trade and investment disputes, China has not yet ratified the Energy Charter Treaty (ECT) providing for international state-state and investor-state arbitration. Avoidance of multilateral treaties and lack of a multilateral dispute settlement approach distinguish the BRI from past US leadership for multilateral dispute settlement systems in GATT, ICSID, the WTO and regional FTAs. This contribution discusses the increasing 'systemic rivalry' among authoritarian, neo-liberal and ordoliberal conceptions of international economic law and the resulting legal problems in the settlement of BRI disputes inside EU countries, whose courts may not recognize arbitration awards by Chinese arbitration institutions and may hold Chinese investors accountable for disregard for human and labor rights in their BRI investment inside EU countries.

A Legal Anal ysis of the Belt and Road Initiative: Towar ds a New Silk Road?

“…Rather than a complete refusal to engage in the BRI cooperation with China, Petersmann suggests that rivalry between China's state capitalism and European ordo-liberalism could be resolved at best through a multilateral, rules-based legal and dispute settlement system. 10 Andersen anatomizes the elements and contents of the rule of law. In contrast with the Chinese instrumentalist notion presented in CHEN's essay above, Andersen extracts the minimum consensus from the Hayek, Rawls and Raz theories, concluding that legal certainty, transparency, predictability, access to justice and equality are necessities for the definition of the rule of law.…”