China signed the ICSID Convention on 9 February 1990, and ratified it on 1 July 1992. China deposited the instrument of ratification on 7 January 1993. The ICSID Convention entered into force in China on February 6, 1993. Following the resumption of sovereignty over Hong Kong and Macao, the ICSID Convention also applies to the two Special Administrative Regions (SARs) in China.

On 7 January 1993, according to Article 25(4) of the ICSID Convention, China notified the ICSID that the Chinese government would only consider submitting to the ICSID jurisdiction disputes over compensation resulting from expropriation and nationalization. However, such a limitation on China’s consent to the ICSID jurisdiction should be deemed lifted if China agrees to broaden the scope of disputes submitted to the ICSID arbitration in its subsequent BITs or multilateral treaties.

On 26 August 2022, China designated Hong Kong SAR as competent to become a party to investment disputes submitted to the ICSID. Moreover, pursuant to Article 25(3) of the ICSID Convention, China also notified that China’s approval would not be required for Hong Kong’s consent to submit disputes to the ICSID.

China acceded to the New York Convention on 22 January 1987, and the Convention entered into force in China on 22 April 1987. Upon resumption of sovereignty over Hong Kong on 1 July  1997, the Government of China extended the territorial application of the Convention to Hong Kong SAR, subject to the statement originally made by China upon accession to the Convention. On 19 July 2005, China declared that the Convention shall apply to the Macao SAR, subject to the statement originally made by China upon accession to the Convention.

When acceding to the Convention, China made two reservations: the reciprocity reservation (i.e., the Convention shall apply to the recognition and enforcement of an arbitral award made in the territory of another Contracting State) and the commercial reservation (i.e., the Convention shall only apply to the disputes arising from contractual and noncontractual commercial legal relationship). The “contractual and non-contractual commercial legal relationship” specifically refers to the economic rights and obligations resulted from contract, infringement or arising according to law, such as sale of goods, lease of property, project contracting, processing, technology assignment, joint adventure, joint business operation, exploration and development of natural resources, insurance, credit, labor service, surrogate, consultation service, marine/civil aviation/railway/road passenger and cargo transportation, product liability, environment pollution, marine accident, dispute over ownership, etc., and it does not include the dispute between foreign investors and the host government.

China has one of the most extensive BIT network in the world, but it does not have its own model BITs. China’s BITs could be roughly divided into three generations.

The first generation refers to the BITs signed between 1982 and 1989. The typical features of the “first-generation BITs” include, for instance, only ad hoc arbitration clauses, and disputes allowed for arbitration were those relating to the “amount of compensation for expropriation”, which from time to time gave rise to conflicting explanations in terms of its application.

The second generation refers to the BITs signed between 1990 and 1997, thanks to China’s acceding to the ICSID Convention in February 1990. The second-generation BITs incorporated both ICSID arbitration and ad hoc arbitration as available options, and also liberalized the scope of disputes that can be submitted for arbitration.

The third generation refers to the BITs signed from 1998 until present, represented by the China – Canada BIT talks and others. The third-generation BITs incorporated many modern provisions that secure much broader investor protection, such as full protection and security (FPS), fair and equitable treatment (FET) and most-favoured-nation (MFN) treatment.

According to the statistics provided by the United National Conference on Trade and Investment (UNCTAD), as of 28 February 2025, 137 investment treaties that China (excluding Hong Kong, Macau and Taiwan) has signed and/or ratified, including 109 BITs and 28 other investment agreements (e.g. FTAs, MITs), are currently in force. Below is a Table listing all effective treaties/agreements facilitating investment that have been signed and/or ratified by China:

a) Has your state exercised termination rights or indicated any intention to do so? If so, on what basis (e.g. impact of the Achmea decisions, political opposition to the Energy Charter Treaty, or other changes in policy)?

No. Among 22 BITs that have been terminated, 4 BITs were terminated by foreign countries (e.g., the China – India BIT (2006) was terminated by India on 03/10/2018, the China – Indonesia BIT (1994) was terminated by Indonesia on 31/03/2015, the China – Ecuador BIT (1994) was terminated by Ecuador on 19/05/2018, and the China – Bolivia, Plurinational State of BIT (1992) was terminated by Bolivia on 14/05/2014), and 18 BITs were terminated due to replacement of new BITs.

b) Do any of the treaties reflect (i) changes in environmental and energy policies, (ii) the advent of emergent technology, (iii) the regulation of investment procured by corruption, and (iv) transparency of investor state proceedings (whether due to the operation of the Mauritius Convention or otherwise).

There are some notable changes in China’s environmental and energy policies. For example, the China – Tanzania BIT (2013) provides that “1. The Contracting Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Contracting Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. 2. Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or 8 maintaining environmental measures necessary to protect human, animal or plant life or health.”

With respect to the regulation of investment procured by corruption, it is China’s long-existing standing in its BITs.  Nearly all BITs China signed contain legality clauses requiring the investment was invested/made in accordance with domestic laws at the time of investment. This should include laws on corruption.

Changes in other aspects remained to be seen.

China is not yet a Contracting Party to the Mauritius Convention.

c) Does your jurisdiction publish any official guidelines, notes verbales or diplomatic notes concerning the interpretation of treaty provisions and other issues arising under the treaties?

China keeps a good record of diplomatic notes exchanged with other states concerning its treaties. The Ministry of Foreign Affairs of the People’s Republic of China (MFA) has established a Chinese treaties database (http://treaty.mfa.gov.cn/Treaty/web/index.jsp) to promote the effective utilization of the treaties concluded with other states. In case a specific diplomatic note could not be found, one could visit and consult the Diplomatic Archives of the MFA (http://dag.fmprc.gov.cn/chn/dakf/) or follow the Guidelines for the MFA’s Government Information Disclosure (https://www.fmprc.gov.cn/web/wjb_673085/zfxxgk_674865/gkzn/) to apply. In Sanum v. Laos (I), the Chinese Embassy in Vientiane, the Lao capital issued a diplomatic note in 2014 indicating that the China – Laos BIT does not apply to the Macao SAR. However, the Singapore Court of Appeal confirmed that the China – Laos BIT applied to Macao SAR.

The Chinese government does not usually publish official commentaries concerning the intended meaning of a treaty or a trade agreement. However, during the negotiation and ratification process, the Ministry of Commerce of the People’s Republic of China (MOFCOM) occasionally held press conferences in the form of Q&As to provide official answers to inquiries.

On 28 June 2021, the MOFCOM published a Reference Guide for Enterprises on Utilizing the Investment Agreements with a view to helping Chinese enterprises to better understand the relevant provisions of Chinese investment treaties and the goals they intend to achieve. Nevertheless, the MOFCOM cautioned that under no circumstance should this Reference Guide be deemed as the Chinese government’s official interpretation of any investment agreement or relevant provisions thereof, nor should it be taken as or otherwise influence the views and stances of the Chinese government on any relevant issue.

a) Please list out any formal criteria imposed by such legislation / instrument (if any) concerning the admission and divestment of foreign investment;

Yes. China promulgated a new Foreign Investment Law (the “FIL”) on 15 March 2019. Since its entry into force on 1 January 2020, the FIL has replaced the previous three old laws governing foreign investment, i.e., the Chinese-Foreign Equity Joint Venture Law, the Chinese-Foreign Cooperative Joint Venture Law, and the Wholly Foreign Owned Enterprise Law. To effectively implement the FIL, the State Council of China promulgated the Implementing Regulations on the FIL (the “IR”) on 26 December 2019, and the instrument came into force on 1 January 2020.

According to Article 4 of the FIL, China applies the “pre-establishment national treatment plus Negative List” regime to the administration of foreign investment. Such a regime has replaced the previous more restrictive “positive list” approach. It means that all previous restrictions on foreign investors in fields outside the “Negative List” are cancelled.

More specifically, foreign investors cannot make investments in prohibited fields in the Negative List annually published by the National Development and Reform Commission (the “NDRC”) and MOFCOM. When investing in a restricted field covered by the Negative List, the foreign investor shall satisfy the restrictive requirements set forth in the Negative List (FIL Article 28(2)). According to Article 33 of the IR, when making an investment in the restricted fields in the Negative List, the foreign investor shall comply with the special administrative measures on restrictive admission, such as those relating to equity ratios and appointment of senior executives, etc. Where the foreign investments are made in fields outside the Negative List, no formal admission would be required and they are subject to protection of national treatment (FIL Article 28(3)), although with caveats: all foreign investments are subject to information reporting system and national security review under the FIL.

b)Please list out what substantive right(s) and protection(s) foreign investors enjoy under such legislation / instrument;

Key Substantive Provisions:

• Foreign investors have the right to make comments and recommendations on legislation, regulations, and rules relating to foreign investment. The unpublished regulatory documents cannot serve as a basis for administration and regulation. (FIL Article 10 & IR Article 7).
• Foreign investors and foreign-invested enterprises may be accorded with preferential treatment in certain industries, fields, and regions. (FIL Article 14).
• Foreign-invested enterprises enjoy the formal right to national treatment. They must not be discriminated in any form in government procurement process. (FIL Article 16 & IR Article 15).
• The FIL and the IR strengthen the protection of IP rights by strictly prohibiting mandatory transfer of technology by administrative measures and protecting the trade secrets of foreign investors and foreign-invested enterprises. (FIL Articles 22-23 & IR 24-25).
• China shall not expropriate the investments made by foreign investors except under specific circumstances where public interest is at stake. In the case of expropriation or requisition, fair and reasonable compensation shall be made in due course of law. The compensation is determined as per the market value of the investment concerned. (FIL 20 & IR 21).
• Chinese local governments shall perform the policy commitments made to and various contracts concluded with foreign investors and foreign-invested enterprises. (FIL Article 25 & IR Articles 27-28).

c) Please list out what recourse (if any) a foreign investor has against the home state in respect of its rights under such legislation / instrument; and

Dispute Resolution

• A working mechanism for complaints of foreign-invested enterprises is incorporated with a view to timely handling problems raised by foreign-invested enterprises or their investors. (FIL 26).
• A swift collaborative protection mechanism is established to ensure the effective protection of IP rights in China. (IR Article 23).
• Litigation proceedings before Chinese people’s courts. The Supreme People’s Court (the “SPC”) in China promulgated a judicial interpretation titled The SPC Interpretations on Several Issues Concerning the Application of the Foreign Investment Law on 26 December 2019, and it entered into force on 1 January 2020. In 2021, the SPC enacted another judicial explanation titled The SPC Provisions on Several Issues in Adjudicating the Cases Concerning Foreign-Invested Enterprise Disputes on 29 December 2020, which entered into force on 1 January 2021.
• Arbitration The FIL and the IR are silent on this issue. It is regulated by the Arbitration Law (amended on 1 September 2017) and Civil Procedural Law (“CPL”, effective from 1 January 2024).

d) Does this legislation regulate the use of third-party funding and other non-conventional means of financing.

No.

There are 9 investor-state arbitration cases where China has been named as the Respondent State.

Pending cases:

• Montenero V. China (2021)
• Goh Chin Soon v. China (PCA Case No. 2021-30) (2021)
• Surfeit Harvest v. China (Taiwan) (UNCITRAL ad hoc arbitration) (2017)
• Hela Schwarz v. China (Taiwan) (ICSID Case No. ARB/17/19) (2017)

Concluded cases:

• Macro Trading v. China (ICSID Case No. ARB/20/22) (2020)
• AsiaPhos v. China (ICSID Case No. ADM/21/1) (2020)
• Jason Yu Song v. China (PAC Case No. 2019-39) (2019)
• Ansung Housing v. China (ICSID Case No. ARB/14/25) (2014)
• Ekran Berhad v. China (ICSID Case No. ARB/11/15) (2011)

The notable practice adopted in those cases is that China is likely to use jurisdictional challenges or objections to defend the claims against it. For example, in Ansung Housing Co., Ltd. v. China, China successfully used the ICSID Arbitration Rule 41(5) to dismiss Ansung’s claim due to the expiry of the 3-year limitation under the China – Korea BIT (2007). In AsiaPhos v. China, China successfully argued that the tribunal lacked jurisdiction to hear disputes other than the amount of compensation resulting from expropriation, nationalization or other measures having equivalent effect under the China – Singapore BIT (1985).

No, China has not yet been used as an arbitral seat for non-ICSID investment treaty arbitration proceedings.

As of this writing, there is no court practice in China in support of investment treaty proceedings.

In theory, for investment treaty proceedings seated in China, Chinese courts have the exclusive jurisdiction to render interim measures (including property and evidence preservation measures, and act preservations) concerning arbitration seated in mainland China. (Articles 28, 46 and 68 of the Arbitration Law, and Article 289 of the CPL). Therefore, during the arbitration, the applications for interim measures shall be transmitted to Chinese courts through the arbitration institution.

Parties to arbitration proceedings administered by designated arbitration institutions in Hong Kong would be able to apply to courts in the mainland China for interim measures, according to the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region signed by the SPC and the Department of Justice of Hong Kong in April 2019.

In the Model Law jurisdictions, specific default procedures to procure assistance from a court would apply when difficulties have arisen in the appointment of arbitrators by the parties or by two arbitrators appointing a third/presiding arbitrator, or an arbitral institution fails to play its role as an appointing authority. However, China is not a Model Law jurisdiction. Chinese law does not set out such default procedures for Chinese courts in the context of commercial or investment treaty arbitrations seated in China.

As of this writing, there is no court practice in China concerning annulment or setting aside of a non-ICSID investment treaty award.

In theory, for investment treaty proceedings seated in China, the potential grounds may be found in Article 290 of the CPL, which includes the following:

• No arbitration agreement;
• No proper notice on a respondent or failure to present its case;
• Non-conformity of composition of a tribunal with arbitration rules;
• Matters arbitrated beyond the scope of the arbitration agreement or not within the mandate of an arbitral institution; and
• Violation of public interest.

According to Article 53(1) of the ICSID Convention, an ICSID award shall be binding on China.

As of this writing, China has not adopted legislative or other measures to make the ICSID Convention effective in its territory pursuant to Article 69 of the ICSID Convention. Court practice remains to be seen.

According to Article 12 of the Law on Foreign State Immunity (effective 1 January 2024, “FSIL”), if a foreign State has agreed in an international investment treaty or otherwise in writing to submit an investment dispute between the foreign State and an organization or an individual of another State (including China) to arbitration, the foreign State shall not enjoy immunity from the jurisdiction of a Chinese court in the matter of recognition and enforcement of an arbitral award.

According to Article 14 of the FSIL, the property of a foreign State shall not enjoy immunity from compulsory judicial measures in Chinese courts if:

• the foreign State has expressly waived immunity from compulsory judicial measures by way of an international treaty, a written agreement, a written document filed with a Chinese court, or other means;
• the foreign State has allocated or earmarked the property for the enforcement of compulsory judicial measures; or
• compulsory judicial measures are taken to enforce a valid judgment or ruling rendered by a Chinese court, and the property of the foreign State is located in China, used for a commercial activity, and connected to the proceedings.

According to Article 53(1) of the ICSID Convention, an ICSID award shall be binding on China. China shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention. However, as of this writing, China has not designated competent courts or other authorities under Article 54(2) of the ICSID Convention for the purpose of recognizing and enforcing ICSID awards. Court practice remains to be seen.

For a non-ICSID investment treaty award made outside China, regrettably, the New York Convention cannot be invoked as a legal basis for recognition and enforcement in China because when acceding to the Convention, China made the commercial reservation excluding disputes between foreign investors and the host government. The SPC’s judicial interpretation on implementing the New York Convention dated 10 April 1987 also confirms the same. Nevertheless, a party seeking enforcement may invoke Article 304 of the CPL and apply to a competent intermediate court in China. The court shall process the application in accordance with an international treaty concluded or acceded by China or under the principle of reciprocity.  Developments remain to be seen.

For a non-ICSID investment treaty award made within China, Article 290 of the CPL may apply

Generally speaking, assets of a foreign state used for commercial activities may be subject to enforcement. Under Article 15 of the FSIL, assets used for commercial activities do not include the following:

• property, including bank accounts, of missions, consular posts, special missions, missions to international organizations, and delegations to international conferences, which is used for the performance of official functions or intended for such use;
• property of a military character or property that is used for military purposes or intended for such use;
• property of the central bank or financial regulatory administration exercising central bank functions of a foreign State or a regional economic integration organization, including cash, notes, bank deposits, securities, foreign exchange reserves, gold reserves and the immovable property and other property of the central bank or a financial regulatory administration exercising central bank functions;
• property that forms part of the cultural heritage or archives of a foreign State, which is not placed or intended to be placed for sale;
• object of scientific, cultural or historical value used for exhibition, which is not placed or intended to be placed for sale as property; and
• other property that a Chinese court considers as not being used for a commercial activity.

China has been active in participating in and expressing contemporary policy views on reforms of investor-State disputes settlement (ISDS) at the global level. On 18 July 2019, Chinese government made submissions to the UNCITRAL Working Group III, setting forth China’s policies and views relating to investor-state arbitration. These submissions are recorded in the UNCITRAL Secretariat Note (A/CN.9/WG.III/WP.177).

According to these submissions, firstly, China believes that the investor-state arbitration “helps to build the rule of law into international investment governance and to avoid economic disputes between investors and host countries escalating into political conflicts between nations.” In general, the ISDS mechanism has the basic functions “to interpret and apply treaties and determine the responsibility of States” in the investment disputes with foreign investors. Therefore, the existing ISDS mechanism, including the investor-state arbitration, should be maintained.

Secondly, China observed some key problems of the current ISDS mechanism that have impaired its functions in resolving investor-state disputes. They are: (1) arbitral awards lack an appropriate error-correcting mechanism; (2) arbitral awards lack stability and predictability; (3) arbitrators’ professionalism and independence are questioned; (4) third-party funding affects the balance between parties’ rights; (5) time frames are overly long and costs overly high.

On such basis, China made several proposals for improving the existing ISDS mechanism, including but not limited to the following areas: (1) establishing a permanent appellate mechanism; (2) retaining the right of the parties to appoint arbitrators; (3) improving the rules relating to arbitrators, such as the relevant codes of conduct, rules for selection and disqualification of arbitrators to increase transparency and reasonableness, etc.; (4) including a pre-arbitration consultation procedure; and (5) stipulating transparency discipline for third-party funding.

On October 24-25, 2024, the eighth intersessional meeting on investor-State dispute settlement (ISDS) reform was held in Chengdu, China. The meeting focused on key issues related to the establishment of an appellate mechanism and a multilateral instrument for ISDS reform. The meeting was divided into several panels, each addressing different aspects of the proposed reform, including the rationale and Implications of an appellate mechanism, structuring an appellate mechanism, key components of an appellate mechanism, impact of an appellate mechanism, standing mechanism and related issues, multilateral instrument on ISDS reform, etc.

In consideration of China’s coherent policy of incorporating investor-state arbitration into its BITs and TIPs and China’s response to the contemporary issues, it appears that China is a conservative supporter and an incremental reformer in investor-state arbitration, believing that significant reform shall be made to the current ISDS mechanism.

While third-party funding is well-established and prevalent in international arbitration, it remains relatively novel in China. Recent Chinese court judgments have demonstrated contrasting positions on third-party funding in litigation versus arbitration. A Shanghai court judgment in May 2022 invalidated a third-party funding agreement in litigation, citing violation of public order and good morals (see (2021) Hu 02 Ming Zhong No. 10224). Conversely, a Beijing court ruling in November 2022 affirmed the validity of third-party funding in arbitration (see (2022) Jing 04 Ming Te No. 368, 369).

Article 27 of the CIETAC International Investment Arbitration Rules (for trial implementation, effective from 1 October 2017) as well as Article 39 of the Rules for International Investment Arbitration of the Beijing International Arbitration Court (effective 1 October 2019) both permit third-party funding. This information enables a tribunal to consider funding arrangements when making its final awards. This kind of new provision promotes procedural transparency and helps mitigate potential conflicts of interest and ethical risks.