My Latest Paper on the Enforcement (or Lack Thereof) of ICSID Awards in China

by Julian Ku

Those international investment law nerds out there know that Article 54 of the ICSID Convention requires each state party to “recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.”  Many of you also probably know that China is one of the most enthusiastic players in the bilateral investment treaty system that often gives ICSID tribunals jurisdiction to issue awards in favor of investors against host governments.

My latest paper, “The Enforcement of ICSID Awards in the People’s Republic of China”, discusses how China (nearly 20 years after joining the ICSID Convention) has failed to adopt any domestic legal mechanism that would fulfill its article 54 obligations.  The only theory by which China could claim fulfillment is if Chinese courts gave the ICSID Convention “direct effect” within its domestic legal system.  I cast some doubts on that theory as well.  Here is the abstract, and comments, of course, are always welcome.

The People’s Republic of China is one of the most enthusiastic signatories of bilateral investment treaties that grant mandatory jurisdiction to the ICSID investment arbitration system. This essay considers the PRC’s domestic laws affecting the fulfillment of its ICSID Convention obligations to recognize and enforce ICSID awards. It notes that the PRC has failed to enact any specific legislation to comply with the ICSID Convention’s recognition and enforcement obligations, making its compliance with these obligations uncertain. It concludes that the only way that the PRC could claim to have fulfilled its treaty obligations is to declare that the ICSID Convention and related agreements have direct effect in its domestic law. The status of treaties within PRC law, however, remains uncertain and unsettled. For this reason, it is likely that a judicial interpretation from the Supreme People’s Court is necessary to guarantee enforcement of such an award within the PRC system. Without such an interpretation, it is highly doubtful that a PRC court would enforce an ICSID award, despite the ICSID Convention’s plain requirement that it do so.

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