Reassertion of Control through Binding Joint Interpretation in International Investment Agreements: Recent Developments and Suggestions for China

Abstract

Recent practice has shown that in cases of ambiguity or lacunae in international investment agreements (IIAs), arbitral tribunals have always come to divergent interpretations of identically or similarly worded treaty obligations. To limit tribunals’ broad discretion over treaty interpretation and ensure that the treaty texts best reflect the intent of contracting states, a growing number of states have attempted to use the joint interpretation mechanism as an innovative solution to exercise their control over IIAs. The awareness of using the joint interpretation mechanism to address concerns regarding what it considers to be adverse interpretations by investment
arbitration tribunals has been gradually formed in China for the last several years. Due to insufficient practice of the Chinese government regarding the use of the mechanism in investment arbitration, this article points out that China may rush into concluding IIAs containing template joint interpretation provisions with little consideration to controversial issues associated with implementation of the mechanism in arbitration. Subsequently, the article raises relevant factors to be taken into account by China and its  counterparties along the “Belt and Road” while incorporating the mechanism into their upcoming IIAs.