File #2537: "2018_Book_TheProtectionOfForeignInvestme.pdf"

2018_Book_TheProtectionOfForeignInvestme.pdf

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1|Preface|6
1|Contents|7
1|Abbreviations|16
1|Chapter 1: Introduction|20
2|1.1 Problem Definition and Research Question|22
2|1.2 Objects of the Investigation and Conceptual Framework|24
2|1.3 The Course of the Argument|27
1|Chapter 2: International Investment Treaties|29
2|2.1 Investment Protection Under International Investment Treaties|31
3|2.1.1 Overview of Protection Standards in International Investment Treaties|32
3|2.1.2 Development of Investment Protection Under International Treaties|33
4|2.1.2.1 Friendship, Commerce and Navigation Treaties|33
4|2.1.2.2 The Proliferation of Bilateral Investment Treaties|37
4|2.1.2.3 Recent Developments in International Investment Treaty-Making|39
3|2.1.3 Early Failures of Multilateral International Investment Treaty Attempts|41
4|2.1.3.1 The Abs-Shawcross Draft Convention on Investments Abroad (1959)|41
5|Substantive Law Protection Standards|42
5|Procedural Law Protection Standards|43
4|2.1.3.2 The OECD Draft Convention on the Protection of Foreign Property (1967)|43
5|Substantive Law Protection Standards|44
5|Procedural Law Protection Standards|45
3|2.1.4 Significance of Legal Protection Under International Investment Treaties|46
4|2.1.4.1 Creating a Favourable and Stable Legal Environment|46
4|2.1.4.2 Enforcement of the Investment Treaty-Shaped Legal Environment|47
3|2.1.5 The Legal Effect of International Law in Mongolia|47
4|2.1.5.1 Customary International Law and International Minimum Standard of Treatment of Aliens|47
4|2.1.5.2 General Principles of Law|50
4|2.1.5.3 International (Investment) Treaties|51
2|2.2 Bilateral Investment Treaties|53
3|2.2.1 Bilateral Investment Treaties Entered into by Mongolia|54
3|2.2.2 Approach Towards Bilateral Investment Treaties|55
4|2.2.2.1 The 1990s|55
4|2.2.2.2 The 2000s|56
4|2.2.2.3 Approach Analysis|56
3|2.2.3 Bilateral Investment Treaties Entered into with Member States of the European Union|57
4|2.2.3.1 The European Union´s Exclusive Competence for Foreign Direct Investments|58
4|2.2.3.2 Regulation (EU) No. 1219/2012 on the Legal Status of Extra-EU Bilateral Investment Treaties Under European Union Law|59
4|2.2.3.3 Future International Investment Treaties of the European Union|60
2|2.3 Trade-Related and Sectoral International Treaties with Investment Chapters|62
3|2.3.1 Preferential Trade and Investment Agreements|63
4|2.3.1.1 The (Re-) Integration of Investment Rules into International Trade Agreements|63
4|2.3.1.2 Implications for the Current International Investment Law System|64
4|2.3.1.3 Preferential Trade and Investment Agreements and Regional Economic Integration in East Asia|67
3|2.3.2 The Japan-Mongolia Economic Partnership Agreement (2015)|69
4|2.3.2.1 Contents of the Agreement and Economic Significance|69
4|2.3.2.2 Chapter 10 of the Agreement Governing Mutual Foreign Investments|70
4|2.3.2.3 Relation of the Agreement to the Japan-Mongolia BIT (2001)|71
3|2.3.3 The Energy Charter Treaty (1994)|72
4|2.3.3.1 Treaty Origin|72
4|2.3.3.2 Sectoral Scope of Treaty Application|73
4|2.3.3.3 Investment Protection Under the Energy Charter Treaty|73
2|2.4 Standards of Investment Protection and Reflection in the International Investment Treaties of Mongolia|75
3|2.4.1 Scope of Application of International Investment Treaties|76
3|2.4.2 Substantive Law Protection Standards in International Investment Treaties|77
4|2.4.2.1 National Treatment|77
5|Overview of Content and Application of the Standard|78
5|Evaluation of International Investment Treaties|81
4|2.4.2.2 Most-Favoured-Nation Treatment|82
5|Overview of Content and Application of the Standard|82
5|The Extension of Most-Favoured-Nation Treatment to Dispute Settlement Clauses|84
5|Evaluation of International Investment Treaties|86
4|2.4.2.3 Fair and Equitable Treatment|87
5|Fair-and-Equitable-Treatment Clauses Linked to (Customary) International Law|88
5|Unqualified Fair-and-Equitable-Treatment Clauses as Autonomous Legal Standard|89
5|Principles of Protection Commonly Associated with Fair and Equitable Treatment|91
5|The Doctrine on the Protection of Legitimate Expectations|96
5|Evaluation of International Investment Treaties|100
4|2.4.2.4 Full Protection and Security|101
5|Overview of Content and Application of the Standard|101
5|Evaluation of International Investment Treaties|107
4|2.4.2.5 Expropriation and Compensation|108
5|Overview of Content and Application of the Standard|108
5|Evaluation of International Investment Treaties|111
4|2.4.2.6 Free Transfer of Funds and Capital|112
5|Overview of Content and Application of the Standard|113
5|Evaluation of International Investment Treaties|115
4|2.4.2.7 Umbrella Clauses in International Investment Treaties|115
4|2.4.2.8 Interim Conclusion|116
4|2.4.2.9 Competing Obligations Under Human Rights Law|117
5|International Human Rights Obligations|119
5|Domestic Human Rights Obligations|122
3|2.4.3 Investor-State Arbitration Offers in International Investment Treaties|124
4|2.4.3.1 Forms of State Consent to Investor-State Arbitration|125
5|Consent Through Dispute Settlement Clauses in International Investment Treaties|125
5|Consent Through Dispute Settlement Clauses in Domestic Investment Laws|126
5|Consent Through Arbitration Clauses in Investor-State Contracts|127
4|2.4.3.2 Significance of Investment Treaty-Based Investor-State Arbitration|127
4|2.4.3.3 Features of Dispute Settlement Clauses in International Investment Treaties|128
5|Scope of Consent to Investment Treaty-Based Investor-State Arbitration|129
5|(Pre-) Conditions of Investment Treaty-Based Investor-State Arbitration|130
4|2.4.3.4 Evaluation of International Investment Treaties|132
5|Wide Dispute Settlement Clauses in International Investment Treaties|133
5|Narrow Dispute Settlement Clauses in International Investment Treaties|134
5|(Pre-) Conditions for Investor-State Arbitration in International Investment Treaties|135
4|2.4.3.5 Interim Conclusion|138
3|2.4.4 Investor-State Arbitrations Based on International Investment Treaties of Mongolia|139
4|2.4.4.1 Alstom Power Italia v. Mongolia|139
4|2.4.4.2 Paushok v. Mongolia|139
4|2.4.4.3 China Heilongjiang v. Mongolia|141
4|2.4.4.4 Khan Resources v. Mongolia|147
2|2.5 International Conventions Supporting the Enforcement of International Investment Treaties|151
3|2.5.1 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)|151
4|2.5.1.1 International Obligation to Enforce Foreign Arbitral Awards|152
4|2.5.1.2 Challenge and Review of Foreign Arbitral Awards by National Courts|153
3|2.5.2 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965)|154
4|2.5.2.1 International Obligation to Enforce Convention-Based Arbitral Awards|155
4|2.5.2.2 Challenge and Annulment of Convention-Based Arbitral Awards|155
2|2.6 Summary of the Main Results|156
1|Chapter 3: Domestic Investment Law|160
2|3.1 Investment Protection Under Domestic Investment Laws|162
3|3.1.1 Significance of Legal Protection Under Domestic Investment Laws|163
3|3.1.2 Drawbacks of erga omnes Protection Under Domestic Investment Laws|164
2|3.2 The Mongolian Investment Law (MIL) (2013)|164
3|3.2.1 The Course of the Legislative Process|165
4|3.2.1.1 The Foreign Investment Law (1993)|165
5|Scope of Application and Admission of Foreign Investments|166
5|Legal Preferences and Incentives for Foreign Investors|167
5|Substantive Law Provisions on Investment Protection|167
5|Procedural Law Provisions on the Settlement of Investor-State Disputes|168
4|3.2.1.2 Amendments to the Foreign Investment Law (2002)|168
5|Scope of Application and Admission of Foreign Investments|169
5|Legal Preferences and Incentives for Investors|169
5|Provisions on Investment Protection and the Settlement of Investor-State Disputes|170
4|3.2.1.3 Law on Foreign Investments in Strategic Sectors (2012)|171
5|Background of the Law|171
5|Legal Content and Restricting Measures|173
4|3.2.1.4 Fundamental Revision of the Domestic Investment Law System (2013)|175
3|3.2.2 Scope of Application of the Mongolian Investment Law|176
3|3.2.3 The Admission of Foreign Investments in Mongolia|177
4|3.2.3.1 Private-Owned Foreign Investments|178
4|3.2.3.2 State-Owned Foreign Investments|179
5|Definition of Foreign State-Owned Legal Entity|179
5|Admission Requirements and Authorisation Procedure|179
3|3.2.4 Taxation Preferences and Incentives for Investments|180
4|3.2.4.1 Types of Taxation Incentives and Covered Tax Rates|181
4|3.2.4.2 Tax-Rate-Stabilisation Certificates|181
5|Issuing Criteria and Validity Periods of Tax-Rate-Stabilisation Certificates|181
5|Right to Demand a Tax-Rate-Stabilisation Certificate and Legal Effect|183
3|3.2.5 Other Legal Incentives for Investments|184
4|3.2.5.1 Land Use-Related Measures|184
4|3.2.5.2 Other Promotional Measures|185
3|3.2.6 Qualified-Majority Requirement for Future Legal Amendments|186
2|3.3 Standards of Investment Protection and Reflection in the Mongolian Investment Law|186
3|3.3.1 Substantive Law Protection Standards in Domestic Investment Laws|187
4|3.3.1.1 National Treatment|188
5|Direct and Indirect Guarantees of Equal Treatment|188
5|Evaluation of the Domestic Investment Law|189
4|3.3.1.2 Expropriation and Compensation|190
5|Constitutional and Domestic Investment Law Guarantees on Expropriation|190
5|Evaluation of the Domestic Investment Law|191
4|3.3.1.3 Free Transfer of Funds and Capital|192
5|Transferable Funds and Transfer Restrictions|192
5|Evaluation of the Domestic Investment Law|193
4|3.3.1.4 Fair and Equitable Treatment|193
3|3.3.2 Investor-State Arbitration Offers in Domestic Investment Laws|194
4|3.3.2.1 Significance of Investor-State Arbitration Based on Domestic Investment Laws|195
4|3.3.2.2 Scope of Consent to Investor-State Arbitration Based on Domestic Investment Laws|196
4|3.3.2.3 (Pre-) Conditions of Investor-State Arbitration Based on Domestic Investment Laws|196
4|3.3.2.4 Evaluation of the Domestic Investment Law|197
2|3.4 Summary of the Main Results|198
1|Chapter 4: Investor-State Contracts|202
2|4.1 Investment Protection Under Investment Contracts with Host States|203
3|4.1.1 Definition of Investment Contracts|205
3|4.1.2 Investment Contracts as a Unique Source of Rights and Obligations|206
4|4.1.2.1 Parties Involved and Objects of Investment Contracts|207
4|4.1.2.2 Special Contractual Techniques of Investment Protection|207
4|4.1.2.3 Investment Contracts and Relation to International Law|208
4|4.1.2.4 Public Law Nature of Investment Contracts|209
3|4.1.3 Significance of Legal Protection Under Investment Contracts|210
4|4.1.3.1 Contractual Support of Investment Law Protection and Public Governance|211
4|4.1.3.2 The Role of Investment Contracts in Mongolia|211
3|4.1.4 The Public Law Character of Investment Contracts in Mongolia|212
2|4.2 The Statutory Framework for Investment Contracts in Mongolia|214
3|4.2.1 Government Entitlement and Right to Demand an Investment Contract|215
3|4.2.2 Minimum Contract Duration of Investment Contracts|215
3|4.2.3 Contents of Investment Contracts Pursuant to Article 20.4 MIL|216
3|4.2.4 Government Regulation on Investment Contracts (2014)|217
4|4.2.4.1 Scope of Application|217
4|4.2.4.2 Application for an Investment Contract and Grounds for Refusal|218
4|4.2.4.3 Negotiation and Conclusion of Investment Contracts|218
4|4.2.4.4 Contents of Investment Contracts Pursuant to the Government Regulation|219
4|4.2.4.5 Monitoring and Termination of Investment Contracts|220
3|4.2.5 General Remarks on the Statutory Framework for Investment Contracts|220
4|4.2.5.1 Investment-Threshold-Amount Requirement and Consequences|221
4|4.2.5.2 Changes of Circumstances and Adaption or Termination of Investment Contracts|222
5|Implementation of Renegotiation Clauses|222
5|Change of Circumstances Addressed by National Law|223
2|4.3 Standards of Investment Protection Provided by Investment Contracts|225
3|4.3.1 Contracting on Legal Stability|226
4|4.3.1.1 Origins of Legal Instability|226
4|4.3.1.2 Legal Stability and Fair-and-Equitable-Treatment Clauses in International Investment Treaties|228
4|4.3.1.3 Contractual Stabilisation Clauses|232
4|4.3.1.4 Parliamentary Authorisation to Contract on Investment Stabilisation|234
3|4.3.2 Contracting on the Applicable Law|236
4|4.3.2.1 The Combined Application of National Law and International Law|238
4|4.3.2.2 Party Freedom to Choose the Applicable Law|241
4|4.3.2.3 Potential Choice-of-Law Restrictions Under National Law|243
5|Special Local-Law Requirements for Public Law Contracts|243
5|General Local-Law Requirements in Domestic Investment Laws|245
5|Restrictions Under Arbitration Rules and Domestic Arbitration Laws|245
4|4.3.2.4 Applicable Law in the Absence of a Choice of Law|247
3|4.3.3 Contracting on Dispute Settlement by International Arbitration|249
4|4.3.3.1 Significance of Investment Contract-Based Investor-State Arbitration|249
4|4.3.3.2 The Legality of Arbitration Agreements Involving the State and Public Law Contracts|251
5|Incapacity of State Entities to Enter into Arbitration Agreements|252
5|Non-Arbitrability of Public Law Contracts and Disputes Arising from the Contract|255
4|4.3.3.3 Forum Selection Clauses in Investment Contracts|257
2|4.4 Standards of Investment Protection and Implementation in Investment Contracts in Mongolia|258
3|4.4.1 Stabilisation Clauses in Investment Contracts|259
3|4.4.2 Applicable-Law Clauses in Investment Contracts|260
4|4.4.2.1 General Permissibility of Applicable-Law Agreements|262
4|4.4.2.2 Potential Choice-of-Law Restrictions Under National Law|263
5|Article 7.2 of the MIL|264
5|Article 20.4 of the MIL|265
4|4.4.2.3 Application of International Law in the Absence of Its Choice|266
3|4.4.3 Arbitration Clauses in Investment Contracts|266
4|4.4.3.1 Statutory Framework for Public-Private Arbitrations|267
4|4.4.3.2 Standing Offer to Arbitrate Investment Contracts in Article 6.9 of the MIL|269
4|4.4.3.3 Scope of Arbitration Agreements and Compatibility with National Law|269
5|Claims in Relation to Investment Contracts|270
5|Claims in Relation to Domestic Laws|271
5|Claims in Relation to International Investment Treaties|273
3|4.4.4 Interim Conclusion|275
4|4.4.4.1 Contracting on Investment Stabilisation|275
4|4.4.4.2 Contracting on the Applicable Law|276
4|4.4.4.3 Contracting on Dispute Settlement by International Arbitration|277
2|4.5 Investment Contracts Invoked Under Umbrella Clauses in International Investment Treaties|278
3|4.5.1 Umbrella Clauses and Contractual Undertakings by the Host State|279
4|4.5.1.1 Overview of Principle and Rationale|280
4|4.5.1.2 Legal Debates and Interpretive Uncertainty|280
3|4.5.2 Umbrella Clauses and Unilateral Promises or erga omnes Guarantees by the Host State|287
3|4.5.3 Umbrella Clauses and Relation to Forum Selection Clauses in Investment Contracts|291
3|4.5.4 Evaluation of International Investment Treaties|296
4|4.5.4.1 Classic Umbrella Clauses|298
4|4.5.4.2 Umbrella Clauses with Particularities|299
5|Restriction to Contractual Undertakings|299
5|Exclusion of erga omnes Guarantees|299
5|The `Singaporean Type´ of Umbrella Clause|300
3|4.5.5 Investment Contracts and International Investment Treaties in the Absence of an Umbrella Clause|302
4|4.5.5.1 The Extension of Most-Favoured-Nation Treatment to Umbrella Clauses|303
4|4.5.5.2 Investment Contracts Invoked Under Wide Dispute Settlement Clauses in International Investment Treaties|306
2|4.6 Summary of the Main Results|311
1|Chapter 5: Results and Concluding Remarks|319
1|Annex|324
2|Mongolian Law on Investment (Unofficial Translation)|324
3|Chapter One|324
4|General Background|324
3|Chapter Two|327
4|Common Legal Guarantee of Investment|327
3|Chapter Three|329
4|Full Rights of the State Bodies Related To Investment|329
3|Chapter Four|330
4|Investment Promotions|330
3|Chapter Five|332
4|Stabilization of Investment Environment|332
3|Chapter Six|337
4|Investment by Foreign Government Owned Legal Entity|337
3|Chapter Seven|338
4|Miscellaneous|338
1|Table of Cases|340
2|ICSID Decisions|340
2|ICSID Additional Facility Decisions|345
2|UNCITRAL Decisions and Cases|346
2|SCC Decisions|347
2|Other Decisions and Judgments|347
1|Table of Treaties|349
2|Multilateral Treaties|349
2|Bilateral Treaties|350
1|Bibliography|357