6 - Procedural Models to Upgrade BITs

Summary

With the rise of a new generation of investment policies, the modernisation or upgrading of existing bilateral investment treaties ('BITs') is of significant interest to States. China has upgraded 28% of its investment treaties in various ways. Two investment arbitration tribunals and one highest court at the seat of arbitration have recently rendered decisions favouring the application of old Chinese BITs over the upgraded ones. China’s experience with upgrading BITs may provide general policy discourse and direction for other countries planning to upgrade their BITs. Using China’s experience, this paper categorises a typology of upgrading BITs into the Co-existence Model (parties to an old BIT join existing or new FTAs or a regional investment agreement), the Replacement Model (replace an old BIT with a new one), the Amendment Model (amend an old BIT by a protocol) and the Joint Interpretation Model (issue a diplomatic announcement to interpret a BIT). This paper also discusses the benefits and challenges of each Model and concludes with possible directions for future BIT upgrading.