The State’s Responsibility for the Violation of Investment Contracts by State-owned Entities in the International Investment Arbitrations


China Business and Market - - NEWS -

(Sichuan University,Chengdu,Sichuan610207,China)

Abstract:The state’s responsibility for the violation of investment contracts by state- owned entities must meet the two requirements of“attribution”and“violation of international obligations”at the same time. The independence of articles 4,5 and 8 of the draft articles on Responsibility of States for Internationally Wrongful Acts indicates that the satisfaction of any element by a State- owned entity can attribute its conduct to the State. Although the international investment arbitration practices are still controversial as to how violation of investment contracts constitutes breach of international obligations,they all agree that attribution rules are inextricably linked to violations of international law. As far as the investment contract of our country is concerned,the joint venture contract is usually a pure commercial contract. The review and approval of the Chinese government authorities cannot be regarded as the basis for the state's liability. The joint exploitation of oil and gas resources and BOT contracts may be recognized as state contracts due to the particularity of Chinese subjects. But even so,they can only apply Chinese laws and resort to local remedies in most cases unless they infringe on the related clauses of BITs.

Key words:state entity;investment contracts;attribution rules;Umbrella Clause;state responsibility

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