No-U-Turn Clauses in Chinese Investment Treaties

Abstract

To prevent parallel proceedings, international investment agreements (IIAs) have incorporated the “fork-in-the-road” clause and “no-U-turn” clause to coordinate domestic and international proceedings to the same investment dispute. The “no-U-turn” clause is more flexible than the “fork-in-the-road” clause because it permits the investor to initiate international arbitration after commencing domestic proceedings against the same measure of the host state. When applying “no-U-turn” clauses in investor-state arbitration cases where China is the respondent state, China’s relevant administrative litigation laws should be considered. This article explores two core issues that should be clarified when interpreting Chinese “no-U-turn” clauses, namely, the identity of the actor initiating domestic proceedings and the time when domestic proceedings can be withdrawn under Chinese law. By analyzing the deficiencies of the existing Chinese “no-U-turn” clauses which may cause ambiguity and impair their effectiveness in preventing parallel proceedings, this article proposes corresponding improvement suggestions. There should be more clarity in the wording of “no-U-turn” clauses that specify the identity of the party filing and withdrawing domestic proceedings. Additionally, China should establish more specific standards for allowing the withdrawal of administrative litigations.