1 1Dr Xiuli Han, LL.B. and LL.M. (Northeast Normal University), PhD (Xiamen University) is an Associate Professor of the School of Law at Xiamen University, P.R. China. The author can be contacted at email@example.com. I am indebted to Professor Benedict Kingsbury and Richard B. Stewart of NYU Law School for their suggestion, help, and encouragement, and I am also enormously grateful to my colleagues Juan Pablo Bohoslavsky and Tillmann Rudolf Braun for providing me with useful materials and suggestions. Thanks are also due to Mr Lucas Carson Gockel and Mr. Michael Kay for their proofreading assistance. Needless to say, I alone am responsible for any errors and for the views expressed in this paper. This research was supported by Hauser Global Law Program of NYU Law School (2008-2009 academic year), and is also outcome of National Social Science Fund Grant, P.R. China "Strategy Research on China's Overseas Environmental Regulation" (Grant No. 09CFX064) and National Social Science Fund Major Grant "Legal System for Promotion and Protection of China's Overseas Investment" (Grant No. 09&ZD032).
The transnational corporation is the major overseas investor; therefore, this paper uses these two phrases in the same sense. The transnational corporations are also called multinational corporations (MNCS) or multinational enterprises (MNES), but the author uses TNCs uniformly in this article. 2 Professor Richard B. Stewart discusses the theory of "disregarded interest" in detail in his paper "Accountability, Participation, and the Problem of Disregard in Global Regulatory Governance"; available at: http://iilj.org/courses/20081ILJColloqium.asp, last visited 16 June 2010. According to professor Richard B. Stewart, the environmental interest of the host state belongs to the disregarding one. The emphasis on environment responsibility of TNCs has been an important aspect of the creation of the New International Economic Order advocated by the developing countries to give greater control over foreign investment in the 1970s. The basic standpoint and content of the New Intemational Economic Order embodied in the Declaration on the establishment of a New International Economic Order (Resolution No. 3201 (S-V 1)) and Programme of Action on the Establishment ofa New International Economic Order (Resolution No. 3202(S-V1)) (available at http://dacccssdds.un.org/doc/PESOLUTION/GEN/Ni�,0/071/94/IMG/NP,007194.pdPOpen Element) and the Charter of Economic Rights and Duties of States (3281 (xxix)) adopted on the reports of the Second Committee of General Assembly Twenty-ninth Session in the same year (available at http://daccessdds. un.org/doc/RESOLUTION/GEN/NRO/738/83/IMG/NR073883.pdf?OpenElement). Regarding the typical viewpoints of scholars from the developing countries, see An Chen, PapersonInternationalEconomicLaw, Beijing University Press, 2005; (Yugoslavia) Bulajic, M., Principlesefinternationaldevelopmentlaw, translated by Dehai Tao, China Translation & Publishing Corporation, 1989. However, the fate of this allegation is tragic because the UN draft Code of Conduct on TNCS which includes environmental responsibility has never been officially adopted due to the resistance by Trrcs and the developed states where many TNCS are based. The content of the Draft of thc United Nations Code of Conduct on Transnational Corporation emphasizes the environmental law of the host state and international standard of environmental protection, and also stresses the self-consciousness of TNCa (for example, TNCs should disclose the environmental information related to their production and also should participate in developing and perfecting environmental standards). SeeU.N.CodeofConductonTransnatiotialCorporations, 23 LL.M. 626 (1984); alsosee David M. Schilling, MakinqCodesof ConductCredible:TheRoleof IndependentMonitoring,inGlobalCodesof Conduct:AnIdeaThoseTimeHasCome, Oliver F. Williams cd., 221, 222, 2000; Pia Z. Thadhani, RegulatingHumanRightsAbuses:Is Unoca!theAnswers 42 WM & MARY L. REV. 619, 640, 2000. In addition, a lot of environmental disasters which occurred in developing countries were disregarded. Among others, a typical case involves claims from victims of the Indian Bhopal disaster which were refused by the American courts. or .
Correspondingly, seldom do textbooks about international investment law or international environmental law discuss the relationship between investment and environment issues. For example, the famous textbook "International Environmental Law" by Wang Xi, published by Law Press China, contains a chapter titled "trade and environment", but no content on "investment and environment". The book "International Environmental Law: Cases, Materials, and Problems" (edited by Donald K. Anton etc., LexisNexis, 2007) also has no content on investment. Most textbooks on "international investment law" don't involve the environmental issue. The book "The Oxford Handbook of International Investment Law" (Peter Muchlinski etc. ed., Oxford University Press, 2008) is an exception, and it may represent a new trend of international investment law. ; The author's colleague Joel Gonzalez from Chile told me that Ttaca from US, England, Canada, Australia, and China create serious pollution through exploring copper mining in Chile, but China is a newcomer, and is regarded as a "threat" that frightens other states. ; Even today, the sky of Beijing and other major cities in China are full of smog, and it is even difficult to enjoy sunshine. I See "China's overseas environmental problems cause domestic concern", available at http://globalcompact critics.blogspot.com/2008/09/chinas-overseas-environmental-problems.html. With regard to the problem of ecological and environmental problems that arise in the process of China's outward investment (direct investment originating in China and directed outwards is also referred to as outward foreign direct investment (OFDI)), some Western medias have even accused China of being a "neo-colonialist" or "environment-colonialist" state. "Neo-colonialism" is a term used to delineate govemance and the mode of influence employed by Western capitalist states in developing states. "Nco-colonialism" should include "Environmental Colonialist" activities such as depleting natural resources, exporting waste, transferring polluting industries, and setting up non-tariff barriers. The Prime Minister of China Jiabao Wcn regards that this term should not be branded on China, but rather on some Western colonialists. See People's daily of China, June 23, 2006, page 7. 6See for example, Joseph Sarkis, Corporateenvironmentalbetuhmarking, Bradford, England: Emerald Group Publishing, 2003; Emeka A. Duruigbo, Multinationalcorporationsandinternational law:accountabilityandcompliaraceissuesinthepetroleumindustry, Ardsley, NY: Transnational Publishers, 2003; Jennifer A. Zerk, MultinationalsandCoqrorateSocialResponsibility,LimitationandOpportunitiesinInternational Law, Cambridge University Press, 2006; Hans Christian Bugge & Christina Voigt, Sustainabledevelopmentinintemationalandnationallaw:thatdidtheBTll11dtlandreportdotolegalthinkingandlegaldevelopment,andwhereranwegofromhere? Groningen: Europa Law Publishing, 2008; Dorccn McBarnet, Aurora Voiculcscu, Tom Campbell, Thenewcorporateaccountability:corporatesocialresponsibilityandthelaw, New York: Cambridge University Press, 2007; Ramon Mullcrat, CorporateSocialResponsibility:TheCorporateGovernanceof the2lstCenarry, Kluwer Law International, 2005.
7 Professor Congli Xu, a famous scholar in international law in China, puts forward the theory that China as a responsible state should not follow some "overbearing" Western countries, and should instead be a "merciful" power, see XU Chong Li, China'sstatusandBasicStrategiesinWto:InPerspectiveofInternationalRelationsandIntemational Law, Modem Law Science, Vol. 28, No 6, 2006, 3-13, at 11. ' The Ok Tedi copper mine, located in the Star mountains of Western Papua New Guinea (Pt.tc), operated by Ok Tedi Mining Limited (OTML), which was mainly set up by BHP, an Australian multination corporation, and the Government of PNG, caused terrible environmental damage to the ecosystem of the entire Ok Tedi and Fly River systems since it started production in 1984. New Caledonia has experienced severe environmental damage from their mining industry, including obvious degradation of the landscape and coastal areas plus air pollution from the nickel plant, see Mining Activities in New Caledonia, available at http;//www.unescap.org/drpad/vc/conference/bg_nc_147_man.htm. 10 The theory of global administrative law is advocated by Benedict Kingsbury and Richard B. Stewart of NYU. According to it, the mechanisms, principles, practices, and supporting social understandings that promote or otherwise affect the accountability of global administrative bodies in particular by ensuring they meet adequate standards of transparency, participation, reasoned decision, and legality, and by providing effective review of the rules and decisions they make. See Benedict Kingsbury, Nico Krisch, Richard B. Stewart, theEmergenceofGlobalAdministrativeLaw,lawandContemporaryProblems.vol.68, 2005,at 17. The following should be pointed out: A lot of NGos concentrate on environmental degradation and protection associated with foreign investment. They are powerful, as seen through the NGOS' success in placing the environmental protection issue into the draft negotiating text of the Multilateral Agreement on Investment (Mn7) by OECD and the subsequent failure of formulating MAL. Coalition for Environmentally Responsible Economies (CERES) for example, put forward CERES Principles (formerly called the Valdez Principles), a ten-point code of corporate environmental conduct to be publicly endorsed by companies as an environmental mission statement or ethic. Other NCOS such as Environmental Defense and International Rivers Network, in cooperation with the Comer House, the international ECA Watch network, and Friends of the Earth, and so on, also play an active role in environmental protection, but this paper does not investigate this aspect. As far as the administration based on collective action by transnational networks of governmental officials, it may result in non-binding policy in the field of environment, but there is no such an example now.
� � Quoting from a secondary source, see Sherif H. Seid, GlobalRegulationofForeignDirectInvestment, Ashgate Publishing Company, 2002, at 131. 12 2008 Statistical Bulletin of China's Outward Foreign Direct Investment, available at http://hzs2.mofcom.gov.cn/accessory/200909/1253869308655.pdf.
t3See Euromoney Institutional Investor PLc, Mining forChina'sOutboundDirectInvesttnent, China Law & Practice, October of 2008. t^ See Stephan W. Schill, TearingDowntheGreatWall -theNewGenerationInvestmentTrentiesof thePeople'sRepublicof China, available at http://wv�rw.cjicl.com/issues/15-1-SchiU.pdf
15 For China previous years' investments in overseas oil and gas sectors, please see the Rand Report: China's s Quest for Energy Security, available at http://www.rand.org/publications/MR/MR1244/. 10See Thirty Anniversary for Opening to the Outside World, Special Coverage Series, Overseas Investment Part, available at littp://zcq.ec.com.cn/topic/kaifarig3Ohwtz/iiidex.slittill. �� In the Industrial Policy for Investment Abroad and Industrial Catalogue for Investment Abroad enacted by National Development and Reform Commission (NDRC) and Ministry of Commerce, etc. on July 5, 2006, resource or raw and processed materials which are in short supply in China or are in urgent need by state economic development, including mining and most manufacturing, belong to the preferred projects. The Chinese government will give a lot of support to these projects. Preferred investments benefit from a broad range of incentives offering priority access to financing and foreign exchange, tax concessions and preferential customs treatment. 18See Euromoney Institutional Investor PLC, Mining forChina'sOutboundDirectInvestment, China Law & Practice, October 2008. Iv See Scott Holwick, Transnational,CorporateBehavioranditsDisparateandUnjustEffectantheIndigenousCulturesandtheEnvironmentofDevelopingNations:Jotav.Texaco,aCaseStudy, Colorado Journal of International Envirorunental Law and Policy, vol. 11, 2000, at 194. 20See China's Overseas Environmental Problems Cause Domestic Concern, available at http://global compacteritics.blogspot.com/2008/09/chinas-overseas-enviromnental-problerns.htnrl. 21 The outward/inward direct investment ratio towards developing countries is six times higher than the ratio towards developed countries. Chinese outward direct investment today is predominantly conducted on a South- South basis. See Axel l3erger, China's/1ewbilateralinvestmenttreaty:substance,rationalandimplication forinternationalinvestmentlaomaking, paper prepared for the American Society of International Law, International Economic Law 2008 biennial conference, November 14-15, 2008.
22 The new generation Brrs include much wider jurisdiction and national treatment clause, see Monika C. E. Hcymann, InternntionalLawandtheSettlement'ofInvestmentDispiitesRelatingtoChina, Journal of International Economic Law 11(3), 507-526, at 526; Axel Bcrger, Chirra'srrewbilateral Investmenttreaty:substance,rationalandimplication forinternationalinvestmentlawmaking, paper prepared for the American Society of International Law, International Economic Law 2008 biennial conference, November 14-15, 2008. z3See China's Overseas Environmental Problems Cause Domestic Concern, available at http://global compaetcritics.blogspot.com/2008/09/chinas-overseas-environmental-problerns.html. 24SeeChina'sMarchintoAfrica, African Business, July 2006, No. 322. 25 The report of WwF pointed out that, "The manner in which Chinese outward investments are guided and promoted will have significant implications for the development of the global governance system." "Chinese outward investments can be viewed as an indicator of the state of the global economy. As a result, decisions regarding the continuation of resource-intensive development, or alternativcly attempts to increase welfare through resource- efficient means, will be reflected in the direction and scale of future Chinese outward investment." See WWF, Rethink China's Outward Investment Flows (April, 2007), at 6, available at http://www.panda.org/ investment. See 2008 Statistical Bulletin of China's Outward Foreign Direct Investment, available at http://hzs2. mofcom.gov.cn/accessory/200909/1253869308655.pdf.
11 The Exim Bank of China is a government policy bank under the direct leadership of the State Council, and it has developed into a key channel of policy financing for offshore construction contracts as well as overseas investment projects. Many of the projects China's Exim Bank is supporting are in environmentally sensitive sectors such as extractive industries and large infrastructure, available at http://www.eca-watch.org/problems/china/ irn_ed_CSO Chexim.pdf. 2�SeeEama,q,IndependentReviewof theEnvironmentalImpactAssessment fortheMeroweDamProject(NileRiver,Sudan), March 1st, 2006. 29See Ben Schiller, the China model, available at http://www.opendemocracy.net/democracy-china/ cliina dcvelopmeiit_3136jsp. 30 China's overseas environmental problems cause domestic concern, available at http://globalcompactcritics. blogspot.com/2008/09/chinas-overseas-environmental-problems.htntl. 31 SeeChinaUdderResource&EnvironmentalConstraints, China Economist, 11-23, March 2006.
3z Most of these regulations and rules come from or are translated from Beida Fabao Database, available at http://vip.chinalawinfo.com/.
33 Article 4 of Administrative Regulation on Contracting Foreign Projects, approved by the executive meetings of the State Council on May 7, 2008, put in force since September 1, 2008. 34 China'sMiningInvestmentinAfricaoffendtheInterestsof ForeignInvestor,mightbeBoycott, First Financial Daily, available at http://news.sohu.com/20070202/n247993255.shtml. 3s See Marta Russell, Backlash,thePoliticalEconomy,andStructuralExclusion, BerkeleyJ. Emp. & Lab. L, vol. 21, 2000, at 335.
3s The investments made and the enterprises established abroad by the enterprises of China have increased each year. In some regions where Sino-fundcd enterprises are relatively concentrated, a number of chambers of commerce, associations and other self-disciplined organizations have been established one after another by overseas Sino-funded enterprises. A chamber of commerce (association) of overseas Sino-funded enterprises refers to a self- disciplined organization promoted by the overseas Sino-funded enterprises or institutions, and registered and established in the place where the overseas Sino-funded enterprises or institutions arc located. The aim and responsibility of an Association includes offering guidance to and coordinating the lawful operations and fair competition of Sino-funded enterprises, helping the Sino-funded enterprises to solve serious operating issues, and negotiating with foreign parties concerned on behalf of its members, and what's more, supervising and urging member enterprises to abide by the host state law (Notice of the Ministry of Foreign Trade and Economic Cooperation on Printing and Distributing the Interim Regulation on the Establishment of Chambers of Commerce (Associations) of Overseas Sino-funded Enterprises, March 12, 2002, available at http://www.lawinfochina.com/ law/display.asp?id=3199&keyword=). Here, the host state law certainly includes local environmental law. The same problem is it will be useless to supervise and urge member enterprises to abide by the host state law given the low level of the host state environmental law. 37ChineseMiningEnterprisesWhoInvestinAfricaMayOffend theInterestofOtherForeignInvestment,andMightBeBoycotted, First Finance and Economics Daily, available at http://news.sohu.com/20070202/n247993255.shtml. 3RSee SherifH. Seid, GlobalRegulationof ForeignDirectInvestment, Ashgate Publishing Company, 2002, at 134.
3.SeeEthylv.Canada, IlR, vol. 121, 2002, at 7. Apr. 14, 1997, U.S. chemical company challenged Canadian environmental regulation of gasoline additive MMT - Ethyl gave a notice that it is ready to commence arbitration under NAFTA Chapter 11 to UNCITRAL, claimed $250 million compensation from Canada. Finally, Ethyl won the case, and $13 million in damages was paid, ban was reversed, and legal fees to Ethyl. The Ethyl case was the first one related to environmental protection of host state under NAFTA, decided under NAFTA; Metalcladv.Mexico, ICSID Case No.Aft.B(AF)/97/l, a project to construct an underwater waste-disposal system in a Mexican province was given clearance by the federal government. But due to the protests occurring at the site for fearing the construction would interfere with the subterranean streams which supplied water to the people in the vicinity, the provincial authorities refused permission for the construction. The tribunal held that there was a taking and that compensation had to be paid. Similar cases include SantaElenav.CostaRica, (2002) 5 ICSID Rpts 153 and Tecrnedv.Mexico, ICSID 2003. In fact, a large proportion of the case law that has arisen under NAFTA has focused on whether interference with the rights of the investor on the grounds of environmental protection could amount to a compensable taking. However, NAFTA Tribunal seemed to change their minds recently. In the case of Methanex v.US, the tribunal held that the California ban was instituted for a public purpose, was non- discriminatory, was accomplished with due process, and was a lawful regulation and not an expropriation. See Methanex Corporation v. United States ofAmerica, In the matter of An Arbitration under Chapter 11 ofthe North American Free Trade Agreement and the UNCITRAL Arbitration Rules, Final Award of the Tribunal, 2005, Part m, Chapter D, para 7. 10 InternationalBankof Washingtonv.OPIC, ILM, vol. 11, 1972, at 1216.
^�See International Labour Organization, Corporate Codes of Conduct, available at http://actrav.itcilo.org/ actrav-english/teleam/global/ilo/code/main.htm; Sullivan Principles came from private individual Rev. Leon Sullivan are subscribed to by many corporations. The Global Sullivan Principles include environmental content, such as protection of the environment and promotion of sustainable development. The whole code of conduct is available at http://en.wikipedia.org/wiki/Sullivan_Principles; 2000 OECD Guideline stipulates enterprises should contribute to economic, social and environmental progress with a view to achieving sustainable development. They are recommendations addressed by governments to multinational enterprises operating in or from adhering countries. They provide voluntary principles and standards for responsible business conduct in a variety of areas including environment etc. OECD Guidelines for Multinational Enterprises, available at http://www.oecd.org/department/ 0,3355,en_2649_34889_l_lJ_l_l,OO.html. 42 The UN Global Compact is a strategic policy initiative for businesses that arc committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, available at http://www.unglobalcompact.org/AboutTheGC/index.html. 43 Chevron Texaco Corp., Business Conduct & Ethics, available at http://www.chevron.com/investors/ corporategovernance/businessconductethics/; Occidental Petroleum Corporation, Code of Business Conduct, available at http://www.oxy.com/SiteCollectionDocuments/code of_business_conduct.pdf Unocal Statement of Principles, available at http://wwwl.umn.edu/humanrts//links/unocalstatement.html; The environmental disaster by Unocal, available at http://www.Stanford.edu/group/SICD/Unocal/unocal.html. 44 Devastation of the natural environment arising from oil production of Chevron Texaco, see Michael Peel, ChevronNearDealtoEndWomen'sSit-in, FIN. Times (London), July 17, 2002, at 5. In 1998, the Nigerian military and police allegedly killed and tortured protestors and environmental activists in the Niger Delta who were campaigning against Chevron's subsidiary's oil drilling in the area, and Chevron Corporation and relevant subsidiaries was accused of complicity, Corporate Complicity & Legal Accountability, available at http://icj.org/ IMG/Volume 3.pdf.
^5See Emeka A. Duruigbo, MultinationalCorporationsandInternationalL,aw:AccountabilityandComplianceIssuesinthePetroleumIndustry, Ardsley, NY: Transnational Publishers, 2003, at 130. 46 The Equator Principles were launched by private banks in June 2003. The Equator Principles (EP) is a set of environmental and social benchmarks for managing environmental and social issues in development project finance globally. Once adopted by banks and other financial institutions, the Equator Principles commit the adoptees to refrain from financing projects that fail to follow the processes defined by the Principles, available at http://en.wikipedia.org/wiki/Equator_Principles. ^� Article 15-20 of Guidelines on the Corporate Social Responsibility of Banking Institutions of China. However, not only are the Guidelines voluntary, but they also take a non-binding 'best efforts' approach. Therefore, I am not sure the guideline can be very effective. 4R China's overseas environmental problems cause domestic concern, available at http://globalcompact critics.blogspot.com/2U08/U9/chinas-overscas-cnvironmcntal-problcttts.html. 4y Available at http://www.equator-principles.com/index.shtml. 5U Available at http://www.sinosure.com.cn/sinosure/cpyfw/tzbx/zxdt/xmxx/58743.html.
51 China's overseas environmental problems cause domestic concern, available at http://globalcompactcritics. blogspot.com/2008/09/chinas-ovetseas-environmental-problems.html. 52See Emeka A. Duruigbo, Multinationalcorporationsandinternational law.accountabilityandcompliance issues inthepetroleumindustry, Ardsley, NY: Transnational Publishers, 2003, at 122-125. 53 See Michael S. Baram, MultinationalCorporations,PrivateCodes,andTechnologyTransferforSustainableDevelopment, 24 ENVTL. L, vol. 24, 1994, at 42. 5^ The author only located 32 treaties between the People's Republic of China and other countries involving judicial assistance in civil affairs in the database of treaties concluded by PRe. 55 See Hu Han, the Legal system and Practical Investigation of Recognition and Enforcement of the Judgment of Foreign Court, available at http://chinalawhb.com/118524036.html.
'fi Surprisingly, some victims cannot even receive justice from their own government because the government and the foreign investors share common interest, and are even complicit. See Scott Dolezal, 11/eSystematicFailuretoInterpretArtideIvof theInternationalCovenantonCivilandPolititalRights:IsThereaPublicEmergencyinNigeria? 15 AM. U. It�r'L REv, vol. 15, 2000, at 1191-1193. � Company Law of the People's Republic of China, October 27, 2005, available at http://www.lawinfo china.com/law/di'ip)ay.asp?db=l&id:=4685&'keyword=-�'�R�M&.M Ss Civil Procedure Law of the People's Republic of China, October 28, 2007, available at http://www.law infochina.com/law/display.asp?db=)&td=6459&keyword� =?')'?&? 5" See Supreme People's Court, Notice on Several Notable Matters Concerning Adjudication and Enforcement of Civil and Commercial Cases Involving Foreign Elements, April 17, 2000, Supreme People's Court Doc., No. 51, 2000.
'e" Article 146, General Principles of the Civil Law of the People's Republic of China, Adopted at the Fourth Session of the Sixth National People's Congress, and promulgated by Order No. 37 of the president of the People's Republic of China on April 12, 1986, and effective as ofJanuary 1, 1987), available at http://www.lawinfochina.com/ law/display.asp?db=l&id= 1165&keyword= -RttM 61 Article 27(3) of Ageement on Trade-Related Aspects of Intellectual Property Rights. 62 These treaties are the Convention on International Trade in Endangered Species of Wild Fauna and Flora, Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter; Vienna Convention for the Protection of the Ozone Layer, The Montreal Protocol on Substances that Deplete the Ozone Layer, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, Convention on Wetlands of International Importance Especially as Waterfowl Habitat, Convention on Biological Diversity, United Nations Framework Convention on Climate Change, Kyoto Protocol, etc. 63See Daniel D. Bradlow and Alfred Escher, RegalAspectsofForeignDirectInvestment, Kluwer Law International, 1999, at 180. 64 It is wrong to think that the investor is not the subject of international treaty, and therefore, it need not shoulder any obligation from intcruational law.
os See Peter Muchlinski, CorporateSocialResponsibility, in Peter Muchlinski etc. ed., the Oxford Handbook of International Investment Law, Oxford University Press, 2008, at 667. tb Available at http://www.unctadxi.org/tcmplatcs/DocScarch.aspx?id=779. All BITS betwccn China and other countries available at htfp://trs.mofcorn.gov.cn/h/h.html. BITS signed from 2003 to 2008 involved African countries such as Benin, Djibouti, Equatorial Guinea, Guinea, Madagascar, Namibia, Seychelles, Tunisia and Uganda. For example, there are objective provisions that aim to protect investors and their investments in the prefaces of the BITS, and there are provisions on the treatment to foreign investments and investors, expropriation and compensation, and jurisdiction and governing law of international dispute settlement bodies to investment disputes in their texts. fi'? BIT between Yitc and India, and BIT between PRC and Mexico, available at http://tradeinservices. mofcom.gov.cn/b/2006-11-21 /29749.shtml. 69 Bit between PRC and Albania, and Bii between Puc and Guyana, available at http://ita.law.uvic.ca/ investrnenttreaties.htm. Due to the defects of Brrs and FTAS, and the arbitrator's wariness and even bias, environmental issues can not get enough recognition by International Centre for Settlement of Investment Dispute (ICSID), which was established in 1966 under the World Bank to resolve investment disputes between governments and foreign investors, and China approved and acceded the Icsin Convention in July of 1990. So far, ICSID has already dealt with several disputes involving the environment, but in most cases the host state has lost.
�� Because this is not exclusively a problem with Chinese BITS, therefore, the suggestions to Chinese Burs should have implications to other BITS. �2 For example, China and Pakistan FTA (November 24, 2006), China and Singapore FTA (October 23, 2008), and China and Chile FTA (November 18, 2005). According to the research of the author, all FTAs include investment clauses. The relationship between investment content of FTAs and BITS should follow lexyosteriorderogatpriori. �3 This kind of provision may also be found in article 1114 (1) ofNAFTA. But the problem is the interpretation of it by the tribunals. In S.D.Myersv.Canada, the tribunal, which interpreted this provision, said that its nature was merely 'hortatory', and the environmental justifications raised by Canada were flat-out rejected for all of the evidence pointed to discriminatory intent. SeeS.D.Myersv.Canada, ILR, vol. 121, 2002, at 1. �4 New Zcaland-China Free Trade Agreement: Summary of Key Outcomes, available at http://www.bellgully. com/resources/pdfs/NZ_China FTA.pdf.
As one of the five World Bank Group institutions, MIGA provides political risk insurance (or guarantees) for investments made in developing countries. Investors who are citizens of Micn member countries other than the country in which the investment is being made (called host country) are eligible for MIGA guarantees. 76 Source: UNCTAD, based on information provided by MIC;A, available at www.miga.org. 77 Interview with David Dollar and Louis Kuijs on China Quarterly Update, 1 July 2008, available at http://discuss.worldbank.org/content/interview/detail/5532/.
78 Peter Norman, ComplaintsPanelSetUp, Fin. Times, Apr. 25, 1994, at 6. 79 See Benedict Kingsbury, Nico Krisch and Richard B. Stewart, 11/eEmf�KffofGlobalAdministrativeLaw, Law & Contcmp Probs, vol. 68, 2005, at 15. 8(1 UNEP Statement, available at http://www.iisd.ca/climate/ba/unep-fin.pdf. 81 Principle 7-9. Now, over 4700 business participants and other stakeholders from more than 130 countries have participated in the Compact, available at http://www.unglobalcompact.org/HowToParticipatc/Business_ Participation/index.html. 12 Bluewash is a disparaging term used to describe a partnership between the United Nations and a corporation which has agreed to abide by the United Nations Global Compact. Since there is no screening or enforcement mechanism to ensure that the corporation adheres to the ten principles, critics argue that such partnerships are merely public relations ploys designed to improve corporate images, available at http://cn.wikipedia.org/wiki/United_Nations_Global_Compact.
13 Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003), article 14, available at http://wwwl.umn.edu/humanrts/links/norms-Aug2003.html. There are similar provisions in U.N. Draft Code of Conduct on Transnational Corporations, U.N.Escc�k, Org. Scss. 1988, Provisional Agenda Item 2, at 11, U.N. Doc. E/1988/39/Add.1, (1988), and OECD Guidelines for Multinational Enterprises, 27 June 2000. 84 See Jennifer A. Zerk, MultinationalsandCorporateSocialResponsibility:LimitationsandOpportunitiesinInternational Law, Cambridge: Cambridge University Press, November 2006.
"5See UN(:TAI), WorldInvestmentReport2003,FD1Policies forDevelopment:NationalandInternationall'erspectives, United Nations, New York and Geneva, 2003, Ch m. 16 With regard to the environmental monitoring over export enterprises, the Ministry of Commerce and the State Environmental Protection Administration of China require: completely comprehending the significance of enhancing environmental monitoring over export enterprises; improving the intensity of environmental monitoring over export enterprises; enhancing the environmental protection compliance inspection of the enterprises at the export administration link; carrying out the pilot system of enterprise environmental supervisors; enhancing the publicity and training on laws, regulations and policies for environmental protection of export enterprises; enhancing the departmental cooperation. As a requirement from an administrative rule, it could be firlfillcd effectively. 11 The full text of Natural Environmental Policy Act, 42 Use 4321, available at http://frwebgate.access. gpo.gov/cgi-bin/getdoc.cgi?dbnamc=browse_usc&docid=Cite:+42USC4321. 1. 88 Sec Scott Pegg, TheCostofDoingBusiness:TransnationalCorporationsandViolenceinNigeria, 30 Security Dialogue, 1999, at 473, 477, 478; Information for the Protest of Chevron Corporation for their Involvement with Oil and Gas Projects in Burma (Myanmar), available at http://protcstchevron.blogspot.corn/. 89 For example, China-ASEAN FrA, China-New Zealand F'rA, China-Chile FTA, and China-Pakistan FTA have important political and diplomatic implication to China.
9uSee Chapters 1, 6 and 9 in China's llth five-year plan, available at http://en.ndrc.gov.cn/hot/t20060529_ 71334.htm. See Highlights of the Action Plan of the Beijing Summit of the Forum on China-Africa Co-operation; China's African Policy, January 2006, Part m. 92 The name is "guideline", but it is binding, not voluntary on enterprises. It is a kind of administrative regulation and rule. 93 Environmental guidelines for firms investing abroad, China Daily, 2008-09-12. Therefore, it is wrong to say "Beijing turns a blind eye to the activities of its companies overseas" (see Ben Schiller, The China model, available at http://www.opendemocracy.nct/democracy-china/china development -3136jsp). China is encouraging investors to undertake afforestation overseas according to a Guide on Sustainable Overseas Silviculture by Chinese Enterprises, which is made by the State Forestry Administration ofPRC and Ministry of Commerce. 94 UNEP, Goals and Principles of Environmental Impact Assessment, January 16, 1987, Principle 1.
9S Environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority, available at http://www.unep.org/Documents.Multilingmal/Default.asp?documentid=78& articleid=1163. yb Available at http://fletcher.tufrs.edu/multi/texts/BH825.txt; http://www.cbd.intlconvention/articles. shtml?a=cbd-14.The provision is too long to be quoted. » This is a tip from OECD Guidelines, and it is very important according to the experience of the author. yd Global Reporting Initiative, available at http://en.wikipedia.org/wiki/Global_Reporting_Initiative. yy SeeTheEmergencyofGlobalAdministrativeL.aw:Foreword:GlobalGovernance asAdministration-NationalandTransnationalApproachesto GlobalAdministrativeLaw, Law & Contemp. Prob., vol. 68, 2005, at 17. too This kind of provision can be found in Generally Accepted Principles and Practices for SWFS (GAAP), and it stipulates SWFS must comply with applicable regulatory and disclosure requirements in their home countries and in the countries in which they invest, available at http://www.iwg-swf.org/pubs/eng/santiagoprinciples.pdf.
The US FCPA, Anti-Bribery Provisions of the Foreign Corrupt Practices Act, United States Code, Title 15 S Commerce and Trade, Chapter 2B Securities Exchanges; OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997 is the equivalent law; Some international treaties on anti-corruption have been passed as well. See Mike Koehler, Tie UniqueFcPAComplianceChallengesofDoingBusinessinChina, Wis. Int'l L J., vol. 25, 2007-2008, at 398; See Gregory C. Ott, China'sAccessionintotheWTo:thePracticeof InternationalBriberyandtheIssuesItPresents forAmericanCounselWhoseClientsareDoingBusinesswithintheConfinesof theGreatWall, Temp. Int'l & Comp. L. J., vol. 15, 2001, at 147. roz For example, impose fines and imprisonment, and abolish export licenses. In addition, the jurisdiction of US court to overseas corruption is very broad. Any company with American shareholders or even a company sending emails through an American system may be considered to be within the jurisdiction of US criminal prosecutors. See Brandon Kirk, ManagingRisksinChina,Bribery,Corruption,andLittleRedPackets, China Law & Practice, November 27, 2007. rn3 See Gregory C. Ott, China'sAccessionintotheW1'o:thePracticeof InternationalBriberyandtheIssuesItPresentsforAmericanCounselWhoseClientsareDoingBusinesswithintheConfinesof theGreatWall, 15 Temp. Int'l & Comp. L. J. vol. 15, 2001, at 162. tu4 Recommendation on Common Approaches on Environment and Officially Supported Export Credits, formally adopted by the OECD Council on December 18, 2003, paragraph 12.1. 105 62 Fed. Reg. 5646, Feb. 6, 1997.
r°6 See C.A. Petsonk, InSearchofa Compass:EthicalPrinciples forEnvironmentalLawandDevelopment, Stanford Environmental Law Journal, vol. 15, 1996, at 9. �°� China Exim Bank has published its environmental procedures in 2007. According to it, China Exim Bank's environmental protection policy includes Before-Project Revicw, During-Project Examination and After-Project Review, the points are as follows: (1) Before-Project Review requires the funded projects conduct feasibility study of environmental impacts, and obtain endorsement or approval from he recipient country's environmental administration, otherwise the projects cannot get funds; (2) During-Project Examination require regular examination for project implementation, and the unqualified projects should take measures, otherwise they will be discontinued; (3) After-Project Review mainly serves the improvement of China Exim Bank. But it can be found that this policy also lacks operability and should be elaborated, available at http://www.eca-watch.org/problems/ china/irn_ed_CSO Chcacim.pdf. 10R To take one example, waste from computers, televisions and other devices used in the United States is polluting the environment and exposing workers to toxic chemicals in regions of China and India where discarded electronics are dismantled, see Terence Chea, AmericanElectronicWasteContaminatesChinaandIndia, Associated Press, 17 Aug 2005; Another example is the production of Western Petroleum Companies in Nigeria often resulting in spillage of crude oil and spontaneous combustion, and further, a wide range of crops and lumber bums into ash, and the air, the soil, and the river become seriously polluted, leaving residents without necessary clean water for their daily life, available at http://news.xinhuanet.com/world/2006-06/23/coment- 4736197.htm.
'°y In re Union Carbide Corp. (1987) 809 F2d 195 (2d Cir); See Further the International Campaign for Justice in Bhopal, available at http://www.bhopal.net/indexl.htm. ""SeeSupremeCourtAskedtoStopAbuseofAlienTortStatute, International Chamber of Commerce, January 26, 2004. However, in the case of Jota v. Texaco Inc, the Second Circuit ruled the decisions that were being challenged were ones made within the United States by the parent company, Texaco. Therefore, the dismissal on ground offommnonconveniens was not appropriate. See 157 F3d 153, 1998. 111 28 Uscs 51350. 112See Armin Rosencranz & Richard Campbell, ForeignEnvironmentalandHumanRightsSuitsAgainstU.S.CorporationsinU.S.Courts, 18 STAN. Erw'r� L.J. 145, 146, 1999. However, it is difficult to apply ATCA to environmental cases. The District court held; Plaintiff foreign residents failed to show that high levels of environmental pollution within foreign nation's borders violated well-established, universally recognized nonns of international law; thus, action against the copper company that allegedly was causing pollution did not constitute a claim under the Alien Tort Claims Act and was dismissed. Flores v. S. Peru Copper Corp. (2002, SD NY) 253 F Supp 2d 510, affd (2003, CA2 NY) 343 F3d 140, 62 Fed Rules Evid Serv 741. 1. 113 Jennifer A. Zerk, MultinationalsandCorporateSocialResponsibility,LimitationsandOpportunitiesinInternationalLaw, Cambridge University Press, 2006, 211. 114 Sarah Joseph, CorporationalandTransnationalHumanRightsLitigation, Hart Publishing, 2004, at. 28-30. 1 See Shelli Stewart, Symposium: Lands, Liberties, And Legacies: Indigenous Peoples And International Law: Application Of International Law To The Problems Of Indigenous Peoples: A Limited Future: The Alien Tort Claims Act Impacting Environmental Rights: Reconciling Past Possibilities With Future Limitations, Am. Indian L. Rev., vol. 31, 2006/2007, at 743; Kevin R. Carter, AmendingtheAlienTortClaimsAct:ProtectingHumanRightsorClosingO�CorporateAccountability? Case W. Res. J. Int'I L. vol. 38, 2006 / 2007, at 629. 116 A treaty concluded by China is a source of the Chinese legal system, and its status is tantamount to legislation of China. For example, the legal basis of WaltDisneyCo.v.BeijingPressandXinhuaBookstores Case is 1992 China-US Memorandum of Understanding on Protection of Intellectual Property Right, see International Civil Litigation in China: A Practical Analysis of the Chinese Judicial System, available at http://www.bc.edu/ bc_org/avp/law/lwsch/journals/bciclr/25_l/02_TXT.htm.
117 See Depei Han, PrivateIntemational Law, Wuhan University Press, 2003, at 311-313. t For investor's part, the controversial issue of international legal personality ofTNC may be involved. This paper will not deal with this issue, and argue that the investor should even shoulder the responsibility indirectly. tt9 See Emeka A. Duruigbo, MultinationalCorporationsandInternational Law:AccountabilityandComplianceIssuesinthePetroleumIndustry, Ardsley, NY: Transnational Publishers, 2003, at 147. tzo The documents are available at http://ita.law.uvic.ca/investmenttreaties.htm. But no environmental clause exists in India 2003 Model BIT.
121 Initial Environmental Assessment (EA) of the Canada-China Foreign Investment Promotion and Protection Agreement, available at http://www.international.gc.ca/enviro/assessment-evaluation/trade-commercial. aspx?lang=eng. izz See World Bank Report 2008. 123 2004 US BIT Model, article 12(1) and article 13(1). 124 The article 23(3)(mn) of Norway 2007 Model BIT, available at http://ita.law.uvic.ca/documents/Norway Model2007.doc. 125 International Investment Rule-Making: Stocktaking, Challenges and the Way Forward, Unctad Series on International Investment Policies for Development, UNITED NATIONS New York and Geneva, 2008, available at http://www.unctad.org/en/docs/iteiit20073_en.pdf. 126See 2000 OECD Guidelines, Part II (General Policies), 1990 UN Draft Code of Conduct on Transnational Corporation, paras. 10, 21, the Preamble of Norway 2007 Model BIT, and there is a similar provision in the Preamble of US 2004 Model BIT and the NAFTA'S Preamble. 127 See 2000 OECD Guidelines, Part v (Environment) and Part VII (Consumer); 1990 UN Draft Code of Conduct on Transnational Corporation, paras. 37-43. 121 The OECD Guidelines for Multinational Enterprises, 27 June 2000, III Disclosure, at 20, http://www.oecd. org/dataoecd/56/36/1922428.pdf.
:z9 See 2000 OECD Guidelines, Part W (Combating bribery); 1990 UN Draft Code of Conduct on Transnational Corporation, para. 20. 13oSee Peter Muchlinski, CorporateSocialResponsibility, in Peter Muchlinski etc. ed., the Oxford Handbook of International Investment Law, Oxford University Press, 2008, 673. 13� World Bank blocked 4 Chinese enterprises which were suspected of corruption, available at http://www.syntao.com/E_Pagc Print. asp?Page_ID= 10845. t32 H. Shams, 771eWorldBankandInvestmentProtection:AQuestionofAccountability, in Norbert Hom (ed.), ArbitratingForeignInvestmentDisputes:ProceduralandSubstantiveLegalAspects, Kluwer Law International, 2004, at 141. As far as the author's knowledge, the project in Qinghai Province was aborted for this reason.
r33 Introduction to the World Bank Inspection Panel, available at http://www.ciel.org/Ifi/wbip.hhnl. 134 D. Hunter, L. Udall, The World Bank's New Inspection Panel: Will It Increase the Bank's Accountability? Center for International Environmental Law, available at www.ciel.org/Publicationslissuc1.html. r3e Only three such kinds of cascs appear: Governmentof theProvinceof EastKalim,mt'1I11'.r. I''T KaltimPrimaCoalandothers, ICSID Case No. ARIJ/07/3; Gabonv.SociétéSereteS.A. ICSID Case No. ARH/76/1; Nicaraguav.theSpanishhotelgroupstfarcehs. Nicaragua lodged an IcsiD case in June against the Spanish hotel group Barccl6. Nicaragua is seeking US$ 30 million, which it claims to be owed from a disputed 1993 resort property sale to Barcelo, available at http://www. invcstmen ttreatynews. org/ cms/ ncws/ arc hive /2008/ 08/ 06/ sou th-amcrican-alternati ve-to- icsid- in-thc-works-as-govemments-create-an-energy-treaty.aspx. r's Certainly the legitimacy of ICSID awards also stir academic attention and debate, see Investor-State Arbitration: Perspectives on Legitimacy and Practice, available at http://www.law.suffolk.edu/academic/als/ coursedetail.cfm?cid=609. r3� This does not mean to grant more power to Ic;wo, but to grant more power to the host state. This can solve the problem of home-state courts not willing to cooperate in enforcement of the judgments and orders of the host- state courts. At least, the host state may have another option to sue the foreign investor. 138 See Jennifer A. Zcrk, MultinationalsandCorporateSorialResponsibility:LimitationsandOpportunitiesinInternationalLaw, Cambridge: Cambridge University Press, 2006.
13')See Peter Muchlinski, CorporateSocialResponsibility,inPeterMuchlinski etc. ed., TheOxfordHandbook ofIntemationalInvestmentLaw, Oxford University Press, 2008, at 674. '4° On June 1, 2007, International Finance Corporation (IFC) under the World Bank and the China EXIM Bank decided to support" environmentally and socially sustainable" Chinese investment in emerging markets, including China itself.