Soft law and Chinese investment dispute resolution with BRI countries

Abstract

The article delves into the utilization of soft law as an effective mechanism for resolving investment disputes within the context of China's ambitious Belt and Road Initiative (BRI). With the resurgence of global investment and the expansion of BRI projects, the potential for disputes in investments has escalated. This article highlights the limitations of traditional dispute resolution methods, such as international investment arbitration and international commercial arbitration, including enforcement difficulties, high costs, and protracted proceedings. In contrast, soft law emerges as a flexible and efficient approach to address these challenges. The concept and characteristics of soft law are thoroughly explored, emphasizing its role as an alternative to conventional legal instruments. Soft law encompasses principles, codes of conduct, and rules, providing a broader range of subjects and facilitating tailored solutions adaptable to local conditions. Its inherent flexibility significantly enhances the efficiency of conflict resolution, reducing contractual and negotiation costs associated with more rigid legal frameworks. The application of soft law within the Chinese context is examined, highlighting the proactive role of Chinese institutions in incorporating soft law mechanisms. For instance, the Export-Import Bank of China (EximBank) incorporates soft law in its loan application process by requiring compliance with relevant environmental policies and standards of both China and the host country. This approach helps fill legal loopholes, ensures environmental protection, and promotes efficient dispute resolution. The article further argues that mediation, as a soft law-based dispute resolution mechanism, holds particular promise for resolving investment disputes. Mediation fosters a cooperative and collaborative environment, encouraging dialogue and negotiation between parties. Its introduction as an alternative to arbitration reduces costs and expedites the resolution process. Leveraging China's cultural tradition and appreciation for mediation, it is suggested that soft law, particularly mediation, can offer novel and effective pathways to address investment disputes arising from the BRI. By embracing the advantages of soft law, a more efficient and convenient dispute resolution mechanism can be established. This not only promotes the successful implementation of BRI projects but also contributes to enhancing China's national reputation, fostering stable relationships with participating countries, and creating a favorable environment for overseas investments. It is essential to establish a robust dispute resolution framework to ensure the smooth operation of the BRI and address the increasing number of investment disputes that may arise along its path. In conclusion, this article advocates for the adoption of soft law, particularly mediation, as a viable and effective approach to resolve investment disputes within the BRI framework. By harnessing the flexibility and efficiency of soft law mechanisms, a conducive environment for investment dispute resolution can be created, benefiting all parties involved and facilitating the realization of the Belt and Road Initiative's overarching goals.