Dispute Resolution under the “EU – China Comprehensive Agreement on Investment (CAI)”

After the EU and China concluded in principle agreement regarding the CAI in December 2020, last Friday (22. January 2021) the text of the CAI has been published for the first time. In the CAI China undertakes to grant EU investors a more comprehensive market access than before, including the opening up of certain new market segments. China further agreed to grant EU investors a fairer treatment than before. After final legal checks and translation, the CAI will be presented to the European Council and the European Parliament for approval.  

All dispute resolution issues under the CAI are addressed under Section V of the CAI that aims to address all relevant issues in 23 articles. The CIA gives the parties to a dispute various possibilities to act, starting with consultations in case of a complaint (Art. 3). Mediation is available and can take place only voluntarily by mutual agreement (Art. 4). Art. 5 provides also various possibilities how the parties can reach a “mutually agreed solution”.  

All issues regarding the establishment of the arbitral tribunal are addressed in Art. 7. There will only be a total of 12 panellists (Art. 8) comprised of 3 sub-lists to be appointed by the EU, China and also a sub-list of individuals that are not “nationals of either Party” and that shall serve as chairpersons.  

Art. 12 addresses in detail the “Decisions and Reports of the Arbitration Panel”.  

Section V of the CAI is supplemented by an Annex I that lays down the “Rules of procedure for state to-state dispute settlement”  and an Annex II containing a “Code of conduct of arbitral tribunals and mediators in state-to-state disputes” that is still empty at this time and only contains a reference to “ongoing discussions”.  

We will report on the further progress of the CAI in due course.