CYIL vol. 9 (2018)

CYIL 9 ȍ2018Ȏ CHALLENGES OF BILATERAL INVESTMENT BETWEEN THE CZECH REPUBLIC AND CHINA economic activities by investors of one state in accordance with the laws and regulations of the other country. 3 These assets make up a significant part of the bilateral investment and more broadly the global economy. Most recently, in 2017, the global FDI flow still represents 1.8% of the global Gross Domestic Product (GDP). 4 FDI brings numerous possibilities, while it is also fraught with uncertainties and challenges. In 2016 the Czech Republic-Chinese relationship was upgraded to a strategic partnership, which was then further enriched in 2017. 5 There is no doubt that both countries share a same value, that is to promote and protect bilateral investment. Both the Czech Republic and China would like to provide a favourable environment for Bilateral Foreign Investment (BFI). The two countries have similarities concerning historical and cultural backgrounds, which are prerequisites for building trust in investment. The average economic achievement of these two states are close to one another, which helps to establish a fair investment environment. However, there are several challenges that the investment policy and the legal practice bring. This paper offers reflections and suggestions on these challenges in bilateral investment between the Czech Republic and China. Firstly, with regard to the investment policy, the Czech Republic encountered difficulties when establishing its investment policy with China. As a Member State (MS) of the European Union (EU), the Czech Republic shall follow the EU regulations and share the common EU investment policy. At the same time, the Czech Republic is also a member of the Central Eastern European Country Group (CEE). CEE countries are more welcome and open to Chinese investors, and investors from CEE countries are also very interested in the Chinese market. Since EU Member States show different interest in China’s investment policy, it is necessary to establish coherent and consistent investment cooperation between China and the Czech Republic. In respect to China, the current Chinese investment policy has been presented with the proposal of One Belt One Road Initiative (OBOR). In particular, after China amended its Constitutional Law in early 2018, it is expected that President XI’s proposal on OBOR will keep playing a role in a long term. In recent years, China has established a series of regulations in relation to foreign investment in a step-by-step manner. China proves itself as a careful reformist in the formulation of foreign investment rules. Secondly, both sides have the legal basis regarding the promotion and protection of the BFI. Bilateral Investment Treaties (BITs) have been signed between China and the Czech Republic, but both states lack the practical experience to solve disputes between the two countries. By analysing the available Investor-State Dispute Settlement (ISDS) cases in relation to both countries, this paper draws attention to two representative legal concerns, that is the jurisdiction provision of successive BITs and the legal status of State-Owned Enterprises (SOEs). This paper concludes by offering suggestions to the investment cooperation between 3 Article 1.1, Agreement Between the Czech Republic and The People’s Republic of China on the Promotion and Protection of Investments, signed on 8 December 2005 and came into force on 1 September 2006. 4 OECD, ‘FDI in Figures’ < http://www.oecd.org/daf/inv/investment-policy/FDI-in-Figures-April-2018 > (24 April 2018) accessed 11 May 2018. This report also marks that “by definition, inward and outward FDI worldwide should be equal, but in practice, there are statistical discrepancies between inward and outward FDI. Unless otherwise specified, references to ‘global FDI flows’ refer to the average of these two figures.” 5 Xinhuanet, ‘China, Czech Republic set up strategic partnership’ (30 March 2016) < http://www.xinhuanet.com/ english/2016-03/30/c_135234520.htm >; Xinhuanet, ‘China, Czech Republic pledge to jointly enrich strategic partnership’ (19 July 2017) < http://www.xinhuanet.com/english/2017-07/19/c_136456289.htm > [accessed 14 May 2018].

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