A Worthy and Substantive Cross-Strait Investment Protection Agreement

A Worthy and Substantive Cross-Strait Investment Protection Agreement
China Times editorial (Taipei, Taiwan, ROC)
A Translation
August 10, 2012

Summary: Yesterday the SEF and ARATS held its latest Chiang-Chen Meeting. The two sides signed the Cross-Strait Investment Protection Agreement and Customs Agreement. These consultations took two years. The Cross-Strait Investment Protection Agreement attracted the attention not just of Taiwan businessmen, but of the general public. It is a substantive legal document deserving of recognition. It is worth taking the time to analyze its significance.

Full Text below:

Yesterday the SEF and ARATS held its latest Chiang-Chen Meeting. The two sides signed the Cross-Strait Investment Protection Agreement and Customs Agreement. These consultations took two years. The Cross-Strait Investment Protection Agreement attracted the attention not just of Taiwan businessmen, but of the general public. It is a substantive legal document deserving of recognition. It is worth taking the time to analyze its significance.

Compare the Cross-Strait Investment Protection Agreement to international bilateral investment protection agreements. This agreement may be the most important fruit of ECFA, the cross-strait economic cooperation framework agreement. Many points are worth noting. First of all, the agreement covers investments, investors, investment income, and relevant government provisions. The agreement is comprehensive. The wording is precise, and consistent with international standards. It establishes basic principles for investment protection. It emphasizes due process and non-discrimination. Besides protecting the security of investments, it specifies that investors must enjoy the same rights as local citizens, and calls for MFN treatment. The two sides pledged to improve treatment for investors, and a halt to new restrictive provisions.

One issue that delayed agreement concerned personal liberty and personal safety. The requirement that family members of detained businessmen be notified within 24 hours was not reflected in the text of the agreement. The agreement merely stated that the two sides must provide notice within the specified period of time, in accordance with existing notification requirements. This results were less than hoped for. But they should not be regarded as a failure. Negotiators for our side stressed the provisions of Article VIII of the Constitution, which require notification within 24-hours to protect personal freedom. They attempted to establish standards for the protection of cross-Strait investors. Their efforts should be applauded.

This set the bar quite high for the the other side. It was difficult to incorporate into their criminal procedure system. But it was also a lesson in constitutionalism. Article VIII of the Constitution provides strict protections for personal freedom. But even on Taiwan the government does not always fully comply with the relevant requirements. Our side stressed the Constitution. Our side called on the Mainland to respect the personal rights and interests of Taiwan businessmen. We called for treatment beyond that afforded local citizens. Such demands were not excessive. They were not incorporated into the agreement. But the government must engage in self-introspection. It must adhere more strictly to Article VIII of the Constitution on Taiwan. It must do so for the sake of foreign investments as well as its own citizens. These principles should apply to everyone. This should become the basis for future reciprocity.

The most praise-worthy aspect of the agreement concerns norms for investment levies. The agreement clearly defines levies to include direct expropriation and indirect expropriation. For Taiwan businessmen, this is highly significant. Taiwan businessmen encounter few cases of direct expropriation. But they encounter many cases of indirect expropriation. Indirect expropriation may not expropriation in name, but it is expropriation just the same. Examples include plant closings, deportations, forfeitures of equity, the repossession of land legally obtained, and so on. These all constitute indirect expropriation. These are expressly included in the agreement. The other side, especially local governments, often makes ever-increasing demands on Taiwan investors. The agreement will impose restraints. Detailed provisions allow investment transfers. This too was a plus.

The agreement calls for the timely payment of compensation. It calls for compliance with international standards. This too deserves praise. It clearly specifies that compensation must be calculated on the basis of fair market value. This constitutes a landmark provision for expropriation compensation, even for Taiwan.

The Cross-Strait Investment Protection Agreement is a rare reminder for investors on both sides of the Strait, especially on Taiwan. International investment protection agreements seldom include provisions for commercial disputes between private investors. This agreement does. Investors may include arbitration clauses in business contracts as an alternative to litigation. Arbitration institutions from either side are eligible, and either side may serve as the arbitration locale. This allows arbitration institutions on either side to handle arbitration on the other side. Taiwan businessmen will have many more options during investment negotiations.

Taiwan businessmen must of course understand the rule of law. They must understand beforehand the arbitration clause in the contract, if they wish to avoid litigation. Consider disputes between investors and local governments. The agreement includes multiple means of conflict resolution. The current agreement includes mediating institutions. It was a compromise arrangement. Critics wanted the inclusion of international arbitration mechanisms. But as one can imagine, this was not something the other side could accept. This is not an option for dispute arbitration between investors and the government even on Taiwan. Such a demand amounts to super-national treatment. One can only hope that attitudes may change in the future. The current agreement is a giant step forward from what we had before. That is no exaggeration.

In sum, two years of concerted effort were not wasted. We expect the two governments to earnestly implement this hard-won agreement, and ensure the two sides' precious cross-Strait investments.

中時電子報 新聞
中國時報 　2012.08.10
社論－兩岸投保協議 內容豐富值得肯定
本報訊

    　兩岸兩會日昨舉行江陳會，會中簽署了《兩岸投資保障協議》與《海關協議》。其中費時兩年協商，深受台商乃至全社會注意的投資保障協議，是一份內容豐富值得肯定的法律文件，也因此值得分析其具有的含義。

    　兩岸投資保障協議，比照國際上雙邊投資保障協定的規格而書立，堪稱是兩岸經濟合作架構協議之後的一項重要協商成果，有許多值得注意之處。首先，其所涵蓋的投資、投資人、投資收益及受到規範的政府措施，相當周延，遣詞用字謹嚴，均符合國際投資保障協議的水準。其中樹立了投資待遇的基本保障原則，除了強調正當程序，不得歧視，並且保障投資安全之後，也納入了國民待遇及最惠國待遇的實質要求，雙方亦承諾改善待遇及不增加不利限制的規定。

    　此中曾經一度拖延協議進度的議題，是關於人身自由與安全保障的通知義務。關於廿四小時內進行通報的規定，並未見諸協議文字，而只寫到了雙方應依各自規定的時限履行相關通知的義務，完善既有通報機制。此一成果雖不如預期，畢竟不應視為失敗。我方談判人員能夠記得憲法第八條關於廿四小時通知以保障人身自由的規定，企圖引為兩岸保障投資人的標準，立意極佳，值得稱許。

    　對於對岸而言，此一要求雖然標準極高且尚難納為刑事訴訟制度的當然內容，但是也不妨視為一種憲法教育的過程，話說回來，憲法第八條關於人身自由的嚴格保障，即使在台灣，政府是否已然完全遵照做到，也非無可資檢討之處。我們不忘記憲法的規定，要求海峽彼岸尊重台商的人身權益，給予超國民待遇，倒也不算陳義過高。雖然並未如願載入協議；但政府同時應該自我督促，更切實地在台灣境內嚴格依照憲法第八條的規定辦事，對於外資以及本國人民，皆應一體適用，做為日後基於互惠原則要求對方的張本。

    　最可稱道的約定，應數徵收投資的規範，本項協議明白定義徵收包括直接徵收與間接徵收，對於台商而言，甚有意義。因為台商遇到直接徵收的情形少，遇到間接徵收的情形多。所謂間接徵收，就是政府對於投資採取了不以徵收為名，而其實質效果等同於直接徵收的措施。例如封廠、驅逐出境、沒收股權、逕行收回合法審批的土地等等，都可能構成間接徵收。此項明文納入協議範圍，對於對岸特別是地方政府，處理台商投資事宜，許多予取予求的作風，應該具有收斂節制的作用，詳細規定容許投資轉移的細節，也具有正面的價值。

    　協議中規定徵收補償應該符合即時、有效及充分等項符合國際要求的原則，也可按讚。尤其是明白寫下應以公平市場價值做為計算徵收補償的基準，即使是在台灣既有的徵收補償法制上，也是一項新穎而具有指標意義的規定。

    　兩岸投資保障協議對於兩岸的投資者，特別是台商，還有一項罕見的提醒。一般的國際投資保障協定，少見明文載入私人間投資商務糾紛的規定，此次則也有著墨，而且仔細交代投資者可於商務契約中納入仲裁條款，作為替代訴訟的選擇。又強調兩岸的仲裁機構可以選擇兩岸各地做為仲裁地點，開放了兩岸仲裁機構至對岸辦理仲裁的可能性，對於台商是項可於投資談判中要求採納的利多選擇。

    　當然此中的關鍵，仍然是台商要有足夠的法治認識，懂得事前在契約中納入仲裁條款，避免訴訟，就投資人與投資地政府的爭端，協議中也有多重的解決途徑。此次納入了機構調解的選擇，應該是折衷的安排。論者或許期待能有所謂的國際仲裁機制，此點不是對岸可以接受的選擇，可以想見。即使就台灣現行法制而言，提供投資者與政府間發生公法性質的爭執循仲裁方式解決，也不是既有的選項。如此要求，不啻是超國民待遇，只能期諸來日觀念的改變。現在協議的安排，比起簽署之前，是一大進步，則非過言。

    　整體而言，兩年的協商努力，可謂功不唐捐，接下來，我們應該期待的是兩岸政府均能誠心落實執行這項來之不易的協議，保障兩岸彌足珍貴的投資活動。