Bilateral investment treaties (BITs) are gaining recognition as important sources of protection for foreign investors. They allow foreign investors to bring an arbitration claim directly against a host country for violations of the protections offered by the BITs.
Historically, Chinese BITs have granted foreign investors limited rights of recourse. However, in recent years, China has entered into two BITs, one with Germany and one with the Netherlands, which have granted much wider rights of recourse to foreign investors. The latest "new generation" BIT, between China and Finland, continues this trend. It gives an investor from Finland the right to bring an arbitration claim directly against China, for breaches of the protections specified in the treaty (such as, for losses suffered by a Finnish investor from alleged expropriation or nationalisation of its investments in China by the PRC government). "Mirror" rights are granted in favour of Chinese investors for investments in Finland.

To date, there has been no publicly known case where a foreign investor has brought a BIT claim against the Chinese government. However, this is likely to change with the growing number of "new generation" BITs. At present, China is also negotiating BITs and multilateral treaties with a number of countries, including Canada, Japan and South Korea. It may only be a matter of time before a foreign investor will bring a claim under a BIT against the Chinese government. Conversely, with the continued growth of investments by Chinese companies outside China, it is likely that Chinese investors will also increasingly look to these BITs to protect their investments abroad. Indeed, as reported in this issue (see "Chinese investor brings first treaty arbitration case under China-Peru BIT" below), in February of this year, in what is believed to be the first case of its kind, a Chinese investor has brought a treaty arbitration claim at ICSID against a foreign state for breach of the relevant BIT.