Enforcing transboundary water obligations through investment treaty arbitration: China, Laos and the Mekong River

• Published date: 01 November 2020
• Author: Ana Maria Daza‐Clark
• Date: 01 November 2020
• DOI: http://doi.org/10.1111/reel.12365

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  RECIEL. 2020;29:442–453.wileyonlinelibrary.com/journal/reel

1 |  INTRODUC TION

By any measure, Ch ina’s economic growth in t he last 50 years has

proven extrao rdinary.1 As a result of this growt h, China has become

one of the most imp ortant actors in t rade and investment . Yet, while

China does not def ine itself as an open-market e conomy, at least in

the context of inte rnational tradin g rules, it has success fully navi-

gated the rules of f ree market liberalism to be come one of the most

important economic powers.2 Governmental inter vention at all lev-

els has not only cre ated this particular eco nomic framework but has

also carefull y crafted both the scope and e xtent to which China en-

ters into internat ional agreement s and the degree to whic h China

consents to eng age in international adjudi cation.

Since economic d evelopment almost i nvariably goes hand-in -

hand with utiliz ation of natural resource s, like many other countries ,

China and its ne ighbouring States often com pete for shared natural

resources to sec ure economic growt h. This means that, w hile they

cooperate and in tegrate through trade an d investment flows via the

conclusion of tra de and investment ag reements, they al so need to

agree and coope rate in the management of shared natural reso urces,

including tra nsboundary wat ers, which is the focu s of this article.

These areas of St ate interaction are c overed by two distinc t fields

of international l aw: international inve stment law (IIL), coveri ng in-

ternational inve stment agreements (IIA s) and investor-State dispute

settlement ( ISDS), and internation al water law (IWL) covering t he

law of non-navigatio nal uses of internatio nal watercourses. I t is a

common ground t hat these two areas of l aw intersect. Fir st, via a

perceived confli ct of norms, albeit t his is contested by some p rac-

titioners an d academics who co nsider that investme nt obligations

under IIAs an d other internationa l obligations unde r human rights

and environmen tal protection conve ntions are not mutual ly exclu-

sive. Second, by influencing one another, thereby achieving some

degree of mutual s upportivenes s. China is an interest ing example

to analyse this inte raction in prac tice, despite the d istinctive ap-

proaches it ado pts in the negotiation of economic i ntegration trea-

ties and agreements for the management of shared water resources.

Indeed, whil e China is currently strongly c ommitted to rules of

trade and inves tment protection , it remains cautio us about

 1N Zhu, ‘Is Chin a’s Growth Model a T hreat to Free-Ma rket Economics? ’ (The Economi st,

13 June 2018).

 2ibid.

Received: 15 Jun e 2020 

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 Accep ted: 9 September 202 0

DOI: 10 .1111/reel .12365

SPECIAL ISSUE ARTICLE

Enforcing transboundary water obligations through investment

treaty arbitration: China, Laos and the Mekong River

Ana Maria Daza-Clark

This is an open ac cess article und er the terms of the Crea tive Commons Attr ibution License, w hich permits use , distribution an d reproduction i n any medium,

provided the o riginal work is prop erly cited.

© 2020 The Autho rs. Review of Europea n, Comparative & Inter national Environm ental Law publishe d by Wiley Periodic als LLC

Correspondence

Email: anamaria.dazavargas@ed.ac.uk Abstract

The study of the inter section between international inve stment law and international

water law is not new. However, this intersecti on may be better unders tood through

the analysis of specif ic case studies, regions and/or economic sec tors. This article ob-

serves the relat ionship between China an d Laos in connection to t he construction of

dams in the Lanc ang/Mekong River. In so doing, it addresses C hina’s attitudes towards

the negotiation and conc lusion of economic integration a nd transboundar y water

agreements, ob serving a sharp contr ast between the two. A gainst this backg round,

the article exa mines some of the most import ant agreements between C hina and Laos

regarding both the p rotection of foreign investme nt and the management of share d

waters. The art icle argues that investor-State dispute sett lement may lend some ‘teeth’

to the enforcement of tran sboundary obligations with re gard to the Mekong River.