China’s position on the reform of the investor-state dispute settlement under the return of the Calvo Doctrine

The return of the Calvo Doctrine, which emphasizes the sovereignty of host states and the primacy of local legal remedies in resolving disputes involving foreign investors, has significant implications for the reform of the Investor-State Dispute Settlement (ISDS) mechanism. This paper explores China’s stance on ISDS reform in the context of this resurgence, offering a detailed analysis of China’s historical approach, recent reforms, and practical applications. Beginning with the exploration of global practices and utilizing theoretical analysis, comparative studies, and case studies, this paper argues that China’s cautious and selective engagement with ISDS reflects a preference for negotiation and local legal remedies over international arbitration. Recent reforms underscore this approach by advocating for a permanent appeal mechanism and emphasizing alternative dispute resolution (ADR) methods such as mediation. China’s ISDS reform strategy aligns with the broader global trend toward enhancing state sovereignty and judicial fairness, potentially influencing other developing countries to adopt similar approaches. The findings of this research contribute to the ongoing debate on ISDS reform and provide practical policy recommendations for strengthening local legal frameworks, promoting alternative dispute resolution methods, and enhancing regional cooperation.