Bilateral Investment Treaties and Indirect Expropriation: Tza Yap Shum v. Republic of Peru

Abstract

China has signed more than 125 BITs (excluding a dozen of FTAs). However, the utility of these BITs has been very limited. Core terms such as expropriation and compensation in Chinese BITs have rarely been tested. Up to today, there has been only one investment arbitration case which has two awards on jurisdiction and merits respectively based on China's BIT with Peru and likely will have an annulment decision as well. In this sense, the awards of the case of Tza Yap Shum v. Republic of Peru are of great importance. The award on merits extensively analyzed the conditions of and defense to indirect expropriation under the China-Peru BIT. This article tries to understand what constitutes indirect expropriation under the China-Peru BIT.

Keywords: BITs, Indirect Expropriation, Taxation, Interim Measures