The variation of countries’ industrial policies and political strategies in a multipolar world brings the investor-state dispute settlement (ISDS) regime to a crossroad. Backlash to the inconsistency, non-transparency, partiality and unfairness of the ISDS regime results from the states’ changing interests and policy priorities, including the rising awareness of democracy. In pursuing the benefits of multilateralism, a multilateral investment court can serve as an alternative to the current investment arbitration regime. States need to clarify the scope of consent based on their political economic considerations. Substantial investment protection standards can be different, whereas the principle of proportionality can serve as an approach to the balance between investment protection and states’ policy arrangements. Meanwhile, there should be efforts to align the interpretation and application of key provisions, possibly through interpretation notes and an appellate body that reviews arbitral decisions, to generalise implicit consensus and to broaden collective acceptance of the regime.

The investor-state dispute settlement (ISDS) system is such a means to an end of further economic development and wider social political goals. With major protective provisions of expropriation against compensation, fair and equitable treatment, national treatment, most-favored-nation treatment, full protection and security and umbrella clause, it helps establish a predictable, transparent, and enforceable legal regime to protect foreign investors’ legitimate expectations and lawful investment. As China intends to attract foreign investments by offering a stable business operation environment, its signing a large number of BITs and FTAs may help reduce political and socio-economic risks, which give states, businesses, and individuals the confidence to work in a coordinated manner. The economic development goal, rule of law strategy, tense US-China relations, ideology of multilateralism and community of common destiny, all add up to China’s inclination to incremental but effective ISDS reform.