CPEC AND INTERNATIONAL INVESTMENT LAW: A CRITICAL ANALYSIS

Abstract

The China Pakistan Economic Corridor (CPEC) is one of the largest foreign investment projects in Pakistan and is a part and parcel of the Belt and Road Initiative (BRI). Although international investment law is of immense economic importance, scholarship on CPEC has paid little attention. This study critically examines the legal regime for investments within the framework of CPEC, Pakistan's commitments under bilateral investment treaties, effectiveness mechanisms, and the legal and institutional issues for investment governance. A qualitative doctrinal research design was used. The primary sources were bilateral investment treaties, the ICSID Convention, domestic investment law, arbitration awards, and policy documents, and the secondary sources were scholarly literature, legal commentaries, and institutional reports. The standards of investor protection, dispute resolution mechanisms, and governance issues were analyzed through comparative legal analysis and thematic interpretation. The results indicate that CPEC investments are governed by a multi-layered legal framework that combines domestic and international laws and legal commitments. Foreign investors are well protected by the Pakistan–China Bilateral Investment Treaty and ICSID arbitration mechanisms, thereby improving investment confidence. However, issues of transparency, regulatory fragmentation, environmental compliance, and institutional coordination were identified. Financial and reputational risks to which Pakistan may be exposed, in view of regulatory inconsistencies and contractual management failures, were also highlighted during the Karkey Karadeniz and Tethyan Copper (Reko Diq) arbitral proceedings. The study concludes that sustainable investment governance under CPEC can be balanced, preserving investors' rights without compromising the sovereignty and autonomy of states in investment governance (Khan, Ahmad, & Munir, 2020). To maximize the developmental benefits of CPEC and ensure the sustainability of its investments, strengthening treaty provisions, increasing transparency, coordinating institutions, and implementing effective mechanisms to prevent conflicts are crucial.