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Experts call for protecting overseas investment


08:10, September 28, 2012

Experts urged investment destination countries to guarantee legitimate interests of Chinese investors in accordance with laws and agreements against the pressure from the slowing economic recovery.

Foreign governments should adhere to the principle of fairness when dealing with investment disputes, especially in the economic downturn, said Wang Zhile, director of The Research Center on Transitional Corporation. He was commenting on a Chinese company's billion-dollar investment loss.

Ping An Insurance Company of China (Ping An), China's second largest insurer, filed an arbitration claim with the International Center for Settlement of Investment Disputes (ICSID) against Belgium after two years of negotiations with Belgian government.

The claim was accepted by ICSID on September 19. Ping An lost about $3 billion when its investment in Belgo-Dutch bank Dortis failed after Fortis was nationalized and sold off during the 2008 financial crisis.

Wang expected the case would take at least one or two years for the World Bank-sponsored arbitration body to make final decision.

Mei Xinyu, researcher with the Chinese Academy of International Trade and Economic Cooperation, estimated that Ping An lost over 90 percent of its total investment into Fortis in 2008.

"So far, we have endeavored to negotiate with the Belgian government through multiple channels to address the issue of compensation for our losses in Fortis investment, without reaching an agreement," Guo Yiwei, spokesperson of Ping An Beijing Branch told Xinhua on Thursday.

According to her, the Belgian government failed to adopt appropriate measures during the nationalization, leading to damage to Ping An's legitimate rights and interests.

Wang noted that the Belgian government's handling over the Fortis case four years ago was irregular, citing that the intervention of administrative order and the mandatory nationalization violated the business regulation and the agreement of protecting foreign investors between the Chinese and Belgian governments.

Cases of this kind are becoming prevalent, such as the abortive bid for Unocal made by a Chinese oil giant in 2005 and the failed acquisition of Rio Tinto by China's largest aluminum maker in 2008. This, at a time when Chinese enterprises began to step into the spotlight of international trading and investment.

However, Mei believed that the temporary frustration would not shatter the confidence of Ping An to "go abroad" albeit the result of the arbitration may affect its choice of investment destinations.

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