The Geoeconomics of Belt and Road Disputes: A Case Study on the China-Pakistan Economic Corridor

Abstract

This article argues that the dovetailing economic, geopolitical, and security interests that underpin the Belt and Road Initiative demands a dispute resolution mechanism that focuses on broader interests and legal rights. Using the China-Pakistan Economic Corridor (CPEC) as a case study, it identifies the conditions in which Chinese investors could have initiated an investment arbitration but did not. This can be explained by the rights-based orientation of investment treaties failing to reflect the interests of multi-project initiatives. Instead, alternative methods of home state intervention, such as state-funded political risk insurance, are used to protect investors. In other words, the political economy of CPEC investments refuses to utilize hard law mechanisms. Given this context, mediation may be a viable alternative. These circumstances accelerate the trend towards “de-legalization”, which is often cited as an inevitable consequence of the emerging “geoeconomic order” but suggests that reasons other than national security are the cause.