Research on Innovative Dispute Resolution Mechanisms for Belt and

Road Investment Disputes: A Case Study of the RCEP Regional

Dispute Resolution Mechanism

Jiani Li

School of Law, Minzu University of China, Beijing, China

Keywords: Belt and Road Investment Disputes, RCEP Dispute Resolution Mechanism, Innovative Dispute Resolution

Mechanism.

Abstract: Frequent investment disputes among Belt and Road Initiative (BRI) member states have exposed the

inefficiencies of traditional mechanisms, including procedural delays, fragmented rules, and weak

enforcement. Notable issues include the lengthy procedures of the International Centre for Settlement of

Investment Disputes (ICSID) and the absence of a unified mediation framework. This study examines the

Regional Comprehensive Economic Partnership (RCEP) dispute resolution mechanism, extracting its core

features-such as consultation prioritization, flexible forum selection, and differentiated treatment for

developing nations-to evaluate its applicability. Building on this analysis, the paper proposes an innovative

BRI dispute resolution framework. At the principal level, it emphasizes fairness, balanced interests, and

cooperation-oriented governance. Structurally, it advocates establishing a permanent multi-lateral institution,

implementing tiered arbitration procedures, and leveraging blockchain technology to enhance cross-border

enforcement. These recommendations aim to address systemic deficiencies and improve global governance

efficacy.

1 INTRODUCTION

In recent years, international trade dispute resolution

has garnered significant attention from scholars,

frequently serving as a focal topic at international law

conferences. The Belt and Road Initiative (BRI), as a

platform for global cooperation, has become a central

subject of academic inquiry. While the BRI fosters

cross-regional collaboration, disputes inevitably arise

during transnational engagements. Statistics from the

UNCTAD database reveal that BRI countries are

frequently respondents in international investment

arbitration cases (Ming, 2018). Resolving such

disputes thus emerges as a critical challenge. Existing

mechanisms, particularly the RCEP framework,

dominate current practices. This study investigates

the RCEP dispute resolution mechanism to propose

innovative solutions tailored to BRI investment

disputes, offering fresh insights for enhancing

governance under evolving global dynamics.

2 LITERATURE REVIEW

Scholars classify BRI-related commercial disputes

into three categories, state-to-state disputes over BRI

projects, infrastructure construction and financial

agreement disputes and international trade and

investment conflicts (Wang, 2020). Comparative

analyses of CPTPP and RCEP highlight that CPTPP

encompasses broader regulatory domains, including

labor rights and state-owned enterprise reforms, with

stricter enforcement clauses (Che & Qiao, 2022).

However, RCEP’s exclusion of Investor-State

Dispute Settlement (ISDS) provisions is noted as a

critical flaw, potentially conflicting with existing

bilateral ISDS agreements (Tran Thi Thuan & Vo Tan

Huy, 2024). Additionally, BRI’s ISDS mechanisms

face challenges such as ambiguous arbitration scopes

and insufficient coordination between international

arbitration and local remedies (Mo & Gao, 2022).

Scholars further critique the limited enforceability of

BRI mediation outcomes and advocate for diversified

dispute resolution frameworks (Ming, 2018).

Building on these discussions, this paper evaluates

606

Li, J.

Research on Innovative Dispute Resolution Mechanisms for Belt and Road Investment Disputes: A Case Study of the RCEP Regional Dispute Resolution Mechanism.

DOI: 10.5220/0014393900004859

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Politics, Law, and Social Science (ICPLSS 2025), pages 606-610

ISBN: 978-989-758-785-6

CPTPP and RCEP mechanisms, identifies gaps, and

proposes actionable reforms for BRI investment

disputes.

3 CURRENT STATUS AND

CHALLENGES OF BRI

INVESTMENT DISPUTES

3.1 Legal and Political Risks

BRI investment disputes are compounded by

heterogeneous legal environments and geopolitical

tensions. Member states’ legal systems span civil law,

common law, and Islamic law, with some

jurisdictions plagued by vague statutes, judicial

inefficiency, and local protectionism. For instance,

Yemen and Jordan face prolonged enforcement

timelines, undermining investor rights (Gu & Deng,

2023). Fragmented bilateral investment treaties

(BITs) further exacerbate jurisdictional ambiguities.

Geopolitical risks are equally salient, particularly in

regions like the Middle East and South Asia, where

strategic rivalries and security threats—such as

terrorism and political instability-directly impact

investments (e.g., disruptions to the China-Pakistan

Economic Corridor).

3.2 Limitations of Existing

Mechanisms

3.2.1 Inadequate Mediation Frameworks

"Belt and Road" investment disputes can be broadly

categorized into three types. The first type involves

investment and trade disputes between the investor’s

home state and the host state. The second type

consists of investment and trade disputes between

international individual investors and the host state.

The third type refers to investment and trade disputes

arising between international individual investors and

private operators within the host state (Fan, 2023).

Among these, sovereign states play a crucial role in

"Belt and Road" investment and trade disputes.

Moreover, "Belt and Road" investments possess

unique characteristics, as individual investors are

often backed by state support or state-owned

enterprises (Wang, 2020). For instance, Chinese

investors frequently engage in transactions involving

state-owned enterprises, meaning that investment and

trade disputes concerning individual investors can

easily escalate into intergovernmental or interstate

conflicts. Consequently, "Belt and Road" investment

disputes cannot be adequately resolved solely through

traditional WTO-based investment dispute settlement

mechanisms.

Some scholars have pointed out that "Belt and

Road" investment disputes are often resolved through

mediated settlement agreements. During mediation,

mediators take into account the interests of both

parties and adopt an "interest-oriented" approach to

facilitate an agreement. However, this mediation

model faces a significant challenge, namely, the lack

of enforceability (Jiang & Wu, 2024). The root cause

lies in the absence of binding mechanisms to ensure

the implementation of mediated agreements. To date,

no supranational regional mediation organization or

treaty agreement has been established among "Belt

and Road" participating countries, which contributes

to the weak enforceability of dispute resolution

mechanisms in "Belt and Road" investment and trade

disputes.

3.2.2 Drawbacks of International

Arbitration

First, regarding the arbitration system, confidentiality

is one of its defining characteristics. However, in the

international context, there is a growing demand for

increased transparency in arbitration. The principle of

confidentiality in arbitration is explicitly reflected in

the arbitration rules of the American Arbitration

Association (AAA) and the International Chamber of

Commerce (ICC), which stipulate that hearings must

generally remain closed unless the parties agree

otherwise (Zhang, 2024).

Unlike traditional domestic investment arbitration,

where both parties are typically entities within a

single country (e.g., companies, enterprises, or

individuals), international investment arbitration

involves cross-border disputes, making the situation

more complex. In certain cases, the confidentiality of

international arbitration may create challenges for

investors-for instance, host states may exploit

confidentiality rules to evade their international

obligations and duties of "good governance." In other

cases, it may also negatively affect domestic investors

in the host country, as they may lack access to critical

information, leading to a deprivation of their right to

know and ultimately harming public welfare.

Furthermore, arbitration proceedings are often

protracted, and the issue of timeliness has long been

criticized by scholars. For investment projects, time

is of the essence, and opportunities can be fleeting.

The longer the arbitration process drags on, the

greater the losses incurred. For example, in the Laos

arbitration case, Power China not only bore

Research on Innovative Dispute Resolution Mechanisms for Belt and Road Investment Disputes: A Case Study of the RCEP Regional

Dispute Resolution Mechanism

607

arbitration costs and time expenditures but also faced

pressures such as labor wage disputes and project

delays.

Notably, in recent years, there have been

constructive explorations addressing this issue. The

Singapore International Arbitration Centre (SIAC)

introduced a summary procedure in its 2025 Rules.

According to Rule 13.1, the summary procedure shall

apply if the parties so agree, or if the amount in

dispute does not exceed S$1,000,000, unless the

SIAC President, upon application by a party, decides

otherwise in the latter scenario. Additionally, Rule

13.3 states: The parties may, by written agreement,

opt out of the summary procedure.

4 CONSTRUCTING AN

INNOVATIVE BRI DISPUTE

RESOLUTION MECHANISM

BASED ON RCEP

4.1 Lessons from the RCEP

Mechanism

4.1.1 Core Features of RCEP

RCEP prioritizes consultation, requiring parties to

respond within 7 days and conclude negotiations

within 30 days (20 days for urgent cases).

Notably, the Regional Comprehensive Economic

Partnership (RCEP) partially addresses the needs of

developing country members by providing

substantial support to less-developed members such

as Laos, Myanmar, and Cambodia through

mechanisms like Special and Differential Treatment

(SDT), economic and technical cooperation, and

transitional period arrangements.

RCEP explicitly mandates that developed member

states assist less-developed members in enhancing

their capacity to fulfill treaty obligations through

technical assistance, knowledge sharing, and

financial support. For instance, the ASEAN

Secretariat Report (2023) indicates that Japan

provided over USD 5 million to Cambodia from 2021

to 2023 for customs system modernization.

Furthermore, to alleviate pressure on developing

countries, RCEP permits extended transitional

periods in areas such as tariff concessions and

services trade liberalization. For example, Annex 2-A

of Chapter 2 allows Cambodia, Laos, and Myanmar a

15-year transitional period for tariff reductions on

goods—compared to the 10-year period for other

members-and permits them to maintain higher tariffs

on sensitive products such as agricultural goods.

4.1.2 Applicability to BRI Disputes

As the largest free trade agreement in the Asia-Pacific

region, the Regional Comprehensive Economic

Partnership (RCEP) embodies significant flexibility

in the procedural design and jurisdictional scope of its

dispute settlement mechanism (Chapter 19). Notably,

it excludes the Investor-State Dispute Settlement

(ISDS) mechanism, instead establishing a distinctive

flexible framework through a State-State Dispute

Settlement (SSDS) mechanism and reserving space

for subsequent negotiations.

RCEP prioritizes efficiency by mandating

consultation as the core preliminary procedure for

dispute resolution. The requested party is required to

respond within 7 days and conclude consultations

within 30 days of receiving a request, with timelines

shortened to 15 days in urgent cases. This contrasts

with the World Trade Organization (WTO)’s 10-day

response period, reflecting RCEP’s stricter adherence

to efficiency (Feng, 2024). Additionally, to avoid

protracted institutional approval processes, RCEP

empowers contracting parties with greater procedural

autonomy by allowing them to either directly select

panelists or delegate appointments to the WTO (Xu

& Xu, 2023).

RCEP achieves a nuanced equilibrium by

explicitly excluding investor-state disputes from its

jurisdiction (Article 18 of Chapter 10), permitting

only inter-state disputes over treaty obligations to be

submitted to panels. This design circumvents

jurisdictional conflicts potentially arising from ISDS

mechanisms while preserving flexibility for future

negotiations. Under the agreement, all parties must

initiate discussions on ISDS mechanisms within two

years of the agreement’s entry into force, with any

final decision requiring unanimous consent, thereby

institutionalizing incremental reform (Wang, 2023).

RCEP stipulates that panel rulings are final and

binding, accompanied by a compliance review

mechanism. If a respondent fails to implement a

ruling, the disputing party may request the

reconvening of the original panel for review, with

proceedings required to conclude within 150 days.

Notably, RCEP diverges from the WTO’s “retaliation

mechanism” by prioritizing political consultation to

enforce compliance, thereby mitigating the

adversarial impact of punitive measures on regional

cooperation (Feng, 2024).

The Regional Comprehensive Economic

Partnership (RCEP) adheres to a cooperation-

oriented approach that fully respects developmental

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

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disparities. Notably, the agreement explicitly

excludes the application of the Investor-State Dispute

Settlement (ISDS) mechanism, confining investment

disputes to resolution through inter-state

consultations among the Contracting Parties. This

design substantially safeguards the sovereignty of

developing nations. Furthermore, Article 18.19

provides procedural exemptions for less developed

member states such as Cambodia, Laos, and

Myanmar, mandating dispute settlement panels to

consider their economic standing during adjudication

and imposing restrictions on the implementation of

compensation procedures.

Concurrently, RCEP prioritizes the principle of

consultation precedence, requiring mandatory

consultations between disputing parties prior to

formal submission to an adjudicative panel. The

consultation mechanism emphasizes both procedural

transparency and confidentiality of substantive

information, constituting an institutional arrangement

aimed at conflict resolution through non-

confrontational means (Xu & Xu, 2023).

4.2 Framework Design for the BRI

Mechanism

4.2.1 Establishment of Principles for

Innovative Mechanisms

Fairness and equity constitute the core value

orientation of both the RCEP and the Belt and Road

Initiative (BRI) dispute resolution mechanisms. The

RCEP ensures impartiality in dispute settlement

procedures through unified rules of origin,

transparency provisions, and alignment with WTO

rules. For instance, RCEP explicitly mandates that

panels interpret the agreement by referencing the

jurisprudence of the WTO Dispute Settlement Body,

thereby maintaining coherence within the

international trade governance framework (Kong,

2021). Concurrently, the agreement establishes

transitional periods and exception clauses for least-

developed countries such as Cambodia and Laos,

balancing the rights and interests of nations at varying

developmental levels through Special and

Differential Treatment (SDT), which embodies

substantive fairness (Shen & Li, 2023). To operate

this principle within the BRI multilateral framework,

procedural fairness could be enhanced by

institutionalizing third-party evaluation mechanisms

during adjudication (Xu & Xu, 2023).

RCEP’s rulemaking emphasizes the coordination

of diverse interests. Its forum selection clause allows

member states to elect applicable dispute resolution

frameworks (e.g., RCEP or bilateral investment

treaties) based on specific disputes, thereby avoiding

jurisdictional conflicts (Kong, 2021). This

mechanism offers critical insights for BRI dispute

resolution: in cases involving multi-state interests, an

Interest Balancing Committee could be established to

holistically assess economic, social, and

environmental impacts, while implementing

compensatory measures to redress losses incurred by

disadvantaged parties. For example, in infrastructure

investment disputes, BRI mechanisms could adopt

RCEP’s approach to technical assistance for

developing countries by requiring advanced

economies to provide funding or capacity-building

support (Jing, 2021).

RCEP prioritizes consultation and non-

confrontational resolution pathways, mandating

compulsory consultations before disputes are

submitted to panels and advocating cooperation

through Alternative Dispute Resolution (ADR)

mechanisms such as mediation and conciliation (Xu

& Xu, 2023). This principle aligns closely with the

BRI’s ethos of “joint consultation, joint contribution,

and shared benefits.” Future mechanisms could

expand cooperative frameworks by establishing a

Dispute Prevention Database to share policy updates

among member states, thereby reducing friction risks.

Additionally, a Joint Technical Committee could

facilitate consensus-building in emerging fields such

as digital trade and green energy (Shen & Li, 2023).

4.2.2 Design of Specific Frameworks

The current RCEP framework lacks a permanent

dispute settlement body, relying instead on ad hoc

panel appointments, which has led to inconsistencies

in rulings (Kong, 2021). To address this, the Belt and

Road Initiative (BRI) could establish a Multilateral

Dispute Settlement Center (MDSC) with three

specialized branches.

Consultation and Mediation Division: Facilitates

informal dialogues among member states, providing

legal advisory and mediation services. Expert

Arbitration Tribunal: Composed of authoritative

scholars and international judges across disciplines,

operating under a roster system to ensure expertise.

Compliance Oversight Committee: Monitors

implementation of rulings and imposes collective

sanctions (e.g., restricted market access) on non-

compliant parties.

Drawing from the Asian Infrastructure Investment

Bank (AIIB)’s governance model, the MDSC could

adopt a weighted voting system to balance the

influence of major powers with the participation

Research on Innovative Dispute Resolution Mechanisms for Belt and Road Investment Disputes: A Case Study of the RCEP Regional

Dispute Resolution Mechanism

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rights of smaller states (Jing, 2021).

While RCEP’s “final and binding” arbitration

principle enhances efficiency, it fails to address

complex issues such as investment disputes (Xu &

Xu, 2023). The innovative mechanism could

introduce a three-tier procedural system. Summary

Procedure: For disputes under USD 5 million,

requiring resolution within 90 days by a single

arbitrator. Expedited Track: Tailored for time-

sensitive sectors like digital trade and cross-border e-

commerce, utilizing online hearings and electronic

evidence submission. Standard Procedure: Retains

traditional arbitration processes but shortens

timelines to 12 months (Kong, 2021).

Additionally, an early dismissal mechanism could

be incorporated, empowering tribunals to reject

frivolous claims after preliminary review, thereby

conserving judicial resources (Shen & Li, 2023).

RCEP’s reliance on voluntary compliance and

limited retaliatory measures (e.g., suspension of

concessions) results in weak enforceability (Kong,

2021). To mitigate this, the innovative mechanism

should establish a tripartite enforcement framework.

Enforcement systems through legislative

amendments. For example, China could revise its

Civil. Procedure Law to include a dedicated chapter

on international award enforcement. Multilateral

Coordination: Collaborate with institutions like

UNCITRAL and the ICC to list non-compliant states

on a compliance blacklist, restricting their access to

international financing projects. Establish a

collectively funded enforcement reserve to

compensate prevailing parties up front, with

subsequent recovery from non-compliant states (Xu

& Xu, 2023).

Further, blockchain technology could be leveraged

for immutable documentation and cross-border

verification of awards, enhancing transparency and

efficiency (Jing, 2021).

5 CONCLUSION

In this paper, RCEP's dispute settlement program

design, award execution, principal establishment and

other aspects are taken as the starting point to study

the "One Belt, One Road" investment dispute

settlement mechanism. It is found that although

RCEP has some conflicts with ISDS, it still has

reference significance. We can learn from the

flexibility and tolerance of RCEP mechanism and

build a new "One Belt, One Road" investment dispute

settlement mechanism based on the principles of

fairness, justice, giving consideration to interests and

promoting cooperation. In this paper, the mechanism

of RCEP is analyzed by means of literature research,

and the flexible, inclusive and efficiency-oriented

rule design of RCEP is studied. Further, the

construction of "One Belt, One Road" innovative

settlement mechanism based on RCEP dispute

settlement mechanism is expounded, which is

embodied in establishing specialized dispute

settlement institutions, optimizing arbitration

procedures, introducing fast arbitration channels,

improving the guarantee mechanism for award

execution, deepening innovation in three dimensions:

institutional permanence, procedural stratification

and enforcement compulsion, and strengthening the

connection with existing international law to help.

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