Agreement between the Government of Russia and China on the Promotion and Mutual Protection of Investments has been ratified

The Russian Federation Government Commission on Legislative Activity approved a draft law on the ratification of the agreement between Russia and China on the promotion and mutual protection of investments (hereinafter referred to as the Agreement). On October 10, 2025, it was submitted to the State Duma of the Russian Federation for consideration, and on October 21, 2025, the Agreement was ratified.

The previous version of a similar agreement on the promotion and mutual protection of capital investments, concluded on November 9, 2006, provided for a standard set of investor protection tools for that time.

The new Agreement clarifies the procedure for resolving disputes between an investor of one state and another state in order to increase its predictability and convenience for both parties. In addition, a number of restrictions on claims have been introduced (including a statute of limitations), and requirements have been established for the content of requests for consultations and for the referral of disputes to arbitration.

The governments of the Russian Federation and the People’s Republic of China (the Contracting Parties) may agree on the interpretation of the provisions of the Agreement, which shall be binding, including on the arbitral tribunal.

The Agreement contains rules that differ from those established by the legislation of the Russian Federation, and therefore it is subject to ratification on the basis of subparagraph “a” of paragraph 1 of Article 15 of the Federal Law “On International Treaties of the Russian Federation.”
In particular, the Federal Law “On Foreign Investments in the Russian Federation” does not stipulate the granting of most-favored-nation treatment to investors and their investments, as well as the conditions, amount, and procedure for payment of compensation in cases of compulsory expropriation of investments.

The Agreement clarifies the definitions of the terms “investor” and “investment,” as well as the provisions on the scope of application of the Agreement, aimed at limiting the ability of foreign investors to file unfounded claims in international arbitration for compensation for damages against the Russian Federation.

Thus, the protection of the Agreement will not be provided to individuals with dual citizenship or who, at the time of the investment, had the citizenship of a Contracting Party in the territory of which the investment was made, as well as to legal entities that do not carry out significant commercial activities in the territory of one of the Contracting Parties and are actually controlled by persons of the other Contracting Party or persons of a third state.

Taking into account arbitration practice, the Agreement now expressly provides that certain types of property rights, such as monetary claims arising exclusively from commercial contracts for the sale or lease of goods or services, or from the provision of credit in connection with a commercial transaction, cannot be recognized as investments within the meaning of the Agreement.

The provisions protecting investors’ interests in the event of expropriation, nationalization, or other measures having a similar effect have been clarified to limit the broad interpretation by arbitral tribunals of what measures may be recognized as expropriation entitling investors to compensation.

Thus, the Agreement provides a clear list of measures that do not constitute expropriation, including the issuance of compulsory licenses for intellectual property, measures taken by a Contracting Party to overcome a financial or economic crisis, such as a moratorium on the payment of public debt, a temporary suspension of interest payments, or negotiations with investors on debt restructuring.

Provisions have been added to the Agreement aimed at simplifying investment procedures in order to create stable, predictable, and transparent conditions for investment activities.

Thus, the Agreement provides for obligations to publish all measures of general application affecting any matter covered by the Agreement, as well as to ensure their reasonable, objective, and impartial application.

With regard to the application of measures related to licensing procedures for investment, there is an obligation to ensure that such procedures are made publicly available in advance and do not unduly complicate or delay investment activities.

Link: https://sozd.duma.gov.ru/bill/1037114-8

Bill No. 1037114-8