The Interpretation of Umbrella Clause in Investment Treaties Essay

The Interpretation of Umbrella Clause in Investment Treaties - Essay congressmanHowever, umbrella article has been widely debated in academic discussions and arbitral practices during the recent years4. Commentators overhear illustrated the argument in terms of interpretation the umbrella article in investment treaties that derived from different tribunals in order to complete whether breaching contractual obligations amount to violating conformity obligations. Within the context of this argument, tribunals will be able to know if they have the legal power to hear claims arising from an alleged investment contract breach. This essay aims to analyse the interpretation of umbrella clause in investment treaties. In the subsequent part of this paper first, the definition of umbrella clause has been provided accord to some commentators, and different formulations of the umbrella terms have also been included in the part. Subsequent to that, the emphasize of umbrella clause is accou nted for. ... 1. Definition of Umbrella Clause Some authors and commentators tried during the last decade to pardon the meaning of umbrella clause. Dolzer and Schreuer represented it as a provision in an investment protection treaty that guarantees the observation of obligations assumed by the multitude render vis-a-vis the investor.5 Moreover, Gallagher and Shan introduced the umbrella clause by revealing that the clause is taken its name from its main objective namely in order to oblige the host state to observe any commitments it has entered into with regard to foreign investors.6 Some also assume that the umbrella clause could be extended to beyond what it created for, as F.A. Mann stated that the umbrella clause is a provision of busy importance in that it protects the investor against any interference with his contractual rights, whether it results from a mere breach of contract or legislative or administrative act.7 As a matter of fact, umbrella clause is also known as m irror effect, pacta sunt servanda clause, parallel effect, elevator, respect clause and sanctity of contract. Yet, the limit of subject matter rationale materiae jurisdiction does not remain invariant under the BITs.8 Some BITs encompass disputes pertaining to an obligation under the agreement only for claims of violations of BIT. Other BITs extend the jurisdiction to any dispute relating to investments. Some others construct an international law obligation that a host state shall, for instance, constantly guarantee the observance of the commitments it has entered to observe any obligation it has assumed, in respect to investments.9 Thus, a breach of such an obligation may consist of