Nobody downloaded yet

Critically Analyse the Interpretation of Umbrella Clause in Investment Treaties - Essay Example

Comments (0) Cite this document
Critically analyse the interpretation of “umbrella clause” in investment treaties, taking into account recent investment treaty practice and arbitration decisions 1. Introduction The development and growth of the global economy has opened up avenues of mutual business activity between developed and developing nations…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.4% of users find it useful
Critically Analyse the Interpretation of Umbrella Clause in Investment Treaties
Read TextPreview

Extract of sample "Critically Analyse the Interpretation of Umbrella Clause in Investment Treaties"

Download file to see previous pages investor in a host state.3 One such device is the umbrella clause. 2. Definitions of Umbrella Clause The umbrella clause is also known by other terms, such as the observance of undertakings clause, the observance of commitments clause, the pacta sunt servanda 4 clause, the sanctity of contract clause, and the mirror effect clause.5 There is no fixed wording for the clause, but it’s different manifestations are all to the effect that obligations are imposed upon the parties for those circumstances for which the contract had not specifically provided. The benefit of umbrella clause is that it can encompass all types of commitments whether express or implied, contractual or not contractual.6 The clause’s broadest version may be stated as: “Each Contracting Party shall observe any obligation it may have assumed with regard to investments.”7 As Dolzer & Stevens describes, the provision of umbrellas clause intends to ensure that contracting parties in an investment agreement should honour their commitments towards citizens or investors of other parts.8 Consequently, The effect of umbrella clauses is for arbitral jurisdiction to be extended more broadly to investment disputes that involve alleged default by the host state in meeting any obligation it owes to the foreign investor. Through umbrella clauses, therefore, the investor secures the state’s observance of its commitments. More state acts are thus brought “under the umbrella of protection of the treaty.”9 There are far-reaching effects of umbrella clauses, the most important of which is to extend violations of a contract relating to an investment to the status of treaty violations.10 The conventional concept of the umbrella clause was best put forward by Noble Ventures v Romania,11 which held that “the purpose of the parties in adopting an umbrella clause was ‘to equate contractual obligations governed by municipal law to international treaty obligations as established in the BIT.”12 3. Evolution of Umbrella Clause Long before BITs were the norm and when investor-to-state arbitration was still unheard of, the only recourse of an individual who felt aggrieved by alleged illicit acts of the host state was by diplomatic protection. Traditional international law insulated governments against the direct claims of private persons (corporations and individuals), requiring aggrieved foreign investors to secure the consent of the host country before it may seek redress.13 It was a rule of customary law that a state may exercise its right of diplomatic protection only if a breach of international law has taken place, and its national has suffered some form of injury as a result thereof. The term umbrella clause was first used by an prominet international scholar Elihu Lauterpacht in a claim against Iran due to nationalisation of iranian oil fields when claim was made by the Anglo-Iranian Oil Company in 1953-54. Lauterpacht supported that an “umbrella treaty” would be implemented infringement of which would make the infringement if the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Critically Analyse the Interpretation of Umbrella Clause in Investment Essay”, n.d.)
Retrieved from
(Critically Analyse the Interpretation of Umbrella Clause in Investment Essay)
“Critically Analyse the Interpretation of Umbrella Clause in Investment Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Critically Analyse the Interpretation of Umbrella Clause in Investment Treaties

Critically analyse the concept of fair and equitable treatment in investment treaties, taking into account recent investment

...of investors when there is doubt on the meaning of any provisions.26 The prerogative to interpret this ambiguity has been mostly to favour the side of investors.27 The combination of the high level of success for investors and the large number of cases brought against the developing world seems to tacitly imply that the treaties are overwhelmingly oriented for the investors. Discussing “fair and equitable” protection of investment assets seems to be fairly ludicrous under these circumstances. Another common criticism is that “fair and equitable” treatment should have been a non-contingent type of absolute standard without all the extraneous clauses such...
15 Pages(3750 words)Essay

Critically analyse the concept of fair and equitable treatment in investment treaties, taking into account recent investment

...? Critically analyse the concept of "fair and equitable treatment” in investment treaties, taking into account recent investment treaty practice and arbitration cases. LIST OF CASES INTERNATIONAL CENTER FOR SETTLEMENT OF INVESTMENT DISPUTS (ICSID) Cases Bayindir Insaat Turizm Ticaret v. Sanayi A.S. v. Islamic Republic of Pakistan, measures affecting FET provisions, ICSID Case No. ARB/03/29, (Nov .14, 2005). Biwater Gauff (Tanzania) Ltd. V. United Republic of Tanzania, Violation of FET provisions, ICSID Case No. ARB/05/22 (Adopted April 18 2006). CMS Gas Transmission Company v. Republic of Argentina, Violation of FET provisions, ICSID Case No. ARB/01/8 (Adopted May 25 2005). Eureko B.V. v. Republic of Poland Eureko B.V. v. Republic... Draft...
15 Pages(3750 words)Essay

Critically analyse the concept of ' fair and equitable treatment ' in investment treaties, taking into account recent investment

...through a literature review followed by an analysis phase which will critically evaluate the importance of fair and equitable treatment in relation to the recent trends of investment treaties and the different related arbitration cases. Arbitration case examples have been appended after the analysis, followed by a viable conclusion. The paper also aims to comprehend the present trends in the light of the older developments which have shaped up today’s international investment scenario. Research Question The research question is in the form of the following statement: Critically analyse the concept of ‘fair and equitable treatment’ in...
16 Pages(4000 words)Essay

The Interpretation of Umbrella Clause in Investment Treaties

...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 according to some commentators, and different formulations of the umbrella terms have also been included in the part. Subsequent to that, the background of umbrella clause is accounted for. In this part, the initial appearance and use for umbrella clause in the light of international...
16 Pages(4000 words)Essay

Critically analyse fair and equitable treatment standard in international investment treaties, taking into account recent treaty

...evolved in bilateral treaties and multilateral agreements, to signify that level of protection which states should provide the investments covered under bilateral investment treaties (BITs) with other countries. The specification of the standard, however, has been subject to various interpretations through the years because of its reliance on principles of equity. Debates over the FET revolve around whether this standard should be based on other standards of law or whether it is an autonomous and self-contained standard in itself. The standard it is most commonly related to is the customary international law minimum standard, and sometimes it is measured...
15 Pages(3750 words)Essay

Exclusion clause

...contracts that have some loopholes which smart employees may utilize to sue the employers for some kinds of compensation. Some contracts include a clause of flexibility, in the sense that the contractual agreement could be re-written and changed in case some unforeseen problems arise. Laxity on the part of the employer may lead to unexpected liability for the employer. For instance, when there is a contract between an employer and an employee from different countries; if International Drilling Co. N.V, for example, recognizes the legal jurisdiction of United Kingdom, where Mr. Sayers is from, there may be complexity in legal interpretation of what amount of compensation Mr. Sayers could sue for, since...
7 Pages(1750 words)Case Study

Early interpretation of the commerce clause

...Early Interpretation of the Commerce Clause The commerce clause raises three major questions that can be satisfactorily answered by having a proper interpretation of the clause. These questions revolve around the meaning of “commerce", “among the several States” and “to regulate.” Interpretation here refers to the method of determining the meaning of the words included in the clause. At the time of its creation, the term commerce was used in the clause to mean trade or exchange of goods. It could also be expansively interpreted as any gainful activity. However, this excluded some gainful...
1 Pages(250 words)Essay

The current extended interpretation of the Commerce Clause

...Interpretations of the Commerce Clause Interpretations of the Commerce Clause The Commerce Clause raises several interpretive and normative questions. How, for example, is commerce to be defined? What constitutes commerce among the several states? What are the proper functions and powers of the respective state and federal governments under the commerce clause? What weight should original intent, current values or modern conditions of trade have in construing the commerce clause? During the constituting era, the implication of a word in any legal document was postulated to be its ordinary, conventional...
1 Pages(250 words)Research Paper

Critically analyse financial statemebt

...“the value of everything that a company owns less all the claims against the business (liability and equity)” (Temte, 2005). c. Cash Flow - cash flows provides the business’ operating, investing, and financing cash flows over a specified period. It reconciles the changes on the cash on hand at end of a period with the beginning balance by including the income derive from non-cash revenue and expenses “by adjusting net income for non-cash revenues and expenses” (Tempte, 2005). d. Statement of Changes in Owners’ Equity – the change in owner’s equity happens when a business profits, its asset value changes and when its owners adds more capital or made withdrawals against the business (McGrann, 1998). II. Features of...
1 Pages(250 words)Essay

Exclusion clause

...the offeror. Failure to fulfil this duty in a precise and clear manner would result in the court’s interpretation of the clauses against the offeror under a doctrine referred to as Contra Proferentum. The case of R&B Customs Brokers Ltd v United Dominions Trust Ltd [1988] 1 WLR 321 provided a rare platform for the court’s interpretation of English contract law within the context of the UCTA 1977. The court disallowed an exclusion clause on the basis that the offeror did not give specific and clear details of the implied terms of the contract. Additionally, if the case involves negligence claims, the judges have assumed that it is improbable that a party would agree to...
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Critically Analyse the Interpretation of Umbrella Clause in Investment Treaties for FREE!

Contact Us