International Investment Law and Arbitration Commentary, Awards and other Materials

This chapter deals with treaty clauses which stipulate that the host State shall observe the undertakings which it has assumed towards a protected investor, including but not limited to any obligations which the host State has assumed under an investor–State contract. We will explore the different interpretations given to various umbrella clauses by investment tribunals. These interpretations are varied and inconsistent. There is as yet no real consensus on the precise scope and even the nature or character of the protection conferred by umbrella treaty clauses. Section 1 explains what umbrella clauses are and the lurking presence of the theory of internationalised contracts explained earlier in Chapter 2 of this book. Section 2 contains excerpts of some of the main arbitral awards. They show at least four different views adopted by tribunals regarding umbrella clauses. Section 3 contains illustrations of contemporary treaty umbrella clauses. Some ways in which tribunals have sought to limit the potentially very wide scope and effect of umbrella clauses are discussed in the Conclusion.