Contracts, treaties and umbrella clauses: Some jurisdictional issues in international investment arbitration

Abstract

Investor-State contracts are an important instrument for realizing foreign investments. The mixture of public and private law present in these contracts raises a number of interesting legal questions. This article focuses on certain jurisdictional issues which are of high importance for both investors and host States in international investment arbitration. Two main issues are discussed. The first is the relationship between the breaches of investor-State contract as opposed to the breaches of the bilateral investment treaty, and the impact this has on establishing arbitral jurisdiction. The second issue discussed are the umbrella clauses and the proper understanding of their content. Both topics are mainly analyzed in the context of ICSID, but conclusions drawn can be applied to other forms of investment dispute settlement. The article concludes with proposed guidelines on how to overcome the existing divergence in jurisprudence which is detrimental to legal certainty in this area of law.