Browsing by Author "Arora, Rohit"

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Umbrella clauses in investment treaties: True function ascertained
(Te Herenga Waka—Victoria University of Wellington, 2015) Arora, Rohit; McLachlan, Campbell; Lewis, Meredith Kolsky
Umbrella clauses are provisions in investment treaties that require the contracting States to observe contractual undertakings or commitments to foreign investors. Umbrella clauses have been subject to much controversy and debate because arbitral tribunals and academic writings are not in agreement with respect to their true function and interpretation. Umbrella clauses are widely understood as substantive provisions in investment treaties which convert a contractual breach committed by a State under municipal law into an international law breach. Another view is that umbrella clauses confer jurisdiction on international arbitral tribunals to adjudicate on contract claims but the proper law of the contract does not change. A purported function of umbrella clauses is that they create a cause of action under international law. This thesis argues that unlike the substantive provisions of an investment treaty whose cause of action lies in public international law, umbrella clauses are not substantive. Different typologies of umbrella clauses are discussed in the thesis. They do not go so far as to show an intention to create a substantive power for umbrella clauses. By applying the rules of interpretation of the Vienna Convention on the Law of Treaties, it is established that umbrella clauses have only a jurisdictional role. The effect of such a role may allow an international arbitral tribunal to exercise jurisdiction over contractual breaches which arise out of sovereign acts of the host State. This thesis establishes that umbrella clauses do not create a cause of action under international law. The procedural laws of the dispute settlement proceedings may change, but the lex causae of the dispute remains as established in the investment contract.