ENFORCEABILITY OF UMBRELLA CLAUSES BY INVESTMENT ARBITRATION TRIBUNALS

Abstract

Over the last few decades, one of the most contentious issues of the international investment law has been the interpretation of the ‘umbrella clauses’. Since the umbrella clauses are generally vague, short and hidden in international investment agreements, the interpretation of the clause is in a controversial position and thereby having been subject to the scholarly interest. Should umbrella clauses in international investment agreements be enforceable by arbitration tribunals? Or to what extent investor’s claims stemming from a contractual bre-ach could be enforceable by arbitration tribunals? SGS v Pakistan and SGS v Philippines have addressed these questions and reached opposite decisions. This article aims to examine the contradictory arbitral deci-sions and to discuss broad and restrictive approaches. The article begins with a brief review of umbrella clauses. Then, it analyses leading arbitral cases with the help of scholar views in order to shed the light on critical aspects of the issue.