INTERNATIONAL ARBITRATION COURSEWORK

International Arbitration Coursework

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International Arbitration Coursework

Introduction

There is a radical change in the face of international law investment over the past decade, which is evident through an escalating percentage of disputes over foreign investment. Such disputes are being settled on by international arbitration as contrasted to domestic lawsuits or diplomatic intervention. The rationale behind this radical change has been the propagation of BIT (bilateral investment treaty), an accord between two nations, which administers the investments treatment made in their particular regions by corporations and individuals from other nations. The BIT facilitates in attracting foreign investment through yielding extensive rights to investors, as well as to create flexibility in investment disputes resolutions. This flexibility usually embraces permitting for any dispute regarding investment to be resolved by means of international arbitration, in particular under the support of ICSID (International Centre for the Settlement of Investment Disputes). During the last 12 years, a number of nations concluded about 1,500 new bilateral investment treaties. This leads the total to 2,400 BITs; to make the BIT the most broadly used international agreement in order to influence and protect foreign investment. Not astonishingly, this remarkable increase in BIT use has resulted to a surge in the arbitrations' numbers relating treaties of investment (Schill, 2009, pp.1-97).

The most notorious issues that have cropped up in the settlement refers to the proper erection of the “umbrella clause,” a provision instituted in a lot of BITs, which obliges a prerequisite on all Contracting States to scrutinize all obligations of investment penetrated into with financiers from other states involve in an agreement. Particularly, the two cases of SGS v. Philippines and SGS v. Pakistan have brought the vital matter of concern in the forefront that whether the umbrella clause pertains to requirements occurring under or else self-governing investment agreements between the host State and the investors. The importance of such application refers that the intercontinental arbitration tribunal formed under the tribunal of BIT, might in that way have jurisdiction have authority over claims of contract violation as an investment contract breach is also the umbrella clause infringement. Significantly, this refers that the investor may at the moment look for redressing of an infringement of any investment agreement between a Contracting State and it by international arbitration as per the BIT.

This paper critically analyzes with reference to relevant case law, the extent to which the effect of the “Umbrella Clause” in BITS, raises any violation of contractual obligations in direct contracts between States and investors, to the extent of Treaty infringe.

Discussion

The Umbrella Clause

An umbrella clause is typically initiated in a BIT (bilateral investment treaty) BIT, as well as is chiefly an association for Economic Cooperation and Development/ European initiative. A bilateral investment treaty refers to an accord between two states (generally a capital importing and a capital exporting state) affirms how investments made by means of their nationals (whether corporations or individuals) ought to be treated in their respective countries.

BITs try to find to ...