On The Umbrella Clauses In Bilateral Investment Agreements

It has been more than half a century since the anglo-iranian oil case first appeared in the field of international investment in 1959.And the dispute over the umbrella clause has not stopped.Some scholars have pointed out that the purpose of umbrella clause is to allow investors to submit the host country’s breach of contract to an international arbitration institution for settlement.There are many problems with the umbrella clause.First of all,it can be seen from the provisions of umbrella clauses in bilateral investment treaties that umbrella clauses are broadly expressed,and most of the language used is "any obligation","any commitment" and "any other obligation",etc.,which expand the scope of application of umbrella clauses and have uncertainty.Secondly,the position of umbrella clauses is not uniform.Different positions may represent different purposes of contracting parties.Furthermore,the scope of application of umbrella clause is ambiguous,not because of its expression,but because it cannot be clearly defined as the subject of application and the scope of application obligation in arbitration practice.Because of the complicated situation in practice,it is difficult for the arbitral tribunal to determine whether it has jurisdiction over the dispute between the two parties when analyzing the umbrella clause.Speaking of jurisdiction,the problem of umbrella clause is its interactivity with the choice of jurisdiction clause in the contract.That is,how to determine jurisdiction when both exist.The most-favored-nation treatment clause in bilateral investment treaty,of course,will also have an influence on the application of the umbrella clause,most-favored-nation treatment clause if the "treatment" contains procedural rights,and did not sign the umbrella clause state investors can quote other third countries umbrella clause contained in the bilateral investment treaty,to enjoy the preferential treatment?Most bilateral investment agreements signed by China include umbrella clauses.Analysis of the status quo of China’s umbrella clause,even now because little umbrella clause of arbitration involving lawsuit in our country,but with the increase of foreign investment in China,and China’s role as a capital exporter and capital importer’s rising influence,in this situation,China in the process of signing,modify,bilateral investment treaties,should be given highly attention on umbrella clause,in front of the contracting parties,should be treated differently umbrella clause.For the umbrella clauses to be added in the future,it is absolutely necessary not to use a highly general statement,and make clear provisions on the scope of application.At the same time,it is necessary to set some exceptions.When using umbrella clauses,it is necessary to exclude pure commercial contracts and coordinate and prevent possible conflicts between them and the jurisdictional choice clauses stipulated in the contract.A bilateral investment treaty is a double-edged sword.Therefore,China should make prudent use of this double-edged sword and make it contribute to the faster and better development of China’s international investment activities.