Revitalizing The Umbrella Clause In Bilateral Investment Treaty:Analysis And Model Clause

Umbrella clause allows investors to bring any claim for the breach of an investment-related promise made by the host State under the jurisdiction of a treaty-based tribunal.Umbrella clauses thereby enable "private ordering" in Investor-State relations by preventing host States from acting opportunistically in reneging on their initial promises.It applies to host State breaches of a governmental nature as well as breaches of a purely commercial character that offset the original Investor-State bargain.By enabling the enforcement of host State promises,umbrella clauses reinforce the principle of pacta sunt servanda as a fundamental basis for investor-state contracts.The hotly debated umbrella clause also gains different application in ICSID practice.Although China has not been involved in cases regarding umbrella clause,our nation needs to address these clauses in its BIT and modify their wording to better protect investors and offset risks when acting as hosting nation.This paper argues that the function of the clauses consists of stabilizing Investor-State relations by opening recourse to dispute settlement by arbitral tribunals for breaches of specific and individual promises made by the State vis-a-vis investors.Four parts will address the article from its history,application,function,and conflicts,then arrive at solutions for China to revitalize and better use the umbrella clause.There are four chapters in this article,with more than 40,000 words.The structure of the paper is as follows:The first chapter explains the concept and historical evolution of Umbrella Clause from the perspective of its historical background,origin,content and function,and then makes a comparative study of ICSID cases involving Umbrella Clause in order to clarify the application of Umbrella Clause in practice.In the second chapter,from the perspective of investors,the author analyses the possible dilemma when investors invoke umbrella clauses in ICSID arbitration,discusses the jurisdiction of arbitral tribunal over a dispute arising from the breach of an investment agreement and how the arbitral tribunal responds to the conflict of the jurisdictional court clauses contained in the investment contract itself.Chapter three,from the perspective of the host country,combines the typical ICSID cases and the Draft Articles on the Responsibility of States for Internationally Wrongful Acts,to analyze the legal basis of attribution of state-owned enterprises(SOEs)to the host country and the criteria for determining such attribution.Giving the fact that a large number of investors have concluded infrastructure,construction and other types of investment contracts with the SOEs of the host countries in international investment activities,the analysis in this chapter will help Chinese investors to mitigate the legal risks of investment when cooperating with the SOEs.Chapter four is the conclusion of the paper.Through the above analysis and summary,the reasons for improving the umbrella clause and suggestions for improvement are discussed in-depth...