Research On Umbrella Clause Of China’s Bilateral Investment Treaty

Umbrella Clause is stipulated in the bilateral investment treaty in order to protect the relevant obligations promised by one contracting party to the investors of the other party.Because it has the specific function of transforming the contract lawsuit into the treaty lawsuit and has not formed a unified interpretation and application method in practice,it has attracted much attention from various countries.In recent years,with the continuous promotion of the "the belt and road initiative",China’s role in the investment field is undergoing major changes.It is of practical significance to conduct a brand-new study on Umbrella Clause.This article is divided into four parts:The first part is an overview of Umbrella Clause.Umbrella Clause can be summarized as "each Party shall comply with any other investment-related obligations it has undertaken to investors in another Party".Its function is to change the host country’s violation of its commitments or obligations to foreign investors from breach of contract to breach of treaty,thus enabling investors to obtain relief in international law.Umbrella Clause first appeared in the Anglo-Iraqi oil case.So far,more than 40%of the more than 3,200 bilateral investment treaties in the world contain Umbrella Clause.The second part is the current situation of Umbrella Clauses in China’s bilateral investment treaties.As of 2018,China has signed more than 130 bilateral investment treaties,53 of which contain Umbrella Clauses.Analyzing Umbrella Clauses in various investment treaties,we can find that they have the following characteristics:they occupy a large proportion;The countries involved in the Parties are undergoing a transition from mainly European countries to Europe,Asia and unbalanced development.The wording of Umbrella Clauses varies greatly and no unified version has been formed.Umbrella Clause can not only provide protection for overseas investors in our country,but also provide relief for investors in other countries to resolve domestic disputes.The third part is about the problems existing in Umbrella Clause in China’s bilateral investment treaties.First of all,the applicable subject of Umbrella Clause in our country is unclear,mainly because it is not clear whether the subsidiaries of sub-state entities and investors enjoy the applicable subject qualification of Umbrella Clause.Secondly,there are also many problems in the scope of obligations in China’s Umbrella Clause:first,the scope of obligations is limited without distinguishing between "state contracts" and "commercial contracts";second,the commitment obligation in the clause is not limited to "specific investment" and the concept of "investment" is not clearly limited.;third,there is no clear answer as to whether the unilateral commitment made by the host country falls within the scope of the commitment obligation.;finally,the vague relationship with other clauses,such as the choice of jurisdiction clause and the most-favored-nation clause,leads to confusion of arbitration jurisdiction.The fourth part is the suggestion to perfect Umbrella Clause in China’s bilateral investment treaties.First of all,on the subject of application of Umbrella Clauses,the author,after drawing lessons from relevant international theories and analyzing arbitration viewpoints,proposes that China should affirm the subject application qualifications of sub-state entities and subsidiaries and explain the relevant reasons.Then,regarding the problems existing in the scope of obligations of Umbrella Clause,the author puts forward the following suggestions:first,clearly distinguish between "state contract" and"commercial contract";Second,the concept of "investment" under Umbrella Clause should be clarified.Third,the unilateral commitment of the host country is limited to investment-related.Finally,it clarifies the applicable relationship with other clauses,negates the choice of jurisdiction clause and makes effective restrictions on the most-favored-nation clause.