Umberlla Clause in Bilateral Investment Treaties and International Arbitration

The Umbrella Clause is included in many bilateral investment treaties. Previously, the clause was used in the international documents relateing to ownership of foreigners. In this article, the meaning of the clause is analyzed in view of the previous history of inserting the clause in international documents and the authoritative views of law scholars. The interpretation of the clause in international investment arbitration proceedings is important. The main issue in the proceedings is whether the tribunals provided for in bilateral investment treaties for settlement of disputes have jurisdiction for dealing with contractual disputes. In other words, the question is whether the investor can refer a contractual dispute to the treaty tribunal on the basis of the umbrella clause. This issue will become important in cases where the contract includes a clause on settelement of disputes. The position of the two clauses on settelement of disputes (one in the contract and the other in treaty) and the conflict of jurisdictions between the two tribunals had been analyzed in international investment arbitration proceedings, and has been disscused in this article.