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11 Treatment of State Obligations (the ‘Umbrella Clause’)

From: The Law of Investment Treaties (2nd Edition)

Jeswald W. Salacuse

From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. date: 28 November 2023

Umbrella clause — Investment — BITs (Bilateral Investment Treaties) — Arbitration

A large number of investment treaties contain provisions, often referred to as ‘umbrella clauses’, that require host states to respect non-treaty commitments and obligations made to foreign investment covered by the treaty. This chapter examines the general nature of umbrella clauses, their historical background, the various forms that they can take, and their application by arbitral tribunals. In view of the unsettled state of the jurisprudence on umbrella clauses, the chapter concludes with a suggested framework of analysis for applying umbrella clauses to specific investments, setting out a number of questions which persons applying umbrella clauses should seek to address.

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