- Expropriation — Investment ‘in accordance with host state law’ — Investor — Most-favoured-nation treatment (MFN) — Fair and equitable treatment standard — Full protection and security — National treatment — Standards of treatment — Umbrella clause
This chapter focuses on umbrella clauses. Most investment treaties provide investors with a relatively standard set of protections, including the rights to national treatment, most-favoured-nation treatment, protection and security, fair and equitable treatment, and compensation for expropriation. Some treaties provide an additional layer of protection by specifically requiring host states to honour the commitments that they have undertaken vis-à-vis foreign investments. Known as ‘umbrella clauses’, these provisions appear to provide a route through which investors can seek to transform their contractual rights into treaty rights, although the interpretation and application of such clauses is one of the most controversial areas of substantive investment law. The tribunals remain divided on proper interpretation of the umbrella clauses, which is why it has been identified as one of the areas of concern by UNCITRAL Working Group III’s work on the reform of the ISDS.
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