NEWSLETTER-2017

195 ARBITRATION LAW Umbrella Clauses in Investment Arbitration* Att. Tilbe Birengel Introduction The obligations observance clauses, namely, umbrella clauses, are aimed to elevate contractual and other commitments of host states under an investment treaty’s protective umbrella 1 . Neither the doctrine nor the case law has a common application of umbrella clauses that may be described as the provisions in international investment agree- ments that oblige host States to acknowledge their obligations rising from these clauses 2 . This Article covers the diverging jurisprudence related to umbrella clauses in investment arbitrations in order to so- lidify the controversial issues raised on this matter. The Awards Giving Effect to Umbrella Clauses Umbrella clauses are highly debated in arbitral awards since they provide an opportunity to foreign investors to elevate their breach of investment contract claims to the violation of investment treaties un- der international law. In Noble Ventures v. Romania 3 , the Tribunal discussed the scope and application of the umbrella clause of the Bilateral Investment Treaty (“BIT”) concluded between the United States of America and * Article of August 2017 1 Rudolf Dolzer / Christoph Schreuer, Principles of International Investment Law, Oxford University Press, 2nd Edition, Oxford 2012, p.166; Katia Yannaca-Small, “ Interpretation of the Umbrella Clauses in Investment Agreements, ” OECD Working Papers on International Investment, 2006/03, OECD Publishing, p.3, available at: http://dx.doi.org/10.1787/415453814578. 2 Shotaro Hamamoto, “ Parties to the Obligations in the Obligations Observance (Umbrella) Clause, ICSID Review, Vol. 30, No.2, 2015, p. 449. 3 Noble Ventures, Inc. v. Romania , Award, ICSID Case No. ARB/01/11, available at: https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/ 01/11.