Unification Of The Interpretation Rule Of Umbrella Clause

Prosperity of multinational investment would consequently push the conclusion of abundant international investment treaties. Umbrella clause, which is applied to prescribe that each contracting party shall observe certain commitments it has made to investors of the other contracting party, is one of important provisions of recent bilateral and multilateral investment treaties. However, the validity and scope of the clause had become hot issues discussed by scholars of International Investment Law and International Commercial Arbitration Law once it was born, especially some cases handled by ICSID in recent years exactly magnify the great discrepancy in explanation of the clause. How to interpret umbrella clause would directly determine whether the investment dispute can be resolved in accordance with the international investment dispute settlement procedure, and would further inflect economic interests and diplomatic relations of contracting countries. Therefore, this issue is of great concern.The root of discrepancy in explanation of umbrella clause rests with its obscure description and broad wording as well as the partial taste of different interpreters. At present, the interpreters can be divided into two groups: the restrictive interpretation group and wide interpretation group, and both of them have representative cases to support their views. Because of the upsurge of umbrella clause in recent years, most of new international investment treaties signed by China include this clause with wide wording, which would consequently bring legal risks to China. This thesis purposes to objectively summarize the right interpretation rule of the clause based on the analysis of its legal attributes, and then further to analyze the clause's influences. At last, I will personally propose some solutions for China to apply the unified interpretation rule in future to protect its interests.This thesis consists of four chapters besides the introduction and epilogue.Chapter 1 is about the basic elements of umbrella clause and the two interpretation groups, as well as the necessity and urgency of establishing an unified interpretation rule.Chapter 2 is about the defects of the traditional mechanism for forcing Host Country to perform its commitments to foreign investors as well as the historic origin of the clause. Legal attributes and scope of the clause are also analyzed in this part.Chapter 3 is to summarize the unified interpretation rule of umbrella clause based on the analysis in Chapter 2, and the clause's influences on Host Country's sovereignty, investment contract, etc. are also involved.Chapter 4 is about umbrella clauses included in BITs signed by China, and some personal suggestions on China's future application of the unified interpretation rule.