Investor Presentaiton

166 INVESTOR-STATE DISPUTE SETTLEMENT: A SEQUEL 204 205 investors to have recourse to ISDS in cases of a breach of contract. Another approach is that umbrella clauses are nothing more than a reiteration of a State's duty to honour its obligations. A third approach takes the middle ground: an umbrella clause prevents a State from using its sovereign power ("puissance publique") to abrogate is obligations, but would not elevate ordinary breaches of contract by a State to an international wrong. A fourth view, which has been described as the "enforcement” view, interprets the umbrella clause as elevating the contractual breach to a treaty breach, but does not replace the law governing the contract (usually domestic law) with international law. 206 If a contract contains a dispute settlement clause that selects arbitration or domestic courts as the proper venue, the breach-of-contract claim might need to first be referred for resolution in accordance with that provision meaning that an investor could not have recourse to investment arbitration without first submitting its claim to the contractually- provided-for dispute resolution process. Other questions raised by umbrella clauses include: whether the wording of the clause has a significant effect on the clause's reach (e.g. "constantly guarantee" vs. "observe"); whether the obligation is owed to the investor or to its investment; whether the promise to guarantee obligations may only be given by a State or may also be given by a State entity and whether the disputing parties in ISDS proceeding need to be the parties to the investment contract concerned (i.e. for example whether it is enough for the claimant in the ISDS proceeding to be a majority shareholder in the company that concluded an investment contract with the State). 204 Schreuer, 2004, pp. 291-324. 205 206 Sasson, 2010, pp. 178–179, 183. Ibid., pp. 184-185. UNCTAD Series on International Investment Agreements II

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