Enabling Private Ordering - the University of Minnesota Law School

2009] UMBRELLA CLAUSES 33
investment treaties. Even though a “treaty cause of action is not
the same as a contractual cause of action”, 80 investment
tribunals have accepted that certain interferences of the host
State with investor-State contracts can give rise to treaty claims
for violation of the concept of indirect expropriation or the fair
and equitable treatment standard. 81
However, tribunals interpret these investors’ rights as only
protecting against sovereign, not commercial breaches. The
Tribunal in CMS v. Argentina, for example, supported that
[t]he standard of protection of the treaty will be engaged only when
there is a specific breach of treaty rights and obligations or a violation
of contract rights protected under the treaty. Purely commercial
aspects of a contract might not be protected by the treaty in some
situations, but the protection is likely to be available when there is
significant interference by governments or public agencies with the
rights of the investor. 82
Likewise, the Tribunal in Impregilo v. Pakistan, a case
involving the breach of an investment contract, emphasized that
“only measures taken by Pakistan in the exercise of its
sovereign power (‘puissance publique’), and not decisions taken
in the implementation or performance of the Contracts, may be
considered as measures having an effect equivalent to
expropriation.” 83 Similarly, the Tribunal in Consortium RFCC v.
Morocco stressed that a violation of fair and equitable treatment
required conduct by the host State in exercise of sovereign
power. 84 Indirect expropriation and fair and equitable
80. Aguas del Aconquija, ICSID Case No. ARB/97/3, at para. 113.
81. See, e.g., SGS v. Philippines, ICSID Case No. ARB/02/6, at para. 162;
Mondev International Ltd. v. United States of America, ICSID (W. Bank) Case No.
ARB(AF)/99/2, Award, paras. 98 and 134 (Oct. 11, 2002) (both tribunals asserting
that a breach of contract may result in a breach of treaty without, however,
establishing criteria for the distinction).
82. CMS Gas Transmission, ICSID Case No. ARB/01/8, Award, at para. 299.
83. Impregilo, ICSID Case No. ARB/02/17 at para. 281; accord Consortium
RFCC v. Morocco, ICSID (W. Bank) Case No. ARB/00/6, Award, paras. 63–69 (Dec.
22, 2003) (stating with respect to indirect expropriation that “[p]our qu’il y ait droit
à compensation il faut que la personne de l’exproprié prouve qu’il a été l’objet de
mesures prises par l’Etat agissant non comme cocontractant mais comme autorité
publique”).
84. Consortium RFCC, ICSID Case No. ARB/00/6, at para. 51 (“L’Etat, ou son
emanation, peuvent s’être comportés comme des cocontractants ordinaries ayant une
divergence d’approche, en fait ou en droit, avec l’investisseur. Pour que la violation
alléguée du contrat constitute un traitement injuste ou inequitable au sens de
l’Accord bilateral, il faut qu’elle résulte d’un comportement exorbitant de celui qu’un
contractant ordinaire pourrait adopter.”); accord Bayindir, ICSID Case No.
ARB/03/29, at para. 180 et seq.; Salini Costruttori S.p.A & Italstrade S.p.A. v.
Hashemite Kingdom of Jordan, ICSID (W. Bank) Case No. ARB/02/13, Decision on