Enabling Private Ordering - the University of Minnesota Law School

2009] UMBRELLA CLAUSES 87
most cases involving application of umbrella clauses clearly
concerned investment-related contracts, the decision in Joy
Mining v. Egypt may elucidate the restriction of umbrella
clauses to investment-related contracts. Here, the Claimant
invoked, inter alia, a breach of the umbrella clause in the
British-Egyptian BIT based on the breach of an agreement with
an Egyptian State agency concerning delivery and installation
of longwall mining systems. In the case at hand, a dispute arose
after the Claimant installed the equipment as to whether the
performance of the investor’s obligations had been in accordance
with the contract. Alleging that the Claimant had not performed
its contractual obligations satisfactorily, the agency refused to
release bank guarantees that had been given by the Claimant in
order to secure the performance of its obligations.
The Tribunal, however, held that neither the bank
guarantees nor the underlying contract qualified as an
investment under Art. 25(1) of the ICSID Convention, because
they were rather comparable to simple sales contracts and
declined its jurisdiction ratione materiae. 248 In this context, it
also commented on the Claimant’s reliance on the umbrella
clause as establishing jurisdiction for alleged contractual
breaches. It stated:
In this context, it could not be held that an umbrella clause inserted in
the treaty, and not very prominently, could have the effect of
transforming all contract disputes into investment disputes under the
Treaty, unless of course there would be a clear violations of Treaty
rights and obligations or a violations of contract rights of such a
magnitude as to trigger the Treaty protection, which is not the case. 249
These observations might be interpreted, and in fact have
been, as supporting a restrictive reading of the function of an
umbrella clause as requiring a substantial interference with
contractual rights or interference by the host State with a
contract in its quality as a sovereign. 250 It seems, however,
Case No. ARB/01/3, Award, paras. 273–74 (May 22, 2007); Siemens A.G. v.
Argentine Republic, ICSID (W. Bank) Case No. ARB/02/8, Award, para. 206 (Feb. 6,
2007); Noble Ventures, ICSID Case No. ARB/01/11, at para. 51; LG&E Energy Corp.
v. Argentine Republic, ICSID (W. Bank) Case No. ARB/02/1, Decision on Liability,
paras. 169–75 (Oct. 3, 2006); Eureko, Partial Award, supra note 6, para. 246.
248. Joy Mining Machinery Limited v. Egypt, ICSID (W. Bank) Case No.
ARB/03/11, Decision on Jurisdiction, paras. 41 et seq. (July 30, 2004).
249. Id. para. 81.
250. See El Paso Energy Int’l Co. v. Argentine Republic, ICSID (W. Bank) Case
No. ARB/03/15, Decision of Jurisdiction, paras. 78–79 (Apr. 27, 2006); Pan American
Energy LLC, and BP Argentina Exploration Co. v. Argentine Republic, ICSID (W.
Bank) Case No. ARB/03/13, and BP America Production Co., Pan American Sur