Enabling Private Ordering - the University of Minnesota Law School

88 MINNESOTA JOURNAL OF INT’L LAW [Vol. 18:1
questionable whether the above quoted statement of the
Tribunal in Joy Mining actually supports such a reading.
Certainly, the passage is not a model of clarity as to the
meaning the Tribunal wants to convey. Yet, instead of reading it
as expressing the view that umbrella clauses only protect
against sovereign breaches of investor-State contracts, the
quoted paragraph arguably makes much more sense if it is read
as a rejection of the argument that umbrella clauses establish
jurisdiction of an investment tribunal for any contractual
claims, independent of the subject matter of the contract and
the scope of application ratione materiae of the investment
treaty. What the passage then emphasizes is that umbrella
clauses do not grant treaty-based jurisdiction for breaches of
non-investment-related contracts. Consequently, an umbrella
clause does not broaden the subject matter jurisdiction of treatybased
tribunals beyond the limits of what constituted protected
investment under the respective investment treaty.
Similarly, many contracts between a host State and a
foreign investor might not qualify as investment agreements or
investment-related contracts, even if the foreigner has a
presence in the host State. A contract of the ministry of a host
State concerning the purchase of cars produced by a foreign
investor in the host State, for example, will not come under the
definition of an investment for purposes of the umbrella clause,
because the contract is not investment-related, but a contract
over the sale of goods that does not concern the investor’s
investment. 251 While unilateral modification or termination of
such contracts could possibly constitute a violation of other
investor’s rights, namely the fair and equitable treatment
standard, a claim for the breach of such contracts cannot be
brought as a violation of an umbrella clause. This limitation is,
however, not due to the limitation of the umbrella clause to
breaches of a sovereign nature, but because a non-investmentrelated
contract is not covered by the scope of application of the
umbrella clause. The concern that the umbrella clause
transforms the violation of any contractual agreement into an
SRL, Pan American Fueguina, SRL and Pan American Continental SRL v.
Argentine Republic, ICSID (W. Bank) Case No. ARB/04/8 (consolidated claims),
Decision on Preliminary Objections, paras. 107–08 (July 27, 2006) (both claiming
that this is the content of the statement of the Tribunal in Joy Mining v. Egypt).
251. Cf. SGS v. Philippines, ICSID Case No. ARB/02/6, para. 99 (“For example
the construction of an embassy in a third State, or the provision of security services
to such an embassy, would not involve investments in the territory of the State
whose embassy it was, and would not be protected by the BIT.”).