Investment Law 1 Flashcards

Question

What can be said about BRICS states regarding FDI restrictiveness?

Answer 1

China, Russia, India have traditionally been difficult to invest.

Answer 2

Everything that is not forbidden is allowed. Permissive.

Answer 3

Developed countries: De Vettel and the Diplomatic Protection Developing countries: Calvo Doctrine

Answer 4

In 1758, Emer de Vattel addressed the status of foreigners in his treatise The Law of Nations.

Answer 5

He explained that once a State admitted a foreigner to its territory, which it was not obliged to do, it had to protect him or her in the same manner as its own subjects. * In addition, the foreigner maintained the bond to the home State and his or her property remained part of the wealth of the home State. * As a result, an injury to the property of a foreigner was an injury to the foreigner’s home State which obtained the right to exercise protection over that property, known as diplomatic protection.

Answer 6

There was no obligation to protect foreign nationals and their property before.

Answer 7

US-Switzerland Treaty from 1850

Answer 8

The link between Emer de Vattel's principles and gunboat diplomacy is evident in the assertion of diplomatic protection. Vattel's idea that an injury to a foreigner's property was an injury to their home State provided a legal foundation for States to intervene, sometimes forcefully, in order to protect the rights and property of their nationals. This connection underscores the intersection of legal principles and practical geopolitical actions during the historical period described.

Answer 9

European States, and developed States in general, were not troubled by the protection of their nationals in other developed States. However, their concern arose when considering the treatment of their nationals in less developed regions like South America. The issue revolved around perceived insufficient protection for their nationals' interests, leading these States to argue that there exists a legal requirement under international law for all States to treat foreigners, particularly nationals of other States, according to a **minimum standard of treatment**. This standard was seen as a universal expectation for **fair and equitable treatment**, irrespective of the economic or social development of the host State.

Answer 10

States, particularly in the eighteenth and nineteenth centuries, actively espoused the claims of their nationals through diplomatic protection. The Permanent Court of International Justice formally recognized a state's right to engage in diplomatic protection. States employed various means—economic, political, and military—to exercise this protection. However, this approach, sometimes referred to as "gunboat diplomacy," also led to numerous inter-state conflicts and military interventions.

Answer 11

1) The treatment a foreign investor should receive should be the same as the treatment the host State offers its own citizens’ property, no matter what the level of protection 2) Home states should not be able to interfere in another state's treatment of its nationals 3) Foreign investors should be limited to national courts when in search of remedies 4) International law should be substantially removed from investment law

Answer 12

National treatment Diplomatic protection

Answer 13

1868: 110 years after the De Vattel doctrine

Answer 14

Equal treatment to foreign nationals can be equally bad. The Soviet Union expropriated the property of nationals and foreign nationals alike.

Answer 15

Latin America

Answer 16

Domestic courts

Answer 17

De Vattel Substantive: Diplomatic Protection, extends to property (investment), minimum standard of treatment Procedural: Settlement before international Courts Calvo Doctrine Substantive: National Treatment Procedural: Settlement before Domestic Courts

Answer 18

1917: Russian revolution 1938: Mexico nationalized US assets in agrarian and oil business

Answer 19

In 1938, the US Secretary of State, Cordel Hull, wrote a diplomatic note acknowledging the Mexican right to expropriate but stating that “expropriation must be accompanied by prompt, adequate and effective compensation".

Answer 20

The US recognized the Mexican government's right to expropriate US national's property.

Answer 21

It is now part of domestic legislation in many countries.

Answer 22

It was initially open to debate. Over time, it became recognized as a customary international law rule. 1926: Neer decision. Then codified in the Vienna Convention on the Law of Treaties (1980).

Answer 23

1) Repeated practice by states (not just Western states) 2) Opinio juris: Belief or conviction that a particular practice is obligatory because it is required by law.

Answer 24

Set the standard for an international minimal standard. “the treatment of an alien, in order to constitute an international delinquency, should amount to an outrage, to bad faith, to **wilful neglect of duty**, or to an insufficiency of governmental action so far short of international standards that every reasonable and impartial man would readily recognize its insufficiency” This has been cited many times by international arbitration tribunals. Also note the reference to the objective theory.

Answer 25

Private international law, also known as conflict of laws, is a field of law that addresses legal issues arising from situations involving individuals, entities, or legal relationships that span multiple countries or legal jurisdictions. The primary objective of private international law is to determine which jurisdiction's laws should apply to a particular dispute or legal relationship.

Answer 26

Foreign private companies to protect their interests abroad began to incorporate applicable law clauses into their contracts with host States. Two examples: 1. they provide for the application of another law (the ‘lex mercatoria’) instead of domestic law, or 2. They had the effect of ‘freezing’ the domestic law of host States at the time of the conclusion of the contract

Answer 27

Body of rules of international commerce developed by customs, affirmed by national courts. Now it's codified in the Vienna Treaty on Goods (United Nations Convention on Contracts for the International Sale of Goods).

Answer 28

Lack of impartiality of domestic tribunals: they would, as a matter of principle, decide disputes against foreigners and in favour of their State

Answer 29

1) Use of force 2) Diplomatic protection 3) State contracts

Answer 30

1902: Venezuela: British, France, and Italian forces enforce repayment of bonds by force 1907: Drago-Porter Convention: Prevent the use of force for the collection of debt. Adopted in the Hague, it stipulated that arbitration and litigation should always be used first. It grew from ideas of the Calvo Doctrine.

Answer 31

State responsibility refers to the legal obligations and accountability of a state for its actions or omissions under international law. It encompasses the idea that states, as subjects of international law, are responsible for complying with their obligations and duties towards other states and the international community. The five key elements of state responsibility include: 1) Breach of International Law: State responsibility is triggered when a state breaches its obligations under international law. This breach can occur through actions (acts of commission) or failures to act (acts of omission) that violate established international norms. 2) Attribution: The wrongful act must be attributable to the state. This involves establishing a direct link between the state and the act or omission, which can be through the actions of state organs, officials, or entities acting on behalf of the state. 3) Internationally Wrongful Act: The act or omission must constitute an internationally wrongful act. This means that the conduct must violate a rule of international law, whether established by treaty, customary international law, or general principles recognized by the international community. 4) Consequences: State responsibility involves consequences for the state responsible. These consequences may include diplomatic protests, negotiations, countermeasures by the injured state, or other forms of dispute resolution. 5) Reparation: If a state is found to be internationally responsible, it may be required to make reparations or compensate the injured state for any damage caused. Reparations can take various forms, including restitution, compensation, or satisfaction. The rules and principles of state responsibility are primarily codified in the Articles on Responsibility of States for Internationally Wrongful Acts, adopted by the International Law Commission (ILC) in 2001. These Articles provide a comprehensive framework for determining when a state is responsible for its actions and the consequences that may follow. State responsibility plays a crucial role in maintaining order and justice in the international system by holding states accountable for their actions and promoting compliance with international legal norms.

Answer 32

In this mechanism, the State of nationality can officially support the claim of its national against the host State, elevating the dispute to the inter-state level. However, it's important to note that the State of nationality is not obligated to exercise its diplomatic protection. If it chooses to do so, any monetary compensation owed by the host State is paid directly to the State of nationality. Significantly, the State of nationality is not obliged to transfer this compensation to its national, introducing a layer of discretion in the process. This is an additional mechanism to going through domestic courts. Domestic courts have to be exhausted.

Answer 33

Diplomatic protection was the only protection.

Answer 34

They have to refer to arbitration.

Answer 35

The end of the Second World War, with growing wealth and development gaps between the industrialized and developing countries, led the latter to start questioning the global economic system’s basic structures. A strong voice came from former colonies. By virtue of GA Res. 1803 (1962), the newly independent States acquired not only their political sovereignty, but also their economic sovereignty over natural resources. Based on three further GA resolutions in the 1970s developing states set out formally the concept of NIEO and raw up a Charter of the economic rights and duties of States. Their goals include: (1) a fair allocation of the world’s resources, (2) technology transfer to developing countries, (3) preferential trade conditions and a (4) reformation of the international monetary system.

Answer 36

* Provided for the right of States to treat foreign investors in their territory according to their domestic law * Set out the developing States right to compensate expropriations and nationalisations **according to their own relevant laws and regulations** It was a renaissance of the Calvo doctrine.

Answer 37

The US rejected it.

Answer 38

If they become customary international law.

Answer 39

The New International Economic Order created insecurity. The collapse of the Soviet Union weakened the socialist view of property. The call for economic independence in Latin America led to many states to conclude BITs. This was at odds with the Calvo Doctrine.

Answer 40

ICJ Statute, art. 38

Answer 41

* International conventions as “rules expressly recognized by the contesting States” * International customary law as “ evidence of a general practice accepted as law” * General principles of law “recognized by States”

Answer 42

Judicial decisions and teachings by scholars around the world, as subsidiary sources.

Answer 43

GA Resolutions Declaration on Human Rights Stockholm Declaration on the Human Environment Guiding Principles on Business and Human Rights

Answer 44

Protect fundamental values of the international community Universally applicable and hierachically superior to other rules of international law Recognized by entire international community Cannot be derogated Can only be modified by a subsequent norm of general international law having the same character Draft conclusions on identification and legal consequences of peremptory norms of general international law (jus cogens) (International Law Commission, 2022)

Answer 45

Art. 53 of the 1969 Vienna Convention.

Answer 46

Unlike trade law, IIL is not organized around a multilateral treaty or central international organization.

Answer 47

1. A multitude of bilateral, regional and multilateral treaties (BITs, NAFTA, FTAs, the ECT etc.), 2. Customary international law, 3. General principles of law 4. Domestic laws, **5. Contracts and insurance schemes, and a diversity of arbitral institutions (ICSID, UNCITRAL, PCA, ICC, SCC etc.) and** 6. Domestic courts and investment agencies, without central authority

Answer 48

Swedish Chamber of Commerce Arbitration Institute in Sweden

Answer 49

International customary law and general principles

Answer 50

On the one hand, substantive rules of investment protection and promotion set out especially in customary international law and treaties (mainly BITs) and, on the other hand, dispute settlement provisions and institutions such as ICSID and UNCITRAL.

Answer 51

UNCITRAL and SCC.

Answer 52

Like most adjudicatory decision-makers, arbitral tribunals often give significant weight to the findings of earlier panels that examines the same general issues of law.

Answer 53

* Rules on attribution and other areas of State responsibility * Rules on damages * Rules on expropriation * Rules on denial of justice * Rules on the nationality of investors.

Answer 54

Good Faith: Good faith is a fundamental principle requiring parties to act honestly, fairly, and with integrity in their dealings. It is often invoked to ensure the fair performance of contractual obligations and to prevent abuse of rights. Nemo Auditur Propriam Turpitudinem Allegans (No-One Can Be Heard, Who Invokes His Own Guilt): This principle precludes a party from benefiting or seeking relief from a situation in which they are at fault or have engaged in wrongdoing. It bars individuals from relying on their own misconduct as a basis for a legal claim. Estoppel: Estoppel prevents a party from denying or asserting a fact that contradicts a previous position or representation made by that party. It aims to ensure consistency and prevent unfairness in legal proceedings. Nullus Commodum Capere de Sua Injuria Propria (No Advantage May Be Gained from One’s Own Wrong): This principle prohibits a party from benefiting or gaining an advantage from their own wrongful or illegal actions. It reflects the idea that one should not profit from their own misconduct. Pacta Sunt Servanda: Pacta sunt servanda means "agreements must be kept." It is a fundamental principle emphasizing the sanctity of contracts, requiring parties to honor the terms and obligations they have willingly agreed to. Unjust Enrichment: Unjust enrichment occurs when one party unfairly benefits at the expense of another, without legal justification. The principle seeks to prevent windfall gains and promotes fairness in situations where there is no valid contractual relationship. Res Judicata: Res judicata means "a matter judged." This principle prevents the same matter or cause of action from being relitigated once a final judgment has been rendered. It promotes judicial efficiency and the finality of legal decisions. General Principles of Due Process, Including the Right to Be Heard: These principles encompass the fundamental rights to a fair and impartial hearing, notice, and an opportunity to present one's case. They form the cornerstone of procedural fairness and are essential for upholding justice in legal proceedings.

Answer 55

MCO Asia Corp and others v. the Republic of Indonesia (1984) Damnum Emergens: Meaning: "actual loss." It refers to the actual, immediate, and quantifiable financial loss suffered by a party as a result of a wrongful act or breach of duty by another party. Lucrum Cessans: Meaning: "loss of profit." It refers to the loss of potential profits or benefits that the injured party could have gained but for the wrongful act or breach of duty by another party. This ruling made the award of damages taken from general principles of law applicable to international investment disputes.

Answer 56

It sets the standard to regulate the treatment of host states to investors.

Answer 57

* Definitions and scope of application * Conditions for the entry of foreign investment and investors * Substantive – protection of investment * Exclusion clauses * General treaty provisions * Dispute settlement

Answer 58

What constitutes nationality.

Answer 59

No, they have an expiry date.

Answer 60

* Protection against discrimination (most-favoured nation treatment and national treatment); * Protection against expropriation which is not for a public policy purpose and not fairly compensated; * Protection against unfair and inequitable treatment – e.g. denying basic procedural fairness; and, * Protection on the possibility to transfer capital.

Answer 61

Most favoured nation treatment ensures non-discrimination vis-à-vis other foreign investors. National treatment ensures treatment like domestic investors (Calvo doctrine).

Answer 62

The investor can only bring a case where it can allege that one of the provisions of the agreement (e.g. the four key guarantees above) has been breached.

Answer 63

Around half

Answer 64

The number of BITs increased dramatically during the 1990s and the 2000s (more than 1000 BITs were signed in this period), and helped enshrine a regime that was very protective for investors.

Answer 65

More treaties are being withdrawn than signed and ratified, which indicates that a peak has been reached.

Answer 66

Either no IDSD at all or limited scope (particularly for the FET standard).

Answer 67

Limited Application of ISDS: Under the USMCA, ISDS provisions are limited exclusively to investor–state disputes between the United States and Mexico. This represents a departure from NAFTA, where ISDS was applicable to all three countries. Narrowed Scope of Investor Claims: The USMCA narrows the claims that investors can bring under ISDS. Disputes between Canadian and Mexican investors and the respective other country are subject to the investment arbitration provisions of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Between Canada and the United States, the only avenue for dispute settlement is the USMCA’s state–state dispute settlement mechanism.

Answer 68

Nationals of that state.

Answer 69

That they are a national of one of the two contracting parties.

Answer 70

No. There have been treaties that have been made operative prior to ratification.

Answer 71

Soufraki v United Arab Emirates (2004) An Italian citizen emigrated to Canada and tried to arbitrate against the UAE. He acquired the Canadian citizenship. Albeit Italy allowing for dual citizenship, the tribunal held that he could not rely on the Italy-UAE BIT.

Answer 72

No (art. 25 ICSID Convention).

Answer 73

1. the country of the company’s incorporation 2. the country of the company’s seat, **registered office, or principal place of business** 3. the country whose nationals have control over, or a substantial interest in, the company making the investment.

Answer 74

The majority of the Tribunal concluded that the claimant was an ‘investor’ of Lithuania under the BIT and a ‘national of another Contracting State’ under Article 25 of the ICSID Convention.

Answer 75

It found that it is a Dutch company.

Answer 76

* the Switzerland–Slovakia BIT provides that the term ‘investor’ refers to ‘legal entities, including companies, corporations, business associations and other organizations, which are constituted or otherwise duly organized under the law of that Contracting party and have their seat, together with real economic activities, in the territory of that same Contracting Party’. * Article I(2) of the Association of Southeast Asian Nations (ASEAN) Agreement provides: “The term ‘company’ of a Contracting Party shall mean a corporation, partnership or other business association, incorporated or constituted under the laws in force in the territory of any Contracting Party wherein the place of effective management is situated”

Answer 77

Defining the term ‘business seat’ as meaning ‘an effective center of administration of business operations’, the tribunal stated that proof of a seat requires regular board or shareholder meetings, top management, a certain number of employees, an address with phone and fax numbers, and expenses and overhead costs in the location of the seat.

Answer 78

The Tribunal found that the controlling Netherlands companies were more than just corporate shells set up to obtain jurisdiction over the dispute before it. Therefore, it found that the BIT’s nationality requirements were fulfilled.

Answer 79

Treaty shopping is not illegal. When an investor had restructured its investment in such a fashion as to obtain the protection of a treaty.

Answer 80

In **Banro v Congo**, a transfer of the ownership of the investment was carried out from a company registered in a non-ICSID party, Canada, to an affiliate company in the United States, a party to the ICSID Convention. The transfer was made after the dispute had arisen and only days before the institution of the arbitration proceedings. It served the obvious purpose to obtain access to ICSID. The Tribunal refused to accept jurisdiction under these circumstances. Same in **Phoenix v Czech Republic**, Czech investor transferred the ownership to Israeli company, which he set up, to benefit from Israel-Czech Republic BIT. ICSID refused to accept jurisdiction as it was clearly abusive.

Answer 81

Through these clauses, a States reserve the right to deny the benefits of the treaty to a company that is owned or controlled by nationals of a third country but is incorporated in a State Party to the treaty without having an economic connection to that State. The economic connection would consist of substantial business activities in the State of incorporation or ownership or control by a national of a State Party to the treaty. The Swiss model BIT has incorporated that substantial business activities (see Slowak-Swiss BIT).

Answer 82

Tribunals have held that: * a denial of benefits clause does not operate automatically but had to be exercised actively by the host State * the conditions for the denial of benefits must be met at the time of commencement of proceedings * the burden of proof for the existence of the conditions for a denial of benefits is with the respondent State invoking it.

Answer 83

an investment made by a resident entity in one economy to acquire lasting interest in an enterprise resident in an economy other than that of the foreign direct investor operating outside of the economy of the investor

Answer 84

Purpose is to gain an effective voice in the management of the enterprise and create capacity. “Immediate direct investment relationships arise when a direct investor directly owns equity that entitles it to 10 percent or more of the voting power in the direct investment enterprise” (IMF)

Answer 85

Portfolio investment is the category of international investment that covers investment in equity and debt securities, excluding any such instruments that are classified as direct investment or reserve assets.

Answer 86

No, but more international treaties now also cover portfolio investments.

Answer 87

Once issued, such bonds, notes, and other negotiable instruments are often traded among investors on capital markets.

Answer 88

* The protection of shareholdings is not limited to majority or controlling shareholding but also covers minority shareholding. * The protection may extend to indirect shareholding /that is, shareholding by way of intermediate companies, and to the assets of the company whose shares the investor holds.

Answer 89

* Intellectual property rights: such as patents, trademarks, and designs are routinely listed in definitions of the term investment. Their potential as investment is beyond doubt, although they have until now generated only limited case law.

Answer 90

In some cases, tribunals found that claims arising from the non-performance of commercial arbitration awards gave rise to protected rights. They classified the awards either as investments or as reflecting rights arising from the investment.

Answer 91

The ICSID Convention does not offer a definition or even a description of this basic term.

Answer 92

Consent and the existence of an investment. The latter was established in Salini costruttori SPA v Morocco (ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001).

Answer 93

1. a (substantial) contributions 2. a certain duration of performance of the contract 3. a participation in the risks of the transaction 4. the contribution to the economic development of the host State of the investment *In tribunal practice, the first three of these criteria (contribution, duration, and risk) have been applied widely. The fourth criterion (contribution to host State development) has turned out to be controversial.

Answer 94

Contributions * Tribunals have accepted a large variety of assets as investments. * A contribution may be financial but may also consist of anything that has economic value such as know-how, management, equipment, material, personnel, labour, and services. * There is no minimum value, but purely symbolic contributions will not qualify. Thus, some amount of financial outlay, material shipment, technical transfer, or personnel involvement by the investor is necessary

Answer 95

Duration * A certain duration distinguishes an investment from a one-off transaction like a sale of goods. * There is no clear limit for a minimum duration. Some tribunals have suggested a minimum period of between one and five years. Generally, a two-year time-span is considered sufficient. * In calculating the duration, tribunals take account also of the time taken for tender, work interruption, renegotiation, extension maintenance, and a contractor’s guarantee. * What matters is the intended/expected duration. An early termination does not affect the nature of the transaction as an investment. Conversely, short-term transactions do not become investments due to an inadvertent delay in the sale of assets.

Answer 96

Risk * Historically, it was the claimant’s acceptance of the extra risk of putting resources into a foreign sovereign’s territory that necessitated the particular protections for aliens. * Tribunals have accepted a wide range of risks, such as sovereign interference, unforeseen incidents, and commercial circumstances. In some cases, the tribunals found that the very existence of the dispute before them was an evidence of risk. Tribunals also found that the economic and political circumstances in the host State posed a relevant risk.

Answer 97

* In Mitchell v DR Congo, the Tribunal had found that the claimant’s law firm in the Congo constituted an investment. The ad hoc Committee annulled the Award since it considered that the law firm did not contribute to the host State’s economic and social development. * In Malaysian Historical Salvors v Malaysia, the Sole Arbitrator declined jurisdiction finding that there was no investment since the salvage of historical objects from an ancient shipwreck did not make a significant contribution to the host State’s economy. The Award was annulled because it had elevated the criterion of contribution to the host State’s development into a jurisdictional condition and interpreted that condition as excluding small contributions and contributions of a cultural and historical nature.

Answer 98

Fedax v Venezuela (ICSID Case NO. ARB/96/3, Award 9 March 1998). *In Fedax v Venezuela the investor had merely acquired promissory notes issued by the host country. The Tribunal rejected the respondent’s argument that the claimant had not invested ‘in the territory’ of Venezuela: "It is a standard feature of many international financial transactions that the funds involved are not physically transferred to the territory of the beneficiary, but are put at its disposal elsewhere." Abaclat v Argentine (ICSID Case No. ARB/07/5, Decision on Jurisdiction, 4 August 2011) *The case concerned Argentinean government bonds held by Italian investors. The tribunal held: With regard to investments of a purely financial nature, the relevant criteria should be where and/ or for the benefit of whom the funds are ultimately used, and not the place where the funds were paid out or transferred”.

Answer 99

The twentieth century witnessed significant expropriations of foreign investment in Latin America, the Soviet Union, the Middle East, and Eastern Europe. In those cases, the governments asserted their legal rights to take the property and denied any obligation to compensate investors for what they had taken. As will be recalled, such actions raised a fundamental question as to the standard of treatment that host countries legally owed to foreign investors.

Answer 100

NAFTA does not give a definition of expropriation. The tribunal summarized the law of expropriation as follows: * a. Expropriation requires a taking (which may include destruction) by a government type authority of an investment by an investor covered by the NAFTA. * b. The covered investment may include intangible as well as tangible property. * c. The taking must be a substantially complete deprivation of the economic use and enjoyment of the rights to the property, or of identifiable distinct parts thereof (i.e. it approaches total impairment). * d. The taking must be permanent, and not ephemeral or temporary. * e. The taking usually involves a transfer of ownership to another person (frequently the government authority concerned), but that need not necessarily be so in certain cases (e.g. total destruction of an investment due to measures by a government authority without transfer of rights). * f. The effects of the host state’s measures are dispositive, not the underlying intent, for determining whether there is expropriation. * g. The taking may be de jure or de facto. * h. The taking may be ‘direct’ or ‘indirect’. * i. The taking may have the form of a single measure or a series of related or unrelated measures over a period of time (the so-called ‘creeping’ expropriation).

Answer 101

Bahrain Germany BIT

Answer 102

Nationalisations concern investments in an entire sector of the economy, - expropriations concern only specific investments. From a legal perspective, the question of whether a state measure is characterised as a nationalisation or as an expropriation is not important. This is because both measures must fulfil the same conditions of legality.

Answer 103

1. for a public purpose, 2. in a non-discriminatory manner, 3. in accordance with due process of law, 4. and upon payment, in the words of the Hull formula, of ‘prompt, adequate, and effective compensation’. The dispute over the conditions under which a host state could expropriate continued into the post-World War II era when newly decolonized countries in the 1960s and 1970s called for a NIEO.

Answer 104

* Whereas outright expropriation through government seizure was common until the 1980s, it has become an increasingly less common phenomenon thereafter. * In the twenty-first century, governments dissatisfied with the original bargains made with foreign investors rarely send their troops to seize a factory or occupy a mine; instead, they use their legislative and regulatory power in more subtle ways to alter the benefits flowing to the investor from the investment. Thus, a government may impose new regulations on the way the investment is operated, raise taxes on the investment substantially, or unilaterally change a contract to reduce the revenues flowing to a concessionaire.

Answer 105

The difference between a direct or formal expropriation and an indirect expropriation turns on whether the legal title of the owner is affected by the measure in question. In consequence, indirect expropriations have gained importance. An indirect expropriation leaves the title untouched but deprives the investor of the possibility to utilize the investment in a meaningful way.

Answer 106

A typical feature of indirect expropriation is that the state denies the very existence of an expropriation and justifies its actions as a legitimate exercise of its regulatory or ‘police powers’, thereby rejecting the investor’s claim of compensation.

Answer 107

* Disproportionate tax increase * Interference with contractual rights * Unjustified interference with the management of the investment * Revocation or denial of government permits or licences

Answer 108

Each measure on its own, although harmful, is insufficient to constitute an indirect expropriation; however, taken collectively, they become sufficiently significant to constitute an indirect expropriation. Generation Ukraine v Ukraine (2003).

Answer 109

Meaningful benefits of ownership and control. Feldman v Mexico, ICSID Case No ARB(AF)/99/1 (Award on Merits) (16 December 2002).

Answer 110

Yes. IUSCT, Phillips Petroleum Company Iran v. Iran, Award No. 425-39-2: expropriation entails liability “whether the property is tangible, such as real estate or a factory, or intangible, such as the contract rights in this case”

Answer 111

Conditions for lawful expropriation 1. Public purpose - broad 2. Non-discrimination and not arbitrary 3. Due process of law (cf link to FET and IMS) 4. Compensation

Answer 112

Pezold v Zimbabwe: The transfer of the legal titles by Zimbabwe constituted a direct expropriation, despite the fact that the claimants still retained a de facto control over part of their properties.

Answer 113

It was the largest-ever award from an international arbitration tribunal: 50 B USD.

Answer 114

In 2012, the Argentine government seized the 51% interests in YPF, an Argentine oil company, whose majority shareholder was Repsol. In March 2014, Repsol and Argentina agreed to settle their dispute with the payment of US$5billion in bonds issued by Argentina.

Answer 115

This is a case of direct expropriation. In the case of Swembalt AB v Latvia, Swedish investors, operating under the belief of a formal agreement with Latvian authorities, purchased and refurbished a ship intended for use as a floating trade center in the port of Riga, Latvia. However, without prior notice to the investors, Latvian port authorities relocated the ship and eventually auctioned it off. The Swedish investors initiated a claim against Latvia, alleging that the actions taken amounted to the unlawful deprivation of their investment. The tribunal, in its findings, determined that Latvia's conduct constituted a direct expropriation. This conclusion was based on Latvia's various actions, including moving the ship, preventing its use, auctioning it, and allowing its scrapping, all without providing any compensation to the investors. As a result, the tribunal awarded the Swedish investors over US$2.5 million in compensation.

Answer 116

Unless it constitutes a violation of treaties or customary international right. States have been free to exercise their regulatory power with the view (or simply with the effect of) expropriating foreign investors. This power is a part of their sovereign right. However, in order for this to comply with international law and for expropriations to be legal, certain conditions must be met.

Answer 117

Since virtually any taking by a government can ostensibly be justified on these grounds, investors are rarely successful in challenging the legality of government taking because it is not for a public purpose.

Answer 118

Tribunals have considered that it is not their role to second-guess the appropriateness of measures adopted by the organs of a sovereign state.

Answer 119

"Whether the destruction of Russia’s leading oil company and largest taxpayer was in the public interest is profoundly questionable. It was in the interest of the largest State-owned oil company, Rosneft, which took over the principal assets of Yukos virtually cost-free, but that is not the same as saying that it was in the public interest of the economy, polity and population of the Russian Federation".

Answer 120

In essence, due process requires (i) that the decision to nationalize be properly adopted, and that (ii) the expropriated investor have an opportunity to challenge such decision before an independent and impartial body.’ (Rusoro v. Venezuela)

Answer 121

Unlike the other conditions of legality, due process of law relates to the procedure and not to the substance of the expropriatory measure.

Answer 122

In the Yukos cases, Russia claimed that the seizure of the assets and treatment of the investors had been done according to law, but the tribunal concluded that it had not been ‘carried out under due process of law’, as required by Article 13(1)(c) of the ECT. In particular, it found that ‘Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a State controlled company, and incarcerate a man who gave signs of becoming a political competitor.’

Answer 123

In international law, non-discrimination rule prohibits governments from distinguishing the treatment of economic resources or actors on the basis of national origin in order to ensure the competitive equality between comparable economic actors.

Answer 124

The tribunal responded that while it was true that ‘for discrimination to exist there must be different treatments to different parties’, the relevant comparison was between the treatment granted to the replacement operator appointed by Hungary and the treatment given to foreign investors as a whole. By this standard, the tribunal found that Hungary’s actions against the claimants had indeed been discriminatory.

Answer 125

1) Investor and state make a contract in which they refer to an arbitration tribunal. 2) In a treaty between states there could be a provision that refers to arbitration tribunals in any case of dispute (catch-all clause, non specific to discrimination).

Answer 126

* Legality → compensation is part of the conditions → primary norm that prohibits illegal expropriation * Illegality → compensation is result of wrongful act → secondary norm → Chorzow Factory principles (incl. lost profits)

Answer 127

Primary Rules: Nature: Primary rules are substantive norms that directly regulate the behavior of states and other subjects of international law. They articulate the rights and obligations of states in various areas of international relations. Examples: Primary rules include prohibitions against the use of force, the principle of sovereign equality, human rights obligations, and the rules governing the conduct of armed conflicts. These rules create legal obligations for states and individuals. Secondary Rules: Nature: Secondary rules, on the other hand, are procedural norms that govern the creation, interpretation, and application of primary rules. They provide the framework for the functioning of the legal system. **Examples**: Secondary rules include rules of treaty interpretation, the principles of state responsibility, and the rules regarding the settlement of disputes. These rules guide how primary rules are understood, implemented, and enforced.

Answer 128

Hull Formula

Answer 129

Many IIAs provide, all things being equal, that: 1. Compensation shall be equivalent to the fair market value of the expropriated investment at the time when the expropriation was publicly announced or immediately before the expropriation occurred, whichever is earlier and that compensation shall include interest at a commercial reasonable rate (adequate) 2. That it shall be paid without undue delay (promptly) 3. That it shall be effectively realizable and freely transferable (effective).

Answer 130

Article 5 of the Korea–Congo BIT provides that such compensation shall amount to: * “the fair market value of the expropriated investments immediately before the expropriation took place or before the impending expropriation became public knowledge, whichever is the earlier, shall include interest at the applicable commercial rate from the date of expropriation until the date of payment.

Answer 131

One useful definition of market value was elaborated by the Iran–US claims tribunal in Starrett Housing Corporation v Iran. ‘the price that a willing buyer would pay to a willing seller in circumstances in which each had good information, each desired to maximize his financial gain, and neither was under duress or threat, the willing buyer being a reasonable person’

Answer 132

* 1. book value, which is based on the actual costs incurred to establish the investment as those costs are reflected on the books (the balance sheet) of the affected enterprise; * 2. replacement value, which is the amount needed to acquire an asset of the same type as that which was expropriated; * 3. liquidation value, which is what a willing buyer would pay for the assets of the expropriated enterprise in liquidation; and * 4. going-concern value or discounted cash flow (DCF), which is a forward-looking method that values the enterprise on the basis of its future expected cash and then, using a discount rate that takes account of the cost of capital and risk, discounts that estimated cash flow to arrive at a present value.

Answer 133

A few treaties are less specific in establishing standards of compensation. Instead of market value, they may require ‘real value’, ‘reasonable compensation’, or simply ‘compensation’. These formulations of a treaty’s standard for compensation provide ample room for controversy as to their meaning and application in specific expropriation cases.

Answer 134

In Amoco v Iran (US Claims Tribunal, 14 July 1987): “A clear distinction must be made between lawful [merely lacking compensation] and unlawful expropriation, since the rules applicable to the compensation to be paid by the expropriator State differ according to the legal characterization of the taking”.

Answer 135

* Compensation for illegal expropriation is governed not by the treaty provisions on expropriation compensation (the “Hull formula”) but on the principles of customary international law, as illustrated by the Chorzów Factory case * The tribunal in ADC v Hungary concluded that the appropriate standard was found in the Chorzów Factory case judgment: * ‘reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed’ * Under this view, while market value immediately prior to expropriation might be the applicable standard in cases of legal expropriation, in cases of illegal expropriation, the appropriate standard is “the amount necessary to restore the investor to the situation it would have been in had the illegal act never taken place”.

Answer 136

1. First, official acts that seize title or control of a foreign investor’s property will attract negative publicity and are likely to do serious damage to the state’s reputation as a site for foreign investments. 2. Second, complex contemporary investment transactions, such as concessions, mineral development agreements, and long-term economic development contracts, which are based on shared benefits and risks between the host country and the investor are susceptible to being altered to the benefit of the host country through its regulatory power.

Answer 137

It is widely accepted that these expressions all mean the same thing, in that they give the same protection to foreign investors against indirect expropriations, including creeping expropriations.

Answer 138

IIAs have traditionally not specified what criteria should be used in determining whether a measure is an indirect expropriation. This is yet another example of the normative indeterminacy/vagueness that has traditionally characterised treaty practice.

Answer 139

Middle East Cement v Egypt (ICSID Case No. ARB/99/6, 12 April 2002). “When measures are taken by a State the effect of which is to deprive the investor of the use and benefit of his investment even though he may retain nominal ownership of the respective rights being the investment, the measures are often referred to as ‘indirect’ expropriation or, as in the BIT, as measures ‘the effect of which is tantamount to expropriation.’ As a matter of fact, the investor is deprived by such measures of parts of the value of his investment.

Answer 140

Police power doctrine Sole effects doctrine These two doctrines are generally seen as conflicting with one another.

Answer 141

* This doctrine has long been considered a part of customary international law. * It focuses on the aim of the measure in order to determine its nature. * The reasoning behind this approach is that measures which protect a public interest should not be characterised as an indirect expropriation. * However, arbitration tribunals have disagreed as to the exact content of this ‘police powers’ doctrine.

Answer 142

Any non-discriminatory measure which protects a public interest and which is enacted in accordance with due process does not constitute an indirect expropriation, no matter what its impact is. Discrimination and lack of due process becomes the only way to enforce.

Answer 143

*State does not commit expropriation when it adopts general regulations that are generally accepted within the police power of states *No compensation is required *This is customary international law today

Answer 144

* This doctrine focuses on the effect of a state measure rather than its aim in order to determine whether it constitutes an indirect expropriation. * As with the ‘police powers’ doctrine, tribunals have also disagreed as to the correct approach to be taken to the ‘sole effects’ doctrine.

Answer 145

According to the Tribunal: ‘Thus, expropriation under NAFTA includes not only open, deliberate and acknowledged takings of property, such as outright seizure or formal or obligatory transfer of title in favour of the host State, but also covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be expected economic benefit of property even if not necessarily to the obvious benefit of host State.’

Answer 146

The Proportionality Approach: In recent years, we can see that an ‘in-between’ approach has emerged. This new approach takes into account all the circumstances of the case in order to assess whether the measure constitutes an indirect expropriation, including both its effect and its object. This approach is known as the ‘proportionality’ approach.

Answer 147

It borrowed from case law of the European Court of Human Rights.

Answer 148

Tribunal in Tecmed v Mexico (29 May 2003) "There must be a reasonable relationship of proportionality between the charge or weight imposed to the foreign investor and the aim sought to be realized by any expropriatory measure [justified with public interest]"

Answer 149

In its summary of expropriation jurisprudence under NAFTA, the tribunal in Fireman’s Fund Insurance Company v United Mexican States listed the following factors as relevant: (1) whether the measure is within the recognized police powers of the host state; (2) the public purpose and effect of the measure; (3) whether the measure is discriminatory; (4) the proportionality between the means employed and the aim sought to be realized; and (5) the bona fide nature of the measure. Proportionality doctrine.

Answer 150

The expropriation provisions of international investment agreements tell us that an expropriatory measure which does not discriminate, which pursues a public purpose and which follows due process shall in fact be compensated to be legal. This follows from US v. Mexico 1938.

Answer 151

A: Virtually all states measures pursue a public interest objective B: States are granted a very large margin of appreciation in this regard C: Virtually all measures are characterised as non-compensable regulation, unless they are discriminatory or are not enacted in accordance with due process

Answer 152

States have introduced more clarity in their newly concluded agreements, in order to provide guidelines to arbitrators in applying the provisions on indirect expropriation and thus in approaching the divide between ‘regulatory measures’ and ‘expropriatory measures’. The US Model BIT is an example of that.

Answer 153

Neer v. United Mexican States, a three-page decision rendered in 1926, is one of the most cited precedents on denial of justice, fair and equitable treatment, and minimum standard of treatment in international law. In the evening of November 16, 1924, Paul Neer, an American superintendent of a mine in Guanaceví, Mexico, was horseback riding to his home with his wife. They were stopped by a group of armed men, who shot and killed Paul Neer. His wife escaped. The United States espoused a claim against the United Mexican States on behalf of American citizens, L. Fay H. Neer, widow, and Pauline E. Neer, daughter, who claimed that they sustained damages in the amount of $100,000.00. The United States alleged that the Mexican authorities were liable as they “showed an unwarrantable lack of diligence or an unwarrantable lack of intelligent investigation in prosecuting the culprits.”

Answer 154

After the Neer Decision in 1926, which has been cited many times in international arbitration tribunals, Article 31(3)(c) of the Vienna Convention on the Law of Treaties provides that together with the treaty’s context ‘any relevant rules of international law applicable in the relations between the parties’ shall be taken into account. The international minimum standard is such a rule. Both general principles and customary international law are included in these rules of international law.

Answer 155

This standard provides a “floor” to the treatment that States must afford to aliens in the form of a set of essential rights that States are obliged to respect vis-à-vis foreign nationals and their property. Tribunals also consider that the standard is “a flexible” standard, which must be adapted to the circumstances of each case. The customary MST has been generally understood to comprise rights, guarantees and obligations (non exhaustive) *Denial of justice (also in the fair and equitable treatment formulations in most BITs) *Protections of foreign nationals and their property *Transparency (some courts have opposing view) *Due process

Answer 156

It remains a matter of debate whether the Fair and equitable treatment standard currently reflects the MST or offers an autonomous standard that is additional to general international law. A number of investment tribunals suggest that the difference between FET and MST may well be "more apparent than real, when applied to the specific facts of a case." - i.e., less signfiicant.

Answer 157

The most salient formulations of MST in current treaty practice are found in NAFTA (Article 1105), the US Model BIT (Article 5), and several FTAs recently concluded by Canada (e.g., CPTPP or the Canada-Colombia FTA). These treaty formulations clarify that: *the MST provision prescribed the customary rule as a minimum standard of treatment; *references to the Fair and equitable treatment and Full protection and security standards do not require treatment “in addition to or beyond” that required under MST; *and a determination of a breach of any other standard of protection does not per se establish a breach of the MST. Such reference does not create additional substantive rights.

Answer 158

US Model BIT and CETA (Canada-EU Trade Agremeent)

Answer 159

It's possible to violate the provision in rare circumstances where the measures taken are excessive in light of their objective. The US Model BIT only defines "except in rare circumstances".

Answer 160

1) Economic impact of the measure on the investor 2) Extent to which government action interferes with distinct, reasonable investment-backed expectations 3) Character of the government action 4) Duration of the measure (CETA only)

Answer 161

Because it contains an absolute no indirect expropriation clause for public policy purposes.

Answer 162

It eliminated the protection against indirect expropriation.

Answer 163

The Tribunal brought forth an additional reason to reject the claim. It found that Uruguay had validly exercised the state's police powers. The power to regulate is customary international law and should be interpreted as such under art. 31(3)(c) of the Vienna Convention on the Law of Treaties. The court also adduced a number of secondary sources (Harvard Draft Convention, Restatements, OECD working paper, and other, newer established BITs).

Answer 164

General standards of treatment apply to all facets of an investment's activities in the host country. These include host government commitments to grant investors and investments ‘fair and equitable treatment’, ‘full protection and security’, and ‘treatment in accordance with international law’. General treatment standards may be found in separate treaty articles or paragraphs or combined into a single treaty provision. Specific treatment standards concern particular matters relating to an investment, such as monetary transfers, expropriation, and investor rights in times of war, revolution, or civil disturbance.

Answer 165

* absolute standards, which are not contingent upon specified factors, happenings, or government behaviour towards other investors or persons. Examples of absolute standards include guarantees of full protection and security, fair and equitable treatment, or treatment in accordance with the minimum standard of international law. * relative standards, which are dependent upon the host government’s treatment of other investments or investor. Examples of relative standards are most-favoured-nation (MFN) treatment and national treatment.

Answer 166

It is present in almost all BITs. 1954 Friendship Treaty US and Germany.

Answer 167

To provide guarantees, MIGA sets the FET as a precondition for investors.

Answer 168

Energy Charter Treaty.

Answer 169

Around 99% of the claims contain the FET standard.

Answer 170

Because it is not defined in most treaties (exception: Energy Charter Treaty). Therefore, arbitrators have to define it themselves. Moreover, arbitrators are not bound by earlier decisions of arbitration tribunals.

Answer 171

1) The standard is vague, general, and elastic 2) Treaty provisions offer no definition and no guidance on how to apply it 3) Despite an abundance of scholarly works on the standard, the application is tied to the facts of the case

Answer 172

It has to be applied in good faith (art. 26 of the VTLT)

Answer 173

Whether the host state has: (1) failed to protect the investor’s legitimate expectations; (2) failed to act transparently; (3) subjected the investor to discriminatory, arbitrary, or unreasonable actions; (4) denied the investor access to justice or procedural due process; or (5) acted in bad faith. The list is neither definitive not exhaustive. It may evolve over time in response to developments in arbitral jurisprudence. One must also recognize, however, that these five general principles are not separate and distinct, but often overlap and blend into one another.

Answer 174

It requires reliance. Therefore, the investor must prove that they have conducted due diligence and their expectations were **reasonable in the light of the circumstances**.

Answer 175

The fundamental notion is that it is unfair for a state to create certain expectations in the minds of investors through its laws, regulations, and actions; and then, once the investment is made, to change those laws and regulations in ways that significantly frustrate or cancel the expectations that the state itself has been instrumental in creating.

Answer 176

The host state does not have to freeze its legal system. The adjustment of environmental regulations to internationally accepted standards or the improvement of labour laws does not lead to violations of the FET standard if applied in good faith and without discrimination.

Answer 177

Thunderbird v. Mexico (same issue as experienced, got an opinion from the government, but left out vital facts)

Answer 178

(1) to make information on relevant laws, regulations, and other policies publicly available; (2) to notify interested parties of relevant laws and regulations and changes to them; and (3) to ensure that laws and regulations are administered in a uniform, impartial, and reasonable manner

Answer 179

Any laws, regulations, and other policies that affect the sector of activity that the investor operates.

Answer 180

Miacula v. Romania (2020)

Answer 181

Something about timing of information in transparency. Eleven months to formulate a complicated compensation system requiring input from many organizations was deemed reasonable.

Answer 182

A willful disregard of due process of law An act which shocks, or at least surprises, a sense of juridical propriety (Korrektheit)

Answer 183

When the intent is to discriminate or the effect is discriminatory.

Answer 184

Discrimination.

Answer 185

1) Was there a wrongful act? (here the violation of the standards is included) 2) Can it be attributed to a government actor? (this is usually easy in BIT cases) 3) Can it be excused? (self-defense, necessity)

Answer 186

The investor must have exhausted the domestic courts first.

Answer 187

The intervention of executive in court proceedings Secret awarding of licenses without the possibility of judicial review Bias on the part of a court Corruption of a judge

Answer 188

Criminal, administrative, civil

Answer 189

This line will be crossed when it is impossible for a third party to recognize how an impartial judge could have reached the result in question (objective standard).

Answer 190

The good faith standard is codified in the Vienna Convention on the Law of Treaties and is customary international law. However, no modern arbitral decision has actually found a state to have acted in bad faith.

Answer 191

- proving a state’s bad faith can be an extremely difficult task, since a government can usually offer some public policy justification for its actions. - most arbitral tribunals would be loath to make such a finding against a sovereign state, particularly if could give redress to an investor under a different factor

Answer 192

A state may not absolve itself of international responsibility arising out of a treaty violation by invoking its own legislation as a defence.

Answer 193

1. Against whom is the host state to protect covered investors and investments? 2. Against what actions is the host state to protect investors and their investments? 3. Precisely, what measures must a host state take in order to meet its treaty obligations?

Answer 194

1. In some earlier cases, acts of insurgents or rioting groups had harmed the foreign investment. 2. In a second group of cases, government forces like police authorities or military units were involved. 3. More recent cases have addressed governmental regulatory acts that disturb the legal stability surrounding the investor’s business.

Answer 195

ELSI case (ICJ, 1989) The United States brought a claim against Italy under the United States–Italy FCN treaty for injuries incurred by Raytheon, a US company, with respect to its subsidiary in Sicily. A factory of Raytheon’s subsidiary in Palermo was taken over by workers and then requisitioned by the mayor in order to prevent its closure by the investor for economic reasons. The ICJ Chamber referred to a due diligence obligation and found that the Italian government had taken adequate measures to protect the investor and its property, stating that ‘[t]he reference in Article V to the provision of “constant protection and security” cannot be construed as the giving of a warranty that property shall never in any circumstances be occupied or disturbed.

Answer 196

The due diligence obligation requires a host state to undertake all measures that could be reasonably expected to prevent damage to foreign investments in the circumstances faced by the country at the time of the injury to the investment. It would seem that a state’s lack of resources or the severity of crisis conditions are factors to be considered in determining whether a state has satisfied the due diligence standard.

Answer 197

The departure of the UK from the EU.

Answer 198

National treatment and MFN The objective is that the foreign investors and their investment do not suffer any discrimination These two provisions are conventional ‘embodiments’ of the non-discrimation principle, which has long been a part of customary international law

Answer 199

One that inflicts damage on the investor without serving any apparent legitimate purpose

Answer 200

For a measure to be discriminatory, it does not need to violate domestic law, since domestic law can contain a provision that is discriminatory towards foreign investment, or can lack a provision prohibiting the discrimination of foreign investment.

Answer 201

Discrimination is the negative formulation of the principle of equality of treatment.

Answer 202

National treatment: Calvo doctrine. Developing states. Minimum standard of treatment. Developed states.

Answer 203

States want to be free to help their own nationals, for instance through subsidies, without having to extend the same treatment to foreign investors.

Answer 204

1) Either remove the protection altogether or 2) include exceptions.

Answer 205

Most treaties will contain a FET clause, which acts as a replacement. It also protects from discrimination (it was one of the factors that we discussed).

Answer 206

States can introduce all kinds of laws and regulations that bar investors from investing.

Answer 207

* The first step is to identify a group of nationals with whom we can compare the claimant. * The second step is to compare the treatment that the two groups have received and to assess whether the treatment received by the claimant is less favourable than that granted to the group of nationals. * The third step is to evaluate whether the two groups are in like circumstances or whether certain factors exist which could justify any differential treatment.

Answer 208

* De jure (direct) discrimination: Refers to discriminatory treatment that is openly linked to (foreign) nationality * De facto (indirect) discrimination: Treatment that disadvantages foreign investors as a matter of fact even though it may be neutral on its face.

Answer 209

The issue of "like circumstances" in national treatment is how "large" the circle of comparison is drawn. The lecture shows two extremes. In one case, the tribunal distinguished between a company that manufactures cigars and those that "just" export them to deny a claim. In another case relating to taxes, a tribunal put all local producers into one circle.

Answer 210

* In SD Myers v Canada, the Tribunal seems to have assumed that subsidies are allowed to promote national policies. * In GAMI v Mexico, the Tribunal found that the solvency of an important local industry, in this case sugar, was a legitimate policy goal.

Answer 211

The State must use **the least interfering means** with investor rights if there are several alternative ways to achieve its policy goals.

Answer 212

Management, conduct, operation, sale or other disposition of investments.

Answer 213

Other treaties, laws, policies, regulations

Answer 214

It can be both.

Answer 215

So the state can have tax agreements

Answer 216

Situation 1: Reference to better treatment in a substantive provision of an IIA concluded with a third state - universally accepted Situation 2: Change the scope of the present IIA, e.g. by using the definition of "investment" from another IIA - not accepted Situation 3: Take the dispute settlement provision from another IIA - most frequent and most controversial

Answer 217

In CME v Czech Republic, the BIT only contained the provision that the claimant should get "just compensation". Another BIT contained that investors should get the "fair market value". Tribunal held that the investor would get the same.

Answer 218

Claimant complained that another BIT did not require him to wait before invoking arbitration like the present BIT did. Tribunal agreed and waived that requirement.

Answer 219

To bring contractual and other commitments under the treaty's protective umbrella.

Answer 220

This can be any kind of obligation under international law, regulatory act, law, contracts, any kind of obligation.,

Answer 221

*Reduce the obligations to written obligations *Reduce obligations to legal obligations (i.e., "subject to law")

Answer 222

*Different formulations of the clause *Different conceptions of the nature of the clause

Answer 223

First Approach: Some tribunals interpret "umbrella clauses" narrowly, arguing that the phrase "entered into" limits the clauses to specific commitments in investment contracts. Second Approach: A more nuanced approach acknowledges that umbrella clauses don't cover general commitments imposed by host states' laws but may include unilateral commitments from specific business sector regulations addressed to foreign investors. Third Approach: Some tribunals take a holistic approach, accepting that umbrella clauses cover obligations stemming from laws and regulations.