How to interpret umbrella clauses in bilateral investment treaties: different perspectives and solutions

Canyaş A. B.

International Journal of Public Law and Policy, vol.9, no.4, pp.418-431, 2023 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 9 Issue: 4
  • Publication Date: 2023
  • Doi Number: 10.1504/ijplap.2023.134278
  • Journal Name: International Journal of Public Law and Policy
  • Journal Indexes: Scopus
  • Page Numbers: pp.418-431
  • Keywords: arbitration, bilateral investment treaties, BITs, investment, investment contracts, parallel effect, umbrella clauses
  • Hacettepe University Affiliated: Yes


Umbrella clauses in bilateral investment treaties (BITs) can be named in various ways with differing scopes and effects depending on their texts. It is debatable whether a host state can be held liable based on an umbrella clause in a BIT if it breaches an investment commitment arising from the investment contract. There are two mainstream opinions in this debate: the restrictive and broad approaches. In our opinion, a case-specific approach should be adopted. In each case, the tribunal should act in conformity with the principle of competence-competence. During this analysis, the use of the general rule of interpretation (Art. 31) in the Vienna Convention on the Law of Treaties (VCLT) should be considered.