Abstract

This paper deals with the function, scope and effect of umbrella clauses in international investment treaties. It proposes to analyze umbrella clauses not from the perspective of the traditional dualist framework that contrasts breaches of contracts and breaches of treaties, but develops the function of umbrella clauses against the background of an economic analysis of the relations between foreign investors and host States. The dualist approach, it is argued, fails to grasp the economic objective of investor-State cooperation to achieve cost-efficient bargains by attenuating the ...