Handle with Care: Umbrella Clauses and MFN Treatment in Investment Arbitration

The overwhelming majority of BITs concluded by France contain a very peculiar provision on specific obligations undertaken by the host State. The provision has been the object of two recent arbitral awards and deserves the closest scrutiny for at least three reasons. First, given the large number of BITs containing such a provision, it may be expected that other arbitral tribunals will have to deal with its interpretation. Second, in spite of the two arbitral pronouncements, the interpretation of this clause is still unclear. Third, this provision may have important implications for the host State, especially when it paves the way to incorporation in the relevant BIT through the through most favoured nation (MFN) clauses of more far reaching umbrella clauses. The article analyses the tribunals’ interpretations of the relevant treaty clauses and to explore the consequences from the standpoint of the host State.