423 / 532
407
UMBRELLA CLAUSE ȃ ADDITIONAL PROTECTION OF INVESTMENT BY CLAUS…
all breaches of each State’s contracts with investors of the other State are forthwith
converted into and to be treated as breaches of the BIT. The Tribunal stressed that,
in this case, there was no clear and persuasive evidence that such was in fact the
intention of both Switzerland and Pakistan in adopting Article 11 of the BIT. So, in
the circumstances of this case, SGS’s claim about Article 11 of the BIT was rejected.
22
The Tribunal determined that it had jurisdiction over those SGS claims based on
BIT provisions establishing substantive standards of treatment (the “BIT claims”),
including BIT provisions which related respectively to the promotion of investments,
the protection of investments, and expropriation.
23
In the other ICSID case
Société Générale de Surveillance S. A. v. Philippines
, as to
the jurisdiction under the “umbrella clause”, SGS alleged that it made an investment
in accordance with Article X(2) of the BIT in the territory of the Philippines. The
Philippines failed to pay for services due under the CISS Agreement and therefore
were in breach of Article X(2) of the BIT. The Philippines denied that Article X(2)
had such an effect, relying
inter alia
on the decision of the SGS v. Pakistan Tribunal.
24
The Philippines invoked the drafting history of the BIT as well as the texts of the
draft exchanged on various earlier occasions, which were claimed to clearly show
that the Parties’ intention was to emphasize their commitment to comply with the
substantive treatment obligations assumed under the BIT and submitted also on the
base of Article 31(1) of the Vienna Convention, which requires that treaties shall be
interpreted in good faith and in the light of their object and purpose. The Philippines
suggested that SGS’s contention could not be upheld unless there was clear evidence
of the contracting Parties’ intention to produce such an unequal bargain, which had
notbeen shown.
25
The Philippines pointed out that the actual text of Article X is
titled “Other Commitments”. Article X(1) is a kind of “without prejudice” clause,
providing that legislative provisions or international law rules more favorable to an
investor shall to that extent “prevail over this Agreement”. It deals with the relation
between commitments under the BIT and distinct commitments under host State law
or under other rules of international law. It does not appear to impose any additional
obligation on the host State in the framework of the BIT.
26
In the view of the Arbitral
Tribunal, the text of Article X(2) of the Switzerland-Philippines BIT is different to
that in the SGS v. Pakistan case and reads: “
Each Contracting Party
shall observe any
obligation it has assumed with regard to specific investments in its territory by investors
of the other Contracting Party.
” Interpreting the actual text of Article X(2), it would
appear to clearly state that each Contracting Party shall observe any legal obligation
it has assumed, or will in the future assume, with regard to specific investments
(here “CISS Agreement”)
27
covered by the BIT. Article X(2) was adopted within the
22
Ibid
at 173.
23
Ibid
at 96.
24
Ibid
at 113.
25
Ibid
at 77.
26
Ibid
at 114.
27
Note by author.