CYIL 2014

VOJTĚCH TRAPL CYIL 5 ȍ2014Ȏ phrase ‘shall observe’ is imperative and categorical. ‘Any’ obligations is capacious [ sic ] and quite broad; it means not only obligations of a certain type but ‘any’, ie. all, obligations entered into with regard to investments of investors of the other Contracting Party. 44 The immediate, operative effects of Article 3.5 are, according to the Arbitral Tribunal, two in number: the first is that Eureko’s contractual arrangements with the Government of Poland were subject to the jurisdiction of the Tribunal that reinforced the jurisdictional conclusions earlier reached in the Award, and the second is that breaches by Poland of its obligations under the SPA and its First Addendum, while not breaches of Articles 3.1 and 5 of the Treaty, could nevertheless be breaches of Article 3.5 of the Treaty, since they transgressed Poland’s Treaty commitment to “observe any obligations it may have entered into” with regard to Eureko’ s investments. 45 The Tribunal concluded that the actions and inactions of the Government of Poland which were in breach of Poland’s obligations under the Treaty – those that have been held to be unfair and inequitable and expropriatory in effect – were also in breach of its commitment under Article 3.5 of the Treaty to “observe any obligations it may have entered into with regards to investments of investors” of the Netherlands.” The same conclusion that the umbrella clause elevates all obligations was not, however, held in Noble Ventures, Inc. v. Romania , 46 even though the umbrella clause in the United States-Romania BIT provides that “[e]ach Party shall observe any obligation it may have entered into with regard to investments. ” 47 The Arbitral Tribunal concluded that the wording of the umbrella clause was “a clear reference to investment contracts”, 48 and it abstained from “express[ing] any definitive conclusion as to whether...[the umbrella clause] perfectly assimilates to a breach of the BIT or the breach by the host State of any contractual obligation,” on the ground that its conclusions in that case would not be affected by the resolution of that question. 49 In Sempra Energy International v. Argentina 50 the Arbitral Tribunal noted that the dispute before it arose from the manner in which “the violation of contractual commitments with the licensees… impacts the rights the investor claims to have in the light of the provisions of the treaty and the guarantees on the basis of which it made the protected investment.” It then went on to hold that it had jurisdiction over the investor’s claim since it was “founded on both the contract and the [BIT]” and “[t]hat the [BIT] also includes the specific guarantee of a general ‘umbrella clause’… involving the obligation to observe contractual commitments concerning the investment, [and] creates an even closer link between the contract, the context 44 Ibid 246 in note 4. 45 Ibid 250 at note 4. 46 Noble Ventures, Inc. v. Romania , Award, ICSID (W. Bank) Case No. ARB/01/11 (2005), available at http://ita.law.uvic.ca/documents/Noble.pdf. 47 Ibid . at 46. 48 Ibid. at 51. 49 Ibid . at 61. 50 See Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16.

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