CONTEMPORARY EURASIA VIII (2) ContEurVIII2 | Page 15

SAREN ABGARYAN
already been made “in accordance to the laws and regulations” of the
states. The post-establishment MFN clause does not cover the entry
conditions of making the investment and does not materialize unless the
investment is already made in the territory of the host state, 45 allowing the
host country to preserve a great deal of discretion over the admission and
establishment of foreign investment. 46
The second characteristic of the MFN clause in China-Armenia
BITs is that the agreement does not specify whether the MFN clause can
be applied to procedural clauses and the investor-state dispute settlement
clause. It has become a recommended practice for BIT making to have
this clarification due to the debates in the scholarly literature and
inconsistent investment treaty jurisprudence.
Umbrella Clause
The umbrella clause presents the possibility that contractual
agreements or commitments assumed by a state can be protected by the
investment treaty, and a breach of those agreements can be considered as
breaches of the treaty. By including an umbrella clause in an investment
treaty, the countries can elevate the contractual undertaking into
international law obligations. 47 It transforms the state’s responsibility
towards a private investor under a contract into an international
responsibility. 48 Thus, this clause becomes a protective umbrella (hence
the name) for investment contracts or other undertakings of the state, a
violation of which can be considered a violation of the BIT. 49 It is
considered a well-established contention that not every contractual breach
can amount to a breach of international law, but certain contractual
breaches might amount to a breach of international law. 50

45 UNCTAD,
Most-Favored-Nation Treatment (UNCTAD Series on Issues in
International Investment Agreements II, New York and Geneva, 2010, 30).
46 UNCTAD, Key Terms and Concepts in IIAs: A Glossary (UNCTAD Series on Issues in
International Investment Agreements, New York and Geneva, 2004, 4).
47 Todd Weiler ed. International Investment Law and Arbitration: Leading Cases from the
ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron, May
2005, 326).
48 Joachim Karl, "The Promotion and Protection of German Foreign Investment Abroad,"
ICSID review 11, no. 1 (1996): 1-36.
49 Christoph Schreuer, "Travelling the BIT route of Waiting Periods, Umbrella Clauses
and Forks in the Road," J. World Investment & Trade 5 (2004): 249-50.
50 Jarrod Wong, "Umbrella Clauses in Bilateral Investment Treaties: Of Breaches of
Contract, Treat Violations, and the Divide between Developing and Developed Countries
in Foreign Investment Disputes," Geo. Mason L. Rev. 14 (2006): 145.
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