4. Investor-State Contracts

Mongolian Law on Investment 2013, published in the Official State Journal, Töriin Medeelel, 2013 No. 41 (‘MIL’). See Annex.

Regulation governing Investment Agreements 2014, Government Resolution 2014 No. 52. An unofficial English language translation is available at: <http://​nda.​gov.​mn/​backend/​f/​hFNIWEKB8k.​pdf> last accessed 11 May 2017.

See also Curtis, ‘The Legal Security of Economic Development Agreements’ (1988) 2 Harv. Int’l L. J. 317, 319–21; Dumberry, ‘International Investment Contracts’ in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 215, 220; Sornarajah, The International Law on Foreign Investment (Oxford University Press, 3rd ed., 2010) 281 and 286; Westberg, International Transactions and Claims Involving Government Parties (Washington, D.C., 1991) 52–4; Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 97.

On early examples of State contracts, see Leben, ‘La Théorie du Contrat d‘Etat et l’Evolution du Droit International des Investissements’ (2004) 302 RdC 197, 213–15. For an overview of traditional and modern forms of State contracts, see Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 9–12.

The award of 6 July 1864 concerned several disputes between M. de Lesseps and the Vice-King of Egypt relating to the construction of the Suez Canal. For the political background and a legal discussion of the case, see Yackee, ‘The First Investor-State Arbitration: The Suez Canal Company v Egypt (1864)’ (2016) 3 JWIT 401.

See also UNCTAD, State Contracts (UN, 2004) 1, 3; Sornarajah, The International Law on Foreign Investment (Cambridge University Press, 3rd ed., 2010) 38.

See Cotula, Investment Contracts and Sustainable Development: How to Make Contracts for Fairer and More Sustainable Natural Resource Investments (International Institute for Environment and Development, London, 2010) 3. See also Cotula and Tienhaara, ‘Reconfiguring Investment Contracts To Promote Sustainable Development’, in Sauvant (ed.), Yearbook on International Investment Law & Policy 2011–2012 (Oxford University Press, 2013) 281, 284 and 286–91.

Oyu Tolgoi Investment Agreement 2009 (signed 6 October 2009), available at: <http://​www.​turquoisehill.​com/​s/​investagree.​asp> last accessed 11 May 2017.

In April 2015, Turquoise Hill Resources was valued with a USD 7 billion value at the New York Stock Exchange. Feasibility studies released in 2014 showed recoverable copper of 24.9 billion pounds, 11.9 million ounces of gold, and 78 million ounces of silver over a mine life of 41 years (worth USD 92 billion at this time’s metals prices) (see Els, ‘Turquoise Hill surges after Oyu Tolgoi expansion okayed’, Mining.​com (online), 6 April 2015).

Sornarajah, International Commercial Arbitration: The Problem with State Contracts (Longman, 1990) 3. UNCTAD refers to investor-State contracts as contracts “made between the State or an entity of the state, which … is given control over an economic activity, and a foreign national or a legal person of foreign nationality” (UNCTAD, State Contracts (UN, 2004) 3).

On page 1, the OT Investment Agreement states that the contract shall “define and regulate a relationship in regard to maintaining for a certain period a stable Tax and operational environment, the sale of Products at international market prices by the Investor, the guarantee of the Investor’s right to use and spend its income at its own discretion, the amount and term of the investment, the undertaking of mining activities with minimum damage to the environment and human health, the rehabilitation of the environment, not to have a negative effect on other industries and operations, the social and economic development of the Southern Gobi region and creation of new jobs, the creation of business opportunities for Mongolian companies and individuals, compensation for damages to property, basis for the termination of this Agreement, and rights and obligations of the Parties during the period of exploring, mining and processing operations within the Contract Area.”

This includes concession agreements concluded between foreign investors and the Mongolian Government pursuant to the Mongolian Concession Law (see Law on Concessions 2010, published in the Official State Journal, Töriin Medeelel, 2010 No. 9, Art. 20 et seq.). On concessions in Mongolia, see Nelle, ‘Rohstoffpolitik der Mongolei im Spannungsfeld der Interessen – Teil 1: Investitions- und Rohstoffrecht’ (2015) 6 WiRO 165, 167.

MIL 2013, Art. 20.4. See also infra at 4.1.3.

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 UNTS 38 (‘New York Convention’). See already supra at 2.​5.​1.

Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965, 575 UNTS 159 (entered into force 14 October 1966) (‘ICSID Convention’). See already supra at 2.​5.​2.

Statute of the International Court of Justice, signed 26 June 1945, 1 UNTS 993 (entered into force 24 October 1945) (‘ICJ Statute’).

See infra at 4.5. See also Noble Ventures v. Romania, Award, 12 October 2005, para. 54; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 274–5; Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 888.

See also von Walter, ‘Investor-State Contracts in the Context of International Investment Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 80, 85; Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 9–10. See also Orrego Vicuña, ‘Of Contracts and Treaties in the Global Market’, in von Bogdandy and Wolfrum (eds.), Max Planck UNYB (Martinus Nijhoff, 2004) vol. 8, 341 (noting that “[w]hat used to be a useful comparison between international law and a separate domestic legal framework – treaties and contracts – has now become a part of a single legal structure which encompasses both contracts and treaties as well as a host of other instruments.”).

For an overview of the concept of the ‘internationalisation’ of investment contracts, see, e.g., Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 29 et seq.

See also Sornarajah, The International Law on Foreign Investment (Oxford University Press, 3rd ed., 2010) 293; Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 8.

See Craig, ‘Specific Powers of Public Contractors’, in Rozen Noguellou and Ulrich Stelkens (eds.), Droit Comparé des Contrats Publics – Comparative Law on Public Contracts (Bruylant, 2010) 173; Friedmann, ‘The Uses of General Principles in the Development of International Law’ (1963) 57 AJIL 279, 281 (noting that “[w]ithin the common law a new category of government contracts has developed, which although in theory only a particular form of private contract, has produced specifically public law principles, closely akin to those of the French contrat administratif.”).

See Bonk and Neumann, ‘§ 60 VwVfG’, in Stelkens, et al. (eds.), Verwaltungsverfahrensgesetz (C.H. Beck, 8th ed., 2014) para. 30 (with further references).

Yackee, ‘Do we really need BITs? Toward a Return to Contract in International Investment Law’ (2011) 3 AJWH 121, 133–4 (even recommending to forgoing BITs for contracts). See also Nacimiento, ‘Investitionsschutz – Gelebtes Völkerrecht in der Wirtschaft’, in Calliess (ed.), Herausforderung an Staat und Verfassung: Völkerrecht – Europarecht – Menschenrechte, Liber Amicorum für Torsten Stein zum 70. Geburtstag (Nomos, 2015) 226, 242.

Such as community engagement or human rights audits (see Nowrot, ‘Obligations of Investors’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1154, 1171–2, para. 27).

See Sumiya, ‘Law and Development, FDI, and the Rule of Law in pots-Soviet Central Asia: The Case of Mongolia’, in McAlinn and Pejovic, Law and Development in Asia (Routledge, 2012) 137. See also UNCTAD, Investment Policy Review: Mongolia (UN, 2013) 36.

See Civil Code 2002, published in the Official State Journal, Töriin Medeelel, 2002 No. 7, Art. 7.3 (State authorities “may enter into civil legal relations like other legal entities”). See also Tseveen and Ganbold, Hauser Global Law School Program, N.Y.U. School of Law, The Mongolian Legal System and Laws: A Brief Overview (January 2006).

See, e.g., Administrative Procedure Act 2003 (Germany), ss. 54–62.

General Administrative Law 2015, published in the Official State Journal, Töriin Medeelel, 2015 No. 28.

See, e.g., Law on Concessions 2010, published in the Official State Journal, Töriin Medeelel, 2010 No. 9, Art. 20 et seq. (for concession contracts); Land Law 2002, Art. 6.3 (for land-use contracts; see already supra at 3.​2.​5.​1); Nuclear Energy Law 2009, published in the Official State Journal, Töriin Medeelel, 2009 No. 29, Art. 30 (for contracts in the nuclear energy sector).

See 4.2 immediately below.

Law on Procedure for Administrative Cases 2016, published in the Official State Journal, Töriin Medeelel, 2016 No. 9. The Law replaced the Law on Procedure for Administrative Cases 2002, published in the Official State Journal, Töriin Medeelel, 2003 No. 3. On administrative law in Mongolia, see Tsend, Judicial Procedure for Administrative Cases in Mongolia (20 October 2010); Gochoo, Verwaltungsrecht in Deutschland und der Mongolei: Ein Rechtsvergleich (Bayreuth, 2008); Scholler and Harbich, Deutscher Kommentar zur Verwaltungsgerichtsordnung der Mongolei (München, 2007).

The Civil Procedure Code of Mongolia defines the country’s ordinary court jurisdiction as follows: “Any person, whose human rights, freedom, and legally protected interests provided by legislation of Mongolia and international treaties to which Mongolia is a party, are considered to be violated, is entitled to apply to the [Civil] Court for protection of the rights.” See Civil Procedure Code 2002, published in the Official State Journal, Töriin Medeelel, 2002 No. 8, Art. 3.1. Civil court cases amounted to 47% of the total case load (along with 19% of criminal cases, 33% cases on child support payments, and only 1% of administrative cases) (see Escudero and Taivankhuu, ‘Strengthening Enforcement of Court Decisions in Mongolia’, in European Bank for Reconstruction and Development (ed.), Law in Transition 2014: Enforcing Court Decisions (London, 2014) 74, 78).

See Law on Procedure for Administrative Cases 2016, Arts. 1 and 3.1.2. See also General Administrative Law 2015, Art. 11.1.2.

Investment contracts in the nuclear energy sector are excluded from the scope of application of Article 20 MIL (see MIL 2013, Art. 4.7). They are subject of the Nuclear Energy Law of Mongolian (see Nuclear Energy Law 2009, Art. 30).

See also MIL 2013, Art. 6.2, pursuant to which the Mongolian State provides tax-rate stability by virtue of investment contracts or stabilisation certificates (see also MIL 2013, Art. 13.2). On tax-rate-stabilisation certificates, see already supra at 3.​2.​4.​2.

Emphasis added.

On the content of this ‘right to demand’ an investment contract, see infra at 4.2.4.3.

On tax-rate-stabilisation certificates, see already supra at 3.​2.​4.​2.

Emphasis added.

Article 20.1 of the MIL only vaguely provides that investment contracts shall stabilise the investor’s environment of business activities.

Emphasis added.

On the invocation of investor-State contracts under umbrella clauses in international investment treaties, see infra at 4.5.

See already supra at 3.​3.​1.​1 (“Evaluation of the Domestic Investment Law”) and 3.​3.​1.​4.

See insofar infra at 4.4.1.

See infra at 4.2.4.4.

Regulation governing Investment Agreements 2014, Government Resolution 2014 No. 52. An unofficial English language translation is available at: <http://​nda.​gov.​mn/​backend/​f/​hFNIWEKB8k.​pdf> last accessed 11 May 2017.

See ibid., Art. 1.2. See also MIL 2013, Art. 4.7.

Ibid., Art. 2.4.5 (in conjunction with MIL 2013, Art. 16.1).

See supra at 4.2.1.

See Regulation governing Investment Agreements 2014, Art. 4.1.8. On the implementation of stabilisation clauses in Article-20-MIL-investment contracts, see infra at 4.4.1.

See also infra at 4.4.3.3.

See Draft United Nations Code of Conduct on Transnational Corporations 1983, reprinted in: UNCTAD, International Investment Agreements: A Compendium (New York, 1996) vol. I, 161–82. For an overview of the Draft and its ultimate abandonment, see, e.g., Muchlinski, Multinational Enterprises and the Law (Oxford University Press, 2nd ed., 2007) 660 et seq. The Draft Code of Conduct requires respect for national sovereignty, domestic laws, and administrative practices. It calls for adherence with national economy goals, development objectives, policies and priorities. Furthermore, the Code of Conduct requires respect for social and cultural objectives, values and traditions of the countries in which TNCs operate, and also calls for environmental responsibility. For an overview of (normative) expectations of foreign investors and their business activities under other ‘non-binding’ international instruments and initiatives, see, e.g., Nowrot, ‘Obligations of Investors’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1154, 1176–84 (concerning the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, the UN Global Compact, and the UN Guiding Principles on Business and Human Rights).

For examples, see Kröll, ‘The Renegotiation and Adaptation of Investment Contracts’, in Horn (ed.), Arbitrating Foreign Investment Disputes – Procedural and Substantive Legal Aspects (Kluwer Law International, 2004) 425, 439–43. For example, the hardship clause of the UNIDROIT Principles of International Commercial Contracts requires an event that fundamentally alters the contractual equilibrium. The triggering event must not have been able to be reasonably considered, and be beyond the control of the disadvantaged party. A request for contract adaption must be made without undue delay and does not entitle to withhold performance. If the parties fail to reach an agreement, either party may refer the matter to a court which may adapt the contract with a view to restoring its equilibrium or terminate the contract (see UNIDROIT Principles of International Commercial Contracts 2010, Arts. 6.2.2–3; the Principles are available at: <http://​www.​unidroit.​org/​publications/​513-unidroit-principles-of-international-commercial-contracts> last accessed 11 May 2017).

See, e.g., Civil Code 2002 (Germany), s. 313(1).

See already supra at 4.1.4.

See supra at 4.2.1–4.2.4.

See, e.g., Administrative Procedure Act 2003 (Germany), s. 60(1), sentence 1.

See, e.g., ibid., s. 60(1), sentence 2 (pursuant to which State authorities may terminate administrative law contracts to avoid or eliminate grave harm to the common good).

Amoco v. Iran (Award) (1987) 15 Iran-US CTR 189, 243. See also Stran Greek Refineries v. Greece (Judgment) (1994) 19 EHRR 293, 328–9 (noting that “according to the case-law of international courts and of arbitration tribunals any State has a sovereign power to amend or even terminate a contract …, provided it pays compensation. This both reflects recognition that the superior interests of the State take precedence over contractual obligations and takes account of the need to preserve a fair balance in a contractual relationship.”).

See also Dumberry, ‘International Investment Contracts’, in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 215, 220; Schill, ‘Contracting with Foreigners: International Investment Law Implications’, in Noguellou and Stelkens (eds.), Droit Comparé des Contrats Publics – Comparative Law on Public Contracts (Bruylant, 2010) 63, 64–5; Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 150–5; Sornarajah, The International Law on Foreign Investment (Oxford University Press, 3rd ed., 2010) 281 and 286.

See also supra at 2.​4.​2.​3 (“The Doctrine on the Protection of Legitimate Expectations”).

Scholars have opposed the view that developing countries compete for FDIs. See, e.g., Frank, ‘Stabilisation Clauses and Foreign Direct Investment: Presumptions versus Realities’ (2015) 1 JWIT 88, 97: “The available evidence on current trends and future projections in the extractive industry point to an intense competition among investors backed by their home governments for access to the mineral resources in developing countries.”

See already supra at 2.​4.​2.​3 (“Principles of Protection Commonly Associated with Fair and Equitable Treatment”).

See also Parkerings v. Lithuania, Award, 11 September 2007, para. 332. See already supra at 2.​4.​2.​3 (“The Doctrine on the Protection of Legitimate Expectations”).

See already supra at 2.​4.​2.​3 (“The Doctrine on the Protection of Legitimate Expectations”).

LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 124. See also CMS v. Argentina, Award, 2 May 2005, para. 276 (stating that “fair and equitable treatment is inseparable from stability and predictability”); Occidental v. Ecuador, Award, 1 July 2004, para. 183.

Weber, Wirtschaft und Gesellschaft (Mohr, 5th ed., 1980) 184. English language translation: “The empirical validity of a norm as a legal norm affects the interests of an individual in many respects. In particular, it may convey to an individual certain calculable chances of having economic goods available or of acquiring them under certain conditions in the future.” See also Cremer, ‘§ 5 Regulierung und Freiheit’, in Fehling and Ruffert (eds.), Regulierungsrecht (Mohr Siebeck, 2010) 212, 249–50, para. 93.

See Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 730 and 747. See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 148.

Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 747.

See Saluka v. Czech Republic, Partial Award, 17 March 2006, para. 305 (cited in National Grid v. Argentina, Award, 3 November 2008, para. 175; Spyridon Roussalis v. Romania, Award, 7 December 2011, para. 317): “In order to determine whether [a] frustration of the foreign investor’s expectations was justified and reasonable, the host State’s legitimate right subsequently to regulate domestic matters in the public interest must be taken into consideration.” See also Lemire v. Ukraine, Decision on Jurisdiction and Liability, 14 January 2010, para. 273: “[T]he preferential treatment of foreigners [must] be balanced against the legitimate right … to pass legislation and adopt measures for the protection of what as a sovereign it perceives to be its public interest.”

See Micula v. Romania, Award, 11 December 2013, para. 671 et seq.

See also Vandevelde, ‘A Unified Theory of Fair and Equitable Treatment’ (2010) 43 N.Y.U. J. Int’l L. & Pol. 43, 66; Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 287; Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 148–9; Hirsch, ‘Between Fair and Equitable Treatment and Stabilization Clause: Stable Legal Environment and Regulatory Change in International Investment Law’ (2011) 12 JWIT 783, 800. See also AES v. Hungary, Award, 23 September 2010, paras. 9.3.29 and 9.3.31; EnCana v. Ecuador, Award, 3 February 2006, para. 173.

Law on Imposition of Price Increase (Windfall) Taxes on some Commodities 2006, published in the Official State Journal, Töriin Medeelel, 2006 No. 20.

See also Cameron, International Investment Energy Law: The Pursuit of Stability (Oxford University Press, 2010) 69, para. 2.19. For a good overview of the concept of stabilisation clauses, see Howse, ‘Freezing Government Policy: Stabilization Clauses in Investment Contracts’ on IISD Investment Treaty News (4 April 2011).

See Duke Energy v. Peru, Award, 18 August 2008, para. 219 (in casu a tax court): “Thus, if, at the time when the guarantee was granted, the application of the existing rules resulted in a consistent interpretation, such interpretation must be deemed to be incorporated into the guaranteed stability. In a broad sense, stability is the standard by which the legal order prevailing on the date on which the guarantee is granted is perpetuated, including the consistent and stable interpretation in force at the time the [stability agreement] is concluded. The Tribunal is convinced that the maintenance of such stable interpretations of the law, existing at the time the [stability agreement] was executed, is part of ‘the continuity of the existing rules’.” (emphasis added).

For an overview of contractual stabilisation techniques, see, e.g., Bertoli and Crespi Reghizzi, ‘Regulatory Measures, Standards of Treatment and the Law Applicable to Investment Disputes’, in Treves, Seatzu and Trevisanut (eds.), Foreign Investment, International Law and Common Concerns (Routledge, 2014) 26, 43–4. For examples of contractual stabilisation clauses, see, e.g., Bishop, Crawford and Reisman, Foreign Investment Disputes: Cases, Materials and Commentary (Kluwer Law International, 2005) 290–4.

AGIP v. Congo, Award, 30 November 1979, para. 86. See also Herdegen, ‘Rechtsprobleme des international Konzessionswesens – insbesondere aus völkerrechtlicher Sicht’, in Baur and Hobe (eds.), Rechtsprobleme von Auslandsinvestitionen: Konzessionen, Vertragsanpassung, Vergabeverfahren (Nomos, 2003) 13, 23.

See Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 108.

See Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 109.

For example, in the investment arbitration of Duke Energy the Respondent State Peru was found liable to pay USD 18 million after Peruvian tax authorities charged the claimant for underpayments equalling USD 48 million for the years 1996–1999, which occurred in breach of a tax-rate-stabilisation agreement (see Duke Energy v. Peru, Award, 18 August 2008, para. 344 et seq.).

See infra at 4.5.

See also Howse, ‘Freezing Government Policy: Stabilization Clauses in Investment Contracts’ on IISD Investment Treaty News (4 April 2011): “Thus, transparency in the negotiation of such clauses … is highly desirable. So are requirements that the clauses be approved by parliaments.” (emphasis added).

See also Mann, ‘Stabilization in Investment Contracts: Rethinking the Context, Reformulating the Result’ on IISD Investment Treaty News (7 October 2011) (“largely unconstitutional in most developed countries”). On the question of whether stabilisation clauses affect the willingness of host States to implement new legal measures in the public interest, see Ruggie, Stabilization Clauses and Human Rights: A Research Project conducted for IFC and the UN Special Representative of the Secretary-General on Business and Human Rights (27 May 2008).

See also Herdegen, ‘Rechtsprobleme des international Konzessionswesens – insbesondere aus völkerrechtlicher Sicht’, in Baur and Hobe (eds.), Rechtsprobleme von Auslandsinvestitionen: Konzessionen, Vertragsanpassung, Vergabeverfahren (Nomos, 2003) 13, 23; Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 121, para. 87.

See ibid., para. 8 et seq. (Judge N. Solberg).

On the relationship between investor-State contracts and umbrella clauses in international investment treaties, see infra at 4.5.

See also Spiermann, ‘Investment Arbitration: Applicable Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1373, 1381, para. 26: Noting that national law “will be confined to certain incidental and preliminary questions (which, as factual questions, must be addressed even if jurisdiction is restricted to treaty claims).” See also ibid., 1373, 1387, para. 43: “Examples of preliminary questions governed by national law are whether an investment is valid, or a contract has been concluded, or terminated” (with references to arbitral practice).

Wälde and Ndi, ‘Stabilizing International Investment Commitments: International Law versus Contract Interpretation’ (1996) 2 Tex. Int’l L. J. 215, 239: “No argument can be advanced by a foreign investor that he had a legitimate expectation in the validity of such clauses negotiated in the face of a questionable legal validity to the extent that he can easily (applying due legal diligence) ascertain their invalidity under national law. Clauses negotiated under the shadow of ultra vires and constitutional invalidity cannot generate valid rights simply by appearance or legitimate reliance on the state agency’s contracting powers.” See also ibid., 215, 242: “A contractual guarantee given by the government without proper authority at the time of the formation of contract can be ultra vires. If so, it cannot be the object of protection under international law.”

See also Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 160, 164; Alvik, Contracting with Sovereignty: State Contracts and International Arbitration (Hart Publishing, 2011) 71–2; Kjos, Applicable Law in Investor-State Arbitration: The Interplay between National and International Law (Oxford University Press, 2013) 171; Sornarajah, The International Law on Foreign Investment (Oxford University Press, 3rd ed., 2010) 291–2. For an overview of the idea of ‘internationalised’ investment contracts, see Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 29 et seq.

See also von Walter, ‘Investor-State Contracts in the Context of International Investment Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 80, 83–4.

See already supra at 4.3.1.4 on the need of parliamentary authorisation when contracting on investment stabilisation.

See ICSID Convention 1965, Art. 52(1)(b). See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 304. For an overview of the ICSID Convention, see already supra at 2.​5.​2.

The Resolution is available at: <http://​justitiaetpace.​org/​resolutions_​alpha.​php?​alpha=​c&​word=​contract> last accessed 11 May 2017. The non-binding Resolutions of the Institute of International Law are brought to the attention of governments, international organisations, and the scientific community. They seek to highlight the characteristics of the lex lata to promote its respect. On possible law choices in State contracts, see also Maniruzzaman, ‘Choice of Law in International Contracts: Some Fundamental Conflict of Law Issues’ (1999) 4 J. Int’l Arb. 141, 166–70.

For examples, see, e.g., Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 100, para. 14.

See Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 150; Herdegen, ‘Rechtsprobleme des international Konzessionswesens – insbesondere aus völkerrechtlicher Sicht’, in Baur and Hobe (eds.), Rechtsprobleme von Auslandsinvestitionen: Konzessionen, Vertragsanpassung, Vergabeverfahren (Nomos, 2003) 13, 20. See also Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 104 (with references to model contracts of Trinidad and Tobago, Cyprus, Bangladesh, Tanzania, and India).

See Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 81, 288; De Brabandere, Investment Treaty Arbitration as Public International Law: Procedural Aspects and Implications (Cambridge University Press, 2016) 30; Caron and Caplan, The UNCITRAL Arbitration Rules: A Commentary (Oxford University Press, 2nd ed., 2013) 116; Delaume, ‘The Proper Law of State Contracts Revisited’ (1997) 1 ICSID Rev. – For. Inv. L. J. 1, 3; Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 214.

See Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 190, para. 3.111.

See also Dumberry, ‘International Investment Contracts’, in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 215, 224; Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 206 et seq. (with examples in arbitral practice); Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 98.

See CSOB v. Slovakia, Decision on Jurisdiction, 24 May 1999, para. 54: “In the absence of a separate [contractual] dispute resolution provision, the reference to the BIT satisfies the requirement that international arbitration, as specified in [the BIT’s dispute settlement clause], is the agreed dispute resolution mechanism. This reference cannot be understood to mean that the contested provision was intended to deal exclusively with the governing law question”. See also ibid., para. 55: “The Tribunal concludes, therefore, that by referring to the BIT, the parties intended to incorporate [the dispute settlement clause] of the BIT by reference into the [investment contract], in order to provide for international arbitration as their chosen dispute-settlement method. The soundness of this conclusion is confirmed by the fact that the provisions of the BIT were well known to the negotiators for both parties.”

See CSOB v. Slovakia, Award, 29 December 2004, paras. 63, 161 (also noting that the incorporation of BIT rules via the applicable-law clause in the contract includes other rules of international law that are relevant for the investment treaty’s interpretation).

OT Investment Agreement 2009, s. 15.14 (emphasis added). On the OT investment contract, see already supra at 4.1.

See, e.g., Kreindler, ‘The Law Applicable to International Investment Disputes’, in Horn (ed.), Arbitrating Foreign Investment Disputes – Procedural and Substantive Legal Aspects (Kluwer Law International, 2004) 401, 402–3; Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 42, para. 21; Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 187, para. 3.97; Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 80.

On the 1979 Resolution adopted by the Institute of International Law, see already supra at 4.3.2.1.

See Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 42, para. 21 et seq.

UNCITRAL Arbitration Rules 1976, as revised in 2010, available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​2010Arbitration_​rules.​html> last accessed 11 May 2017 (‘UNCITRAL Arbitration Rules’).

See, e.g., ICC Rules of Arbitration 2012 (available at: <http://​internationalarb​itrationlaw.​com/​about-arbitration/​international-arbitration-rules/​2012-icc-arbitration-rules/​> last accessed 11 May 2017), Art. 21(1): “The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute”; Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, available at: <http://​www.​sccinstitute.​com/​dispute-resolution/​rules/​> last accessed 11 May 2017 (‘SCC Arbitration Rules 2010’), Art. 22(1): The “Tribunal shall decide the merits of the dispute on the basis of the law(s) or rules of law agreed upon by the parties.” See also LCIA Arbitration Rules 2014 (available at: <http://​www.​lcia.​org/​dispute_​resolution_​services/​lcia-arbitration-rules-2014.​aspx> last accessed 11 May 2017), Art. 22(3). Regional and institutionalised arbitration centres mainly deal with commercial arbitration but do not exclude the conduction of investor-State arbitrations. In fact, a considerable part of international investment disputes is carried out outside the ICSID Convention system based on the rules of commercial arbitration centres (see Cordero-Moss, ‘Commercial Arbitration and Investment Arbitration: Fertile Soil for false Fiends?’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 782, 793).

UNCITRAL Model Law on International Commercial Arbitration 1985 (printed in (1985) 24 ILM 1302), with amendments as adopted in 2006, available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​1985Model_​arbitration.​html> last accessed 11 May 2017 (‘UNCITRAL Model Law on International Commercial Arbitration 2006’), Art. 28(1).

See also Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 187, para. 3.97 (with examples at fn. 114).

Arbitration Law 2003, published in the Official State Journal, Töriin Medeelel, 2003 No. 20.

TOPCO v. Libya (Award) (1977) 17 ILM 1, 11. For further examples, see Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 69.

Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 96. Other commentators even suggest that the principle of party autonomy should be restricted to purely commercial contracts. See Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 39–40.

See already supra at 2.​1.​5.​1.

See already supra at 4.3.1.4 with respect to contractual stabilisation clauses.

See Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 105.

Generally on the role of international law if national law primarily applies, see Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 181 et seq.

See UNCITRAL Arbitration Rules 1976 (available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​2010Arbitration_​rules.​html> last accessed 11 May 2017), Art. 33(1).

See UNCITRAL Arbitration Rules 1976, as revised in 2010 (available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​2010Arbitration_​rules.​html> last accessed 11 May 2017) (‘UNCITRAL Arbitration Rules 2010’), Art. 35(1); UNCITRAL Model Law on International Commercial Arbitration 2006, Art. 28(1); ICSID Convention 1965, Art. 42(1) (see Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 42, para. 39).

See, e.g., Shackleton, ‘The Applicable Law in International Arbitration under the New English Arbitration Act 1996’ (1997) 13 Arb. Int’l 375, 376. See Arbitration Act 1996 (United Kingdom), s. 46(1)(a) (“the law chosen by the parties as applicable to the substance of the dispute”).

Parra, ‘Applicable Law in Investor-State Arbitration’ (2009) 1 TDM 4 (emphasis added). See also Autopista v. Venezuela, Award, 23 September 2003, para. 96.

UNCITRAL Arbitration Rules 2010, Art. 35(1) (emphasis added). See also Caron and Caplan, The UNCITRAL Arbitration Rules: A Commentary (Oxford University Press, 2nd ed., 2013) 118–9.

Both the SCC Arbitration Rules and the ICC Rules of Arbitration stipulate that in the absence of a choice of law the arbitral tribunal shall apply the law or rules of law which it considers to be most appropriate in the case at hand (see SCC Arbitration Rules 2010, Art. 22(1); ICC Rules of Arbitration 2012, Art. 21(1)). See also LCIA Arbitration Rules 2014, Art. 22(3); DIAC Arbitration Rules 2007 (available at: <http://​www.​diac.​ae/​idias/​rules/​> last accessed 11 May 2017), Art. 33(1).

See Mongolian Arbitration Law 2003, Art. 34.3; Code of Civil Procedure 2011 (Netherlands), Art. 1054(2); Code of Civil Procedure 2005 (France), Art. 1496; International Commercial Arbitration Act 2017 (Canada-Ontario), Art. 7.

See supra at 4.3.1.2.

On the interplay of umbrella clauses in international investment treaties and investor-State contracts, see in detail infra at 4.5.

For examples of sources of international law applicable through Article 42(1) ICSID Convention, see Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2010) Art. 42, para. 177.

See Spiermann, ‘Investment Arbitration: Applicable Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1373, 1379, para. 20.

Klöckner v. Cameroon, Decision on Annulment, 3 May 1985, para. 69 (emphasis in the original). See also Amco v. Indonesia, Resubmitted Case, Award, 5 June 1990, para. 40: “If there are no relevant host-state laws on a particular matter, a search must be made for the relevant international laws. And, where there are applicable host-state laws, they must be checked against international laws, which will prevail in case of conflict … In any event, the Tribunal believes that its task is to test every claim of law in this case first against Indonesian law, and then against international law.”

Amco v. Indonesia, Decision on Annulment, 16 May 1986, para. 20. See also Santa Elena v. Costa Rica, Award, 17 February 2000, para. 191; Autopista v. Venezuela, Award, 23 September 2003, para. 207; LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 94; MCI v. Ecuador, Award, 31 July 2007, para. 218; Autopista v. Venezuela, Award, 23 September 2003, para. 102: “Whatever the extent of the role that international law plays under Article 42(1) (second sentence), this Tribunal believes that there is no reason in this case, considering especially that it is a contract and not a treaty arbitration, to go beyond the corrective and supplemental functions of international law.” (emphasis added). It is argued that international law shall prevail over conflicting domestic law. See Reed, Paulsson and Blackaby, Guide to ICSID Arbitration (Kluwer Law International, 2nd ed., 2011) 47; LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 94: “International law overrides domestic law when there is a contradiction since a State cannot justify non-compliance of its international obligations by asserting the provisions of its domestic law.” See also Duke Energy v. Peru, Decision on Jurisdiction, 1 February 2006, para. 162.

For examples of contractual dispute settlement clauses allowing for investor-State arbitration, see, e.g., ICSID, ‘ICSID Model Clauses’ (1993) 1 ICSID Rev. – For. Inv. L. J. 134.

On the three different forms of State consent to investor-State arbitration, see already supra at 2.​4.​3.​1.

See already supra at 2.​4.​3.​2.

See already supra at 2.​5 and supra at 4.1.2.2.

See Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 25, para. 618. See already supra at 2.​4.​3.​1 (“Consent Through Dispute Settlement Provisions in Domestic Investment Laws”) and supra at 3.​3.​2.​1.

See Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 25, para. 620 et seq. International arbitration rules and domestic arbitration laws typically reflect the doctrine of severability. See, e.g., ICSID Convention 1965, Art. 25(1) (“[w]hen the parties have given their consent, no party may withdraw its consent unilaterally”); UNCITRAL Model Law on International Commercial Arbitration 2006, Art. 16(1): “[A]n arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the … tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” See also ICC Rules of Arbitration 2012, Art. 6(4); LCIA Arbitration Rules 2014, Art. 23.1.

See Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 104, para. 2.101.

If the contracting parties are legally entitled to enter into the contract, they are usually also entitled to enter into a contractual arbitration agreement (see Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 81, para. 2.31).

Arbitrations and disputes shall be referred to as ‘public-private’ if one disputing party is a State or public law authority irrespective of the legal nature of the claim or the law applicable to the dispute.

Civil Code 2013 (France), Art. 2060. For an overview of the development of the application of this rule by French courts, see Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014) 728.

See also Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 25, para. 625.

On the review of awards rendered by tribunals operating under the ICSID Convention, see already supra 2.​5.​2.​2.

ICSID Convention 1965, Art. 52(1)(b). See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 304: “Absence of valid consent to arbitration would also mean that there is no jurisdiction and an award on the merits would be an excess of powers.”

See ICSID Convention 1965, Art. 54(1). The enforcing State or court authorities are limited to verifying the authenticity of the ICSID award (see Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 310–11).

Emphasis added.

See already supra at 4.3.2.1.

Emphasis added. With the UNCITRAL Model Law on International Commercial Arbitration (1985) in mind (printed in (1985) 24 ILM 1302), the 2003 Arbitration Law of Mongolia empowers a court of appeal to annul or refuse the enforcement of arbitral awards “if one party to the arbitration agreement did not have [the] legal capability or, [the] arbitration agreement was invalid under the laws of a state, agreed upon by parties, if not agreed upon so under the laws of Mongolia.” See Arbitration Law 2003, published in the Official State Journal, Töriin Medeelel, 2003 No. 20, Art. 43.1.1 in conjunction with Art. 40.2.1. An unofficial English language translation of the 2003 Arbitration Law is available at: <http://​www.​wipo.​int/​edocs/​lexdocs/​laws/​en/​mn/​mn025en.​pdf> last accessed 11 May 2017. See also Cottrill and Buxbaum, ‘Part C: Mongolia’, in Moser (ed.), Arbitration in Asia (Juris Publishing, 2nd ed., 2008) MON-30-3.

See also supra at 2.​5.​1.

See, e.g., Wilske and Fox, ‘Article V(1)(a)’, in Wolff (ed.), New York Convention: Commentary (C.H. Beck, Hart Publishing, Nomos, 2012) 267, 273, para. 103; Nacimiento, ‘Article V(1)(a)’, in Kronke, et al. (eds.), Recognition and Enforcement of Foreign Final Awards: A Global Commentary on the New York Convention (Kluwer Law International, 2010) 205, 220. For references to court decisions which rejected incapacity defences by foreign States and State-related entities, see Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014) 730–1.

The Tribunal in Autopista v. Venezuela adopted the following view: “[A] jurisdictional challenge based on an alleged exclusive jurisdiction of a [national] authority would … violate the well-established principle of international law pursuant to which a state cannot rely on its domestic legislation to renege on a contractual obligation to resort to arbitration.” See Autopista v. Venezuela, Award, 23 September 2003, para. 91.

Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 25, para. 630 (arguing with an analogy to Article 46 of the VCLT: “A State may not invoke the fact that its consent to be bound by a treaty has been expressed in violation of a provision of its internal law regarding competence to conclude treaties as invalidating its consent unless that violation was manifest and concerned a rule of its … law of fundamental importance.”).

See, e.g., Private International Law Act 1987 (Switzerland), Art. 177(2): “A state, or an enterprise held by, or an organization controlled by a state, which is party to an arbitration agreement, cannot invoke its own law in order to contest its capacity to arbitrate or the arbitrability of a dispute covered by the arbitration agreement.”

See already supra at 2.​1.​5.​1 (fn. 107).

See Shan, ‘Part One: General Report’, in Shan (ed.), The Legal Protection of Foreign Investment: A Comparative Study (Hart Publishing, 2012) 3, 36 (table 4). See also Otto and Elwan, ‘Article V(2)’, in Kronke, et al. (eds.), Recognition and Enforcement of Foreign Final Awards: A Global Commentary on the New York Convention (Kluwer Law International, 2010) 345, 350–3 (especially on Arab countries).

ICSID Convention 1965, Art. 52(1)(b). On the review and enforcement of awards rendered by tribunals operating under the ICSID Convention, see already supra at 2.​5.​2.

See already supra at 2.​5.​1.

See also Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 UNTS 38 (‘New York Convention’), Art. II(1) for the pre-award stage: Each State “shall recognize an agreement in writing under which the parties undertake to submit to arbitration … differences … between them in respect of a defined legal relationship … concerning a subject matter capable of settlement by arbitration.” (emphasis added).

See also Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (Kluwer Law International, 3rd ed., 2010) 17 et seq.

See comprehensively infra at 4.5.

See, e.g., supra at 4.3.2.1.

Vivendi v. Argentina, Decision on Annulment, 3 July 2002, para. 101. See also Siemens v. Argentina, Decision on Jurisdiction, 3 August 2004, paras. 174–83; Salini v. Jordan, Decision on Jurisdiction, 29 November 2004, para. 96; Enron v. Argentina, Decision on Annulment, 30 July 2010, para. 134 et seq.; SGS v. Paraguay, Award, 10 February 2012, paras. 75 and 101 et seq.

Arbitral practice is divided on the question of whether contractual forum selections affect a claim’s admissibility or the tribunal’s jurisdiction (see Waibel, ‘Investment Arbitration: Jurisdiction and Admissibility’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1213–5, para. 268 et seq.).

On the annulment of ICSID awards pursuant to Article 52(1) of the ICSID Convention, see supra at 2.​5.​2.

See supra at 4.3.1.2.

See supra at 4.3.1.4.

Emphasis added.

Emphasis added. See also MIL 2013, Art. 1, according to which the purpose of the Mongolian Investment Law is to “protect the legal rights and interests of investors in the territory of Mongolia, to establish a common legislative guarantee for investment, to encourage investment, to stabilize the tax environment, to determine the rights and obligations of investors and the competences of a government body related to investment and to regulate other relations pertaining to investment.” (emphasis added).

General Taxation Law 2008, published in the Official State Journal, Töriin Medeelel, 2008 No. 22.

Emphasis added.

See insofar supra at 4.2.1 and 4.2.4.2.

See already supra at 3.​2.​4.

On the national law invalidity of ultra vires stability promises and the potential lack of legal protection in this regard under international investment treaties, see already supra at 4.3.1.4.

See supra at 4.3.2.1.

See, e.g., OT Investment Agreement 2009, s. 15.14: “[S]hall be governed by and interpreted in accordance with the laws and regulations of Mongolia and international treaties to which Mongolia is a party.”

See supra at 4.3.2.2.

See supra at 4.3.2.2.

For examples, see Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 105, para. 29; Shan, ‘Part One: General Report’, in Shan (ed.), The Legal Protection of Foreign Investment: A Comparative Study (Hart Publishing, 2012) 3, 36, table 4 (on local-law rules and requirements for State contracts in Argentina, China, Greece, Japan, Macau, and the United States).

See supra at 4.3.2.3.

On Article 20.4 MIL, see already supra at 4.2.3.

Emphasis added.

See also Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 97, para. 2.73. See, e.g., OT Investment Agreement 2009, s. 14.2: “If a dispute is not settled by negotiation …, it shall be resolved by binding arbitration in accordance with the procedures under the Arbitration Rules of the United Nations Commission on International Trade Law (the ‘UNCITRAL Rules’) as in force at the time of the dispute.”

See already supra at 4.3.2.2.

See infra at 4.4.3.

See Moses, Principles and Practice of International Commercial Arbitration (Cambridge University Press, 2nd ed., 2012) 48; Silberman and Ferrari, ‘Getting to the Law Applicable to the Merits in International Arbitration and the Consequences of Getting it Wrong’, in Ferrari and Kröll (eds.), Conflict of Laws in International Arbitration (Sellier, 2011) 257, 260–1.

Constitution of Mongolia 1992, published in the Official State Journal, Töriin Medeelel, 1992 No. 1 (‘Constitution’).

On express local-law requirements for public law contracts in other constitutions, see supra at 4.3.2.3.

Emphasis added.

See also MNCCI, Arbitration of Mongolia (2010) 5: “The parties are free to choose the substantive law of the agreement.” See also Cottrill and Buxbaum, ‘Part C: Mongolia’, in Moser (ed.), Arbitration in Asia (Juris Publishing, 2nd ed., 2008) MON-20-1. The same applies to arbitrations conducted at the international level. Both the UNCITRAL Arbitration Rules and the ICSID Convention require arbitral tribunals to use the ‘rules of law’ as chosen as the applicable law by the disputing parties.

Mandatory law references within the 2013 Mongolian Investment Law include, for example, Article 3.1.5 (referring to corporate laws), Article 3.1.7 (referring to taxation), Article 6.6 (referring to IP), Article 7.2.9, Article 12.1.5, Article 12.1.6, and Article 17.2.4 (referring to environmental laws).

See supra at 4.3.2.3.

For a different view, see Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 105 (national law references as an indicator for the exclusive application of national law to State contracts).

The situation is different where foreign investors are covered by international investment treaties, which then directly apply through the domestic legal order of Mongolia. See Constitution 1992, Art. 10.3: “[T]reaties … shall become effective as domestic legislation upon the entry into force of the laws on their ratification or accession” and prevail over conflicting domestic laws (on the supremacy of international treaty law with respect to possibly conflicting Mongolian laws, see already supra at 2.​1.​5.​3).

On the complementary role of international law in cases where national law primary applies, see Kjos, Applicable Law in Investor-State Arbitration (Oxford University Press, 2013) 189 et seq.

Emphasis added.

See already supra at 4.2.3.

See also Gaillard, ‘Use of General Principles of International Law in Long-Term Contracts’ (1999) 3 Int’l Bus. Law. 214; Besch, ‘Typical Questions Arising within Negotiations’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 93, 97.

See already supra at 2.​1.​5.​1.

See supra at 4.3.3.2.

Civil Procedure Code 2002, published in the Official State Journal, Töriin Medeelel, 2002 No. 8.

Arbitration Law 2003, published in the Official State Journal, Töriin Medeelel, 2003 No. 20. An unofficial English language translation is available at: <http://​www.​wipo.​int/​edocs/​lexdocs/​laws/​en/​mn/​mn025en.​pdf> last accessed 11 May 2017.

Emphasis added. On arbitration in Mongolia, see also Cottrill and Buxbaum, ‘Part C: Mongolia’, in Moser (ed.), Arbitration in Asia (Juris Publishing, 2nd ed., 2008); Chapaev and Bradautanu, ‘Current Development: International Commercial Arbitration in the CIS and Mongolia’ (2006) 17 Am. Rev. Int’l Arb. 411.

Usually, this only follows from an overall picture of the national and international arbitration framework.

See ibid., Art. 1.1: “The purpose of this Law is to regulate matters related to resolving … civil legal disputes arisen between the participants of civil legal relations.” (emphasis added). See also Civil Code 2002, Art. 7.2 (“foreign citizens … participating in the civil legal relationship shall be deemed as citizens”) (emphasis added).

See supra at 4.4.3.1.

See supra at 3.​3.​2.​4.

Emphasis added.

Emphasis added.

Multi-tier-dispute-resolution clauses require negotiations before arbitration and help to preserve a cordial relationship as often the entire transaction is doomed to fail once arbitration has been initiated (see Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 218). See, e.g., OT Investment Agreement 2009, s. 14.1: “Any disputes between the Parties arising out of or in connection with this Agreement shall be settled by the Parties first attempting in good faith to negotiate a resolution and if a negotiated resolution … is not agreed to within 60 (sixty) Working Days … or such other time period as may be agreed, then the dispute shall be settled [by arbitration] in accordance with Clause 14.2.”

Generally on the scope of arbitration agreements, see Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 92 et seq.

See China-Mongolia BIT 1991, Art. 8. See already supra at 2.​4.​3.​4 (“Narrow Dispute Settlement Provisions in International Investment Treaties”).

See in detail supra at 3.​3.​1.

For a case summary, see already supra at 2.​4.​4.​4.

Foreign Investment Law 1993, published in the Official State Journal, Töriin Medeelel, 1993 No. 4–5 (‘Foreign Investment Law 1993’).

Foreign Investment Law 1993, published in the Official State Journal, Töriin Medeelel, 1993 No. 4–5, as amended on 3 January 2002 (‘Foreign Investment Law 2002’).

See supra at 3.​3.​1.​2 (“Evaluation of the Domestic Investment Law”).

Emphasis added.

On the question of whether umbrella clauses in international investment treaties cover erga omnes obligations assumed by host States vis-à-vis foreign investors in domestic (investment) laws, see infra at 4.5.2.

See also Law on Concessions 2010, Art. 34.3: “Any disputes between the parties to the concession agreement shall be settled in the manner prescribed in the agreement.” (emphasis added). With respect to non-contractual disputes related to the use of Mongolian land by companies with foreign investment, see already supra at 3.​2.​5.​1.

Foreign Investment Law 1993, Art. 25 and Foreign Investment Law 2002, Art. 25 (emphasis added). However, the provisions’ ultimate repeal might also be taken as an argument against the arbitrability of statutory claims based on contractual arbitration clauses. On the 1993 and 2002 Foreign Investment Law versions, see already supra at 3.​2.​1.​1 and 3.​2.​1.​2.

See already supra at 2.​4.​3.​3 (“Scope of Consent to Investment Treaty-Based Investor-State Arbitration”).

Emphasis added. Arbitration of investment treaty claims may still take place by way of initiating inter-State proceedings (see China-Mongolia BIT 1991, Art. 7(2)). For an overview of the here relevant and controversial question of whether most-favoured-nation clauses in international investment treaties apply to more favourable procedural conditions in third-party investment treaties, see already supra at 2.​4.​2.​2 (“The Extension of Most-Favoured Nation Treatment to Dispute Settlement Provisions”).

For example, one commentator asserts that controversies over investment treaty matters other than the amount of compensation for expropriation, “such as the existence of expropriation itself, or breaches of treatment obligations, were to be settled in domestic courts, or could be submitted to arbitration by mutual consent of the investors and national authorities” (Chaisse, ‘The Regulation of Trade-Distorting Restrictions in Foreign Investment Law’ in Hermann and Terhechte (eds.), 2012 European Yearbook of International Economic Law (Springer, 2012) 159, 185). Similarly: Cymrot, ‘Investment Disputes with China’ (2006) 3 DRJ 80, 83. Another commentator noted the following: “According to the Chinese BITs concluded before 2000, no dispute concerning other matters can be submitted, without, for example, a special mutual agreement, which in reality is a special consent by the Chinese Government to international arbitration … For this reason, it is unlikely that China would be confronted with such proceedings” (Xiao, ‘Chinese BITs in the Twenty-First Century: Protecting Chinese Investment’, in Chaisse and Gugler (eds.), Expansion of Trade and FDI in Asia: Strategic and Policy Challenges (Routledge, 2011) 122, 131). See also Carter, ‘The Protracted Bargain: Negotiating the Canada-China Foreign Investment Promotion and Protection Agreement’, in McRae and de Mestral (eds.), Canadian Yearbook of International Law 2009 (University of British Colombia Press, 2010) 197, 246): The limited consent to arbitrate investor-State disputes requires “that a separate consent must be agreed upon by China either in the pre-investment phase or during the actual dispute.”

This implies that disputes over investor-State contracts are also attached to the national courts of the host State (see already supra at “Claims in Relation to Investment Contracts”). On the BIT clause’s application in recent arbitral practice, see already supra at 2.​4.​4.​3.

See Constitution 1992, Arts. 38.2 and 38.9. See also ibid., Arts. 25.1 and 25.15 (according to which the Parliament decides “to ratify and denounce international agreements to which Mongolia is a Party”).

The ‘internal invalidity’ of BIT-circumventing arbitration agreements must be distinguished from questions of their external binding effect (on the invocation of ‘incapacity defences’ by host States, see already supra at 4.3.3.2 (“Incapacity of State Entities to Enter into Arbitration Agreements”)).

See supra at 4.4.2.2.

See supra at 4.2.3.

See supra at 4.4.2.2.

See China-Mongolia BIT 1991, Art. 8(3), according to which only disputes over the amount of compensation for expropriation can be submitted to ad hoc investment treaty-based investor-State arbitration.

For an overview of the history of umbrella clauses in international investment treaties and investment treaty practice, see Sinclair, ‘The Origins of the Umbrella Clause in the International Law of Investment Protection’ (2004) 4 Arb. Int’l 411; Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 440 et seq.

See Gill, Gearing and Birt, ‘Contractual Claims and Bilateral Investment Treaties: A Comparative Review of the SGS Cases’ (2004) 5 J. Int’l Arb. 397 (at fn. 31). See also UNCTAD, Bilateral Investment Treaties 1995–2006: Trends in Investment Rule Making (UN, 2007) 73.

See, e.g., Noble Ventures v. Romania, Award, 12 October 2005, para. 54; Sempra Energy v. Argentina, Decision on Objections to Jurisdiction, 11 May 2005, para. 101; LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 170; SGS v. Philippines, Decision on Jurisdiction, 29 January 2004, para. 128; Schreuer, ‘Travelling the BIT-Route – Of Waiting Periods, Umbrella Clauses and Forks in the Road’ (2004) 2 JWIT 231, 250; Dolzer and Stevens, Bilateral Investment Treaties (Kluwer Law International, 1995) 81–2; Salacuse, The Three Laws on International Investment (Oxford University Press, 2103) 391.

See Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92. Cancellations and alleged breaches of State contracts belong to the most challenged host State measures in international investment arbitration. See UNCTAD, ‘Investor-State Dispute Settlement: Review of Developments in 2014’ (UNCTAD IIA Issue Note No. 2, United Nations UNCTAD, May 2015).

Comprehensively: Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1; Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887.

SGS v. Pakistan, Decision on Jurisdiction, 6 August 2003, para. 166 (similarly: El Paso Energy v. Argentina, Decision on Jurisdiction, 27 April 2006, para. 82).

See ibid., paras. 169, 170. See also Joy Mining Machinery v. Egypt, Decision on Jurisdiction, 6 August 2004, para. 81. The Tribunal in SGS v. Philippines opposed this view by arguing that “it is difficult to accept that the same language in other Philippines BITs is legally operative, but that it is legally inoperative in the Swiss-Philippines BIT merely because of its location” (SGS v. Philippines, Decision on Jurisdiction, 29 January 2004, para. 124).

On the debate and for references to both arbitral practice and legal literature, see Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 922 et seq.

See Joy Mining v. Egypt, Decision on Jurisdiction, 6 August 2004, para. 72 (“a basic general distinction can be made between commercial aspects of a dispute and other aspects involving the existence of some form of State interference with the operation of the contract involved”); Pan American Energy v. Argentina, Decision on Jurisdiction, 27 July 2006, paras. 108 and 109; Sempra Energy v. Argentina, Award, 28 September 2007, paras. 305–14; CMS v. Argentina, Award, 12 May 2005, paras. 296–303.

See already Mann, ‘British Treaties for the Promotion and Protection of Investments’ (1981) 52 BYIL 241, 246 (noting that the umbrella clause “protects the investor against any interference with his contractual rights, whether it results from a mere breach of contract or a legislative or administrative act”); Zolia, ‘Effect and Purpose of “Umbrella Clauses” in Bilateral Investment Treaties: Unresolved Issues’ (2005) 2 TDM 34–6; Yannaca-Small, ‘What about this “Umbrella Clause”’, in Yannaca-Small (ed.), Arbitration under International Investment Agreements (Oxford University Press, 2010) 479, 495; Dolzer and Stevens, Bilateral Investment Treaties (Kluwer Law International Law International, 1995) 81–2. For further references, see Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 925, fn. 241.

SGS v. Paraguay, Decision on Jurisdiction, 12 February 2010, para. 168. See also Noble Ventures v. Romania, Award, 12 October 2005, paras. 60–1; Duke Energy v. Ecuador, Award, 18 August 2008, paras. 320–1; Burlington Resources v. Ecuador, Decision on Jurisdiction, 22 April 2005, para. 190: “Ecuador alleges that Burlington’s claims do not involve the exercise of sovereign power. This requirement, however, has no support in the text of the umbrella clause of the Treaty. Moreover, while different views have been expressed on this matter … the Tribunal considers that umbrella clauses may apply even if no exercise of sovereign power is involved.” See also Eureko v. Poland, Partial Award, 19 August 2005, para. 246: “The ‘ordinary meaning’ – of a provision prescribing that a State ‘shall observe any obligations it may have entered into’ with regard to certain foreign investments is not obscure. The phrase, ‘shall observe’ is imperative and categorical. ‘Any’ obligations is capacious; it means not only obligations of a certain type, but ‘any’ – that is to say, all – obligations entered into with regard to investments of investors of the other Contracting Party.”

Gaillard, ‘Investment Treaty Arbitration and Jurisdiction over Contract Claims – The SGS Cases Considered’, in Weiler (ed.), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May, 2005) 325, 345 (with further references in fn. 52). See also Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 907 et seq.

Draft Articles on Responsibility of States for Internationally Wrongful Acts 2001, printed in: ‘Report of the International Law Commission on the Work its Fifty-Third Session (23 April-1 June and 2 July-10 August 2001)’ [2001] vol. II(2) UNYBILC 1, 26; Crawford, The International Law Commission’s Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press, 2002) 61 et seq.

See Noble Ventures v. Romania, Award, 12 October 2005, paras. 50–2; SGS v. Philippines, Decision on Jurisdiction, 29 January 2004, para. 116; Eureko v. Poland, Partial Award, 19 August 2005, para. 248; Gaffney and Loftis, ‘The “Effective Ordinary Meaning” of BITs and the Jurisdiction of Treaty-Based Tribunals to Hear Contract Claims’ (2007) 1 JWIT 5, 12; Zolia, ‘Effect and Purpose of “Umbrella Clauses” in Bilateral Investment Treaties: Unresolved Issues’ (2004) 5 TDM 34–5; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 39.

See also Eureko v. Poland, Partial Award, 19 August 2005, para. 258; Schreuer, ‘Travelling the BIT-Route – Of Waiting Periods, Umbrella Clauses and Forks in the Road’ (2004) 2 JWIT 231, 253; Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 922.

See Gill, Gearing and Birt, ‘Contractual Claims and Bilateral Investment Treaties: A Comparative Review of the SGS Cases’ (2004) 5 J. Int’l Arb. 397, 407; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 39.

Noble Ventures v. Romania, Award, 12 October 2005, para. 82. See also Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 927.

See Talus, ‘Revocation and Cancellation of Concessions, Operating Licences, and Other Beneficial Administrative Acts’, in Schill (ed.), International Investment Law and Comparative Public Law (Oxford University Press, 2010) 453, 453–4; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 271. See also Gritón Salias, ‘Do Umbrella Clauses Apply to Unilateral Undertakings?’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 490.

See, e.g., Austria-Mongolia BIT 2001, Art. 7(2).

See Greece-Mexico BIT 2000, Art. 19(2); Denmark-Kuwait BIT 2001, Art. 3(2) (“any particular investment of an investor”); Energy Charter Treaty 1994, Art. 10(1): “Each Contracting Party shall observe any obligations it has entered into with an Investor or an Investment of an Investor of any other Contracting Party.”

See also Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 945, para. 169.

SGS v. Philippines, Decision on Jurisdiction, 29 January 2004, para. 121. See also Enron v. Argentina, Award, 22 May 2007, para. 274.

While arbitral tribunals typically focussed on the wording of umbrella clause, the legal literature also refers to a functional understanding. The clause, as argued, aims at protecting the “private ordering between host States and foreign investors”, whereas, from the investor’s point of view, it makes no difference whether the investment operation is backed up by a contract, some unilaterally granted licence or other public law guarantee. Every of these instruments can be a main reason why the investment is made (Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 90, 92; see also ibid.: In order to be covered by an umbrella clause, it would therefore be decisive whether the unilaterally promise assumed by the host State serves as a “functional substitute for an investor-State contract”).

Khan Resources v. Mongolia, Decision on Jurisdiction, 25 July 2012, para. 438 (emphasis added). See also Trevino and Peterson, ‘A Look inside the Liability and Damages Holdings in the Khan Resources v. Mongolia Uranium Arbitration’ on IAReporter (12 May 2015) (noting that “the Tribunal also held, in a terse fashion, that the respondents were liable … under … the umbrella clause.”) (emphasis added).

Emphasis added.

Caratube International v. Kazakhstan, Decision on Annulment, 21 February 2014, para. 91. On relevant case-law, see, e.g., Bigge, ‘Iura Novit Curia in Investment Treaty Arbitration: May? Must?’ on Kluwer Arbitration Blog (29 December 2011).

SGS v. Pakistan, Decision on Jurisdiction, 6 August 2003, para. 168. On contractual forum selection clauses, see already supra at 4.3.3.3. See also Cremades and Cairns, ‘Contract and Treaty Claims and Choice of Forum in Investment Disputes’, in Horn (ed.), Arbitrating Foreign Investment Disputes – Procedural and Substantive Legal Aspects (Kluwer Law International, 2004) 325.

Ibid., para. 148. Later it was noted that “a continued stay of the proceedings is the appropriate way forward, being a cost-effective and efficient in the treatment of the issue of admissibility” (see BIVAC v. Paraguay, Further Decision on Jurisdiction, 9 October 2012, para. 290).

See, e.g., Cremades and Cairns, ‘Contract and Treaty Claims and Choice of Forum in Foreign Investment Disputes’, in Horn (ed.), Arbitrating Foreign Investment Disputes – Procedural and Substantive Legal Aspects (Kluwer Law International, 2004) 325, 341; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 63–70; Van Haersolte-Van Hof and Hoffmann, ‘The Relationship between International Tribunals and Domestic Courts’, in Muchlinski, Ortino and Schreuer (eds.), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 964, 983.

Ibid., para. 110 (see also ibid., para. 103: “A state cannot rely on an exclusive jurisdiction clause in a contract to avoid the characterization of its conduct as internationally unlawful under a treaty.”).

Ibid., para. 181 (see also the Declaration (Dissenting Opinion) of Antonio Crivellaro of 29 January 2004, para. 2 et seq., available at: <https://​www.​italaw.​com/​arbitrators/​antonio-crivellaro> last accessed 11 May 2017); Bayindir v. Pakistan, Decision on Jurisdiction, 14 November 2005, para. 267. See also Gaillard, ‘Investment Treaty Arbitration and Jurisdiction Over Contract Claims – The SGS Cases Considered’, in Weiler (ed.), International Investment Law and Arbitration – Leading cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May, 2005) 325, 345.

See also Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 935, para. 131.

See also Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 66–7. Comprehensively on jurisdiction and admissibility in light of contractual forum selections, see Sinclair, ‘Umbrella Clause’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 887, 934 et seq.

See Japan-Mongolia EPA 2015, ch. 10, Art. 10.1.1, note 1. On the relationship between the 2001 Japan-Mongolia BIT and the 2015 Japan-Mongolia EPA, see supra at 2.​3.​2.​3.

OECD Draft Convention on the Protection of Foreign Property 1967, reprinted in (1968) 7 ILM 117 et seq. For an overview of the Draft Convention, see already supra at 2.​1.​3.​2.

See Sinclair, ‘The Origins of the Umbrella Clause in the International Law of Investment Protection’ (2004) 4 Arb. Int’l 411, 427, 433–4; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 277; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 57. See OECD Draft Convention on the Protection of Foreign Property 1967, reprinted in (1968) 7 ILM 117 et seq., Art. 2: “Each Party shall at all times ensure the observance of undertakings given by it in relation to property of nationals of any other Party.”

See Crawford, ‘Treaty and Contract in Investment Arbitration’ (2008) 3 Arb. Int’l 351, 353. On the use of awards rendered based on international investment treaties as precedents, see Commission, ‘Precedent in Investment Treaty Arbitration’ (2007) 24 J. Int’l Arb. 129.

See, e.g., CMS v. Argentina, Award, 12 May 2005, paras. 296–303; El Paso Energy v. Argentina, Decision on Jurisdiction, 27 April 2006, paras. 71–88; Wälde, ‘The “Umbrella Clause” in Investment Arbitration: A Comment on Original Intentions and Recent Cases’ (2005) JWIT 183.

On tax-rate-stabilisation certificates issued under the 2013 Mongolian Investment Law, see already supra at 3.​2.​4.​2.

See Dolzer and Stevens, Bilateral Investment Treaties (Kluwer Law International, 1995) 82; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 8.

See Impregilo SpA. v. Pakistan, Decision on Jurisdiction, 22 April 2005, para. 223 (concerning a contract concluded with a Pakistani Water and Power Development Authority). On State attribution and umbrella clauses in international investment treaties, see Hobér, ‘State Responsibility and Attribution’, in Muchlinski, Ortino and Schreuer (eds.), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 549, 575–82. See also Crawford, ‘Investment Arbitration and the ILC Articles on State Responsibility’ (2010) 1 ICSID Rev. – For. Inv. L. J. 127.

Schmidberger v. Austria (C-112/00) [2003] ECR I-5659, para. 57. See also Brown, ‘Case C-112/00, Eugen Schmidberger, Internationale Transporte und Planzüge v. Austria’ (2003) 6 CMLRev. 1499.

See also Acconci, ‘Most-Favoured-Nation-Treatment’, in Muchlinski, Ortino and Schreuer (eds.), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 363; Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009) 121–96. See already supra at 2.​4.​2.​2.

See already supra at 2.​4.​2.​2 (“The Extension of Most-Favoured-Nation Treatment to Dispute Settlement Provisions”).

See Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 570; Impregilo v. Argentina, Award, 21 June 2011, paras. 185–7; Abaclat v. Argentina, Decision on Jurisdiction, 4 August 2011, para. 322; Siag v. Egypt, Award, 1 June 2009, para. 464; Impregilo v. Pakistan, Decision on Jurisdiction, 22 April 2005, para. 223.

SGS v. Philippines, Decision on Jurisdiction, 29 January 2004, para. 124. Many umbrella clauses in international investment treaties of Mongolia are located at the beginning of the investment treaty (see, e.g., Denmark-Mongolia BIT 1995, Art. 2(3); Mongolia-United States of America BIT 1996, Art. II(2)(c); Mongolia-Netherlands BIT 1995, Art. 3(3); Mongolia-United Kingdom BIT 1991, Art. 2(2); Mongolia-Sweden BIT 2003, Art. 2(4); Mongolia-United Arab Emirates BIT 2001, Art. 3(6)).

See EDF v. Argentina, Decision on Annulment, 5 February 2016, para. 237 (stating that the investment treaty’s most-favoured-nation clause is “broad enough to embrace the use of an umbrella clause in another BIT” and that the “umbrella clause is part of the same genus of provisions on substantive protection of investments as the fair and equitable treatment clause and other similar provisions which feature in the Argentina-France BIT.”) (emphasis in the original).

See Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 466; Schreuer, ‘Travelling the BIT Route – Of Waiting Periods, Umbrella Clauses and Fork in the Road’ (2004) 2 JWIT 231, 250–1; Schill, ‘Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties’ (2009) 1 Minn. J. Int’l L. 1, 60.

Shan, ‘Umbrella Clauses and Investment Contracts under Chinese BITs: Are the Latter Covered by the Former?’ (2010) 2 JWIT 135, 145. That host States can breach substantive terms and interfere with procedural commitments (e.g. frustrate an investor’s contractual right to arbitrate) is also noted by Gazzini and Tanzi, ‘Handle with Care: Umbrella Clauses and MFN Treatment in Investment Arbitration’ (2013) 14 JWIT 978, 985.

See also Reinisch, ‘Most Favoured Nation Treatment’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 807, 809. On most-favoured-nation clauses in international investment treaties of Mongolia, see already supra at 2.​4.​2.​2 (“Evaluation of International Investment Treaties”).

See China-Mongolia BIT 1991, Art. 3. For further most-favoured-nation clauses in Mongolian investment treaties that contain ratione materiae limitations, see already supra at 2.​4.​2.​2 (“Evaluation of International Investment Treaties”).

See supra at 2.​4.​3.​3 (“Scope of Consent to Investment Treaty-Based Investor-State Arbitration”).

See, e.g., Mongolia-United Kingdom BIT 1991, Art. 8(1): “Disputes between a national or company of one Contracting Party and the other Contracting Party concerning an obligation of the latter under this Agreement in relation to an investment of the former.” (emphasis added).

See also Alexandrov, ‘Breach of Treaty Claims and Breach of Contract Claims: Is It Still Unknown Territory?’ in Yannaca-Small (ed.), Arbitration under International Investment Agreements: A Guide to the Key Issues (Oxford University Press, 2010) 323, 328; Dumberry, ‘International Investment Contracts’ in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 215, 234.

See already supra at 2.​4.​3.​4 (“Wide Dispute Settlement Provisions in International Investment Treaties”).

For an overview, see Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92; Griebel, ‘Jurisdiction Over “Contract Claims” in Treaty-Based Investment Arbitration on the Basis of Wide Dispute Settlement Clauses in Investment Agreements’ (2007) 5 TDM 1; Gaillard, ‘Investment Treaty Arbitration and Jurisdiction Over Contract Claims – The SGS Cases Considered’, in Weiler (ed.), International Investment Law and Arbitration – Leading cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May, 2005) 325, 330–6; Voss, The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Martinus Nijhoff, 2011) 68–81.

Schreuer, ‘Investment Treaty Arbitration and the Jurisdiction over Contract Claims – The Vivendi I Case Considered’, in Weiler (ed.), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May, 2005) 281, 296. See also Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92; Alexandrov, ‘Breach of Treaty Claims and Breach of Contract Claims: Is It Still Unknown Territory?’ in Yannaca-Small (ed.), Arbitration under International Investment Agreements: A Guide to the Key Issues (Oxford University Press, 2010) 323, 331–2; Gaffney and Loftis, ‘The “Effective Ordinary Meaning” of BITs and the Jurisdiction of Treaty-Based Tribunals to Hear Contract Claims’ (2007) 1 JWIT 5, 14, 24–7; Spiermann, ‘Applicable Law’, in Muchlinski, Ortino and Schreuer (eds.), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 89, 103.

See Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92, 97.

Salini v. Morocco, Decision on Jurisdiction, 23 July 2001, paras. 59, 61 (emphasis added). See also RFCC v. Morocco, Decision on Jurisdiction, 16 July 2001, para. 68; Impregilo v. Pakistan, Decision on Jurisdiction, 22 April 2005, para. 188; Tokios Tokelés v. Ukraine, Decision on Jurisdiction, 29 April 2004, para. 52.

Griebel, ‘Jurisdiction Over “Contract Claims” in Treaty-Based Investment Arbitration on the Basis of Wide Dispute Settlement Clauses in Investment Agreements’ (2007) 5 TDM 1, 14. See also Gaillard, ‘Investment Treaty Arbitration and Jurisdiction Over Contract Claims – The SGS Cases Considered’, in Weiler (ed.), International Investment Law and Arbitration – Leading cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May, 2005) 325, 336: “There is always a danger in divorcing the jurisdictional provisions from the substantive terms of the same treaty in that it may suggest that the arbitral tribunal has jurisdiction but is invited to rule in a vacuum. This tension does not exist, however, when the treaty contains an observance of undertakings clause pursuant to which the breach of a contract entered into by the State party can also be characterised as a treaty violation.”

See Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92, 102–3 (emphasising that a multitude of legal and practical differences exists between contractual liability under national law and the State’s liability under international law, including matters of interpretation, defences, and remedies).

See also Gaffney and Loftis, ‘The “Effective Ordinary Meaning” of BITs and the Jurisdiction of Treaty-Based Tribunals to Hear Contract Claims’ (2007) 1 JWIT 5, 14; Sinclair, ‘Bridging the Contract/Treaty Divide’, in Binder, et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press, 2009) 92, 95.

Japan-Mongolia BIT 2001, Art. 1(1)(b) (emphasis added). The 2015 Japan-Mongolia EPA introduces an umbrella clause (see Japan-Mongolia EPA 2015, ch. 10, Art. 10.5.2).

See, e.g., Malaysia-Mongolia BIT 1995, Art. 1; Mongolia-United Kingdom BIT 1991, Art. 1; Czech Republic-Mongolia BIT 1998, Art. 1; Mongolia-Republic of Korea BIT 1991, Art. 1; Mongolia-Sweden BIT 2003, Art. 1(e) (according to which investment means any kind of asset including “business concessions conferred by law, administrative decisions or under contract”). Similarly: Croatia-Mongolia BIT 2006, Art. 1(e); Denmark-Mongolia BIT 1995, Art. I(1)(v); Finland-Mongolia BIT 2007, Art. I(1)(f); Indonesia-Mongolia BIT 1997, Art. I(1)(e); Israel-Mongolia BIT 2003, Art. I(1)(e); Mongolia-Singapore BIT 1995, Art. (I)(1)(e). See also Mongolia-United Arab Emirates BIT 2001, Art. 1(d): Investment includes every kind of right “conferred by law, contract or by virtue of any licenses or permits granted pursuant to law, including rights to prospect, explore, extract, or utilize natural resources, and rights to undertake other economic or commercial activities.”

See Amoco v. Iran (Award) (1987) 15 Iran-US CTR 189, 243: “Rather private parties who contract with a government are only entitled to fair compensation when measures of public policy are implemented at the expense of their contract rights.” See also Stran Greek Refineries v. Greece (Judgment) (1994) 19 EHRR 293, 328–9: “Indeed according to the case-law of international courts and of arbitration tribunals any State has a sovereign power to amend or even terminate a contract …, provided it pays compensation.”