The Origin and Evolution of Investment Treaty Standards Stability Value and Reasonableness Federico Ortino Ebook Full Chapter

The Origin and Evolution of Investment
Treaty Standards: Stability, Value, and

Reasonableness Federico Ortino
Visit to download the full and correct content document:
https://ebookmass.com/product/the-origin-and-evolution-of-investment-treaty-standar
ds-stability-value-and-reasonableness-federico-ortino/
The Origin and Evolution of Investment
Treaty Standards
The Origin and Evolution
of Investment Treaty
Standards
Stability, Value, and Reasonableness
F E D E R IC O O RT I N O
1
3
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© Federico Ortino 2019
The moral rights of the author have been asserted
First Edition published in 2019
Impression: 1
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
by law, by licence or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above
You must not circulate this work in any other form
and you must impose this same condition on any acquirer
Crown copyright material is reproduced under Class Licence
Number C01P0000148 with the permission of OPSI
and the Queen’s Printer for Scotland
Published in the United States of America by Oxford University Press
198 Madison Avenue, New York, NY 10016, United States of America
British Library Cataloguing in Publication Data
Data available
Library of Congress Control Number: 2019947385
ISBN 978–0–19–884263–7
Printed and bound by
CPI Group (UK) Ltd, Croydon, CR0 4YY
Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
Acknowledgements
This book has been a long time coming. It is my attempt at understanding a

very chaotic and evolving area of international law. This journey started in the
International Investment Agreements Section at UNCTAD in 2003, continued
in the Investment Treaty Forum at BIICL between 2005 and 2007 and has perse-
vered at King’s College London ever since. Along the way, many people have, in
different ways, contributed to the making of the book. In particular, I would like
to thank Anna Joubin-Bret, Professor Peter Muchlinski, Professor Christoph
Schreuer, Audley Sheppard, and Professor M Sornarajah for having introduced me
to the world of investment treaties. For their friendship and insights, I am more-
over greatly indebted to the many colleagues at King’s College London and beyond,
in particular, Lorand Bartels, Megan Bowman, David Caron, Jan Dalhuisen, Piet
Eeckhout, Jessica Gladstone, Florian Grisel, Ori Herstein, Holger Hestermeyer,
Christoph Kletzer, Petros Mavroidis, Cian Murphy, Nikki Palmer, Mona Pinchis-
Paulsen, Lauge Poulsen, Chris Townley, Irit Samet, Karl Sauvant, Michael Schillig,
Thomas Schultz, Anthony Sinclair, Johnny Veeder, Guglielmo Verdirame, Gaetan
Verhoosel, Philippa Webb, Sam Wordsworth and Lorenzo Zucca. I would like to
thank Ceyda Knoebel and two of my former doctoral students, Emily Lydgate and
Maria Laura Marceddu, for their invaluable research assistance. I would also like to
thank all of my students, who have been a big part of this journey and endured sto-
ically my protracted efforts at ordering chaos.
Finally, I am grateful to my family, in particular, my wife, Maria, and our chil-
dren, Noah, Elias and Greta, for their unconditional love and support and for
helping me keep things in perspective. This book is dedicated to them.
Federico Ortino
London, July 2019
Contents
Table of Cases xi
List of Abbreviations xvii
Introduction 1
I. Guarantees of Legal Stability in the Strict Sense 5
Introduction 5
A. Respect of Host State’s Undertakings with Regard to Foreign
Investments and the Umbrella Clause 8
B. Regulatory Stability in the Strict sense and (the Little Known
Case of) Investment Treaties’ Stabilization Clauses 14
C. Strict Stability through the Fair and Equitable Treatment (FET)
Standard 19
1. Linking FET and legal stability in the strict sense: the early attempt 20
2. The majority of investment tribunals have rejected the link between
FET and stability in the strict sense 25
3. FET, regulatory change and recent arbitral practice: still
in muddy waters 33
(a) Some tribunals’ failure to take a clear position on whether
or not FET includes a strict stability obligation 33
(b) Some tribunals’ failure to clearly address the precise ambit of,
and relationship between, the obligation to provide a stable legal
framework and the obligation to protect the investor’s legitimate
expectations 37
(c) Some tribunals’ failure to clarify the kind of regulatory change
that qualifies for a breach of the FET provision 39
D. Recent Treaty Practice 43
Preliminary Conclusions 46
II. Protecting the Value of Investments: The Expropriation Provision 49
Introduction 49
A. The Origin of the Concept of Expropriation in Modern Investment
Treaties 53
1. Textual emphasis on adverse ‘effect’ on the foreign ‘investment’ 53
2. What relevance for the host State measure’s public purpose? 57
B. Indirect Expropriation in Investment Arbitral Practice: ‘Sole-Effect’
versus ‘Police Powers’ 61
1. Initial interpretations and the exclusive relevance of the measure’s
(adverse) economic effect 61
viii Contents
2. The relevance of the measure’s purpose in assessing the existence

of an indirect expropriation 65
3. ‘Sole effect’ versus ‘police powers’: an enduring but evolving
inconsistent arbitral tribunal practice 68
C. ‘Expropriatory Effect’: A Concept in Search of a Definition 72
1. The threshold question: substantial versus total deprivation 73
2. The denominator problem 76
3. The object of deprivation: property interest, control or value? 81
(a) Implications of investment treaties’ emphasis on
‘effect’: substance over form 81
(b) Early arbitral practice: a broad view with a few dissenting
voices 84
(c) Arbitral practice beyond the early years: conflicting views
remain and minority dissenting voices become louder 87
D. Recent Treaty Practice 93
III. Ensuring Reasonableness in the Conduct of Host States 101
Introduction 102
A. The Origin of Reasonableness-Based Provisions in Modern
Investment Treaties 105
1. Express references in early investment protection instruments
to ‘standards’ 105
2. What is the ‘original’ meaning of ‘fair’, ‘equitable’, ‘unreasonable’,
‘arbitrary’, ‘discriminatory’? Clues pointing to extensive protection 108
(a) No clear link between investment treaty standards and
customary law 108
(b) Overlapping nature of investment treaty standards 111
(c) Open-ended nature of investment treaty standards 113
3. Investment treaty standards (such as fair and equitable treatment,
full protection and security, non-impairment through arbitrary,
unreasonable or discriminatory measures) as reasonableness-based
standards 114
(a) Focus on the merit or soundness of the host State’s conduct 114
(b) Focus on a variety of factors 115
(c) Focus on balancing different interests 117
B. Full Protection and Security and Due Diligence 117
1. The very first case: AAPL v Sri Lanka 119
2. Subsequent arbitral practice and divergent application of the ‘due
diligence’ standard 121
3. What standard when assessing acts of State organs causing harm
to the investment? 125
C. Fair and Equitable Treatment (and Non-Impairment)
Standards: Good Faith, Arbitrariness and Legitimate Expectations 127
1. Good faith 128
2. Arbitrary (or unjustifiable or unreasonable) conduct 132
Contents ix
(a) Arbitrariness and the ‘high threshold’ approach 134

(b) Arbitrariness and the broader (more intrusive) reach 137
(c) Arbitrariness and investment tribunals’ ambivalent approach 140
3. The protection of legitimate expectations 143
(a) Balancing investors’ legitimate expectations and host States’
right to regulate: sketching two approaches followed by
investment tribunals 145
(b) Balancing exercise and standard of review 150
D. Indirect Expropriation and the ‘Legitimate’ Exercise of Police Powers 153
1. Several versions of the ‘police powers’ doctrine 153
2. Means–ends rationality (or bona fide regulation for a
public purpose) 154
(a) Host State’s measure is a bona fide measure 154
(b) Host State’s measure is a legitimate exercise of its right to
sanction violations of domestic law 156
(c) Host State’s measure is a legitimate exercise of its rights under
the investment contract 156
3. Proportionality balancing 157
(a) Tecmed and the sensitivity of putting different values on the
proportionality scale 157
(b) Subsequent arbitral practice and various applications of
proportionality balancing 159
(c) Proportionality balancing in the context of the host State’s
exercise of its rights under the investment contract 163
E. Recent Treaty Practice 164
1. FPS and FET clauses 164
2. Expropriation 168
Conclusion 175
Select Bibliography 177

Index 185
Table of Cases
Abengoa, SA y COFIDES, SA v United Mexican States, ICSID Case

No. ARB(AF)/09/2, Award, 18 April 2013�� 70–71n77
AEDF v United States, ICSID Case No. ARB (AF)/00/1, Award,
9 January 2003��134–35n140
AES Summit Generation Limited and AES-Tisza Erömü Kft v The Republic of Hungary,
ICSID Case No ARB/07/22, Award, 23 September 2010��18, 27, 87–88, 138–39, 140
Alex Genin v Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001 ��135–36, 137–38
American Manufacturing & Trading, Inc (AMT) v Republic of Zaire, ICSID
Case No ARB/93/1, Award, 21 February 1997��118–19
Ampal–American Israel Corporation and others v Arab Republic of Egypt, ICSID
Case No ARB/12/11, Decision on Liability, 21 February 2017��124, 125
Antaris Solar GmbH and Dr Michael Göde v Czech Republic, PCA Case
No 2014-01, Award, 2 May 2018��33, 37, 142–43
Antin Infrastructure Services Luxembourg Sàrl and Antin Energia Termosolar
BV v Kingdom of Spain, ICSID Case No ARB/13/31, Award, 15 June 2018�� 147n198
Asian Agricultural Products Limited (AAPL) v Republic of Sri Lanka, ICSID Case
No ARB/87/3, Award, 27 June 1990��51–52n12, 119
AWG v Argentina, UNCITRAL, Decision on Liability, 30 July 2010 ��87–88n139
Bayindir Insaat Turizm Ticaret Ve Sanayi AS v Islamic Republic of Pakistan,

ICSID Case No ARB/03/29, Award, 27 August 2009�� 130
Bear Creek Mining Corporation v Republic of Peru, ICSID Case No ARB/14/21,
Award, 30 November 2017 ��97–98
Bernhard von Pezold and others v Republic of Zimbabwe, ICSID Case No ARB/10/15,
Award, 28 July 2015��121–22n78, 124
BG v Argentina, UNCITRAL, Award, 24 December 2007�� 90n150
Bilcon of Delaware et al v Government of Canada, PCA Case No 2009-04, Award on
Jurisdiction and Liability, 17 March 2015��138n157, 142n175, 167n291
Biwater Gauff v Tanzania, ICSID Case No ARB/05/22, Award, 18 July 2008 �� 87, 126
Blusun SA, Jean-Pierre Lecorcier and Michael Stein v Italian Republic, ICSID
Case No ARB/14/3, Final Award, 27 December 2016��37, 39, 150–51
Burlington Resources Inc v Republic of Ecuador, ICSID Case No ARB/08/5,
Decision on Liability, 14 December 2012 �� 80n118, 88
Cargill v Mexico, ICSID Case No. ARB(AF)/05/2, Award, 18 September 2009��73n88

CEF Energia BV v Italy, SCC Case No 158/2015, Award,
16 January 2019 �� 12, 148n201, 151
Charanne and Construction Investments v Spain, SCC Case No V 062/2012,
Final Award, 21 January 2016��30n111, 146n196, 147n198, 150n210
Chemtura Corporation v Government of Canada, UNCITRAL (formerly Crompton
Corporation v Government of Canada), Award, 2 August 2010 ��74, 77, 80, 131n119, 160
CME Czech Republic BV v Czech Republic, UNCITRAL, Partial Award,
13 September 2001�� 8n13, 19n64, 84–85n129, 88–89n145
CMS Gas Transmission Company v The Republic of Argentina, ICSID Case
No ARB/01/8, Award, 12 May 2005��21, 23–24, 25n91, 28, 34, 40n140, 74n92, 90
xii Table of Cases
Compania de Aguas del Aconquija and Vivendi Universal v Argentina,

Case No ARB/97/3, Award, 20 August 2007��131–32n120, 146n196
Compañíadel Desarrollo de Santa Elena, SA v Costa Rica, Case No ARB/96/1,
Award, 17 February 2000�� 65, 93
Continental Casualty Company v The Argentine Republic, ICSID Case No ARB/03/9,
Award, 5 September 2008 �� 26
Copper Mesa Mining Corporation v Republic of Ecuador, PCA No 2012-2, Award,
15 March 2016�� 70–71n77, 79n112
Crystallex International Corporation v Venezuela, ICSID Case No ARB(AF)/11/2,
Award, 4 April 2016��146, 148
Dan Cake v Hungary, ICSID Case No ARB/12/9 �� 133n129

Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka, ICSID Case
No ARB/09/2, Award, 31 October 2012��70–71, 161
EDF (Services) Limited v Romania, ICSID Case No AR/05/123, Award,

8 October 2009��27, 28–29
EDF International SA, SAUR International SA and León Participaciones Argentinas
SA v Argentine Republic, ICSID Case No ARB/03/23, Award, 11 June 2012
8 October 2009�� 159n253
Eiser Infrastructure Limited and Energía Solar Luxembourg Sàrl v Kingdom of Spain,
ICSID Case No ARB/13/36, Award, 4 May 2017 ��40n142, 42–43
El Paso Energy International Company v The Argentine Republic, ICSID Case
No ARB/03/15, Award, 31 October 2011 ��31n112, 34n120, 40n142,
40n144, 41n144, 44, 91–93, 95–96, 126n95, 145–46, 147n198, 147n199, 159
Electrabel v Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction,
Applicable Law and Liability, 30 November 2012�� 80n118, 88–89n144
Elettronica Sicula SpA (ELSI) (United States of America v Italy), Judgment of
20 July 1989, [1989] ICJ Rep 15�� 102–3n10, 114–15, 122–23, 134–35, 137–38, 140, 141
Eli Lilly and Company v The Government of Canada, UNCITRAL, ICSID
Case No UNCT/14/2, Final Award, 16 March 2017�� 35n126, 40n142, 41–42
Enkev Beheer BV v Republic of Poland, PCA Case No 2013-01, First Partial Award,
29 April 2014�� 75
Enron Corporation and Ponderosa Assets, LP v Argentine Republic, ICSID Case
No ARB/01/3, Award, 22 May 2007��21nn72–74, 21–22n77, 25n91,
34, 88n145, 90nn148–149, 136–37
Eureko v Poland, UNCITRAL, Partial Award, 19 August 2005��125n92, 126n96
Flemingo Duty Free Shop Private Limited v The Republic of Poland, UNCITRAL,
Award, 12 August 2016 �� 79
Foresight Luxembourg Solar Sàrl et al v Kingdom of Spain, SCC Arbitration V
(2015/150), Final Award, 14 November 2018�� 43n153, 70–71n77
Frontier v Czech Republic, UNCITRAL, Award, 12 November 2010��130, 131
Gami Investments Inc v Mexico, UNCITRAL, Final Award,

15 November 2004�� 74n91, 129–30n114
Glamis Gold v United States, UNCITRAL, Award, 8 June 2009��89–90, 135n142, 137, 166
Goetz and Consorts v Burundi, ICSID Case No. ARB/95/3, Decision on Liability,
2 September 1998��61, 84, 88–89n145, 91, 92
Gold Reserve v Venezuela, ICSID Case No. ARB(AF)/09/1, Award,
22 September 2014�� 156–57, 163
Table of Cases xiii
Grand River Enterprises v USA, UNCITRAL, Award, 12 January 2011�� 80

Greentech Energy Systems et al v Italy, SCC Case No. V 2015/095, Final Award,
23 December 2018��148n201, 151–53
Guimont v Clarke 121 Wn. 2d 586 (1993) 854 P.2d 1 ��95–96n168
ImpregiloSpA v The Republic of Argentina, ICSID Case No ARB/07/17, Award,

21 June 2011 �� 30, 149nn208–209
Inmaris Perestroika Sailing Maritime Services GmbH and others v Ukraine, ICSID
Case No ARB/08/8, Award, 1 March 2012�� 88n141
Ioan Micula, Viorel Micula, S European Food SA, S Starmill SRL and SC Multipack
SRL v Romania, ICSID Case No ARB/05/20, Final Award,
11 December 2013��30n111, 32n117, 140, 148n201, 149
Joseph Charles Lemire v Ukraine, ICSID Case No ARB/06/18, Decision on

Jurisdiction and Liability, 10 January 2010�� 31n112, 32n117, 148n201, 150–51n213
Les Laboratoires Servier, SAA, Biofarma, SAS, Arts et Techniques du Progres SAS v
Republic of Poland, UNCITRAL, Award, 14 February 2012�� 70–71n77
LFH Neer and Pauline Neer (USA) v United Mexican States, United Nations, Reports
of International Arbitral Awards, 1926, IV�� 108–9, 132, 138
LG&E Energy Corporation, LG&E Capital Corporation and LG&E International,
Inc v Argentine Republic, ICSID Case No ARB/02/1, Decision on Liability,
3 October 2006��21nn72–74, 22–23, 133n149, 134—–35, 137–38, 140, 159n253
Malicorp v Egypt, ICSID Case No. ARB/08/18, Award,

7 February 2011�� 156–57nn244–245
Mamidoil Jetoil Greek Petroleum Products Societé SA v Republic of Albania, ICSID
Case No ARB/11/24, Award, 30 March 2015 ��40n141, 92–93
Marfin Investment Group v The Republic of Cyprus, ICSID Case No ARB/13/27,
Award, 26 July 2018�� 154n232
Marvin Roy Feldman Karpa v United Mexican States, ICSID Case No ARB(AF)/99/1,
Award, 16 December 2002 �� 65, 84
Merrill & Ring Forestry LP v Canada, ICSID Case No UNCT/07/1, Award,
31 March 2010�� 80n116, 138, 166
Metalclad Corporation v The United Mexican States, ICSID Case No ARB(AF)/97/1,
Award, 30 August 2000 �� 20n69, 61, 63-–65, 74, 84, 90, 91
Methanex v United States, UNCITRAL, Final Award, 3 August 2005, part IV,
chapter D��94–95, 153–55, 160
Mezzanine v Hungary, ICSID Case No. ARB/12/3, Award, 17 April 2015��95–96n167
Middle East Cement Shipping and Handling Co SA v Arab Republic of Egypt, ICSID
Case No ARB/99/6, Award, 12 April 2002�� 69, 84–85, 91–92
MTD Equity Sdn Bhd and MTD Chile SA v Republic of Chile, ICSID Case
No ARB/01/7, Decision on Annulment, 21 March 2007�� 25–26, 146–47n197
Murr v Wisconsin, 137 SCt 1933, 2017�� 78n107
National Grid plc v Argentina, UNCITRAL, Award, 3 November 2008��23n64, 133n127, 137
Noble Ventures, Inc v Romania, ICSID Case No ARB/01/11, Award,
12 October 2005�� 121–23, 135, 136
Novenergia II—Energy & Environment (SCA) (Grand Duchy of Luxembourg),
SICAR v The Kingdom of Spain, SCC Case No 2015/063, Final Award,
15 February 2018 �� 70–71n77
xiv Table of Cases
Nykomb v Latvia, SCC, Award, 16 December 2003 �� 86n134

Occidental Exploration and Production Company v The Republic of Ecuador
(Occidental v Ecuador I), LCIA Case No. UN3467, Final Award, 1 July 2004 ��6–7,
19, 20, 22–23n81, 25n91, 34, 141, 164
Olin Holdings Limited v Libya, ICC Case No 20355/MCP�� 133n127, 133n131
Oxus Gold v Republic of Uzbekistan, UNCITRAL, 17 December 2015��33n118, 126n95
Pantechniki SA Contractors and Engineers (Greece) v The Republic of Albania,

ICSID Case No ARB/07/21, Award, 30 July 2009��123–24
Parkerings-Compagniet AS v Republic of Lithuania, ICSID Case No ARB/05/8,
Award, 11 September 2007�� 26–28, 28n103, 29n108, 30, 122
Patrick Mitchell v The Democratic Republic of Congo, ICSID Case No ARB/99/7,
Decision on the Application for Annulment of the Award, 1 November 2006�� 70
Paushok v Mongolia, UNCITRAL, Award on Jurisdiction and Liability,
28 April 2011��28n102, 29n108
Perenco Ecuador Limited v The Republic of Ecuador and Empresa Estatal Petróleos del
Ecuador (Petroecuador), ICSID Case No ARB/08/6, Decision on Remaining
Issues of Jurisdiction and Liability, 12 September 2014��31, 32n117, 147n199
Philip Morris Brands Sàrl, Philip Morris Products SA and Abal Hermanos SA v Oriental
Republic of Uruguay, ICSID Case No ARB/10/7, Award, 8 July 2016 �� 34, 35,
37–38, 39, 41, 73, 78–79, 80, 88n140, 141, 142, 159–61
PL Holdings Sàrl v Republic of Poland, SCC Case No V 2014/163, Partial
Award, 28 June 2017��161–62
Popeand Talbot v Canada, UNCITRAL, Interim Award, 28 June 2000�� 61, 86n134
PSEG Global, Inc, The North American Coal Corporation and Konya Ingin Electrik
Üretimve Ticaret Limited Sirketi v Republic of Turkey, ICSID Case No ARB/02/5,
Award, 19 January 2007�� 21–22, 23n86
Quiborax SA, Non Metallic Minerals SA and Allan Fosk Kaplún v Plurinational
State of Bolivia, ICSID Case No ARB/06/2, Award, 16 September 2015 ��71–72, 76,
133n127, 156
Railroad Development Corporation v Republic of Guatemala, ICSID Case

No ARB/07/23, Award, 29 June 2012��131–32
Renta 4 v Russia, SCC No. 24/2007, Award, 20 July 2012��72n83
The Rompetrol Group NV v Romania, ICSID Case No ARB/06/3, Award,
6 May 2013 �� 127n102
Ronald S Lauder v Czech Republic, UNCITRAL, Award, 3 September 2001��68–69, 85-–86,
134n133, 135–36, 140, 141, 141n174
RosInvest Co UK Lt v The Russian Federation, SCC Case No V079/2005, Final
Award, 12 September 2010�� 76n101
RREEF Infrastructure (GP) Limited and RREEF Pan-European Infrastructure
Two Lux Sàrl v Kingdom of Spain, ICSID Case No ARB/13/30, Decision
on Responsibility and Principles of Quantum, 30 November 2018��26, 31–32n113
Saar Papier Vertriebs GmbH v Poland, UNCITRAL, Award, 16 October 1995�� 61, 73
Saluka Investments BV v The Czech Republic, UNCITRAL, Partial Award,
17 March 2006�� 7, 25, 28–29, 57n19, 68n67, 129, 131–32n120, 147–48, 150,
153–54, 155–56
SD Myers v Canada, UNCITRAL, Partial Award, 13 November 2000�� 65–66, 68–69, 85
Sempra Energy International v The Argentine Republic, ICSID Case No ARB/02/16,
Award, 28 September 2007�� 12n38, 21–22, 23n86, 25n91, 74–75,
88–89n145, 90, 128–29n109
Table of Cases xv
Señor Tza Yap Shum v The Republic of Peru, ICSID Case No ARB/07/6,
Award, 7 July 2011 �� 70–71n77
SGS Société Générale de Surveillance SA v Islamic Republic of Pakistan, ICSID Case
No ARB/01/13, Decision on Jurisdiction, 6 August 2003��7–8n12, 11n31
SGS Société Générale de Surveillance SA v Republic of the Philippines, ICSID Case
No ARB/02/6, Decision on Jurisdiction, 29 January 2004��7–8n12, 11n32
Siemens AG v The Argentine Republic, ICSID Case No ARB/02/8, Award,
6 February 2007 ��131n118, 135–36n147
Spyridon Roussalis v Romania, ICSID Case No. ARB/06/1, Award,
7 December 2011. . . . . . . . . . . . 87n139
Suez, Sociedad General de Aguas de Barcelona SA and Inter Aguas Servicios Integrales
del Agua SA v The Argentine Republic, ICSID Case No ARB/03/17, Decision on
Liability, 30 July 2010�� 146n196
Técnicas Medioambientales Tecmed, SA v The United Mexican States, ICSID Case

No ARB(AF)/00/2, Award, 29 May 2003�� 20, 22–23, 25–26, 34, 65,
67–68, 70–71, 73, 85, 90n145, 91, 92, 122–23, 128–29, 153–54, 157, 159
Teinver SA, Transportes de Cercanías SA and Autobuses Urbanos del Sur SA v
The Argentine Republic (Teinver v Argentina), ICSID Case
No ARB/09/1 �� 133n128, 138, 146n196
Telenor Mobile Communications AS v Republic of Hungary, ICSID Case
No. ARB/04/15, Award, 13 September 2006��80n116, 87n137
Tippets, Abbet, McCarthy, Stratton v TAMS–AFFA Consulting Engineers of Iran,
Iran–US Claims Tribunal, 22 June 1984, 6 Iran–US CTR 219��95–96
Total SA v The Argentine Republic, ICSID Case No ARB/04/01, Decision on
Liability, 27 December 2010��27, 28, 29, 88–89
Tulip Real Estate and Development Netherlands BV v Republic of Turkey, ICSID
Case No ARB/11/28, Award, 10 March 2014 �� 126n96, 126–27, 156–57n245
UAB E energija (Lithuania) v Republic of Latvia, ICSID Case No ARB/12/33,

Award, 22 December 2017 �� 133n126, 141n174
Valeri Belokon v Kyrgyzstan, UNCITRAL, Award, 24 October 2014�� 71, 75

Venezuela Holdings BV, Mobil Cerro Negro Holding Limited et al v Venezuela,
ICSID Case No. ARB/07/27, Award, 9 October 2014�� 88
Vigotop Limited v Hungary, ICSID Case No ARB/11/22, Award, 1 October 2014�� 163
Vivendi v Argentina, ICSID Case No ARB/97/3, Award, 20 August 2007 �� 69–70n73,
74–75, 131–32n120
Waguih Elie George Siag and Clorinda Vecchi v The Arab Republic of Egypt,
ICSID Case No ARB/05/15, Award, 1 June 2009 �� 125n94, 126
Waste Management, Inc v Mexico II, ICSID Case No ARB(AF)/00/3, Award,
25 June 2003 �� 69–70, 74, 128–30, 131–32, 135, 167
Wena Hotels Limited v Arab Republic of Egypt, ICSID Case No ARB/98/4,
Award, 8 December 2000�� 123
Windstream Energy LLC v Government of Canada, PCA Case No 2013-22, Award,
27 September 2016�� 80n116
List of Abbreviations
BIICL British Institute of International and Comparative Law

BIT bilateral investment treaty
CETA Comprehensive and Economic Trade Agreement
CFIA Cooperation and Facilitation Investment Agreement
COMESA Common Market for Eastern and Southern Africa
CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership
ECHR European Commission on Human Rights
ECT Energy Charter Treaty
EIU Economist Intelligence Unit
FCN friendship, commerce and navigation
FCTC Framework Convention for Tobacco Control
FET fair and equitable treatment
FPS full protection and security
GATT General Agreement on Tariffs and Trade
ICJ International Court of Justice
IFC International Finance Corporation
ILA International Law Association
IMF International Monetary Fund
IPA Investment Protection Agreement
ISDS investor–State dispute settlement
JRP joint review panel
MFN most favoured nation
MIGA Multilateral Investment Guarantee Agency
NAFTA North American Free Trade Agreement
NT national treatment
OECD Organisation for Economic Co-operation and Development
PCB printed circuit board
PCIJ Permanent Court of International Justice
SPR single presentation regulation
TTIP Transatlantic Trade and Investment Partnership
UNCTAD United Nations Conference on Trade and Development
UNCTC United Nations Centre on Transnational Corporations
WBG World Bank Group
WGI worldwide governance indicator
WHO World Health Organization
Introduction
This book’s principal aim is to provide a conceptual and legal analysis of the dis-
tinctive guarantees that emerge from international treaties signed since 1959 for
the promotion and protection of foreign investment.
While investment treaties include a variety of different provisions (mainly
‘standards’),1 the focus of this study is principally on those provisions that have
caused the greatest controversy, particularly following the exponential increase in
claims brought by foreign investors before ad hoc arbitral tribunals alleging the
violation of such provisions by the host State.2 These provisions include the re-
quirements to accord foreign investments ‘fair and equitable treatment’ (FET) and
‘full protection and security’ (FPS), the requirement to compensate for ‘direct and
indirect expropriation’, the prohibition of ‘arbitrary, unreasonable and discrimin-
atory’ measures and the requirement to observe any commitments undertaken by
the host State vis-à-vis the foreign investment.3
A basic assumption of this study is that, while the international investment law
system is a complex system (based on more than 3000 treaties and lacking a formal
multilateral institutional structure), investment treaties on the whole (and at least
up until the early 2000s) are rather similar in terms of ‘objective’ and ‘content’.
1 Federico Ortino, ‘Refining the Content and Role of Investment “Rules” and “Standards”: A New
Approach to International Investment Treaty Making’ (2013) 28 ICSID Rev 152.

2 As of the time of writing, the total number of known investor–State arbitrations based on invest-
ment treaties has reached 942, two-thirds of which have been concluded and the remaining one are
still pending. See United Nations Conference on Trade and Development (UNCTAD) database https://
investmentpolicy.unctad.org/investment-dispute-settlement accessed 20 May 2019.
3 Based on data collected by UNCTAD, it appears that the investment treaty provisions that have
been relied the most by investors include: FET (in 83% of the 553 arbitrations), indirect expropri-
ation (71%), FPS (42%), arbitrary, unreasonable or discriminatory measures (33%), observance of
obligations (23%), national treatment (23%) and most-favoured-nation (MFN) treatment (18%). See
UNCTAD database, ‘Breaches of IIAs Provisions Alleged and Fund’ https://investmentpolicy.unctad.
org/investment-dispute-settlement accessed 20 May 2019. Scholarly publications in the past ten years
have focused on several of these treaty provisions: Ioana Tudor, The Fair and Equitable Treatment
Standard in the International Law of Foreign Investment (OUP 2008); Roland Kläger, Fair and Equitable
Treatment’ in International Investment Law (CUP 2011); Alexandra Diehl, The Core Standard of
International Investment Protection: Fair and Equitable Treatment (Kluwer Law International 2012);
Martins Paparinskis, The International Minimum Standard and Fair and Equitable Treatment (OUP
2013); Jonathan Bonnitcha, Substantive Protection under Investment Treaties: A Legal and Economic
Analysis (CUP 2014); Sebastián López Escarcena, Indirect Expropriation in International Law (Edward
Elgar 2014); Caroline Henckels, Proportionality and Deference in Investor–State Arbitration (CUP
2015); Gebhard Buecheler, Proportionality in Investor–State Arbitration (OUP 2015); and Valentina
Vadi, Proportionality, Reasonableness and Standards of Review in International Investment Law and
Arbitration (Edward Elgar 2018).
The Origin and Evolution of Investment Treaty Standards. Federico Ortino, Oxford University Press
(2019). © Federico Ortino.
DOI: 10.1093/oso/9780198842637.001.0001
2 Introduction
In terms of objective, while the ‘object’ (or immediate aim) of investment treaties is
to afford protection to foreign investments operating in a host State, the ‘purpose’
(or long-term aim) of such treaties4 is to encourage capital flows and in turn con-
tribute to the prosperity and development of the contracting parties.
In terms of content, despite the various differences across the more than 3000
investment treaties, there clearly exists a core of investment protection guarantees
that are found in the great majority of such treaties, as shown in the mapping ex-
ercise carried out by UNCTAD (of more than 2500 investment treaties). In quan-
titative terms, this core includes provisions on transfer of funds (found in almost
100% of the treaties mapped by UNCTAD), MFN treatment (99%), investor–State
dispute settlement (ISDS) (98%), expropriation (98%), subrogation (96%), fair
and equitable treatment (FET) (95%), and national treatment (NT) (87%).5 In
qualitative terms, these provisions are, on the whole, rather homogeneous, par-
ticularly those on FET and expropriation (certainly at least until the early 2000s).
Furthermore, the existence of broadly worded MFN treatment clauses in most
investment treaties has contributed to the multilateralization of international
investment law.6
The present analysis focuses on both the ‘origin’ and ‘evolution’ of investment
treaty standards. In terms of origin, the work considers the broader context at
the time when the first modern investment treaty (the 1959 Treaty between the
Federal Republic of Germany and Pakistan for the Promotion and Protection of
Investments) was concluded. In terms of evolution, the work examines (a) the
many decisions of ad hoc arbitral tribunals that, in the past twenty years, have been
called upon to apply these treaties in order to resolve the several hundred investor–
State disputes, as well as (b) some of the recent investment treaties that in the past
ten to fifteen years have attempted to clarify and/or reform the content and scope
of investment protection guarantees.
This study argues that the key investment protection provisions in investment
treaties (and thus much of the related controversy) revolve around three distinct
concepts: legal stability, investment’s value and reasonableness. Accordingly, the
main three chapters of the present book attempt to explain the origin and evolution
of these key provisions through these three distinct concepts.
Chapter I investigates the extent to which investment treaties include a guarantee
of ‘legal stability in the strict sense’. A guarantee of legal stability in the strict sense
may require (a) the host State to observe its contractual undertakings vis-à-vis the
4 Isabelle Buffard and Karl Zemanek, ‘The “Object and Purpose” of a Treaty: An Enigma?’ (1998) 3
ARIEL 311, 326. See Gus Van Harten, Investment Treaty Arbitration and Public Law (OUP 2007) 140.
5 Other provisions that feature in many investment treaties include provisions on full FPS (84%),
non-impairment through unreasonable, arbitrary or discriminatory measures (68%) and observance

of obligations (so-called umbrella clauses) (42%). See UNCTAD database ‘Mapping of IIA Content’
https://investmentpolicy.unctad.org/international-investment-agreements accessed 20 May 2019.
6 Stephan Schill, The Multilateralization of International Investment Law (CUP 2009).
Introduction 3
foreign investment (contractual stability); or (b) the host State to avoid subjecting
the foreign investment to (adverse) changes in the applicable regulatory frame-
work (regulatory stability). In the presence of any such strict stability guarantee, a
breach of the investment treaty would be established if the investor was successful
in demonstrating that the host State had either violated its contractual obligations
or introduced a change in the underlying regulatory framework negatively af-
fecting the investment. Crucially, justifications advanced by the host State based on
the need to act in the public interest are irrelevant for the purposes of establishing
host States’ responsibility under a strict stability guarantee. This chapter addresses
in particular the following three investment treaty provisions: the umbrella clause,
the stabilization clause and the FET clause.
Chapter II investigates the extent to which investment treaties require compen-
sation when a host State’s measure deprives the investor of the value of its invest-
ment. In the presence of a guarantee based on the adverse impact on the (value of
the) investment, a breach of the investment treaty is established if the investor is
successful in demonstrating that a measure of the host State has caused such de-
privation. As in the case of the guarantee of stability in the strict sense, crucially,
justifications advanced by the host State based on the need to act in the public
interest are also irrelevant for purposes of establishing the host State’s responsi-
bility pursuant to a guarantee to protect the value of the investment. This chapter
focuses principally on investment treaties’ provision on (indirect) expropriation.
Chapter III investigates the extent to which investment treaties include a ‘rea-
sonableness’ guarantee aimed at requiring fairness and rationality in the conduct
of the host State affecting foreign investment. A reasonableness guarantee may in-
clude certain fairness requirements that go to the substance of an act or omission
of the host State (substantive reasonableness) as well as to the process leading up
to the adoption of the relevant conduct under review (procedural reasonableness).
While there may be several conditions, a breach of a reasonableness-based provi-
sion in an investment treaty will crucially require the investor to demonstrate lack
of fairness, justification or rationality in the substantive or procedural aspects of
the conduct of the host State under review. Focusing on substantive reasonableness
only, this chapter examines the following investment treaty provisions: FPS, FET,
non-impairment through arbitrary or unreasonable measures and expropriation.
The book’s underlying argument is two-pronged. First, from the very beginning,
the protection afforded to foreign investments by modern investment treaties has
been exceptionally broad (and, as such, restrictive of the host State’s ability to regu-
late). Such protection included guarantees vis-a-vis the host State’s (a) breach of in-
vestment contracts and regulatory change; (b) substantial deprivation of the value
of the foreign investment; and (c) unreasonable conduct.
Second, while a growing number of investment treaty tribunals as well as
new investment treaties have reined in such broad protections, the evolution of
key investment treaty provisions has been (and in many ways still is) marred by
4 Introduction
inconsistency and uncertainty. In particular, the same investment treaty provision

has been interpreted by arbitral tribunals as providing different kinds of guarantee.
For example, some tribunals have interpreted the provisions on indirect expropri-
ation as a guarantee vis-à-vis the host State’s substantial deprivation of the value of
the investment and other tribunals as a guarantee vis-à-vis the host State’s unrea-
sonable conduct. Similarly, some tribunals have interpreted the FET provision as
a guarantee of legal stability in the strict sense and other tribunals as a guarantee
vis-à-vis the host State’s unreasonable conduct, although it may at times be difficult
to decipher what a specific tribunal’s position actually is.
Furthermore, while there appears to be a growing preference in arbitral prac-
tice (as well as treaty practice) for reasonableness-based guarantees, there is still
no clarity with regard to the specific reasonableness test that should be employed
in order to review the lawfulness of the host State conduct under an investment
treaty. For example, whether for purposes of assessing the existence of an indirect
expropriation or for purposes of determining a violation of FET, some investment
tribunals have employed a (more deferential) means–ends rationality test, while
other tribunals have employed a (more intrusive) proportionality balancing test.
I
Guarantees of Legal Stability
in the Strict Sense
Introduction 5 3. FET, regulatory change and recent

A. Respect of Host State’s Undertakings arbitral practice: still in muddy waters 33
with Regard to Foreign Investments (a) Some tribunals’ failure to take a clear
position on whether or not FET
and the Umbrella Clause 8
includes a strict stability obligation 33
B. Regulatory Stability in the Strict (b) Some tribunals’ failure to clearly
Sense and (the Little Known Case of) address the precise ambit of, and
Investment Treaties’ Stabilization relationship between, the obligation
Clauses 14 to provide a stable legal framework
C. Strict Stability through the Fair and and the obligation to protect the
Equitable Treatment (FET) Standard 19 investor’s legitimate expectations 37
1. Linking FET and legal stability in the (c) Some tribunals’ failure to clarify
strict sense: the early attempt 20 the kind of regulatory change that
2. The majority of investment tribunals qualifies for a breach of the FET
have rejected the link between FET provision 39
and stability in the strict sense 25 D. Recent Treaty Practice 43

Introduction
Stability, whether legal, political, economic, financial or monetary, seems to rep-

resent one of the core values of today’s society.1 Unsurprisingly, stability in all the
above-mentioned meanings also represents one of the key desiderata of economic
operators, particularly when they invest in a foreign market. For example, stability
with regard to the host State’s political environment (political stability) or with re-
gard to the rate of inflation in the foreign market (economic stability) will ensure
predictability and reduce the risks that may ultimately undermine the viability
of the investor’s business venture. With regard to legal stability, foreign investors’
focus is on the stability of both the underlying investment contract (contractual
1 Political stability is one of the six Worldwide Governance Indicators (WGI) according to the World
Bank Group (WBG) (https://info.worldbank.org/governance/wgi/#home); ensuring monetary and fi-

nancial stability is the main goal of the International Monetary Fund (IMF) (https://www.imf.org/ex-
ternal/about/howwedo.htm). For the argument that trade agreements address uncertainty, see Nuno
Limão and Giovanni Maggi, ‘Uncertainty and Trade Agreements’ (2015) 7 AEJ: Microeconomics 1.
The Origin and Evolution of Investment Treaty Standards. Federico Ortino, Oxford University Press
(2019). © Federico Ortino.
DOI: 10.1093/oso/9780198842637.001.0002
6 Guarantees of Legal Stability in the Strict Sense
stability) and the applicable regulatory framework in the host country (regulatory
stability). A recent World Bank Group survey confirms that, among the so-called
political risks facing foreign investors, ‘breach of contract’ and ‘adverse regulatory
change’ by the host State represent the most pressing ones.2
The concept of stability may, however, be somewhat controversial. Stability as a
general value, or even as an aspiration, is more likely to be a ‘relative’ (or soft) ra-
ther than an ‘absolute’ (strict) concept. According to its dictionary definition, sta-
bility in fact highlights the ‘state of something that is not easily changed’ rather
than something that cannot (or should not) be modified. In other words, stability is
not understood as a total standstill but more as gradual movement. This definition
is also reflected in the notion of stability as one of the formal elements of the rule of
law, which is often seen as implying a system of norms that is ‘sufficiently resistant
to change’3 or as requiring that the ‘demands [that] laws make on citizens should
remain relatively constant’.4 The reference to stability at times expressly included
in the preamble of international investment treaties should be understood in this
softer sense.5
When it comes to investment treaty obligations, there can, however, be two al-
ternative understandings of the concept of legal stability, which highlight two
conceptually distinct obligations. According to one view, legal stability may be
understood to include an obligation of legal stability in the strict sense (akin to so-
called ‘freezing clauses’ in investment contracts). According to this understanding,
the mere failure to preserve the more advantageous regulatory framework applic-
able to the investment will lead to a violation of the investment treaty (regulatory
stability in the strict sense). Similarly, failure to observe a contractual undertaking
vis-à-vis the foreign investment will lead to a treaty violation (contractual stability
in the strict sense).
According to a second view, the obligation of legal stability may be understood
in a softer sense, according to which violation of the investment treaty can only be
found if the non-observance of the investment contract or the change in the regu-
latory framework (detrimental to the foreign investment) cannot be justified by the
legitimate exercise of public policy powers.
Early investment tribunals were divided on the question of whether or not in-
vestment treaties provided strict legal stability obligations. For example, invest-
ment tribunals interpreting the fair and equitable treatment provision in order to
address adverse regulatory change contain statements supporting either the ‘strict’
or ‘soft’ understanding of a stability obligation. One of the paradigmatic examples
of a strict obligation of regulatory stability under the fair and equitable treatment
2 Multilateral Investment Guarantee Agency (MIGA)–Economist Intelligence Unit (EIU) Political
Risk Survey 2013.

3 Jeremy Waldron, ‘The Rule of Law and the Importance of Procedure’ (2011) 50 Nomos 3.
4 Colleen Murphy, ‘Lon Fuller and the Moral Value of the Rule of Law’ (2005) 24 L Phil 239, 241.
5 See eg the 1991 United States–Argentina bilateral investment treaty (BIT).
Introduction 7
(FET) standard is the 2004 decision in Occidental v Ecuador I. Having stated that
‘[t]‌he stability of the legal and business framework is [ . . . ] an essential element of
fair and equitable treatment’,6 the Occidental v Ecuador I tribunal found a breach
of the FET provision, as the tax framework under which the investment had been
made and had been operating ‘has been changed in an important manner by the
actions adopted by the [Ecuadorian tax authorities]’.7 The tribunal also noted that
a determination of whether there is a breach of the FET standard is premised on
whether or not the host State has ‘alter[ed] the legal and business environment in
which the investment has been made’.8
On the other hand, one example adopting a softer, more deferential, interpret-
ation of regulatory stability as part of FET is the 2006 decision in Saluka v Czech
Republic.9 In the view of the Saluka tribunal, in order to be protected, the investor’s
expectations ‘must rise to the level of legitimacy and reasonableness in light of the
circumstances’10 and a determination of a breach of the FET standard ‘requires a
weighing of the Claimant’s legitimate and reasonable expectations on the one hand
and the Respondent’s legitimate regulatory interests on the other’.11
Similarly, early investment tribunals were divided on the protection provided by
the so-called ‘umbrella clause’. In particular, tribunals disagreed on whether or not
‘a simple breach of contract, or of municipal statute or regulation, by itself, would
suffice to constitute a treaty violation on the part of a Contracting Party and engage
the international responsibility of the Party’.12
It is clear that from the perspective of the foreign investor, a strict stability obli-
gation would afford a very high level of protection vis-à-vis the risk of contractual
or regulatory change (as the investor will be compensated for the existence of the
contract breach or adverse regulatory change). On the other hand, a soft stability
obligation would afford a greater degree of discretion to the host State as, at a min-
imum, the existence of a treaty violation (and the duty to compensate the investor)
6 The Occidental v Ecuador I tribunal relied on the clear statement found in the preamble of the
underlying treaty (the 1993 Ecuador–United States BIT) that FET ‘is desirable in order to maintain a
stable framework for investment and maximum effective utilization of economic resources’. Occidental
Exploration and Production Company v The Republic of Ecuador (Occidental v Ecuador I), Final Award,
1 July 2004, para 183.
7 ibid, paras 183–84.
8 ibid, para 191. See Rudolf Dolzer, ‘Fair and Equitable Treatment: Today ‘s Contours’ (2013) 12
Santa Clara J Int’l L 7, 22. See also Rudolf Dolzer and Christoph Schreuer, Principles of International
Investment Law (2nd edn, OUP 2012) 145.
9 Saluka Investments BV v The Czech Republic, UNCITRAL, Partial Award, 17 March 2006.
10 ibid, para 304.
11 ibid, para 306.
12 SGS Société Générale de Surveillance SA v Islamic Republic of Pakistan, ICSID Case No ARB/01/
13, Decision on Jurisdiction, 6 August 2003, para 168. But see SGS Société Générale de Surveillance SA
v Republic of the Philippines, ICSID Case No ARB/02/6, Decision on Jurisdiction, 29 January 2004, para
128: ‘To summarize the Tribunal’s conclusions on this point, Article X(2) makes it a breach of the BIT
for the host State to fail to observe binding commitments, including contractual commitments, which it
has assumed with regard to specific investments.’
would depend in relevant part on an assessment of the public policy justification

underlying the contractual breach or regulatory change at issue.
The aim of this chapter is to inquire whether—and if so, the extent to which—
investment treaties contain guarantees of strict legal stability. More specifically,
this chapter asks whether investment treaties contain provisions (a) guaranteeing
that contractual undertakings vis-à-vis the foreign investment are respected (con-
tractual stability in the strict sense); and/or (b) ensuring that adverse regulatory
changes will not be applied to foreign investments (regulatory stability in the strict
sense).
Three main arguments are advanced in this chapter. First, legal stability in
the strict sense does represent one of the guarantees in international invest-
ment treaties, provided specifically through investment treaties’ umbrella clauses
(section A) and stabilization clauses (section B). Second, despite an attempt by
a few early tribunals to read the FET provision as imposing a strict stability ob-
ligation on host States,13 most investment treaty tribunals faced with the task of
interpreting FET, seem to have recognized the need to balance the protection vis-
à-vis adverse contractual and regulatory changes and host States’ right to regulate
in the public interest. However, one can still find recent arbitral decisions where
the role of legal stability within the FET standard remains at best ambiguous, and
which thus fail to assuage the fears that the FET standard may indeed function as
imposing an obligation of stability in the strict sense (section C). Third, investment
treaties signed in the past ten years clearly show a retreat of provisions guaran-
teeing legal stability in the strict sense (section D).
A. Respect of Host State’s Undertakings with Regard

to Foreign Investments and the Umbrella Clause
While contracts are principally used to define parties’ respective rights and obli-
gations, they are drafted in order to bring a level of stability and thus predictability
in the parties’ contractual relationship. Subject to the usual clauses addressing ex-
ceptional events (such as force majeure, or changed circumstances), contracts are
legally binding on the parties, they are enforceable before courts and tribunals and
remedies are available in case of contractual breaches.
Investment contracts, negotiated by the investor and the host State, are no dif-
ferent: ‘[i]‌n principle, it will be the intention of both sides to create a legal frame-
work that will last from the beginning to the end of their common project’.14
13 Some early tribunals have also interpreted the ‘full protection and security’ as requiring a strict
stability obligation. See eg CME Czech Republic BV v Czech Republic, UNCITRAL, Partial Award, 13
September 2001, para 613.
14 Dolzer and Schreuer, Principles of International Investment Law (n 8) 82.
Respect of host State’s Undertakings 9
However, in the international investment context, contractual mechanisms face

particular challenges in providing a high level of stability, as the State party to the
contract has the ability to affect unilaterally the terms of the investment contract
as well as the likely law applicable to such contract (ie the law of the host State).15
International investment treaties have for a long time provided for a clause spe-
cifically designed to promote and ensure stability in the strict sense with regard to
the contractual relations between foreign investors and host States. The so-called
‘umbrella clause’ (or ‘observance of undertakings clause’) requires the host State
to observe any obligation it may have entered into with regard to foreign invest-
ments.16 While language varies across the various investment treaties, roughly 40–
50% of existing treaties contain an umbrella clause.17
The last sentence of Article 7 of the 1959 Germany and Pakistan BIT, the first
modern investment treaty, reads as follows: ‘Either Party shall observe any other
obligation it may have entered into with regard to investments by nationals or com-
panies of the other Party.’18 While some variations exist, the text of most umbrella
clauses in modern investment treaties look similar to the one contained in the very
first modern BIT.19
As evidenced by Dr Sinclair, the origin of umbrella clauses is to be found in a
movement during the 1950s in Western Europe pressing for the sanctity of long-
term investment contracts (particularly, concessions)20 and epitomized in Article II
15 ibid, 82–6 (pointing to stabilization clauses as a mechanism used in state contracts to preserve the
sanctity and stability of the contract; as well as to renegotiation clauses focusing on guaranteeing the
economic equilibrium of the contract, rather than its legal stability). See Peter Cameron, International
Energy Investment Law: The Pursuit of Stability (OUP 2010) 27 noting the in-built vulnerability of the
contractual relationship following from the fact that a state has the power under its municipal law to
alter the terms of a contract, and indeed to terminate it entirely.
16 See generally Stephan Schill, ‘Enabling Private Ordering—Function, Scope and Effect of Umbrella
Clauses in Internationa Investment Treaties’ (2009) 18 Mich J Int’l L 1; Thomas Wälde, ‘The “Umbrella
Clause” in Investment Arbitration: A Comment on Original Intentions and Recent Cases’ (2005) 6
JWIT 183.
17 Katia Yannaca-Small, ‘Interpretation of the Umbrella Clause in Investment Agreements’ (2006)
OECD Working Papers on International Investment, 5–6:

It is estimated that, of the 2500 or more BITs currently in existence approximately forty per
cent contain an umbrella clause. Treaty practice of States does not point to a uniform ap-
proach to the treatment of these clauses. While Switzerland, the Netherlands, the United
Kingdom and Germany, often include umbrella clauses in their BITs, France, Australia and
Japan include umbrella clauses in only a minority of their BITs. Of 35 French BITs exam-
ined, only 4 contain an umbrella clause while only 5 out of 20 Australian BITs and 2 of the
9 Japanese BITs examined. Canada is the only OECD member state examined in this study
which has never included an umbrella clause in its BITs. [ . . . ] 34 of the 41 US BITs exam-
ined, based on the former Model, contained an umbrella clause [ . . . ] [footnotes omitted].
18 See Article 7 of the 1959 Germany–Pakistan BIT.
19 As of 20 May 2019, out of 2571 investment treaties mapped by the United Nations Conference on
Trade and Development (UNCTAD), 1107 contain an umbrella clause. See UNCTAD database, ‘IIA
Mapping Project’ http://investmentpolicyhub.unctad.org accessed 20 May 2019.
20 Anthony Sinclair, ‘The Origin of the Umbrella Clause in the International Law of Investment
Protection’ (2004) 20 Arb Int’l 411, 423–4.

of the 1959 Abs-Shawcross Draft Convention on Investments Abroad21 and Article

2 of the 1967 Organisation for Economic Co-operation and Development (OECD)
Draft Convention on the Protection of Private Property.22 The purpose was two-
fold: (a) to internationalize the investment contract, thus preventing its exclusive
subjection to the law of the host State and the risk of unilateral variation by the
government; and (b) to provide a remedy in international law for breaches of the
contract.23 In other words, ‘[f]‌rom an investor’s point of view, the umbrella clause
was a natural progression in the law of investment protection beyond negotiated
contractual techniques to internationalize and stabilize investment agreements’.24
The Notes and Comments to Article 2 of the 1967 OECD Draft Convention ex-
plain that the umbrella clause represents an application of the general principle of
pacta sunt servanda, which also applies to agreements between States and foreign
nationals.25 Accordingly, ‘any right originating under such an undertaking [given
by the host State in relation to property] gives rise to an international right that the
Party of the national concerned or of his successor in title is entitled to protect’.26
As noted by FA Mann in 1981, umbrella clauses are of particular importance be-
cause they protect ‘the investor’s contractual rights against any interference which
might be caused by either a simple breach of contract or by administrative or legis-
lative acts, and independently of the question whether or no [sic] such interference
amounts to expropriation’.27 According to Mann, the variation of the terms of a
contract or license by legislative measures, the termination of the contract or the
failure to perform any of its terms are acts that the umbrella clause would render
wrongful in international law.28
In terms of guaranteeing contractual stability in the strict sense, the umbrella
clause has certain peculiar features. First, it only covers the (contractual) under-
takings of the host State vis-à-vis the protected investment and thus it does not
21 Article II reads as follows: ‘Each Party shall at all times ensure the observance of any undertakings
which it may have given in relation to investments made by nationals of any other Party.’
22 Article 2, titled ‘Observance of Undertakings’, reads as follows: ‘Each Party shall at all times en-
sure the observance of undertakings given by it in relation to property of nationals of any other Party.’
Incidentally, the OECD Draft Convention, based heavily on the Abs-Shawcross text, greatly influenced
the many investment treaties that were signed in the last thirty years of the twentieth century.
23 Sinclair, ‘The Origin of the Umbrella Clause’ (n 20) 424. See also Andrew Newcombe and Lluis
Paradell, Law and Practice of Investment Treaties: Standards of Treatment (Kluwer Law International
2009) 441.
24 Sinclair, ‘The Origin of the Umbrella Clause’ (n 20) 425.
25 Paragraph 1 of the Notes and Comments to Article 2 of the OECD Draft Convention on the
Protection of Foreign Property, adopted by the OECD Council on 12 October 1967, reproduced in
(1968) 2 Int’l Lawyer 335–6.
26 ibid, 336. Interestingly, the above explanation refers implicitly to the State-to-State arbitration
mechanism only, rather than to the investor-to-State one (Article 7(a)), which is also included in the
Draft Convention (Article 7(b)).
27 FA Mann, ‘British Treaties for the Promotion and Protection of Investments’ (1981) 52 BYIL 241,
246. See also Rudolf Dolzer and Margrete Stevens, Bilateral Investment Treaties (ICSID and Kluwer Law
International 1995) 81–2.
28 Mann, ‘British Treaties’ (n 27) 246.
Respect of host State’s Undertakings 11
include the corresponding undertakings of the foreign investor. Accordingly, the

umbrella clause appears to be premised on the assumption that the foreign investor
is in need of special protection rather than on the underlying investment contract
as a whole.
Second, at least part of the content of the umbrella clause is determined through
what appears to be a ‘dynamic reference’ to any undertakings entered by the host
State vis-à-vis the foreign investment (akin to the legislative technique of incorp-
oration by reference often used in domestic or international legal systems).29 Thus,
the content of the undertakings protected by the umbrella clause will need to be
determined on the basis of the undertaking’s legal system of reference at the time
the claim under the umbrella clause is made.30
Despite a few initial decisions that were sceptical vis-à-vis the very function of
umbrella clauses,31 investment treaty tribunals have since recognized that umbrella
clauses are (at a minimum) more than ‘aspirational statements’.32 While there has
been disagreement, particularly with regard to the ‘effect’ and ‘scope’ of umbrella
clauses, more recently there appears to be a consensus among investment tribunals
favouring an interpretation according to which (a) the function of umbrella clauses
is ‘essentially jurisdictional in that it provides a claimant with access to an arbitral
tribunal but does not alter their actual rights’;33 and (b) ‘the scope of the umbrella
clause extends at least to contractual obligations and potentially beyond, provided
that a specific undertaking is entered into with regard to an investment’.34
29 With regard to United States administrative law, see Emily Bremer, ‘Incorporation by Reference
in an Open-Government Age’ (2013) 36 Harv J L & Pub Poly 131 and for WTO law, see Marina Foltea,
International Organizations in WTO Dispute Settlement: How Much Institutional Sensitivity? (CUP
2012) 60 ss.
30 In principle, a protected ‘undertaking’ for purposes of the umbrella clause may stem from both do-
mestic law and international law. Umbrella clauses use different terms, including ‘undertaking’, ‘obliga-
tion’, or ‘commitment’. Dolzer and Stevens have noted that the ‘term “obligation” tends not to be defined
in the treaties but is generally assumed to include both obligations arising from investment contracts
i.e. contracts between a Party and investors from the other Contracting Party, as well as obligations
stemming from direct undertakings between the two Contracting Parties’: Dolzer and Stevens, Bilateral
Investment Treaties (n 27) 82. See Newcombe and Paradell, Law and Practice of Investment Treaties (n
23) 448–9.
31 See in particular, SGS v Pakistan, Decision on Jurisdiction, 6 August 2003 (n 12).
32 Jude Antony, ‘Umbrella Clauses since SGS v Pakistan and SGS v Philippines—A Developing
Consensus’ (2013) 29 Arb Int’l 607, 614.

33 ibid.
34 ibid, 638. Interestingly, the Notes and Comments to Article 2 of the OECD Draft Convention seem
to include a general undertaking giving rise to legitimate expectations. The Notes specify, first, that
the ‘undertaking may represent a consensual or a unilateral engagement on the part of the Party con-
cerned’ and, second, that ‘it must relate to the property concerned; it is not sufficient if the link is in-
cidental’. Moreover, in order to establish the link between the undertaking and the property, the Notes
and Comments include the case where, though the undertaking was originally couched in general
terms, the national concerned acted in reliance on it. ‘In such cases, in accordance with the principles
of international law, a situation must be protected in which a Party by its conduct had given rise to a le-
gitimate expectation of the continuance of a particular state of affairs.’ See further, Christoph Schreuer,
‘Travelling the BIT Route: Of Waiting Periods, Umbrella Clauses and Forks in the Road’ (2004) 5 JWIT
231, 250–1; Mann, ‘British Treaties’ (n 27) 246.
On the basis of this growing consensus, and leaving to one side the still con-
troversial question of privity,35 the umbrella clause represents a clear example of
an investment treaty obligation guaranteeing the stability in the strict sense of the
host State’s (contractual) undertakings, as it requires the host State to respect, and
conform to, any undertakings assumed with regard to the foreign investment. As
noted above, whether the undertaking exists and whether it has been breached
crucially depend on the content of the undertaking itself.36 In the paradigmatic
case of a contract between the host State and the foreign investor, the existence and
non-observance of the contractual undertaking for purposes of an umbrella clause
claim is determined on the basis of the contract and its applicable law. For example,
in CEF Energia BV v Italy the tribunal rejected the investor’s umbrella claim on the
basis of the finding that the contractual breaches alleged by the investor were in
fact unilateral modifications permitted by Italian law, as the applicable law to the
contracts at issue.37
Nevertheless, having determined the existence of an undertaking, failure by
the host State to observe such undertaking represents a breach of the investment
treaty’s umbrella clause.38 Excluding general exception clauses in the underlying
treaties (or circumstances precluding wrongfulness under customary law), the
umbrella clause does not require an investment tribunal to take into account the
possible reasons that may have justified the host State’s conduct. In this sense, an
umbrella clause represents a treaty obligation directly guaranteeing the stability in
the strict sense of the host State’s undertakings.
However, while umbrella clauses guarantee the stability in the strict sense of the
host State’s undertakings (principally of a contractual nature) entered into with re-
gard to the investment, they do not guarantee regulatory stability in the strict sense.
In other words, umbrella clauses may not be able to freeze the regulatory frame-
work governing the foreign investment at the time the investment is made. This is
35 The issue of privity refers to whether or not the respondent State and the claimant are (either or
both) required to be parties to the contract establishing the obligation relied on in the umbrella clause
claim. See Antony, ‘Umbrella Clauses’ (n 32) 639.
36 The role of an investment treaty tribunal is to determine whether the host State has complied with
the relevant undertaking (or obligation). The existence of an exclusive forum selection clause in the
underlying source of the obligation may create a potential jurisdictional conflict (say, eg, between the
treaty tribunal and the contractual forum). However, such conflict can and should be resolved using
the traditional tools, such as lis alibi pendens. See Campbell McLachlan, Lis Pendens in International
Litigation in Collected Courses of the Hague Academy of International Law (Hague Academy of
International Law 2009).
37 CEF Energia BV v Italy, SCC Case No 158/2015, Award, 16 January 2019, para 254.
38 Some tribunals have limited a finding of breach of the umbrella clause to ‘governmental’ breaches of
the underlying obligation (or undertaking), thus excluding ‘pure commercial’ breaches (see eg Sempra
Energy International v The Argentine Republic, ICSID Case No ARB/02/16, Award, 28 September 2007,
para 310). However, even under this reading, the umbrella clause’s fundamental nature and operation
does not change; it is still for the host State to respect its undertakings (even if such obligation only
applies when the host State exercises ‘sovereign’ powers, rather than merely acting in its ‘commercial’
capacity). See Mihir C Naniwadekar, ‘The Scope and Effect of Umbrella Clauses: The Need for a Theory
of Deference?’ (2010) 2 Trade, L Dev 169.
Another random document with
no related content on Scribd:
Still, even so and when you come right down to it, was there
anything so terrible about her writing a celebrity like that and asking
for his picture, if that was all she had done. But was it? Those long-
enveloped gray letters he had found in the fireplace that morning,
after that day in which he had seen her in the car (or thought he had)
—or at least traces of them. And the queer way she had looked at
him when he brought them up in connection with that closed car in
Bergley Place. She had squinted her eyes as if to think, and had
then laughed rather shakily when he charged her with receiving
letters from Raskoffsky, and with his having come here to see her.
His finding them had been entirely by accident. He always got up
early to “start things,” for Beryl was a sleepyhead, and he would start
the fire in the grate and put on the water to boil in the kitchen. And
this morning as he was bending over the grate to push away some
scraps of burnt wood so as to start a new fire, he came across five or
six letters, or the ashes of them, all close together as though they
might have been tied with a ribbon or something. What was left of
them looked as though they had been written on heavy stationery
such as a man of means might use, the envelopes long and thick.
The top one still showed the address—“Mrs. Beryl Stoddard, Care of
——” He was bending over to see the rest when a piece of wood
toppled over and destroyed it. He rescued one little scrap, the half-
charred corner of one page, and the writing on this seemed to be like
that on Raskoffsky’s picture, or so he thought, and he read: “to see
you.” Just that and nothing more, part of a sentence that ended the
page and went to the next. And that page was gone, of course!
But it was funny wasn’t it, that at sight of them the thought of
Raskoffsky should have come to him? And that ride in the park.
Come to think of it, the man in the car had looked a little like
Raskoffsky’s picture. And for all he knew, Raskoffsky might have
then been in town—returned for this especial purpose,—and she
might have been meeting him on the sly. Of course. At the Deming.
That was it. He had never been quite able to believe her. All the
circumstances at the time pointed to something of the kind, even if
he had never been able to tie them together and make her confess
to the truth of them.
But how he had suffered after that because of that thought! Things
had seemed to go black before him. Beryl unfaithful? Beryl running
around with a man like that, even if he was a great violinist?
Everybody knew what kind of a man he was—all those men. The
papers were always saying how crazy women were over him, and
yet that he should come all the way to C—— to make trouble
between him and Beryl! (If only he could prove that!) But why should
she, with himself and Tickles to look after, and a life of her own which
was all right—why should she be wanting to run around with a man
like that, a man who would use her for a little while and then drop
her. And when she had a home of her own? And her baby? And her
mother and sister right here in C——? And him? And working as
hard as he was and trying to make things come out right for them?
That was the worst of it. That was the misery of it. And all for a little
notice from a man who was so far above her or thought he was,
anyhow, that he couldn’t care for her or any one long. The papers
had said so at the time. But that was the whole secret. She was so
crazy about people who did anything in music or painting or anything
like that, that she couldn’t reason right about them. And she might
have done a thing like that on that account. Personally he wouldn’t
give a snap of his finger for the whole outfit. They weren’t ordinary,
decent people anyhow. But making herself as common as that! And
right here in C——, too, where they were both known. Oh, if only he
had been able to prove that! If only he had been able to at that time!
When he had recovered himself a little that morning after he had
found the traces of the letters in the ashes he had wanted to go into
the bedroom where she was still asleep and drag her out by the hair
and beat her and make her confess to these things. Yes, he had.
There had been all but murder in his heart that morning. He would
show her. She couldn’t get away with any such raw stuff as that even
if she did have her mother and sister to help her. (That sly little Alice,
always putting her sister up to something and never liking him from
the first, anyhow.) But then the thought had come to him that after all
he might be wrong. Supposing the letters weren’t from Raskoffsky?
And supposing she had told the truth when she said she hadn’t been
in the car? He had nothing to go on except what he imagined, and
up to then everything had been as wonderful as could be between
them. Still....
Then another thought had come: if the letters weren’t from
Raskoffsky who were they from? He didn’t know of anybody who
would be writing her on any such paper as that. And if not
Raskoffsky whom did she know? And why should she throw them in
the fire, choosing a time when he wasn’t about? That was strange,
especially after the automobile incident of the day before. But when
he taxed her with this the night of the Bergley Place car incident—
she had denied everything and said they were from Claire Haggerty,
an old chum who had moved to New York just about the time they
were married and who had been writing her at her mother’s because
at that time he and she didn’t have a home of their own and that was
the only address she could give. She had been meaning to destroy
them but had been putting it off. But only the night before she had
come across them in a drawer and had tossed them in the fire, and
that was all there was to that.
But was that all there was to it?
For even as he had been standing there in front of the grate
wondering what to do the thought had come to him that he was not
going about this in the right way. He had had the thought that he
should hire a detective at once and have her shadowed and then if
she were doing anything, it might be possible to find it out. That
would have been better. That was really the way. Yet instead of
doing that he had gone on quarreling with her, had burst in on her
with everything that he suspected or saw, or thought he saw, and
that it was, if anything, that had given her warning each time and had
allowed her to get the upper hand of him, if she had got the upper
hand of him. That was it. Yet he had gone on and quarreled with her
that day just the same, only, after he had thought it all over, he had
decided to consult the Sol Cohn Detective Service and have her
watched. But that very night, coming back from the night conference
with Mr. Harris Cohn, which was the only time he could get to give it,
was the night he had seen the car in Bergley Place, and Beryl near
it.
Bergley Place was a cross street two doors from where they lived
on Winton. And just around the corner in Bergley, was an old vacant
residence with a deal of shrubbery and four overarching trees in
front, which made it very dark there at night. That night as he was
coming home from Mr. Harris Cohn’s—(he had told Beryl that he was
going to the lodge, in order to throw her off and had come home
earlier in order to see what he might see) and just as he was
stepping off the Nutley Avenue car which turned into Marko Street,
about half a block above where they lived whom should he see—
But, no, let us put it this way. Just at that moment or a moment later
as he turned toward his home an automobile that had been going the
same way he was along Winton swung into Bergley Place and threw
its exceptionally brilliant lights on a big closed automobile that was
standing in front of the old house aforementioned. There were two
vacant corner lots opposite the old house at Bergley and Winton and
hence it was that he could see what was going on. Near the rear of
the automobile, just as though she had stepped out of it and was
about to leave, stood Beryl—or, he certainly thought it was Beryl,
talking to some one in the car, just as one would before parting and
returning into the house. She had on a hooded cape exactly like the
one she wore at times though not often. She did not like hooded
capes any more. They were out of style. Just the same so sure had
he been that it was Beryl and that at last he had trapped her that he
hurried on to the house or, rather, toward the car. But just as he
neared the corner the lights of the car that had been standing there
lightless flashed on for a second—then off and then sped away. Yet
even with them on there had not been enough light to see whether it
was Beryl, or who. Or what the number on the license plate was. It
was gone and with it Beryl, presumably up the alley way and into the
back door or so he had believed. So sure was he that she had gone
that way that he himself had gone that way. Yet when he reached the
rear door following her, as he chose to do, it was locked and the
kitchen was dark. And he had to rap and pound even before she
came to let him in. And when she did there she was looking as
though she had not been out at all, undressed, ready for bed and
wanting to know why he chose to come that way! And asking him not
to make so much noise for fear of waking Tickles...!
Think of it. Not a trace of excitement. No cape with a hood on. The
light up in the dining-room and a book on the table as though she
might have been reading—one of those novels by that fellow
Barclay. And not a sign about anywhere that she might have been
out—that was the puzzling thing. And denying that she had been out
or that she had seen any car, or anything. Now what would you
make of that!
Then it was, though, that he had burst forth in a fury of suspicion
and anger and had dealt not only with this matter of the car in
Bergley Place but the one in Briscoe Park, the letters in the ashes
and the matter of Naigly seeing her come out of the Deming, to say
nothing of her writing to Raskoffsky for his picture. For it was
Raskoffsky, of course, if it was anybody. He was as positive as to
that as any one could be. Who else could it have been? He had not
even hesitated to insist that he knew who it was—Raskoffsky, of
course—and that he had seen him and had been able to recognize
him from his pictures. Yet she had denied that vehemently—even
laughingly—or that he had seen any one, or that there had been a
car there for her. And she did show him a clipping a week later which
said that Raskoffsky was in Italy.
But if it wasn’t Raskoffsky then who was it—if it was any one. “For
goodness’ sake, Gil,” was all she would say at that or any other time,
“I haven’t been out with Raskoffsky or any one and I don’t think you
ought to come in here and act as you do. It seems to me you must
be losing your mind. I haven’t seen or heard of any old car. Do you
think I could stand here and say that I hadn’t if I had? And I don’t like
the way you have of rushing in here of late every little while and
accusing me of something that I haven’t done. What grounds have
you for thinking that I have done anything wrong anyhow? That silly
picture of Raskoffsky that Alice sent for. And that you think you saw
me in an automobile. Not another thing. If you don’t stop now and let
me alone I will leave you I tell you and that is all there is to it. I won’t
be annoyed in this way and especially when you have nothing to go
on.” It was with that type of counter-argument that she had
confronted him.
Besides, at that time—the night that he thought he saw her in
Bergley Place—and as if to emphasize what she was saying, Tickles
in the bedroom had waked up and begun to call “Mama, Mama.” And
she had gone in to him and brought him out even as she talked. And
she had seemed very serious and defiant, then—very much more
like her natural self and like a person who had been injured and was
at bay. So he had become downright doubtful, again, and had gone
back into the dining-room. And there was the light up and the book
that she had been reading. And in the closet as he had seen when
he had hung up his own coat was her hooded cape on the nail at the
back where it always hung.
And yet how could he have been mistaken as to all of those
things? Surely there must have been something to some of them. He
could never quite feel, even now, that there hadn’t been. Yet outside
of just that brief period in which all of these things had occurred there
had never been a thing that he could put his hands on, nothing that
he could say looked even suspicious before or since. And the
detective agency had not been able to find out anything about her
either—not a thing. That had been money wasted: one hundred
dollars. Now how was that?
II
The trouble with Gil was that he was so very suspicious by nature
and not very clever. He was really a clerk, with a clerk’s mind and a
clerk’s point of view. He would never rise to bigger things, because
he couldn’t, and yet she could not utterly dislike him either. He was
always so very much in love with her, so generous—to her, at least—
and he did the best he could to support her and Tickles which was
something, of course. A lot of the trouble was that he was too
affectionate and too clinging. He was always hanging around
whenever he was not working. And with never a thought of going any
place without her except to his lodge or on a business errand that he
couldn’t possibly escape. And if he did go he was always in such
haste to get back! Before she had ever thought of marrying him,
when he was shipping clerk at the Tri-State and she was Mr.
Baggott’s stenographer, she had seen that he was not very
remarkable as a man. He hadn’t the air or the force of Mr. Baggott,
for whom she worked then and whose assistant Gil later became.
Indeed, Mr. Baggott had once said: “Gilbert is all right, energetic and
faithful enough, but he lacks a large grasp of things.” And yet in spite
of all that she had married him.
Why?
Well, it was hard to say. He was not bad-looking, rather
handsome, in fact, and that had meant a lot to her then. He had fine,
large black eyes and a pale forehead and pink cheeks, and such
nice clean hands. And he always dressed so well for a young man in
his position. He was so faithful and yearning, a very dog at her heels.
But she shouldn’t have married him, just the same. It was all a
mistake. He was not the man for her. She knew that now. And, really,
she had known it then, only she had not allowed her common sense
to act. She was always too sentimental then—not practical enough
as she was now. It was only after she was married and surrounded
by the various problems that marriage includes that she had begun
to wake up. But then it was too late.
Yes, she had married, and by the end of the first year and a half,
during which the original glamour had had time to subside, she had
Tickles, or Gilbert, Jr., to look after. And with him had come a new
mood such as she had never dreamed of in connection with herself.
Just as her interest in Gil had begun to wane a little her interest in
Tickles had sprung into flame. And for all of three years now it had
grown stronger rather than weaker. She fairly adored her boy and
wouldn’t think of doing anything to harm him. And yet she grew so
weary at times of the humdrum life they were compelled to live. Gil
only made forty-five dollars a week, even now. And on that they had
to clothe and feed and house the three of them. It was no easy
matter. She would rather go out and work. But it was not so easy
with a three-year-old baby. And besides Gil would never hear of such
a thing. He was just one of those young husbands who thought the
wife’s place was in the home, even when he couldn’t provide a very
good home for her to live in.
Still, during these last few years she had had a chance to read and
think, two things which up to that time she had never seemed to
have time for. Before that it had always been beaux and other girls.
But most of the girls were married now and so there was an end to
them. But reading and thinking had gradually taken up all of her
spare time, and that had brought about such a change in her. She
really wasn’t the same girl now that Gil had married at all. She was
wiser. And she knew so much more about life now than he did. And
she thought so much more, and so differently. He was still at about
the place mentally that he had been when she married him,
interested in making a better place for himself in the Tri-State office
and in playing golf or tennis out at the country club whenever he
could afford the time to go out there. And he expected her to curry
favor with Dr. and Mrs. Realk, and Mr. and Mrs. Stofft, because they
had a car and because Mr. Stofft and Gil liked to play cards together.
But beyond that he thought of nothing, not a thing.
But during all of this time she had more and more realized that Gil
would never make anything much of himself. Alice had cautioned her
against him before ever they had married. He was not a business
man in any true sense. He couldn’t think of a single thing at which he
could make any money except in the paper business, and that
required more capital than ever he would have. Everybody else they
knew was prospering. And perhaps it was that realization that had
thrown her back upon books and pictures and that sort of thing.
People who did things in those days were so much more interesting
than people who just made money, anyhow.
Yet she would never have entered upon that dangerous affair with
Mr. Barclay if it hadn’t been for the awful mental doldrums she found
herself in about the time Tickles was two years old and Gil was so
worried as to whether he would be able to keep his place at the Tri-
State any longer. He had put all the money they had been able to
save into that building and loan scheme, and when that had failed
they were certainly up against it for a time. There was just nothing to
do with, and there was no prospect of relief. To this day she had no
clothes to speak of. And there wasn’t much promise of getting them
now. And she wasn’t getting any younger. Still, there was Tickles,
and she was brushing up on her shorthand again. If the worst came
—
But she wouldn’t have entered upon that adventure that had come
so near to ending disastrously for herself and Tickles—for certainly if
Gil had ever found out he could have taken Tickles away from her—if
it hadn’t been for that book Heyday which Mr. Barclay wrote and
which she came across just when she was feeling so out of sorts
with life and Gil and everything. That had pictured her own life so
keenly and truly; indeed, it seemed to set her own life before her just
as it was and as though some one were telling her about herself. It
was the story of a girl somewhat like herself who had dreamed her
way through a rather pinched girlhood, having to work for a living
from the age of fourteen. And then just as she was able to make her
own way had made a foolish marriage with a man of no import in any
way—a clerk, just like Gil. And he had led her through more years of
meagre living, until at last, very tired of it all, she had been about to
yield herself to another man who didn’t care very much about her but
who had money and could do the things for her that her husband
couldn’t. Then of a sudden in this story her husband chose to
disappear and leave her to make her way as best she might. The
one difference between that story and her own life was that there
was no little Tickles to look after. And Gil would never disappear, of
course. But the heroine of the story had returned to her work without
compromising herself. And in the course of time had met an architect
who had the good sense or the romance to fall in love with and
marry her. And so the story, which was so much like hers, except for
Tickles and the architect, had ended happily.
But hers—well—
But the chances she had taken at that time! The restless and yet
dreamy mood in which she had been and moved and which
eventually had prompted her to write Mr. Barclay, feeling very
doubtful as to whether he would be interested in her and yet drawn
to him because of the life he had pictured. Her thought had been that
if he could take enough interest in a girl like the one in the book to
describe her so truly he might be a little interested in her real life.
Only her thought at first had been not to entice him; she had not
believed that she could. Rather, it was more the feeling that if he
would he might be of some help to her, since he had written so
sympathetically of Lila, the heroine. She was faced by the problem of
what to do with her life, as Lila had been, but at that she hadn’t
expected him to solve it for her—merely to advise her.
But afterwards, when he had written to thank her, she feared that
she might not hear from him again and had thought of that picture of
herself, the one Dr. Realk had taken of her laughing so heartily, the
one that everybody liked so much. She had felt that that might entice
him to further correspondence with her, since his letters were so
different and interesting, and she had sent it and asked him if his
heroine looked anything like her, just as an excuse for sending it.
Then had come that kindly letter in which he had explained his point
of view and advised her, unless she were very unhappy, to do
nothing until she should be able to look after herself in the great
world. Life was an economic problem. As for himself, he was too
much the rover to be more than a passing word to any one. His work
came first. Apart from that, he said he drifted up and down the world
trying to make the best of a life that tended to bore him. However if
ever he came that way he would be glad to look her up and advise
her as best he might, but that she must not let him compromise her
in any way. It was not advisable in her very difficult position.
Even then she had not been able to give him up, so interested had
she been by all he had written. And besides, he had eventually come
to U—— only a hundred and fifty miles away, and had written from
there to know if he might come over to see her. She couldn’t do other
than invite him, although she had known at the time that it was a
dangerous thing to do. There was no solution, and it had only
caused trouble—and how much trouble! And yet in the face of her
mood then, anything had been welcome as a relief. She had been
feeling that unless something happened to break the monotony she
would do something desperate. And then something did happen. He
had come, and there was nothing but trouble, and very much trouble,
until he had gone again.
You would have thought there was some secret unseen force
attending her and Gil at that time and leading him to wherever she
was at just the time she didn’t want him to be there. Take for
example, that matter of Gil finding Mr. Barclay’s letters in the fire
after she had taken such care to throw them on the live coals behind
some burning wood. He had evidently been able to make out a part
of the address, anyhow, for he had said they were addressed to her
in care of somebody he couldn’t make out. And yet he was all wrong,
as to the writer, of course. He had the crazy notion, based on his
having found that picture of Raskoffsky inscribed to Alice, some
months before, that they must be from him, just because he thought
she had used Alice to write and ask Raskoffsky for his picture—
which she had. But that was before she had ever read any of Mr.
Barclay’s books. Yet if it hadn’t been for Gil’s crazy notion that it was
Raskoffsky she was interested in she wouldn’t have had the courage
to face it out the way she had, the danger of losing Tickles, which
had come to her the moment Gil had proved so suspicious and
watchful, frightening her so. Those three terrible days! And imagine
him finding those bits of letters in the ashes and making something
out of them! The uncanniness of it all.
And then that time he saw her speeding through the gate into
Briscoe Park. They couldn’t have been more than a second passing
there, anyhow, and yet he had been able to pick her out! Worse, Mr.
Barclay hadn’t even intended coming back that way; they had just
made the mistake of turning down Ridgely instead of Warren. Yet, of
course, Gil had to be there, of all places, when as a rule he was
never out of the office at any time. Fortunately for her she was on
her way home, so there was no chance of his getting there ahead of
her as, plainly, he planned afterwards. Still, if it hadn’t been for her
mother whom everybody believed, and who actually believed that
she and Alice had been to the concert, she would never have had
the courage to face him. She hadn’t expected him home in the first
place, but when he did come and she realized that unless she faced
him out then and there in front of her mother who believed in her,
that she as well as he would know, there was but one thing to do—
brave it. Fortunately her mother hadn’t seen her in that coat and hat
which Gil insisted that she had on. For before going she and Alice
had taken Tickles over to her mother’s and then she had returned
and changed her dress. And before Gil had arrived Alice had gone
on home and told her mother to bring over the baby, which was the
thing that had so confused Gil really. For he didn’t know about the
change and neither did her mother. And her mother did not believe
that there had been any, which made her think that Gil was a little
crazy, talking that way. And her mother didn’t know to this day—she
was so unsuspecting.
And then that terrible night on which he thought he had seen her in
Bergley Place and came in to catch her. Would she ever forget that?
Or that evening, two days before, when he had come home and said
that Naigly had seen her coming out of the Deming. She could tell by
his manner that time that he thought nothing of that then—he was so
used to her going downtown in the daytime anyhow. But that Naigly
should have seen her just then when of all times she would rather he
would not have!
To be sure it had been a risky thing—going there to meet Mr.
Barclay in that way, only from another point of view it had not
seemed so. Every one went through the Deming Arcade for one
reason or another and that made any one’s being seen there rather
meaningless. And in the great crowd that was always there it was
the commonest thing for any one to meet any one else and stop and
talk for a moment anyhow. That was all she was there for that day—
to see Mr. Barclay on his arrival and make an appointment for the
next day. She had done it because she knew she couldn’t stay long
and she knew Gil wouldn’t be out at that time and that if any one else
saw her she could say that it was almost any one they knew casually
between them. Gil was like that, rather easy at times. But to think
that Naigly should have been passing the Deming just as she was
coming out—alone, fortunately—and should have run and told Gil.
That was like him. It was pure malice. He had never liked her since
she had turned him down for Gil. And he would like to make trouble
for her if he could, that was all. That was the way people did who
were disappointed in love.
But the worst and the most curious thing of all was that last
evening in Bergley Place, the last time she ever saw Mr. Barclay
anywhere. That was odd. She had known by then, of course, that Gil
was suspicious and might be watching her and she hadn’t intended
to give him any further excuse for complaint. But that was his lodge
night and he had never missed a meeting since they had been
married—not one. Besides she had only intended to stay out about
an hour and always within range of the house so that if Gil got off the
car or any one else came she would know of it. She had not even
turned out the light in the dining-room, intending to say if Gil came
back unexpectedly or any one else called, that she had just run
around the corner in the next block to see Mrs. Stofft. And in order
that that statement might not be questioned, she had gone over
there for just a little while before Mr. Barclay was due to arrive with
his car. She had even asked Mr. Barclay to wait in the shadow of the
old Dalrymple house in Bergley Place, under the trees, in order that
the car might not be seen. So few people went up that street,
anyhow. And it was always so dark in there. Besides it was near to
raining which made it seem safer still. And yet he had seen her. And
just as she was about to leave. And when she had concluded that
everything had turned out so well.
But how could she have foreseen that a big car with such powerful
lights as that would have turned in there just then. Or that Gil would
step off the car and look up that way? Or that he would be coming
home an hour earlier when he never did—not from lodge meeting.
And besides she hadn’t intended to go out that evening at all until
Mr. Barclay called up and said he must leave the next day, for a few
days anyhow, and wanted to see her before he went. She had
thought that if they stayed somewhere in the neighborhood in a
closed car, as he suggested, it would be all right. But, no. That big
car had to turn in there just when it did, and Gil had to be getting off
the car and looking up Bergley Place just when it did, and she had to
be standing there saying good-bye, just as the lights flashed on that
spot. Some people might be lucky, but certainly she was not one of
them. The only thing that had saved her was the fact that she had
been able to get in the house ahead of Gil, hang up her cape and go
in to her room and undress and see if Tickles was still asleep. And
yet when he did burst in she had felt that she could not face him—he
was so desperate and angry. And yet, good luck, it had ended in his
doubting whether he had really seen her or not, though even to this
day he would never admit that he doubted.
But the real reason why she hadn’t seen Mr. Barclay since (and
that in the face of the fact that he had been here in the city once
since, and that, as he wrote, he had taken such a fancy to her and
wanted to see her and help her in any way she chose), was not that
she was afraid of Gil or that she liked him more than she did Mr.
Barclay (they were too different in all their thoughts and ways for
that) or that she would have to give up her life here and do
something else, if Gil really should have found out (she wouldn’t
have minded that at all)—but because only the day before Mr.
Barclay’s last letter she had found out that under the law Gil would
have the power to take Tickles away from her and not let her see him
any more if he caught her in any wrongdoing. That was the thing that
had frightened her more than anything else could have and had
decided her, then and there, that whatever it was she was thinking
she might want to do, it could never repay her for the pain and agony
that the loss of Tickles would bring her. She had not really stopped to
think of that before. Besides on the night of that quarrel with Gil, that
night he thought he saw her in Bergley Place and he had sworn that
if ever he could prove anything he would take Tickles away from her,
or, that he would kill her and Tickles and himself and Raskoffsky
(Raskoffsky!), it was then really that she had realized that she
couldn’t do without Tickles—no, not for a time even. Her dream of a
happier life would be nothing without him—she knew that. And so it
was that she had fought there as she had to make Gil believe he
was mistaken, even in the face of the fact that he actually knew he
had seen her. It was the danger of the loss of Tickles that had given
her the courage and humor and calmness, the thought of what the
loss of him would mean, the feeling that life would be colorless and
blank unless she could take him with her wherever she went,
whenever that might be, if ever it was.
And so when Gil had burst in as he did she had taken up Tickles
and faced him, after Gil’s loud talk had waked him. And Tickles had
put his arms about her neck and called “Mama! Mama!” even while
she was wondering how she was ever to get out of that scrape. And
then because he had fallen asleep again, lying close to her neck,
even while Gil was quarreling, she had told herself then that if she
came through that quarrel safely she would never do anything more
to jeopardize her claim to Tickles, come what might. And with that
resolution she had been able to talk to Gil so convincingly and
defiantly that he had finally begun to doubt his own senses, as she
could see. And so it was that she had managed to face him out and
to win completely.
And then the very next day she had called up Mr. Barclay and told
him that she couldn’t go on with that affair, and why—that Tickles
meant too much to her, that she would have to wait and see how her
life would work out. And he had been so nice about it then and had
sympathized with her and had told her that, all things considered, he
believed she was acting wisely and for her own happiness. And so
she had been. Only since he had written her and she had had to say
no to him again. And now he had gone for good. And she admired
him so much. And she had never heard from him since, for she had
asked him not to write to her unless she first wrote to him.
But with how much regret she had done that! And how
commonplace and humdrum this world looked at times now, even
with the possession of Tickles. Those few wonderful days.... And that
dream that had mounted so high. Yet she had Tickles. And in the
novel the husband had gone away and the architect had appeared.
XIV
THE “MERCY” OF GOD
“Once, one of his disciples, walking with him in the garden, said:
‘Master, how may I know the Infinite, the Good, and attain to union
with it, as thou hast?’ And he replied: ‘By desiring it utterly, with all thy
heart and with all thy mind.’ And the disciple replied: ‘But that I do.’
‘Nay, not utterly,’ replied the Master, ‘or thou wouldst not now ask how
thou mayst attain to union with it. But come with me,’ he added, ‘and I
will show thee.’ And he led the way to a stream, and into the water,
and there, by reason of his greater strength, he seized upon his
disciple and immersed him completely, so that presently he could not
breathe but must have suffocated and drowned had it not been his
plan to bring him forth whole. Only when, by reason of this, the
strength of the disciple began to wane and he would have drowned,
the Master drew him forth and stretched him upon the bank and
restored him. And when he was sufficiently restored and seeing that
he was not dead but whole, he exclaimed: ‘But, Master, why didst thou
submerge me in the stream and hold me there until I was like to die?’
And the Master replied: ‘Didst thou not say that above all things thou
desirest union with the Infinite?’ ‘Yea, true; but in life, not death.’ ‘That
I know,’ answered the Master. ‘But now tell me: When thou wast thus
held in the water what was it that thou didst most desire?’ ‘To be
restored to breath, to life.’ ‘And how much didst thou desire it?’ ‘As
thou sawest—with all my strength and with all my mind.’ ‘Verily. Then
when in life thou desirest union with the All-Good, the Infinite, as
passionately as thou didst life in the water, it will come. Thou wilt know
it then, and not before.’”
Keshub Chunder Sen.
A FRIEND of mine, a quite celebrated neurologist, psychiatrist,

and interpreter of Freud, and myself were met one night to
discuss a very much talked-of book of his, a book of clinical studies
relative to various obsessions, perversions and inhibitions which had
afflicted various people in their day and which he, as a specialist in
these matters, had investigated and attempted to alleviate. To begin
with, I should say that he had filled many difficult and responsible
positions in hospitals, asylums, and later, as a professor of these
matters, occupied a chair in one of our principal universities. He was
kindly, thoughtful, and intensely curious as to the workings of this
formula we call life, but without lending himself to any—at least to
very few—hard and fast dogmas. More interesting still life appeared
to interest but never to discourage him. He really liked it. Pain, he
said, he accepted as an incentive, an urge to life. Strife he liked
because it hardened all to strength. And he believed in action as the
antidote to too much thought, the way out of brooding and sorrow.
Youth passes, strength passes, life forms pass; but action makes all
bearable and even enjoyable. Also he wanted more labor, not less,
more toil, more exertion, for humanity. And he insisted that through,
not round or outside, life lay the way to happiness, if there was a
way. But with action all the while. So much for his personal point of
view.
On the other hand he was always saying of me that I had a touch
of the Hindu in me, the Far East, the Brahmin. I emphasized too
much indifference to life—or, if not that, I quarreled too much with
pain, unhappiness, and did not impress strongly enough the need of
action. I was forever saying that the strain was too great, that there
had best be less of action, less of pain.... As to the need of less pain,
I agreed, but never to the need of less action; in verification of which
I pointed to my own life, the changes I had deliberately courted, the
various activities I had entered upon, the results I had sought for. He
was not to be routed from his contention entirely, nor I from mine.
Following this personal analysis we fell to discussing a third man,
whom we both admired, an eminent physiologist, then connected
with one of the great experimental laboratories of the world, who had
made many deductions and discoveries in connection with the
associative faculty of the brain and the mechanics of associative
memory. This man was a mechanist, not an evolutionist, and of the
most convinced type. To him nowhere in nature was there any
serene and directive and thoughtful conception which brought about,
and was still bringing about continually, all the marvels of structure
and form and movement that so arrest and startle our intelligence at
every turn. Nowhere any constructive or commanding force which
had thought out, for instance, and brought to pass flowers, trees,
animals, men—associative order and community life. On the
contrary, the beauty of nature as well as the order of all living, such
as it is, was an accident, and not even a necessary one, yet
unescapable, a condition or link in an accidental chain. If you would
believe him and his experiments, the greatest human beings that
ever lived and the most perfect states of society that ever were have
no more significance in nature than the most minute ephemera. The
Macedonian Alexander is as much at the mercy of fate as the lowest
infusoria. For every germ that shoots up into a tree thousands are
either killed or stunted by unfavorable conditions; and although,
beyond question, many of them—the most—bear within themselves
the same power as the successful ones to be and to do, had they the
opportunity, still they fail—a belief of my own in part, albeit a hard
doctrine.
One would have thought, as I said to Professor Z—— at this
meeting, that such a mental conviction would be dulling and
destructive to initiative and force, and I asked him why he thought it
had not operated to blunt and destroy this very great man. “For the
very reasons I am always emphasizing,” he replied. “Pain, necessity,
life stung him into action and profound thought, hence success. He is
the person he is by reason of enforced mental and physical action.”
“But,” I argued, “his philosophy makes him account it all as
worthless, or, if not that, so fleeting and unstable as to make it
scarcely worth the doing, even though he does it. As he sees it,
happiness and tribulation, glory and obscurity, are all an accident.
Science, industry, politics, like races and planets, are accidents.
Trivial conditions cause great characters and geniuses like himself to
rest or to remain inactive, and mediocre ones are occasionally
permitted to execute great deeds or frustrate them in the absence of
the chance that might have produced a master. Circumstances are
stronger than personalities, and the impotence of individuals is the
tragedy of everyday life.”
“Quite so,” agreed my friend, “and there are times when I am
inclined to agree with him, but at most times not. I used to keep
hanging in one of my offices, printed and framed, that famous
quotation from Ecclesiastes: ‘I returned, and saw under the sun that
the race is not to the swift, nor the battle to the strong, neither yet
bread to the wise, nor yet favor to men of skill; but time and chance
happeneth to them all.’ But I took it down because it was too
discouraging. And yet,” he added after a time, because we both fell
silent at this point, “although I still think it is true, as time has gone on
and I have experimented with life and with people I have come to
believe that there is something else in nature, some not as yet
understood impulse, which seeks to arrange and right and balance
things at times. I know that this sounds unduly optimistic and vainly
cheerful, especially from me, and many—you, for one, will disagree
—but I have sometimes encountered things in my work which have
caused me to feel that nature isn’t altogether hard or cruel or
careless, even though accidents appear to happen.”
“Accidents?” I said; “holocausts, you mean.” But he continued:
“Of course, I do not believe in absolute good or absolute evil,
although I do believe in relative good and relative evil. Take
tenderness and pity, in some of their results at least. Our friend Z
——, on the contrary, sees all as accident, or blind chance and
without much if any real or effective pity or amelioration, a state that I
cannot reason myself into. Quite adversely, I think there is something
that helps life along or out of its difficulties. I know that you will not
agree with me; still, I believe it, and while I do not think there is any
direct and immediate response, such as the Christian Scientists and
the New Thought devotees would have us believe, I know there is a
response at times, or at least I think there is, and I think I can prove
it. Take dreams, for instance, which, as Freud has demonstrated, are
nature’s way of permitting a man to sleep in the presence of some
mental worry that would tend to keep him awake, or if he had fallen
asleep, and stood in danger to wake him.”
I waived that as a point, but then he referred to medicine and
surgery and all the mechanical developments as well as the
ameliorative efforts of life, such as laws relating to child labor,
workingmen’s compensation and hours, compulsory safety devices
and the like, as specific proofs of a desire on the part of nature,
working through man, to make life easier for man, a wish on her part
to provide him, slowly and stumblingly, mayhap, with things helpful to
him in his condition here. Without interrupting him, I allowed him to
call to mind the Protestant Reformation, how it had ended once and
for all the iniquities of the Inquisition; the rise of Christianity, and how,
temporarily at least, it had modified if not entirely ended the
brutalities of Paganism. Anesthetics, and how they had served to
ameliorate pain. I could have pointed out that life itself was living on
life and always had been, and that as yet no substitute for the flesh
of helpless animals had been furnished man as food. (He could not
hear my thoughts.) The automobile, he went on, had already
practically eliminated the long sufferings of the horse; our anti-
slavery rebellion and humane opposition in other countries had once
and for all put an end to human slavery; also he called to mind the
growth of humane societies of one kind and another, that ministered
to many tortured animals. And humane laws were being constantly
passed and enforced to better if not entirely cure inhuman
conditions.
I confess I was interested, if not convinced. In spite of life itself
existing on life, there was too much in what he said to permit any
one to pass over it indifferently. But there came to my mind just the
same all the many instances of crass accident and brutish
mischance which are neither prevented nor cured by anything—the
thousands who are annually killed in railroad accidents and industrial
plants, despite protective mechanisms and fortifying laws compelling
their use; the thousands who die yearly from epidemics of influenza,
smallpox, yellow fever, cholera and widespread dissemination of
cancer, consumption and related ills. These I mentioned. He
admitted the force of the point but insisted that man, impelled by
nature, not only for his own immediate protection but by reason of a
sympathy aroused through pain endured by him, was moved to
kindly action. Besides if nature loved brutality and inhumanity and
suffering why should any atom of it wish to escape pain, and why in
those atoms should it generate sympathy and tears and rejoicing at
escape from suffering by man, why sorrow and horror at the
accidental or intentional infliction of disaster on man by nature or
man?

The Origin and Evolution of Investment Treaty Standards Stability Value and Reasonableness Federico Ortino Ebook Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Origin and Evolution of Investment Treaty Standards Stability Value and Reasonableness Federico Ortino Ebook Full Chapter

Uploaded by

Copyright:

Available Formats

The Origin and Evolution of Investment

Treaty Standards: Stability, Value, and

This book has been a long time coming. It is my attempt at understanding a

2. The relevance of the measure’s purpose in assessing the existence

(a) Arbitrariness and the ‘high threshold’ approach 134

Select Bibliography 177

Abengoa, SA y COFIDES, SA v United Mexican States, ICSID Case

Bayindir Insaat Turizm Ticaret Ve Sanayi AS v Islamic Republic of Pakistan,

Cargill v Mexico, ICSID Case No. ARB(AF)/​05/​2, Award, 18 September 2009���������������73n88

Compania de Aguas del Aconquija and Vivendi Universal v Argentina,

Dan Cake v Hungary, ICSID Case No ARB/​12/​9 ���������������������������������������������������������� 133n129

EDF (Services) Limited v Romania, ICSID Case No AR/​05/​123, Award,

Gami Investments Inc v Mexico, UNCITRAL, Final Award,

Grand River Enterprises v USA, UNCITRAL, Award, 12 January 2011��������������������������������� 80

ImpregiloSpA v The Republic of Argentina, ICSID Case No ARB/​07/​17, Award,

Joseph Charles Lemire v Ukraine, ICSID Case No ARB/​06/​18, Decision on

Malicorp v Egypt, ICSID Case No. ARB/​08/​18, Award,

Nykomb v Latvia, SCC, Award, 16 December 2003 �������������������������������������������������������� 86n134

Pantechniki SA Contractors and Engineers (Greece) v The Republic of Albania,

Railroad Development Corporation v Republic of Guatemala, ICSID Case

Técnicas Medioambientales Tecmed, SA v The United Mexican States, ICSID Case

UAB E energija (Lithuania) v Republic of Latvia, ICSID Case No ARB/​12/​33,

Valeri Belokon v Kyrgyzstan, UNCITRAL, Award, 24 October 2014������������������������������� 71, 75

BIICL British Institute of International and Comparative Law

Approach to International Investment Treaty Making’ (2013) 28 ICSID Rev 152.

non-​impairment through unreasonable, arbitrary or discriminatory measures (68%) and observance

inconsistency and uncertainty. In particular, the same investment treaty provision

Introduction 5 3. FET, regulatory change and recent

Stability, whether legal, political, economic, financial or monetary, seems to rep-

Bank Group (WBG) (https://​info.worldbank.org/​governance/​wgi/​#home); ensuring monetary and fi-

2 Multilateral Investment Guarantee Agency (MIGA)–​Economist Intelligence Unit (EIU) Political

Risk Survey 2013.

would depend in relevant part on an assessment of the public policy justification

A. Respect of Host State’s Undertakings with Regard

However, in the international investment context, contractual mechanisms face

OECD Working Papers on International Investment, 5–​6:

Protection’ (2004) 20 Arb Int’l 411, 423–​4.

of the 1959 Abs-​Shawcross Draft Convention on Investments Abroad21 and Article

include the corresponding undertakings of the foreign investor. Accordingly, the

Consensus’ (2013) 29 Arb Int’l 607, 614.

A FRIEND of mine, a quite celebrated neurologist, psychiatrist,

You might also like

(a) Arbitrariness and the ‘high threshold’ approach 134

Cargill v Mexico, ICSID Case No. ARB(AF)/05/2, Award, 18 September 2009��73n88

Dan Cake v Hungary, ICSID Case No ARB/12/9 �� 133n129

EDF (Services) Limited v Romania, ICSID Case No AR/05/123, Award,

Grand River Enterprises v USA, UNCITRAL, Award, 12 January 2011�� 80

ImpregiloSpA v The Republic of Argentina, ICSID Case No ARB/07/17, Award,

Joseph Charles Lemire v Ukraine, ICSID Case No ARB/06/18, Decision on

Malicorp v Egypt, ICSID Case No. ARB/08/18, Award,

Nykomb v Latvia, SCC, Award, 16 December 2003 �� 86n134

UAB E energija (Lithuania) v Republic of Latvia, ICSID Case No ARB/12/33,

Valeri Belokon v Kyrgyzstan, UNCITRAL, Award, 24 October 2014�� 71, 75

non-impairment through unreasonable, arbitrary or discriminatory measures (68%) and observance

Bank Group (WBG) (https://info.worldbank.org/governance/wgi/#home); ensuring monetary and fi-

2 Multilateral Investment Guarantee Agency (MIGA)–Economist Intelligence Unit (EIU) Political

OECD Working Papers on International Investment, 5–6:

Protection’ (2004) 20 Arb Int’l 411, 423–4.

of the 1959 Abs-Shawcross Draft Convention on Investments Abroad21 and Article