BIVAC BV v Paraguay versus SGS v Paraguay: The Umbrella Clause Still in Search of One Identity

Abstract

In two recent Decisions and one Award4 involving cases arising essentially out of the same facts—refusal by the government to pay sums acknowledged to be due under similar contracts—two International Centre for Settlement of Investment Disputes (ICSID) Tribunals examined jurisdiction over a contract dispute under their respective BITs’ umbrella clauses.5 While the two Tribunals agreed that the umbrella clause gave them jurisdiction over contractual disputes, the fact that the underlying contract gave exclusive jurisdiction over disputes to local courts raised the issue of admissibility, on which they disagreed. Consequently, given the difficulty of finding violation of other BIT standards in breach of contract situations, they reached different practical results for the similarly situated Claimants. This brings the discussion on the umbrella clause once more to the forefront. Professor Crawford wrote in 2008 that ‘arbitral tribunals’ positions—particularly on the question of umbrella clauses, reflect a level of dissent...