Jurisdiction(s):
United Kingdom

Key definition

Investment definition

What does Investment mean? In practice, investment describes an asset or bundle of rights committed in a host state with the aim of generating a return. In investor-state work, the operative definition is treaty-specific: most bilateral investment treaties (BITs) and the Energy Charter Treaty use broad, asset-based lists covering, where applicable, tangible and intangible property located in the territory, shareholdings and other equity interests, contractual rights (including concessions), intellectual property, and loans or claims to money, subject to stated carve-outs. The ICSID Convention does not define investment; tribunals assess jurisdiction by the treaty text and case law, commonly considering a contribution of resources,...

Umbrella clauses in investment treaty arbitration: case law on scope, jurisdictional conflicts, and drafting trends

Published by a LexisNexis Arbitration expert

Practice notes

What is an umbrella clause?

An umbrella clause (also referred to as an umbrella agreement or an observance of undertakings clause) is a provision in a bilateral investment treaty (BIT) by which a state undertakes to honour all obligations owed to foreign investors. For investors, such clauses can be particularly beneficial, as they may permit an argument that issues ordinarily governed by local law and courts—such as a state’s breach of contractual duties to the investor—also amount to a breach of the treaty by virtue of the umbrella clause. Consequently, the investor may attempt to bring all disputes with the state before an international forum under the BIT’s protective umbrella. However, whether a clause in fact elevates domestic law obligations in this way (and, if so, which obligations are elevated) turns on the proper interpretation of the clause. The interpretation of umbrella clauses has been contentious, and this Practice Note will consider several key decisions that address this point...

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Web page updated on 22/05/2026

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