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5 J. World Investment & Trade 555 (2004)
Breaches of Contract and Breaches of Treaty: The Jurisdiction of Treaty-Based Arbitration Tribunals to Decide Breach of Contract Claims in SGS v. Pakistan and SGS v. Philippines

handle is hein.journals/jworldit5 and id is 553 raw text is: Breaches of Contract and Breaches of Treaty The Jurisdiction of Treaty-based Arbitration Tribunals to Decide Breach of Contract Claims in SGs v. Pakistan and SGs v. Philippines Stanimir A. ALEXANDROV* I. INTRODUCTION Foreign investments are often made through a contract between a foreign investor and an entity or instrumentality of the host State. The promotion and protection of such investments is consistent with the object and purpose of investment treaties. In numerous cases, disputes between investors and host States under investment treaties arise out of breaches of underlying contracts. Public information regarding these arbitrations is limited. A quick review of the International Centre for Settlement of Investment Disputes (ICSID) sources suggests, however, that in approximately ninety to one hundred cases registered with ICSID since 1 January 1997, ICSID jurisdiction was asserted based on a provision in an investment treaty and roughly one half of them appear to have involved underlying contractual breaches. The recent decisions of the ICSID Tribunals in SGs v. Pakistan' and SGS V. Philippines2 have brought to the forefront the question as to whether an international arbitration tribunal constituted under an investment treaty has the authority to exercise jurisdiction over claims for breaches of a contract between a foreign investor and a State.3 These Decisions have been the subject of ongoing discussions as a result of the two Tribunals' contradictory holdings on this issue. This article focuses on the different rulings of the SGS v. Pakistan and SGS V. Philippines Tribunals with respect to two questions: (i) whether a breach of contract by the State will constitute a breach of the investment treaty where the contracting States have included an umbrella clause, * Sidley Austin Brown & Wood LLP, Washington, D.C. The author can be reached at: <salexandrov@sidley.com>. SGs Socitd Giirale de Surveillance S.A. v. Islamic Republic of Pakistan (hereinafter SGS V. Pakistan), ICSID Case No. ARB/01/13, Decision of the Tribunal on Objections toJurisdiction of 6 August 2003, 18 ICSID Rev.-F.I.L.J. 307, 2003. 2 SGs Socit Ginfrale de Suweillance S.A. v. Republic of the Philippines (hereinafter Scs v. Philippines), ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to jurisdiction of 29 January 2004, available at: <http://www.worldbank.org/icsid/cases/SGsvPhil-final.pdf6 (last visited on 14 June 2004). 3 Any references to contracts in this article are references to contracts between a State and a foreign investor.

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