Jan 01, 2005
“Investment Treaty Arbitration and Jurisdiction over Contractual Claims—The SGS Cases Considered” in International Investment Law and Arbitration: Leading cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (Cameron May: London, 2005, T. Weiler, ed.), p. 325.
Rarely have practitioners and legal commentators expected a decision on jurisdiction, in the context of investment treaty arbitration, with as much eagerness as the decision of August 27, 2003 in SGS v. Pakistan. One of the key issues in SGS v. Pakistan, that of the effect of the so-called “umbrella” clause or, more plainly, the “observance of undertakings” clause, was first discussed in the 1960s by authorities such as Professor Weil and Sir Elihu Lauterpacht, but only put to the test in arbitral case law in 2003 before the Arbitral Tribunal constituted in SGS v. Pakistan, which was composed of Florentino Feliciano, President, André Faurès and Christopher Thomas. The dispute in SGS v. Pakistan emerged from the PSI entered into between the Swiss company SGS and the Republic of Pakistan whereby SGS was to provide PSI services with respect to goods exported from certain countries to Pakistan. The PSI Agreement was mutually performed, although the parties disputed the adequacy of each other’s performance, before Pakistan terminated the Agreement. The resulting dispute between the parties as regards the validity and consequences of the termination gave rise to different proceedings.