Contract interpretation in investment treaty arbitration (completed)

Is striking how much effort is devoted to highlighting the methodology of treaty interpretation during the decision-making process when little effort is devoted to analysing contract interpretation in investment treaty arbitration. Admittedly, it is quite natural to focus on the content of treaty provisions as tribunals are called upon to apply them. However, the uncomfortable feeling that the difference in effort engenders is caused not so much by the predominant attention which treaty interpretation receives, but more by the scarcity of discussion on contract interpretation.

About the Project

The lesser role of contracts if compared with treaty provisions does not explain the scarcity. Investments are regularly channelled via contracts and so clarification of the contracts’ content is an essential element in decision making. Existence of contractually based investment, violations of investment protection standards which result from premature contract termination or from adoption of regulatory measures, calculation of damages – these and other aspects of international investment law may rely on contractual provisions and so on contract interpretation. Moreover, apart from investment contracts, other contractual arrangements regularly gain attention in investment treaty arbitration, such as settlement agreements and contracts that are incidental to investments. Their interpretation may also be indispensable for the resolution of investment treaty disputes.

The scarcity of discussion surrounding contract interpretation may nevertheless be explained by the difficulties in investment treaty arbitration of characterising the ascertainment of contracts’ content as interpretation. Unlike for treaty interpretation, tribunals rarely label their contractual analytical efforts as contract interpretation. As tribunals’ principal analysis focuses on international investment law provisions, contract interpretation is often hidden behind lengthy fact-finding activity. Contracts are treated as facts in investment treaty arbitration and contract interpretation itself inevitably contains factual components, but this cannot detract from the relevance of law, more precisely of governing law, and interpretative principles and canons when analysing contractual provisions beyond facts and evidence.

In response to the existing complexity in characterising ascertainment as contract interpretation, the approach adopted in this research takes the position that a hermeneutic reading of a contract is interpretation. This position, by no means unique, enables a broad range of tribunals’ analytical efforts to be investigated, efforts which are not necessarily prompted by parties’ disagreement about contractual provisions’ content or their ambiguity.

Investment treaty arbitration’s substantive and procedural legal frameworks shape such a hermeneutic reading of contractual provisions. While public international law provides dogmatic approaches to override municipal law or to adjust certain contractual provisions, municipal law and conflict-of-laws rules seek answers from within the contract, ie from governing law of the contract. Some interpretative principles and canons that are not necessarily associated with either public international law or municipal law are also visible in contract interpretation, sometimes to a prevailing extent. Apart from substantive principles and canons of interpretation, the procedural framework of investment treaty arbitration impacts contract interpretation. Allocation of the burden of proof, admissibility of evidence, administration of the parties’ submissions etc – all directly affect the ultimate result of ascertaining and clarifying contracts’ content.

The ambition of the research is thus to investigate peculiarities of contract interpretation in investment treaty arbitration by defining interpretative methods and preferences which are used in addressing contractual provisions, as well as to investigate the impact of the dispute resolution framework. The examined material is not limited to investment contracts and includes a wide variety of other contracts. If reduction of contract interpretation to a fact-finding activity is questioned in the research, prevailing textual or literal reading of contracts is readily acknowledged. In fact, the reasons for a textual reading constitute a particular focus for the investigation. The research question thus asks what impacts contract interpretation in investment treaty arbitration and how contract interpretation is/should be ultimately structured.


The PhD will be delivered Autumn 2019. 


University of Oslo

Published Nov. 9, 2016 10:44 AM - Last modified June 11, 2020 10:47 AM