Characteristics of the New Umbrella Clause in Vietnamese International Investment Agreements

The article is devoted to the analysis of arbitration practice explaining the umbrella clause. Based on an analysis of the provisions of Vietnam’s international treaties on the protection of «new generation» investments and arbitration practice, it has been established that the new umbrella clause has a narrower scope, which focuses specifically on violations related to the exercise of sovereign power. The characteristics of the new umbrella clause are highlighted: 1) The umbrella clause applies to a breach of contract when the State acts in its sovereign capacity (de iure imperii) rather than in its commercial capacity (de iure gestionis); 2) In order to successfully file a claim under the new umbrella clause, the investor must prove that the State has interfered with his rights through specific actions a government agency, rather than through the execution (or non-execution) of a standard contract; 3) The investor must demonstrate that a breach of contract also constitutes a violation of the material norms guaranteed by international investment treaties; 4) The State is responsible, in accordance with international law, for the actions of its own government agencies, but not necessarily for contracts concluded by these authorities.