John et al (2000) define a treaty as an agreement under the international law; it is entered into by actors in international law, namely international organizations and/or sovereign states. Treaties can also be termed as: protocol, an agreement, covenant, exchange of letters, convention, etc. Regardless of all these terminologies that are used, these international agreements when scrutinized under the international law will fall equally under treaties and the rules used are all the same. It is also good to note that while in the rest of the world the term treaty may mean an agreement, in United States constitutional law, the term has a special meaning which is more restricted than its meaning in international law.
A contract in law on the other hand is a binding legal agreement enforceable in a court of law. That means that a contract is an exchange of promises having a specific remedy for breach. Agreement is said to be reached when an offer capable of immediate acceptance is met with a "mirror image" acceptance (unqualified acceptance). Parties must have necessary capacities to contract while the contract must not be; indeterminate, trifling, illegal, or impossible.
Contract laws are based principles that are expressed in the Latin phrase pacta sunt servanda –it must be kept. Breach of contract will be recognized by the law and remedies provided. Sometimes written contracts are required by either the parties, or by statutory law within various jurisdictions for certain types of agreement, for example when buying a house or land (Stevens, 1995). IntroductionIt is good to note that there is an increasing number of investment treaty arbitrations involved not only with the treaties but also with investor-state contracts.
To some extent of subject matter jurisdiction will not be uniform under the Bilateral Investment Treaties (BITs). One the other hand, the clauses of this kind has been lately added to help provide additional protection to willing and would be investors and is thus directed at covering the investment agreements that most host countries will conclude with any foreign investors. Although the “umbrella clause” has been known since the 1950s and its effects have been discussed in literature and doctrine, it was not until the recent two SGS Société Générale de Surveillance SA cases where it started to be tested (Schreuer, 2004). Common features of a general natureShihata (1995) asserts that the main common factors between the umbrella clauses are uses of mandatory languages.
For instance, Article 8(2) of the German Model BIT 1991(2) reads: “Each Contracting Party shall observe any obligation it has assumed with regard to investments in its territory by nationals or companies of the other Contracting Party” (emphasis added). A different formulation is found in Article 10 of the Australia -Poland BIT 1991 which is phrased in less forceful terms: “A Contracting Party shall, subject to its law, do all in its power to ensure that a written undertaking given by a competent authority to a national of the other Contracting Party with regard to an investment is respected” (emphasis added).
The second feature most common to majority of BITs as examined is; they relate to the obligations undertaken by any State and thus do not refer to the obligations found between the private individuals.