Umbrella and Stabilization Clauses in the System of Protection of Foreign Investments

The article examines the role of umbrella and stabilization clauses within the system of legal guarantees for the protection of foreign investments and their relevance to ensuring the legal certainty of the investment regime. It outlines the functional purpose of the umbrella clause as a treaty-based mechanism aimed at reinforcing the binding character of the host State’s obligations vis-à-vis the investor, and analyses the stabilization clause as an instrument mitigating the adverse effects of changes in domestic legislation on the investor. Particular attention is paid to the interrelation of these clauses with procedural guarantees for the settlement of investment disputes and with the quality of the law-application environment affecting the predictability of public authority. It is noted that the effectiveness of these legal constructs is determined by their complementary nature and depends on the coherence of regulatory priorities, the stability of the legal framework, and the availability of effective legal remedies.