Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Legal Analysis of the Implementation of Umbrella Clauses Principle in Bilateral Investment Treaties in Indonesia

Author(s): Daniel Hendrawan, Emilia F Dewi, WV Anggara Wisesa, Subiakto Soekarno, Anggie RA Widodo

Developing countries have the need for capital to build their country. One way to get capital is to open foreign investment in the country. Implementation of the opening of foreign capital investment is done by making international agreements between countries. This is done to attract foreign investors to enter the country. One of the countries that make foreign investment is Indonesia. Indonesia made Bilateral Investment treaties as one of the international agreements to make foreign investment to enter and invest in Indonesia. One of the clauses inherent in bilateral investment treaties is the umbrella clause. Umbrella clause is used to protect foreign investors who enter the country against the rules that can harm these investors. This paper seeks to analyse the origin and foundation of the existence of Bilateral Investment Treaties in Indonesian laws and regulations, the implementation and the consequences of umbrella clauses in legal context, and practical application run by a special investment-related agency, the Investment Coordinating Board in carrying out bilateral investment in the context of the umbrella clause. The study results reveal important changes in Indonesia's orientation, through recent regulatory legislation, in an effort to more open to foreign investment, and to protect it.