This chapter deals with the difficultdistinction between treaty and contract claims. Most treaty arbitrations involve an investment which gave rise to a contract. Treaty arbitrations are particularly complex precisely because of the co-existence of treaty and contract dispute resolution methods at the jurisdictional level, and of treaty and contact claims at the merits stage.
Although its implementation and effects are still controversial, the distinction as such is well accepted nowadays. In lieu of many others, one may quote from the Vivendi annulment decision.
"A state may breach a treaty without breaching a contract, and vice versa, and this is certainly true of these provisions of the BIT. [...] [W]hether there has been a breach of the BIT and whether there has been a breach of contract are different questions. Each of these claims will be determined by reference to its own proper or applicable law - in the case of the BIT, by international law; in the case of the Concession Contract, by the proper law of the contract [...]"