Application of MFN to Extend the Jurisdiction of Arbitral Tribunals

Abstract

Jurisdiction of international courts and tribunals refers to their power to decide international disputes. Investor-state arbitral tribunals derive their jurisdiction from the consent of states, and they are constituted by their mandate providers, the sovereign states. In this way, states subject themselves to a consensual system of investment dispute settlement by conferring power upon tribunals. Consequently, the lack of consent by a state means the lack of jurisdiction over the state. However, as has been previously discussed in Chaps. 1 and 5 of this book, since the Maffezini v Spain case in the year 2000, some investor-state tribunals have extended their jurisdiction by MFN clauses in IIAs, while others have rejected such an extension. The present chapter focuses more on the application of MFN for expanding four traditional dimensions of the jurisdiction of tribunals, namely: jurisdiction over specific persons (ratione personae), territorial (ratione loci), temporal (ratione temporis) and subject matters (ratione materiae). The chapter argues that MFN should not be applied to bypass consent of IIA party states conferring jurisdiction to the arbitral tribunals. The chapter also argues that extending jurisdiction by MFN can result in abuse of the arbitral process, ultimately undermining the integrity of investor-state arbitral tribunals. From the developing host-states’ perspective, the application of MFN to jurisdictional issues can cause their distrust in investor-state arbitration ultimately prompting them to exclude MFN or investor-state arbitration from new IIAs.