MOST-FAVORED NATION TREATMENT CLAUSE IN INVESTMENT ARBITRATION

Abstract

Bilateral and regional investment agreements have proliferated in the last decade and new ones are still being negotiated. Most-Favored-Nation (MFN) clauses link investment agreements by ensuring that the parties to one treaty provide treatment no less favorable than the treatment they provide under other treaties in areas covered by the clause. MFN clauses have thus become a significant instrument of economic liberalization in the investment area. Moreover, by giving the investors of all the parties benefiting from a country’s MFN clause the right, in similar circumstances, to treatment no less favorable than a country’s closest or most influential partners can negotiate on the matters the clause covers, MFN avoids economic distortions that would occur through more selective country-by-country liberalization. Such a treatment may result from the implementation of treaties, legislative or administrative acts of the country and also by mere practice. The present article provides a factual survey of jurisprudence and related literature on MFN treaty clauses in investment agreements with a view to contributing a better understanding of the MFN interfaces between such agreements. Key words: dispute resolution, foreign investment, ICSID, most-favored nation treatment, third party treaty, mandate of the arbitration tribunal, a selective import