Should the MFN within Investment Treaties Exclude Dispute Resolution? An Evaluation of the Australian Approach

Abstract

International Investment Agreements (IIAs) frequently include Most-Favoured-Nation (MFN) clauses to multilateralise the treaty protections. During 2000 to 2016, some Investor-State Arbitral (ISA) tribunals have used the treatment to bypass various procedural prerequisites to arbitration including the requirement to litigate in the domestic forum of the host state before arbitration. The tribunals have done so by using MFN to import more favourable Dispute Settlement Provisions (DSPs) from other treaties. While such use of MFN benefits the investors, it limits the power of the domestic courts of the host state. Globally, to address the issue, some countries have recently reformed their IIAs by excluding DSPs explicitly from the scope of MFN. In the global context mentioned above, this Article examines the approach taken by Australia to deal with the issue. The Article finds that, while some countries are moving towards a narrower MFN which excludes DSPs, Australia is following a case-by-case approach. The Article argues that Australia should maintain the status quo since the current approach is the most suitable to the economic policies of the country.