Evolution of MFN Treatment and Drafting Trends in the Older Generation of IIAs

Sharmin, Tanjina

doi:10.1007/978-981-15-3730-1_2

Tanjina Sharmin³

Part of the book series: International Law and the Global South ((ILGS))

469 Accesses

Abstract

This chapter has mainly two parts. Part 1 examines the origin, history and development of MFN to examine as to whether MFN clauses in IIAs should be interpreted mainly by their wording, or whether any guidance can be sought from the conceptual nature of the standard. Another purpose of this part is to provide a detailed understanding of the concept and evolution of MFN so as to inform its application in the context of IIAs. This chapter discusses the origin and history of MFN in different phases of its evolution. It draws some insights from the evolution to clarify MFN’s conceptual nature. Part 2 of this chapter examines different styles of drafting MFN clauses in the older generations of IIAs, the core contents of MFN across the styles, and ascertains whether interpretation should be case by case based on the text or whether it is necessary to look beyond the text. The chapter argues that in the light of the history and evolution of MFN, it is unlikely that, while including MFN in IIAs, the IIA parties could have intended that MFN would import any more favourable treatment standard agreed in other IIAs. Instead, the state parties to IIAs intended to confer specific advantages by MFN. The chapter also argues that in the light of the history, states could not have intended that dispute settlement matters would fall under the scope of MFN clauses in IIAs.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

eBook: USD 16.99; Price excludes VAT (USA)

Softcover Book: USD 109.99; Price excludes VAT (USA)

Hardcover Book: USD 109.99; Price excludes VAT (USA)

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

1.
Endre Ustor, Special Rapporteur, ‘First report on the most-favoured-nation clause,’ (1970) II Yearbook of the International Law Commission (1969) 158–181; Jeswald W. Salacuse, A History of International Investment Treaties, in the Law of Investment Treaties (Oxford University Press, 2015). Bryan Coutain, ‘The Unconditional Most-Favored-Nation Clause and the Maintenance of the Liberal Trade Regime in the Post-war 1870s,’ (2009) 63 International Organization 139–175. Coutain argued that the maintenance of a liberal world economy especially in the post-World War II trade regime could be explained by MFN. For MFN in International Trade Law, see, Fred Trost, ‘Reconciling Regional Trade Agreements with the Most Favoured Nation Principle in WTO-GATT,’ (2008) 5 Macquarie Journal of Business Law 43; Also see, Jurgen Kurtz, ‘The MFN Standard and Foreign Investment: An Uneasy Fit, (2004) 5 Journal of World Investment and Trade 861.
2.
The ILC, ‘Draft Articles on Most Favoured Nation Clause 1978 with Commentaries,’ (1978) II (part 2) Yearbook of the International Law Commission 16–73, Art 7, available at <http://legal.un.org/ilc/texts/instruments/english/commentaries/1_3_1978.pdf>.
3.
Ibid., Article 5.
4.
Jacob Viner, ‘The Most Favored-Nation Clause in American Commercial Treaties,’ 32 Journal of Political Economy (1924) 101–129; Georg Schwarzenberger, ‘The Most-Favoured Nation Standard in British State Practice,’ 22 British Yearbook of International Law (1945) 96–97; Commercial treaties were signed between states to ensure mutual rights related to various subject matters which were not exclusively limited to commercial matters. However, custom treatment of goods and treatment accorded to the merchant ships were two important areas which used to be addressed by the commercial treaties. Although many commercial treaties were signed before the seventeenth century, from this point of time, there was a trend of increase in the signing of these treaties. These treaties are considered to be the foundations of modern trade and investment treaties. Eventually, these treaties are taken over by trade and investment treaties in the modern time. The difference between commercial treaties and trade and investment treaties will be further clarified through the subsequent discussion in this chapter. For the definition, evolution and subject matters of commercial treaties, see, Wallace McClure, ‘The Development of Commercial Treaties in the Americas,’ (1931) 65 Bulletin of the Pan American Union, 991–1029; for details on the role of MFN in commercial treaties, see, Thomas Barclay, ‘Effect of Most-Favoured–Nation Clause in Commercial Treaties,’ (1907–1908) 17 Yale Law Journal, 26.
5.
The ILC, Draft Articles, above n 2, Article 7.
6.
For the definition of IIAs, see Chap. 1 (Introduction), Section 1.2.1.
7.
For the total number of IIAs existing presently, see, UNCTAD, Investment Policy Hub, <http://investmentpolicyhub.unctad.org>; For the most recent data on the IIAs signed and entered into force during 2017–18, see, UNCTAD, IIA Issues Note, Recent Developments in the International Investment Regime, Issue 1, (May 2018), available at https://unctad.org/en/PublicationsLibrary/diaepcbinf2018d1_en.pdf; Also see, Axel Berger, ‘Developing Countries and the Future of International Investment Regime’ (German Federal Ministry for Economic Co-operation and Development (BMZ) Division 411, GIZ, Germany 2015) 6. For the definition of IIAs, see Chap. 1, Section 1.2.1.
8.
From 2008, evolution of IIAs has entered into a new phase. Details are coming later in this chapter.
9.
UNCTAD, Most-Favoured-Nation Treatment, UNCTAD Series on Issues in International Investment Agreements II, UNCTAD/DIAE/IA/2010/1 (2010) 13–53, available at <http://unctad.org/en/Docs/diaeia20101_en.pdf>.
10.
Yas Banifatemi, ‘The Emerging Jurisprudence on the Most-Favoured-Nation Treatment in Investment Arbitration’ in A. Bjorklund, I. Laird, S. Ripinsky (eds), Investment Treaty Law: Current Issues III (British Institute of International and Comparative Law, 2009), 24; Martins Paparinskis, ‘MFN Clauses and International Dispute Settlement: Moving beyond Maffezini and Plama’ (2011) 26(2) ICSID Review 14–58; Rudolf Dolzer and Terry Myers, ‘After Tecmed: Most-Favoured-Nation Clauses in Investment Protection Agreements’ (2004) 19 ICSID Review 49.
11.
Tony Cole, ‘The Boundaries of Most Favored Nation Treatment in International Investment Law’ (2012) 33 Michigan Journal of International Law 537–586. However, Cole also accepted that interpretation of IIA MFN is always a case-by-case exercise.
12.
Ibid.
13.
Vienna Convention on the Law of Treaties (VCLT), signed on 23 May 1969, 1155, 1-18232 United Nations Treaty Series 332 (entered into force on 27 January 1980), Articles 31 and 32. Article 31 provides that treaty provisions should be interpreted in accordance with the ordinary meaning of the texts in their context in light of their object and purpose. For more details on requirements in the VCLT provisions, see Chap. 3 (Interpretative Principles).
14.
MFN can be included in different clauses within IIAs although most IIAs contain a standard independent MFN clause which explicitly identifies itself as an MFN treatment clause. Some IIAs include MFN within the Fair and Equitable Treatment Clause. Some IIAs may include MFN in the clause on compensation for loss.
15.
Cole, above n 11.
16.
P. Verloren van Themaat, The Changing Structure of International Economic Law (The Hague: Martinus Nijhoff, 1981) 19–21; Ustor, above n 1.
17.
Ustor, above n 1.
18.
Stanley K. Hornbeck, ‘The Most-Favored-Nation Clause’ (1909) 3(3) American Journal of International Law 619–647; Ustor, above n 1.
19.
Ibid.
20.
Ustor, above n 1, Also see, Andrew Paul Newcombe and Lluís Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009); Themaat, above n 16.
21.
Schwarzenberger, above n 4 at 96–97.
22.
Marie-France Houde, ‘Most-Favoured-Nation Treatment in International Investment Law’ in International Investment Law: A Changing Landscape, A Companion Volume to International Investment Perspectives (OECD: 2005) 129.
23.
Ustor, above n 1; Michael J. Trebilocock and Robert Howse, The Regulation of International Trade (3rd ed) (Routledge, 2005) 49.
24.
Cole, above n 11.
25.
Ustor, above n 1.
26.
Ibid. The commercial treaty between England and Brittany of 1486 and the Anglo-Danish treaty of 1490 were cited by Ustor as the examples.
27.
Ustor, above n 1, 160.
28.
G.P. Verbit, ‘Preferences and the Public Law of International Trade: The End of Most-Favoured Nation Treatment?’ (1969) Hague Academy of International Law, Colloquium 1968: International Trade Agreements 25–26.
29.
Ustor, above n 1.
30.
Hornbeck, above n 18, 401. Hornbeck has called MFN as a ‘Matter of Course’ during the nineteenth century.
31.
Richard Pomfret, The Economics of Regional Trading Arrangements (Oxford University Press, 2001).
32.
The conditional form of MFN may generally impose a condition on the privileged state that the same concessions must be offered to the grantor state as a precondition to avail the MFN privileges. In the unconditional form, there is no such condition. For details, see, Stephen W. Schill, ‘Multilateralizing Investment Treaties through Most-Favored-Nation Clauses’ (2009) 27 Berkeley Journal of International Law, 496–569, at 510; for the definition of conditional and unconditional MFN, also see, Newcombe and Paradell, above n 20, at 199.
33.
Guiguo Wang, International Investment Law: A Chinese Perspective, (Routledge, 2015) 336. Wang has argued that, ‘[n]eedless to say, there is no free lunch anywhere. The motivation for giving unconditional MFN treatment was to maintain the dominant position in world trade of the countries which granted it rather than a sign of friendship or assistance to the economic development of other countries’; Also see Cole, above n 26, 546.
34.
Pomfret, above n 31.
35.
Akiko Yanai, ‘The Function of the MFN Clause in the Global Trading System,’ (Working Paper Series 01/02-No. 3, Institute of Development Economics JETRO APEC Study Centre, 2002) 7–8, available at <http://www.ide.go.jp/library/English/Publish/Download/Apec/pdf/2001_15.pdf>.
36.
Ibid.
37.
Joshua P. Meltzer, Investment, in Bilateral and Regional Trade Agreements: Commentary and Analysis, in vol 1 (Simon Lester, Bryan Mercurio and Lorand Bartles eds (Cambridge University Press, 2015) 245–247; Also see, Andreas Paulus, Treaties of Friendship, Commerce and Navigation, Max Planck Encyclopaedia of Public International Law, (Oxford Public International law, March 2011) http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e1482.
38.
M. Sornarajah, the International Law on Foreign Investment, (Cambridge University Press, 2010) 180.
39.
Treaty of Amity and Commerce between the United States and France, 1778. It was the first FCN treaty. It contained an MFN clause in Article 2. For the text of the treaty, see, William Malloy, 1 Treaties, Conventions, International Acts, Protocols and Agreements between the United States and Other Powers: 1776–1909, (US Government Printing Office, 1923). Also see, Pomfret, above n 31; M. Sornarajah, The International Law on Foreign Investment (Cambridge University Press, 2004) 204–205.
40.
Calvo Doctrine was formulated by an Argentine Lawyer, for more details on the doctrine, see, Donald R Shea, The Calvo Clause: A Problem of Inter American and International Law and Diplomacy (Minnesota University Press, 1955) 17.
41.
For example, the 1978 Treaty of Amity and Commerce included a conditional MFN clause. See, Surya P. Subedi, International Investment Law, Reconciling Policy and Principle (Hart Publishing, 2012) (Article I: Evolution of Foreign Investment Law).
42.
Douglas A. Irwin, ‘Multilateral and Bilateral Trade Policies in the World Trading System: a Historical Perspective’ in Melo, De, and Panagariya, A., (eds), New Dimensions in Regional Integration (Cambridge University Press, 1993) 90–118.
43.
Cobden Treaty, Article 19; See 50 British and Foreign State Papers 13, 24–25 (1860).
44.
Ustor, above n 1, 162.
45.
Verbit, above n 28, 26.
46.
Ibid.
47.
Verbit, above n 28, 26.
48.
Ustor, above n 1, 162.
49.
Ibid.
50.
Ustor, above n 1, 162.
51.
Verbit, above n 28, 26.
52.
Irwin, above n 42.
53.
Marc Hayford and Carl A Pasurka Jr., ‘The Political Economy of the Fordney-McCumber and Smoot-Hawley Tariff Acts,’ (1992) 29 Explorations in Economic History 30–50.
54.
Douglas A. Irwin, ‘From Smoot-Hawley to Reciprocal Trade Agreement: Changing the Course of U.S. Trade Policy in the 1930s, in Bordo, Michael D., Goldin, Claudia and White, Eugene N., (eds), The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (University of Chicago Press, 1998) 325–352.
55.
Irwin, above n 54, 90–118.
56.
Ustor, above n 1, 158–181; Verbit, above n 42, 27.
57.
Ibid.
58.
Jaroslav Zourek, Special Rapporteur, ‘Scope of the Most-Favoured-Nation Clause in the Matter of Consular Intercourse and Immunities,’ (1961) II Yearbook of the International Law Commission 1960, 25.
59.
Ibid.
60.
Zourek, above n 58.
61.
Ibid.
62.
League of Nations, Treaty Series, vol. CLXXXVIII 289, available at <https://treaties.un.org/pages/lononline.aspx?clang=_en>.
63.
Zourek, above n 58, 25.
64.
Ibid.
65.
United Nations, Nationality Decrees in Tunis and Morocco, Advisory opinion of 7 February 1923 (series B No. 4), Summaries of Judgments, Advisory Opinions and Orders of the Permanent Court of International Justice (New York, 2012), UN Doc ST/LEG/SER.F/1/Add.4.
66.
Ibid.
67.
Nationality Decrees in Tunis and Morocco, Advisory opinion, above n 65.
68.
Ustor, above n 1, 167.
69.
Ibid.
70.
Ustor, above n 1, 167.
71.
Ibid.
72.
Ustor, above n 1, at 167.
73.
Trost, above n 1, at 47.
74.
The United Nations (UN) was founded in 1945. For details, see UN website at <http://www.un.org/en/about-un/>.
75.
Kerry A Chase, Trading Blocs, States, Firms and Regions in the World Economy, (University of Michigan Press, 2005) 105–140.
76.
Havana Charter for an International Trade Organization (24 March 1948), UN Doc E/Conf2/78 <https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=X-1-b&chapter=10&clang=_en>. For example, Articles 11 and 12 of the Charter provided for various protections to foreign investments including just and equitable treatment, non-discrimination and full protection and security.
77.
Although Article 11(2) of the Havana Charter kept room for bilateral and multilateral agreements on international investments, those would potentially be overseen by the establishment of an International Trade Organisation.
78.
Interim Commission for the International Trade Organization, Final Act and Related Documents, United Nations Conference on Trade and Employment (New York, 1948). https://www.wto.org/english/docs_e/legal_e/havana_e.pdf.
79.
Salacuse, above n 1. UNCTAD, Fair and Equitable Treatment (1999) UNCTAD/ITE/IIT/11 (vol 3)24-5; UNCTAD, International Investment Instruments: A Compendium (1996) vol. 1, p 3.
80.
Interim Commission for the International Trade Organization, above n 78.
81.
Verbit, above n 28, 30.
82.
Mary E Footer, On the Laws of Attraction: Examining the Relationship between Foreign Investment and International Trade in Prospects, in International Law and Policy (Roberto Echandi and Pierre Sauve eds) (Cambridge University Press, 2013) 109.
83.
Trost, above n 1, at 47–48.
84.
1994 GATT, Article XXIV, available at <https://www.wto.org/english/docs_e/legal_e/10-24_e.htm>.
85.
During 1947 to 1994, GATT 1947 had provisional application. In 1994, WTO Agreements were signed which included 1947 GATT with some modifications. For more details, see WTO website on ‘The GATT Years from Havana to Marrakesh,’ available at: <https://www.wto.org/english/thewto_e/Whatis_e/tif_e/fact4_e.htm>.
86.
For example, Treaty of Friendship, Commerce, and Navigation between the US and Japan, dated 2 April 1953, 4 UST 2063, 2070, TIAS No. 2863; Treaty of Friendship, Commerce and Navigation between the US and Pakistan, dated 12 November 1959, 12 UST 110, TIAS No. 4683; For more examples of FCN, see, Andrew B. Thorson, ‘The 1953 United States-Japan FCN Treaty: Can Title VII Protect American Women,’ (1993) 3 Boston University Public International Law Journal, 315. Some scholars have argued that the USA led FCN treaties signed in this phase were essentially investment treaties. However, there are contrary views. Some scholars have argued that the scope of these FCN treaties extended beyond investment which sometimes included various aspects of trade, commerce, navigation, and consular issues. For more details on this debate, see, Wayne Sachs, ‘The New US Bilateral Investment Treaties,’ (1984) 2 International Tax and Business Law, 192, at 196–197.
87.
Salacuse, above n 1.
88.
Kenneth J Vandevelde, United States Investment Treaties: Policy and Practice (Kluwer Law and Taxation, 1992).
89.
Kurtz, above n 1.
90.
Salacuse, above n 1.
91.
The efforts included the International Chamber of Commerce’s International Code of Fair Treatment of Foreign Investments 1949, the Draft International Convention for the Mutual Protection of Private Property Rights in Foreign Countries 1957 and the OECD Draft Convention on the Protection of Foreign Property 1967. For details, see, F Tschofen, ‘Multilateral Approaches to the Treatment of Foreign Investment’ 1992, 7 ICSID Review Foreign International Law Journal, 384; Generally on the Evolution of International Investment Law, and how attempts to establish a multilateral framework failed, see, Emmanuel Laryea, ‘Evolution of International Investment Law and Implications for Africa,’ in Francis N. Botchway (eds), Natural Resource Investments and Africa’s Development (Edward Elgar, 2011), 293–327.
92.
Treaty between the Federal Republic of Germany and Pakistan for the Promotion and Protection of Investments (Germany-Pakistan BIT), signed on 25 November 1959, (entry into force on 28 April 1962).
93.
Ibid., Article 3(3).
94.
The 1959 Germany-Pakistan BIT, above n 92.
95.
Salacuse, above n 1.
96.
ICSID website, at: https://icsid.worldbank.org/en/Pages/about/default.aspx.
97.
Agreement on Economic Cooperation between the Government of the Kingdom of the Netherlands and the Government of Indonesia (Netherlands-Indonesia BIT), signed on 7 July 1968, (entry into force on 17 July 1971) (terminated on 1 July 1995), Article 11.
98.
Ibid., Articles 5(1) and (2).
99.
Schill, above n 32, 514.
100.
UNGA, Res 33/139, 89th Plenary Meeting (19 December 1978).
101.
The International Law Commission (ILC), Report on the Sixty Seventh Session, Annex. Final Report of the Study Group on the Most-Favoured-Nation (the 2015 ILC Report), GE.15-13770 United Nations General Assembly A/70/10 (2015), available at <http://legal.un.org/ilc/reports/2015/english/annex.pdf>.
102.
UNGA, Res A/RES/40/65 (11 December 1985).
103.
Ibid.
104.
The 2015 ILC Report, above n 101.
105.
Ibid.
106.
The ILC, Draft Articles, above n 2. Articles 4-5.
107.
Ibid., Article 7.
108.
The ILC, Draft Articles, above n 2.
109.
Ibid., Article 13.
110.
The Marrakesh Agreement Establishing the World Trade Organization, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 15 April 1994, 33 ILM 1144, 1994 (the WTO Agreement).
111.
Kurtz, above n 1 at 865; Also see, Cole, above n 11, at 557.
112.
The 1994 GATT, above n 84, Article 1.
113.
Ibid., Article XXIV.
114.
The 1994 GATT, above n 84, Article XIII.
115.
Decision of the GATT Contracting Parties of 28 November 1979, BISD 26S/203.
116.
The 1994 GATT, above n 84, Article XX.
117.
Ibid., Article XXI.
118.
The 1994 GATT, above n 84, Article XXIV (3).
119.
Trost, above n 1, for details on how FTAs have evolved under the exception to MFN under GATT Article XXIV.
120.
Ibid.
121.
WTO, General Agreement on Trade in Services, Article II, available at: <www.wto.org>.
122.
WTO, Agreement on Trade Related Aspects of Intellectual Property Law TRIPS <www.wto.org>.
123.
WTO, Agreement Establishing the World Trade Organization WTO (1994), available at: <www.wto.org>.
124.
Claudia Salomon and Sandra Friedrich, How Most Favoured Nation Cluses in Bilateral Investment Treaties Affect Arbitration (2013) <uk.practicallaw.com/0-381-7466>.
125.
Newcombe and Paradell, above n 20, 57–58.
126.
Ibid.
127.
Newcombe and Paradell, above n 20, 57–58.
128.
OECD, ‘Most-Favoured-Nation Treatment in International Investment Law,’ in International Investment Law: A Changing Landscape: A Companion Volume to International Investment Perspectives (OECD Publishing, 2006) 127–161, 129 available at <https://www.oecd.org/investment/internationalinvestmentagreements/40077165.pdf>, at 130.
129.
Ibid.
130.
The OECD, above n 128.
131.
Ibid., at 131.
132.
Agreement between the People’s Republic of China and the Federal Republic of Germany on the Encouragement and Reciprocal Protection of Investments (China-Germany BIT), signed on 1 December 2003, (entry into force on 11 November 2005).
133.
Ibid.
134.
2003 China-Germany BIT, above n 132.
135.
The examples do not consist of any comprehensive list.
136.
For the cases, see Chap. 4.
137.
David D. Caron and Esme Shirlow, ‘Most-Favoured-Nation Treatment: Substantive Protection’ in Building International Investment Law: The First 50 Years of ICSID 399, 408-13 (Meg Kinnear, Geraldine R. Fischer, Jara Minguez Almeida, Luisa Fernanda Torres & Mairee Uran Bidegain eds, 2015).
138.
Emilio Agustin Maffezini v The Kingdom of Spain, ICSID Case No ARB/97/7, (Decision on Objections to Jurisdiction) dated 25 January 2000.
139.
For the cases, see Chap. 5.
140.
For the cases, see Chap. 6.
141.
Salomon and Friedrich, above n 124.
142.
Julie A Maupin, ‘MFN Based Jurisdiction in Investor-State Arbitration: Is There Any Hope for a Consistent Approach?’ (2011) 14(1) Journal of International Economic Law, 157–190.
143.
Schill, above n 11; Zachary Douglas, ‘The MFN Clause in Investment Arbitration: Treaty Interpretation Off the Rails’ (2011) 2 Journal of International Dispute Settlement, 97–113.
144.
Kurtz, above n 1.
145.
Gabrielle Marceau and Julian Wyatt, ‘Dispute Settlement Regimes Intermingled: Regional Trade Agreements and the WTO,’ (2010) 1(1) Journal of International Dispute Settlement, 67–95.
146.
The ILC, Draft Articles, above n 2.
147.
The Statute of International Court of Justice, Article 38, available at: <http://legal.un.org/avl/pdf/ha/sicj/icj_statute_e.pdf>.
148.
Lepard, Brian D, Customary International Law: A New Theory with Practical Applications (Cambridge University Press, 2011).
149.
The ILC, Draft Articles, above n 2.
150.
Erich Vranes, ‘The Definition of Norm Conflict in International Law and Legal Theory,’ (2006) 17 The European Journal of International Law (EJIL) 395–418. Vranes argued that the fundamental function of norms are obligating, prohibiting, permitting according to denotic (legal logic).
151.
The Vienna Convention on the Law of Treaties (VCLT) (signed in 1969), (entry into force on 27 January 1980), UN Treaty Series, Vol 1155, p 331, Arts 31 and 32. Under the VCLT provisions, the conceptual nature of MFN may potentially form a context in which any particular MFN clause should be interpreted. This issue will be discussed detail in Chap. 4 of this thesis (on Interpretative principles).
152.
Schill, above n 32.
153.
The 2015 ILC Report, above n 101.
154.
The OECD, ‘OECD Code of Liberalisation of Capital Movement,’ (OECD Publishing, Paris) (OECD 2013a), available at: <http://www.oecd.org/daf/inv/investment-policy/CapitalMovements_WebEnglish.pdf>.
155.
Cole, above n 11, at 553.
156.
Ibid.
157.
Cole, above n 11.
158.
According to the website of UNCTAD, presently, there are total 2358 BITs in force. See, UNCTAD, Investment Policy Hub at <http://investmentpolicyhub.unctad.org/IIA>; For the evolution of International Investment Law, and the failed attempts to establish a multilateral framework, also see, Laryea, above n 91.
159.
Kurtz, above n 1.
160.
Ibid., at 869.
161.
Kurtz, above n 1.
162.
Sonia E. Rolland & David M. Trubek, ‘Legal Innovation in Investment Law: Rhetoric and Practice in Emerging Countries,’ (2017) 39.2 U. Pa. J. Int’l L. 358.
163.
Ibid., Kurtz; Also see, Cole, above n 11.
164.
Kurtz, above n 1.
165.
Ibid.
166.
Kurtz, above n 1.
167.
Ibid.
168.
See above n 92.
169.
Stephan W Schill, ‘Multi-lateralization through Most-Favoured Nation Treatment,’ in The Multi-lateralization of International Investment Law, (Cambridge University Press, 2010) 121–196. The definition of multilateralisation and how MFN has been perceived by some arbitral tribunals as an instrument of multi-lateralisation is discussed in Chap. 4.
170.
The 1959 Germany-Pakistan BIT, above n 92.
171.
Hereinafter, General MFN Clauses.
172.
Hereinafter, Specific MFN Clauses.
173.
This chapter uses the terms, ‘general’ and ‘specific’ in a particular context based on the scope that MFN clauses purport to cover in IIAs. For more details on the classification of MFN into the categories, general and specific, see, the ILC Draft Articles on MFN, above n 2, see, commentary on Art 4, p. 20 which provides as follows:

Most-favoured-nation clauses have been customarily categorized as ‘general’ or ‘special’ clauses. A ‘general’ clause means a clause which promises most-favoured nation treatment in all relations between the parties concerned, whereas a ‘special’ one refers to relations in certain limited areas.
174.
Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kyrgyz Republic (Kyrgyz- UK BIT), signed on 8 December 1994 (entry into force on 18 June 1998).
175.
These are definitions, promotion and protection of investments, compensation for losses, expropriation, exceptions, investor-state dispute settlement, subrogation and application of other rules.
176.
The 1994 Kyrgyz-UK BIT, above n 174.
177.
It does not make a significant difference in the sense that the specific area was already covered by the general MFN clause. However, this researcher does not argue that the specific clause was superfluous because inclusion of a general MFN clause does not restrain the treaty parties to include another clause on a specific matter already covered by the general clause. The treaty parties may have a different purpose for such inclusion of specific clause one of which could be to place additional emphasis on the specific matter signalling the importance of that issue.
178.
Agreement between the Republic of Hungary and the Republic of Albania for the Promotion and Reciprocal Protection of Investments (Albania-Hungary BIT), signed on 24 January 1996 (entry into force on 1 April 1998). The clause would apply only to post-establishment phase of investment because it uses the term, ‘investments’ which ordinarily comes into existence only it is established. For more details, see, UNCTAD, Most-Favoured-Nation Treatment (2010), above n 9, at 38.
179.
Agreement between the Government of the Republic of Finland and the Government of the People’s Democratic Republic of Algeria on the Reciprocal Promotion and Protection of Investments (Algeria-Finland BIT), signed on 13 January 2005 (entry into force on 25 February 2007).
180.
However, domestic legal frameworks still work to the extent they do not contradict the treaty provisions. See, UNCTAD, Most-Favoured-Nation Treatment, (2010), above n 9, at 103.
181.
Ibid., UNCTAD, at 102-103; Newcombe, Paradell, above n 20, at 134.
182.
UNCTAD, Ibid., at 103. According to UNCTAD, the post-establishment MFN is appropriate when the objective of the IIA ‘is merely to protect foreign direct investment flows and to liberalise. The rational of MFN here is weaker as opposed to the pre-establishment model.’
183.
For example, see Agreement between the Government of Australia and the Government of the Republic of Chile on the Reciprocal Promotion and Protection of Investments (Australia-Chile BIT), signed on 9 July, 1996 (entry into force on 18 November 1999). Article 7 provides that, investors who have suffered losses due to a war or emergency, should be accorded treatment

as regards restitution, indemnification, compensation or other valuable consideration no less favourable than that which that Contracting Party accords to its domestic investors or to investors of any third country, whichever is more favourable to the investors concerned.
184.
For example, see Agreement between the Portuguese Republic and the Islamic Republic of Pakistan on the Mutual Promotion and Protection of Investments (Pakistan-Portugal BIT), signed on 11 October 1996 (entry into force on 14 December 1996). Article 10 provides that,

If the provisions of law of either Contracting Party or obligations under international law existing at present or established hereafter between the Contracting Parties in addition to this Agreement contain a regulation, whether general or specific, entitling investments made by investors of the other Contracting Party to a treatment more favourable than is provided for by this agreement, such provisions shall, to the extent that they are more favourable, prevail over this Agreement.
185.
For example, see Agreement between Japan and the Kingdom of Saudi Arabia for the Promotion and Protection of Investment (Japan-Saudi Arabia BIT), signed on 30 April 2013. Article 5 provides that,

Each Contracting Party shall accord to investors of the other Contracting Party treatment no less favourable than the treatment it accords in like circumstances to its own investors or investors of a non-Contracting Party with respect to access to the courts of justice and administrative tribunals and agencies in all degrees of jurisdiction, both in pursuit and in defense of such investors’ rights.
186.
For example, see Agreement between the Government of the Republic of Korea and the Government of the Hungarian People’s Republic for the Encouragement and Reciprocal Protection of Investments (Hungary-Korea BIT), signed on 28 December 1988 (entered into force on 1 January 1989), Article 10(2). It provides that,

The legal remedies under the laws and regulations of a Contracting Party in the territory of which the investment has been made are available for the investor of the other Contracting Party on the basis of treatment no less favourable than that accorded to investments of its own investors or investors of any third State, whichever is more favourable to the investor.
187.
For example, see, Ibid., 1988 Korea-Hungary BIT. Article 3(2) provides that,

each Contracting Party shall accord to such investments and returns full security and protection which in any case shall not be less than that accorded to investments and returns of its own investors or investors of any third State.
188.
For example, see Association of South East Asian Nations Comprehensive Investment Agreement (ACIA), (entered into force on 29 March 2012), Articles 13 (4) (c), 13(5) (e) and 13(4) (c). Article 13 (4) (c) provides that,

[A] Member State shall not impose restrictions on any capital transactions inconsistently with its specific commitments under this Agreement regarding such transactions, except… where, in exceptional circumstances, movements of capital cause, or threaten to cause, serious economic or financial disturbance in the Member State concerned.

Further, Article 13(5)(e) provides that, ‘[t]he measures taken in accordance with sub-paragraph 4(c)… shall be applied such that any one of the other Member States is treated no less favourably than any other Member State or non-Member State.’
189.
For example, see Japan-Mongolia Economic Partnership Agreement (EPA) (signed on 10 February 2015). Article 10.14 provides as follows:

(1) A Party may adopt or maintain restrictive measures with respect to cross-border capital transactions as well as payment and transfers related to investments: (a) in the event of serious balance-of-payments and external financial difficulties or threat thereof; or (b) in exceptional cases where movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular monetary and exchange rate policies.

(2) Restrictive measures referred to in paragraph 1: (a) shall be applied on the basis of national treatment and most-favoured-nation treatment.
190.
For example, see Trans-Pacific Partnership Agreement (TPP), (signed by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States of America and Vietnam) (Recently, the USA withdrew) (singed on 04 February 2016), Article 9-C provided that,

Notwithstanding the obligations under Article 9.8 (Expropriation and Compensation), where Singapore is the expropriating Party, any measure of direct expropriation relating to land shall be for a purpose and upon payment of compensation at market value, in accordance with the applicable domestic legislation and any subsequent amendments thereto relating to the amount of compensation where such amendments provide for the method of determination of the compensation which is no less favourable to the investor for its expropriated investment than such method of determination in the applicable domestic legislation as at the time of entry into force of this Agreement for Singapore.

Given the uncertainty created by the withdrawal, other parties to the TPP are negotiating at the moment to incorporate the TPP texts into a new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The TPP Ministerial Statement dated 11 November 2017 announced that the new Agreement will include most of the TPP provisions with reservations to some. However, no change in the MFN provision is recommended so far. For details, see Australian Government, Department of Foreign Affairs and Trade, Trans-Pacific Partnership Ministerial Statement (11 November 2017) <http://dfat.gov.au/trade/agreements/tpp/news/Pages/trans-pacific-partnership-ministerial-statement.aspx>.
191.
Most IIAs contain exceptions to MFN in respect of privileges agreed in any past or future regional economic treaties, Free Trade Agreements, customs unions, common market or similar regional organisational agreements for avoiding double taxation. For example, see Agreement between Japan and the Islamic Republic of Iran on Reciprocal Promotion and Protection of Investment (Iran-Japan BIT), (signed on 5 February 2016). Article 4(2) of this BIT providing for the exceptions to MFN mentions that,

If a Contracting Party has accorded or would accord in future special advantages or rights to investors of any non-Contracting party by virtue of any agreement establishing a free trade area, a customs union, a common market or a similar regional organisation or by virtue of any convention for the avoidance of double taxation, it shall not be obliged to accord such advantages or rights to investors of the other Contracting Party.
192.
IIAs include some clauses which determine the overall scope of the treaty. MFN remains subject to them. For example, the definition clauses and the clauses determining the temporal scope of the treaty. Application of MFN to the definition clause and temporal scope of the IIA will be discussed in Chap. 4.
193.
See above n 191.
194.
For example, see Investment Cooperation and Facilitation Agreement between the Federative Republic of Brazil and the Republic of Malawi (signed on 25 June 2015). Article 10(7) excluding taxation from the scope of the whole treaty provides that, ‘[n]o provision of this Agreement shall be interpreted in a way that prevents the adoption or execution of any measure aimed at ensuring the equitable or effective imposition or collection of taxes as provided in the Party legislation.’
195.
For example, see Agreement between the Government of Canada and the Government of Burkina Faso for the Promotion and Protection of Investments (Burkina Faso-Canada BIT), (signed on 20 April 2015). Article 17(4) provides that, parties may derogate from their MFN obligation in respect of Intellectual Property (IP) rights provided that the derogation is done in a manner consistent with the TRIPS agreement, an amendment to the TRIPS agreement or a waiver to the TRIPS under Article IX of WTO agreement.
196.
For example, see, Ibid., 2015 Burkina Faso-Canada BIT. Article 17(1) and (2) of this BIT save existing non-conforming measures, and allow non-application of MFN to future measures in specific sectors specified in Annex II. The future sectors reserved in this BIT include social services, preferences for socially and economically disadvantaged minorities, government securities, licensing agriculture, licensing in the telecommunication services sector, the establishment or acquisition in Burkina of services sector, development aid organizations and priority for use of local product and services procurement, subsidy, grant and financial services.
197.
For example, see Agreement between the Government of the Republic of Turkey and the Government of the Republic of Azerbaijan on the Reciprocal Protection and Promotion of Investments (Azerbaijan-Turkey BIT), signed on 25 October 2011(entry into force on 2 May 2013), Article 3(5)(c). It excludes the application of MFN to the dispute settlement provision of the BIT; also see Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) signed on 8 March 2018, Article 9.5 containing MFN. Article 9.5(3) explicitly mentions that the MFN would not ‘encompass international dispute resolution procedures or mechanisms.’
198.
UNCTAD, ‘Reforming the International Investment Regime: An Action Menu’ in World Investment Report, UNCTAD/WIR/2015 (2015) 121, available at <http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf>. For generally on the evolution of IIAs in the 1960s focused on investment as distinct from the trade treaties, and the eventual inclusion of investor-state arbitration in IIAs, see this chapter, Sects. 2.3.3 and 2.3.4.
199.
Ibid., UNCTAD, at 121. During 1990–2007, total 2663 new IIAs were signed, and the total number of IIAs by the end of 2007 was 3067.
200.
UNCTAD, above n 198, at 121. During 1990–2007, the total number of investor-state dispute settlement (ISDS) cases was 291, and the total number of ISDS cases by the end of 2007 was 292. Thus, the UNCTAD report implies that only one ISDS case was commenced before 1990.
201.
Ibid., UNCTAD, at 121. From 2008 to 2015, total 410 new IIAs were signed which made the number of total IIAs by the end of 2015 to be 3271. During this period, total 316 new ISDS cases have been commenced, and at the end of 2015, total number of ISDS cases was 608.
202.
Ibid.
203.
UNCTAD, above n 198.
204.
UNCTAD, 1 IIA Issues Note: Taking Stock of IIA Reform, UNCTAD/WEB/DIAE/PCB/2016/1 (March, 2016) 1–19.
205.
Ibid.
206.
UNTAD, IIA Issue Note (2016) above n 204.
207.
For example, the 2017 Free Trade Agreement between Argentina and Chile (Argentina-Chile FTA), (signed on 2 November 2017), Burundi-Turkey BIT (signed on 14 June 2017), Agreement between Japan and the State of Israel for the Liberalisation, Promotion, and Protection of Investment (Israel-Japan BIT), signed on 1 February 2017, (entry into force on 5 October 2017), Turkey-Ukraine BIT (signed on 9 October 2017), Agreement between the Government of Rwanda and the United Arab Emirates on the Promotion and Reciprocal Protection of Investments (Rwanda-United Arab Emirates BIT) (signed on 1 November 2017) contain references to the protection of health and safety, labour rights, environmental or sustainable development in the preamble. These treaties have also included a refined FET clause by circumscribing FET with reference to Customary International law; The 2017 Turkey-Uzbekistan BIT (signed on 25 October 2017), Bilateral Agreement for the Promotion and Protection of Investments between the Government of the Republic of Colombia and the Government of the United Arab Emirates (Colombia-United Arab Emirates BIT), (signed on 13 November 2017), Mozambique-Turkey BIT (signed no 24 January 2017) clarify what would constitute an indirect expropriation; The 2017 ASEAN-Hong-Kong, China, Investment Agreement (signed on 12 November 2017), Jordan-Saudi Arabia BIT (signed on 27 March 2017), Pacific Agreement on Closer Economic Relations Plus (signed on 14 June 2017) have provided limited access to ISDS only for the breaches of some specific treaty provisions. For more details on these recent developments, see, UNCTAD, IIA Issues Note, Recent Developments in the International Investment Regime, Issue 1, (May 2018), available at https://unctad.org/en/PublicationsLibrary/diaepcbinf2018d1_en.pdf, at, Table: 1; Also see, UNDTAD, World Investment Report (2015), above n 198, at 136 in which UNCTAD has emphasised on MFN reforms. It commented that ‘The MFN clause is a crucial provision for IIA reform. Failure to take appropriate action with respect to MFN clause can undermine improved formulations of treaty provisions.’ It will be demonstrated in the following discussions in this chapter that states have extensively reformed MFN clauses in recent IIAs by clarifying their scope and exceptions.
208.
This trend of IIA reform became most visible in 2008. However, some states may have undertaken IIA reform to preserve their regulatory right even before 2008. For more details, see, UNCTAD, World Investment Report (2015), Ibid., at 121, Figure IV: 1 where UNCTAD has identified the year, 2008 as the beginning of an era of re-orientation.
209.
See UNCTAD Policy Hub, above n 158. The UNCTAD website demonstrates that so far 522 investor-state arbitral cases have been lodged amongst them 433 cases concern the application of FET clauses. As mentioned in above, some recent IIAs are narrowly drafting the FET clauses. There seems to be an apparent logical connection between the high number of cases on FET and the FET reforms undertaken in recent IIAs.
210.
For example, some older generation IIAs did not contain any definition of indirect expropriation, while some recent treaties are including such definitions. Generally, for illustrations on how some of the older generation IIA clauses lacked clarity and the corresponding IIA reforms, see, UNCTAD, IIA Issue Note Issue 1 (May 2018), above n 207.
211.
Catharine Titi, ‘Most-Favoured-Nation Treatment, Survival Clauses and Reform of International Investment Law,’ (2016) 33(5) Journal of International Arbitration 425-440. Titi has argued that, although reform of investment law is in no way limited to the reform of MFN clauses, this may be a good place to start.
212.
In some recent IIAs, parties have included an obligation on investors not to hamper public health of the host-state. Inclusion of such obligation in IIAs is a recent trend. Such requirements were rare in older generation IIAs.
213.
This example just illustrates a potential danger of not reforming MFN clauses. Any such attempt by investors is less likely to succeed in practice as in MTD Equity Sdn Bhd. & MTD Chile S.A. v Republic of Chile (MTD v Chile), ICSID Case No. ARB/01/7, Award, dated 25 May 2004, the tribunal observed that MFN cannot override the public policy of the host-state, for more details, see Chap. 4; Also in Maffezini v Spain, above, n 138, the tribunal observed that the application of MFN should remain subject to the public policy of the host-state, for more details, see Chap. 5.
214.
For example, see 1996 Agreement on Reciprocal Promotion and Protection of Investments between the Government of the Republic of Turkey and the Government of the Republic of Iran (Turkey-Iran BIT), signed on 21 December 1996, (entry into force on 13 April 2005), Article 5.
215.
Agreement between Japan and the People’s Republic of Bangladesh Concerning the Promotion and Protection of Investment (Bangladesh-Japan BIT), signed on 10 November 1998 (entry into force on 25 August 1999).
216.
Agreement between Australia and the Islamic Republic of Pakistan on the Promotion and Protection of Investments (Australia-Pakistan BIT), signed on 7 February 1998 (entry into force on 14 January 1998).
217.
See Chap. 3 (Interpretation) for details on interpretation issue.
218.
Arbitral decisions on the application of MFN will be extensively reviewed in Chaps. 4, 5, and 6. The example discussed in the present section is given to pave the way for further discussion in the upcoming sections. The upcoming sections will demonstrate how the use of broadly drafted MFN clauses and arbitral decisions on them have impacted on the MFN reforms undertaken by some states recently.
219.
Maffezini v Spain, above n 138.
220.
Ibid; also see, Inci Ataman Figanmese, ‘The Impact of the Maffezini Decision on the Interpretation of MFN Clauses in Investment Treaties’ (2011) 8(2) Ankara Law Review 221–237.
221.
Maffezini v Spain, above n 138, paragraph 38.
222.
Agreement between the Argentine Republic and the Kingdom of Spain on the Reciprocal Promotion and Protection of Investments (Argentina-Spain BIT) (signed on 28 September 1992).
223.
Ibid., paragraph 38; Agreement between the Republic of Chile and the Kingdom of Spain for Protection and Promotion of Reciprocal Investment, (Chile-Spain BIT), signed on 2 October 1991, (entry into force on 28 March 1993).
224.
For the cases, see Chaps. 5 and 6. However, some specific examples which confirm that the Maffezini approach has influenced the idea that MFN can be interpreted expansively are as follows. For example, in Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. and Talsud S.A. v The United Mexican States (Gemplus v Mexico), (ICSID Case No. ARB (AF)/04/03 and ARB (AF)/04/4, Award, 16 June 2010), the Claimant invoked the basic BIT MFN to get more favourable substantive treatment. The Claimant, in this case, specifically referred to the Maffezini decision to strengthen its argument for the application of MFN (see Part X of the decision). To avoid repetition, this case is discussed in detail in Chap. 6. The main reason given by the Maffezini tribunal to apply the basic BIT MFN to dispute settlement was an interpretative maxim called, ‘expressio unius est exclusion alterius’ which implies that unless explicitly excluded, any matter would be deemed included within the scope of MFN. This maxim was relied on in National Grid PLC v The Argentine Republic (National Grid v Argentina), (UNCITRAL) Decision on Jurisdiction, 20 June 2006, para 68; and in Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. v The Argentine Republic (Suez v Argentina), ICSID Case No. ARB/03/19, and AWG Group Ltd. v the Argentine Republic (AWG v Argentina), In the Arbitration under the Rules of UNCITRAL, Decisions on Jurisdiction dated 3 August 2006. The cases are discussed in detail in Chap. 5.
225.
UNCTAD, IIA Issues Note (2016), above n 204, 9.
226.
Ibid.
227.
UNCTAD, World Investment Report 2015, above n 198, 120–171.
228.
UNCTAD, Ibid., 130-131. UNCTAD commented that, selective adjustments of IIA provisions ‘comprehensively address the challenges posed by the existing stock of treaties’ unless ‘the selective adjustments address the most-favoured-nation (MFN) clause. Without addressing MFN application, selective adjustments may lead to ‘treaty shopping’ and ‘cherry-picking’ and thereby undermine improved formulations of treaty provisions.’
229.
Siemens. G. v Argentina, ICSID Case No. ARB/02/8 (Decision on Jurisdiction) (3 August 2004) paragraph 106. It was held that MFN clauses can ‘eliminate the effect of specifically negotiated provisions unless they have been excepted.’
230.
In the 2003 Draft Free Trade Agreement of the Americas, the drafting committee included a note specifically addressing the Maffezini decision. In that note, the committee expressed its intent to avoid the Maffezini like application of IIA MFN clauses. UNCTAD has commented that this note was ‘the result of strong disagreement by many states in Latin America to the decision and reasoning of the Maffezini v Spain tribunal.’ See, UNCTAD, Most-Favoured-Nation Treatment, (2010), above n 2, at 65.
231.
Examples are coming shortly.
232.
UNCTAD, Most-Favoured Nation Treatment (2010), above n 9, 104.
233.
Agreement between the Government of the Kingdom of Cambodia and the Government of the Republic of Singapore on the Promotion and Protection of Investments (Cambodia-Singapore BIT), signed on 4 November 1996, (entry into force on 24 February 2000), Article 4. The clause accords MFN essentially to investments, and not to investors. Thus, the subject matter of the right under this clause is ‘investment’ which is defined as ‘every kind of asset’ in the same BIT. Oppositely, in some IIAs, MFN is accorded to both investments and investors. For example, see Article 4 of the Agreement between the Government of the United Mexican States and the Government of the Hellenic Republic on the Promotion and Reciprocal Protection of Investments (Greece-Mexico BIT), singed on 30 November 2000, (entry into force on 1 April 2003) as follows:

1 Each Contracting Party shall accord to investments made in its territory by investors of the other Contracting Party, treatment not less favourable than that which it accords to investments of its own investors or to investments of investors of any third State, whichever is more favourable.

2 Each Contracting Party shall accord to investors of the other Contracting Party, as regards the management, maintenance, use, enjoyment or disposal of their investments in its territory, treatment not less favourable than that which it accords to its own investors or to investors of any third State, whichever is more favourable.
234.
UNCTAD, Most-Favoured Nation Treatment (2010), above n 9.
235.
Free Trade Agreement between Australia and the United States of America, signed 18 May 2004, [2005] ATS 1 (entered into force 1 January 2005).
236.
UNCTAD, Most-Favoured-Nation Treatment (2010), above n 9, 85.
237.
Ibid.
238.
UNCTAD, Most-Favoured-Nation Treatment (2010), above n 9, 85.
239.
VCLT, above n 13. Article 32 of the VCLT provides that,

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31 (a) leaves the meaning ambiguous or obscure; or (b) leads to a result which is manifestly absurd or unreasonable.

For more details, see Chap. 3 (interpretation).
240.
Gagne, Gilbert and Jean-Fredric Morin, ‘The evolving American policy on investment protection: Evidence from recent FTAs and the 2004 Model BIT’ (2006) 9(2) Journal of International Economic Law 375; Suez, Sociedad General de Aguas de Barcelona SA v The Argentine Republic (Decision on Jurisdiction (ICSID Case No. ARB/03/17, 16 May 2006).
241.
UNCTAD, Most-Favoured-Nation Treatment (2010), above n 9, 111–112.
242.
Agreement between the Arab Republic of Egypt and the Federal Republic of Germany Concerning the Encouragement and Reciprocal Protection of Investments (Egypt-Germany BIT), signed on 16 June 2005 (entry into force on 22 November 2009).
243.
Vladimir Berschader and Moïse Berschander v The Russian Federation (Berschader v Russia) (Award) (SCC Case No. 080/2004, 21 April 2006) para 47. The case is reviewed in detail in Chap. 6.
244.
Belgium, Luxembourg, and Union of Soviet Socialist Republics Agreement Concerning the Reciprocal Promotion and Protection of Investments, signed on 9 February 1989, Article 2.
245.
Berschader v Russia, above n 243, paras 179–98.
246.
Ibid.
247.
Lex specialis is a principle suggesting that in case of conflict, the specific rule should apply over the more general rule. It is used here in the sense that MFN is a treaty-based obligation and, therefore, more specific than a principle of Customary International Law. For more details on the application of lex specialis in International Economic Law, see, Javier L-Hage, ‘How Many Tribunals Apply the Customary Necessity Rule to the Argentine Cases? An Analysis of ICSID Decisions With Respect to the Interaction between Article XI of the US-Argentina BIT and the Customary Rule of Necessity’ in Karl P. Sauvant (eds), Yearbook on International Investment Law and Policy 2011–12 (Oxford University Press, 2013) 461.
248.
In this respect, the ILC commented that MFN clauses can be drafted in the most diverse ways. Therefore, whether the MFN can apply to any particular treaty provision is a matter of interpretation. That is why any attempt to generalise the effect of MFN clauses should be made with caution. For the comment, see, the ILC, Draft Articles with commentaries, above n 2, at 20.
249.
The interpretative principles are discussed in the next chapter.
250.
For arbitral decisions on MFN, see Chaps. 4, 5, and 6.

References

Banifatemi, Y. (2009). The emerging jurisprudence on the most-favoured-nation treatment in investment arbitration. In A. Bjorklund, I. Laird, & S. Ripinsky (Eds.), Investment treaty law: Current issues III. British Institute of International and Comparative Law.
Google Scholar
Barclay, T. (1907–1908). Effect of “Most-Favoured-Nation” clause in commercial treaties. Yale Law Journal, 17, 26.
Google Scholar
Berger, A. (2015). Developing countries and the future of International investment regime (German Federal Ministry for Economic Co-operation and Development (BMZ) Division 411. Germany: GIZ.
Google Scholar
Caron, D. D., & Shirlow, E. (2015). Most-Favoured-Nation treatment: Substantive protection. In M. Kinnear, G. R. Fischer, J. M. Almeida, L. F. Torres, & M. U. Bidegain (Eds.), Building international investment law: The first 50 years of ICSID (Vol. 399, pp. 408–413).
Google Scholar
Chase, K. A. (2005). Trading blocs, states, firms and regions in the world economy (p. 105). University of Michigan Press.
Google Scholar
Cole, T. (2012). The boundaries of most favored nation treatment in International investment law. Michigan Journal of International Law, 33, 537.
Google Scholar
Coutain, B. (2009). The unconditional most-favored-nation clause and the maintenance of the liberal trade regime in the Post-war 1870s. International Organization, 63, 139.
Google Scholar
Dolzer, R., & Myers, T. (2004). After Tecmed: Most-Favoured-Nation clauses in investment protection agreements. ICSID Review, 19, 14.
Google Scholar
Douglas, Z. (2011). The MFN clause in investment arbitration: Treaty interpretation off the rails. Journal of International Dispute Settlement, 2, 97.
Google Scholar
Figanmese, I. A. (2011). The impact of the Maffezini decision on the interpretation of MFN clauses in investment treaties. Ankara Law Review, 8(2), 221.
Google Scholar
Footer, M. E. (2013). On the laws of attraction: Examining the relationship between Foreign investment and International trade in prospects. In R. Echandi & P. Sauve (Eds.), International law and policy (p. 109). Cambridge University Press.
Google Scholar
Gilbert, G., & Morin, J.-F. (2006). The evolving American policy on investment protection: Evidence from recent FTAs and the 2004 Model BIT. Journal of International Economic Law, 9(2), 375.
Google Scholar
Hayford, M., & Pasurka, C. A. Jr. (1992). The political economy of the Fordney-McCumber and Smoot-Hawley tariff acts. Explorations in Economic History, 29, 30.
Google Scholar
Hornbeck, S. K. (1909). The Most-Favored-Nation clause. American Journal of International Law, 3(3), 619.
Google Scholar
Houde, M.-F. (2005). Most-Favoured-Nation treatment in International investment law. In International investment law: A changing landscape, a companion volume to international investment perspectives (p. 129). OECD.
Google Scholar
Interim Commission for the International Trade Organization. (1948). Final act and related documents. In United Nations Conference on Trade and Employment, New York.
Google Scholar
Irwin, D. A. (1993). Multilateral and bilateral trade policies in the world trading system: A historical perspective. In De Melo & A. Panagariya (Eds.), New dimensions in regional integration (p. 90). Cambridge University Press.
Google Scholar
Irwin, D. A. (1998). From Smoot-Hawley to reciprocal trade agreement: Changing the course of U.S. trade policy in the 1930s. In M. D. Bordo, C. Goldin, & E. N. White (Eds.), The defining moment: The great depression and the American economy in the twentieth century (p. 325). University of Chicago Press.
Google Scholar
Kurtz, J. (2004). The MFN standard and foreign investment: An uneasy fit. Journal of World Investment and Trade, 5, 861.
Google Scholar
Laryea, E. (2011). Evolution of international investment law and implications for Africa. In F. N. Botchway (Eds.), Natural resource investments and Africa’s development (p. 29). Edward Elgar.
Google Scholar
Lepard, B. D. (2011). Customary International law: A new theory with practical applications. Cambridge: Cambridge University Press.
Google Scholar
L-Hage, J. (2013). How many tribunals apply the customary necessity rule to the Argentine cases? An analysis of ICSID decisions with respect to the interaction between Article XI of the US-Argentina BIT and the customary rule of necessity. In K. P. Sauvant (Eds.), Yearbook on international investment law and policy 2011–12 (p. 461). Oxford University Press.
Google Scholar
Marceau, G., & Wyatt, J. (2010). Dispute settlement regimes intermingled: Regional trade agreements and the WTO. Journal of International Dispute Settlement, 1(1), 67.
Google Scholar
Maupin, J. A. (2011). MFN based jurisdiction in investor-state arbitration: Is there any hope for a consistent approach? Journal of International Economic Law, 14(1), 157–190.
Google Scholar
McClure, W. (1931). The development of commercial treaties in the Americas. Bulletin of the Pan American Union, 65, 991.
Google Scholar
Meltzer, J. P. (2015). Investment, in bilateral and regional trade agreements: Commentary and analysis. In S. Lester, B. Mercurio, & L. Bartles (Eds.), (Vol. 1, p. 245). Cambridge University Press.
Google Scholar
Newcombe, A. P., & Paradell, L. (2009). Law and practice of investment treaties. Kluwer Law International.
Google Scholar
OECD. (2006). Most-Favoured-Nation treatment in international investment law. In: International investment law: A changing landscape: A companion volume to international investment perspectives (pp. 127–161, 129). OECD Publishing. Available at https://www.oecd.org/investment/internationalinvestmentagreements/40077165.pdf.
OECD. (2013a). OECD code of liberalisation of capital movement. OECD Publishing, Paris. Available at: http://www.oecd.org/daf/inv/investment-policy/CapitalMovements_WebEnglish.pdf.
Paparinskis, M. (2011) MFN clauses and international dispute settlement: Moving beyond Maffezini and Plama. ICSID Review, 26(2).
Google Scholar
Paulus, A. (2011, March) Treaties of friendship, commerce and navigation, Max Planck encyclopaedia of public international law. Oxford Public International law.
Google Scholar
Pomfret, R. (2001). The economics of regional trading arrangements. Oxford University Press.
Google Scholar
Rolland, S. E., & Trubek, D. M. (2017). Legal innovation in investment law: Rhetoric and practice in emerging countries. U. Pa. J. Int’l L, 39(2), 358.
Google Scholar
Sachs, W. (1984). The new US bilateral investment treaties. International Tax and Business Law, 2, 192.
Google Scholar
Salacuse, J. W. (2015). A history of international investment treaties. In The law of investment treaties. Oxford University Press.
Google Scholar
Salomon, C., & Friedrich, S. (2013). How Most Favoured Nation cluses in bilateral investment treaties affect arbitration. uk.practicallaw.com/0-381-7466.
Google Scholar
Schill, S. W. (2009). Multilateralizing investment treaties through Most-Favored-Nation clauses. Berkeley Journal of International Law, 27, 496.
Google Scholar
Schill, S. W. (2010). Multi-lateralization through Most-Favoured Nation treatment. In The multi-lateralization of international investment law. Cambridge: Cambridge University Press.
Google Scholar
Schwarzenberger, G. (1945). The Most-Favoured Nation standard in British state practice. British Yearbook of International Law, 22, 96.
Google Scholar
Shea, D. R. (1955). The Calvo clause: A problem of inter American and international law and diplomacy (p. 17). Minnesota University Press.
Google Scholar
Sornarajah, M. (2010). The international law on foreign investment. Cambridge University Press.
Google Scholar
Subedi, S. P. (2012). International investment law, reconciling policy and principle. Oxford: Hart Publishing.
Google Scholar
The International Law Commission (ILC). (2015). Report on the sixty seventh session, Annex. Final Report of the Study Group on the Most-Favoured-Nation (the 2015 ILC Report), GE.15-13770 United Nations General Assembly A/70/10. Available at http://legal.un.org/ilc/reports/2015/english/annex.pdf.
Thorson, A. B. (1993). The 1953 United States-Japan FCN treaty: Can title VII protect American Women. Boston University Public International Law Journal, 3, 315.
Google Scholar
Titi, C. (2016). Most-Favoured-Nation treatment, survival clauses and reform of international investment law. Journal of International Arbitration, 33(5), 425.
Google Scholar
Trebilocock, M. J., & Howse, R. (2005). The regulation of international trade (3rd ed., p. 49). Routledge.
Google Scholar
Trost, F. (2008). Reconciling regional trade agreements with the Most Favoured Nation principle in WTO-GATT. Macquarie Journal of Business Law, 5, 43.
Google Scholar
Tschofen, F. (1992). Multilateral approaches to the treatment of foreign investment. ICSID Review Foreign International Law Journal, 7, 384.
Google Scholar
UNCTAD. (1996). Fair and equitable treatment (1999) UNCTAD/ITE/IIT/11 (vol 3)24-5. UNCTAD, International investment instruments: A compendium (Vol. 1).
Google Scholar
UNCTAD. (2010). Most-Favoured-Nation treatment, UNCTAD Series on Issues in International Investment Agreements II (pp. 13–53). UNCTAD/DIAE/IA/2010/1. Available at http://unctad.org/en/Docs/diaeia20101_en.pdf.
UNCTAD. (2015). Reforming the international investment regime: An action menu. In World investment report. UNCTAD/WIR/2015 (2015) 121. Available at http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf.
UNCTAD. (2016, March). 1 IIA issues note: Taking stock of IIA reform. UNCTAD/WEB/DIAE/PCB/2016/1.
Google Scholar
UNCTAD. (2018, May) IIA issues note, recent developments in the international investment regime, issue 1. Available at https://unctad.org/en/PublicationsLibrary/diaepcbinf2018d1_en.pdf.
Ustor, E. (1969). Special Rapporteur, ‘First report on the most-favoured-nation clause’. II Yearbook of the International Law Commission (1970), 158.
Google Scholar
van Themaat, P. V. (1981). The changing structure of international economic law (pp. 19–21). The Hague: Martinus Nijhoff.
Google Scholar
Vandevelde, K. J. (1992). United States investment treaties: Policy and practice. Kluwer Law and Taxation.
Google Scholar
Verbit, G. P. (1969). Preferences and the public law of international trade: The end of most-favoured nation treatment? In Hague Academy of International Law, Colloquium 1968: International Trade Agreements 25.
Google Scholar
Viner, J. (1924). The Most Favored-Nation clause in American commercial treaties. Journal of Political Economy, 32, 101–129.
Google Scholar
Vranes, E. (2006). The definition of norm conflict in international law and legal theory. The European Journal of International Law (EJIL), 17, 395.
Google Scholar
Wang, G. (2015). International investment law: A Chinese perspective (p. 336). Routledge.
Google Scholar
Yanai, A. (2002). The function of the MFN clause in the global trading system. Working Paper Series 01/02-No. 3, Institute of Development Economics JETRO APEC Study Centre.
Google Scholar
Zourek, J. (1961). Special Rapporteur, ‘Scope of the Most-Favoured-Nation Clause in the Matter of Consular Intercourse and Immunities’. II Yearbook of the International Law Commission 1960, 25.
Google Scholar

Download references

Author information

Authors and Affiliations

Faculty of Law, Monash University, Clayton, VIC, Australia
Tanjina Sharmin

Authors

Tanjina Sharmin
View author publications
You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Tanjina Sharmin .

Rights and permissions

Reprints and permissions

Copyright information

About this chapter

Cite this chapter

Sharmin, T. (2020). Evolution of MFN Treatment and Drafting Trends in the Older Generation of IIAs. In: Application of Most-Favoured-Nation Clauses by Investor-State Arbitral Tribunals. International Law and the Global South. Springer, Singapore. https://doi.org/10.1007/978-981-15-3730-1_2

Download citation

DOI: https://doi.org/10.1007/978-981-15-3730-1_2
Published: 02 April 2020
Publisher Name: Springer, Singapore
Print ISBN: 978-981-15-3729-5
Online ISBN: 978-981-15-3730-1
eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics