Principles of Interpretation

Sharmin, Tanjina

doi:10.1007/978-981-15-3730-1_3

Tanjina Sharmin³

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

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Abstract

This chapter investigates whether there exists a set of uniform interpretative principles applicable to IIA MFN clauses so that the findings can be applied to evaluate arbitral decisions on their application in the subsequent chapters of this book. This chapter examines the applicability of the 1969 Vienna Convention on the Law of Treaties (VCLT), discusses the rules of interpretation and compares various interpretative approaches. It discusses some relevant provisions in the 1978 Draft Articles on MFN prepared by the International Law Commission (ILC) as it is often considered to be a reflection of the then prevailing understanding about the function of MFN clauses in international treaties. This chapter draws some insights from the VCLT and the ILC Draft Articles for the interpretation of MFN clauses in IIAs. The chapter argues that the VCLT provisions require treaty provisions to be given their ordinary meaning in good faith, in the light of the object and purpose of the treaty. The Draft Articles requires application of MFN to remain subject to various boundaries. Therefore, MFN clauses should not be interpreted with any preconceived idea or presumption, and MFN cannot necessarily bypass any IIA provision.

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Notes

1.
See, Chap. 1.
2.
For example, this issue arose in, Accession Mezzanine Capital L.P. and Danubius Kereskedohaz Vagyonkezwlo ZRT v Hungary, ICSID Case No. ARB/12/3, Decision on Respondent’s Objection under Arbitration Rule 41(5), dated 16 January 2013, paras 38–56. This case is reviewed in Chap. 6.
3.
For example, this issue arose in, European American Investment Bank (Euram) v Slovakia, PCA Case No. 2010-17, Decision on Jurisdiction, dated 22 October 2012, para 439. This case is reviewed in Chap. 6.
4.
The issue arose in, ICS Inspection and Control Services Limited (United Kingdom) v the Argentine Republic, PCA Case No. 2010-9, Award on Jurisdiction, 10 February 2012, paras 273–313. This case is reviewed in Chap. 5.
5.
This issue also arose in ICS Inspection v Argentina, Ibid.
6.
The issue arose in Austrian Airlines v The Slovak Republic, UNCITRAL, Final Award, 9 October 2009, paras 121–131; The case arose under the Agreement between the Republic of Austria and the Czech and Slovak Federal Republic Concerning the Promotion and Protection of Investments (Austria-Czech and Slovak Federal Republic BIT), signed on 15 October 1990, (entry into force on 1 October 1991). This case is reviewed in Chap. 6.
7.
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).
8.
The International Law Commission (ILC), ‘Draft Articles on MFN with Commentaries,’ (1978) II Yearbook of the International Law Commission, part 2, available at http://legal.un.org/ilc/texts/instruments/english/commentaries/1_3_1978.pdf.
9.
The VCLT, above n 7, preamble.
10.
Ibid.
11.
For the definition of IIAs, see Chap. 1.
12.
The VCLT, above n 7.
13.
Some of the cases in which MFN clauses were interpreted according to Articles 31 and 32 of the VCLT are as follows: Teinver v The Argentine Republic (Decision on Jurisdiction) (ICSID Case No ARB/09/1, 21 December 2012); MTD Equity v Republic of Chile (Award) (ICSID Case No ARB/01/7, 25 May 2004); Wintershall v Argentine Republic (Award) (ICSID, Case No ARB/04/14, 8 December 2008); Daimler v Argentine Republic (Award) (ICSID Case No ARB/05/1, 22 August 2008); KILIÇ v Turkmenistan (Award) (ICSID Case No ARB/10/1, 2 July 2013); ICS v Argentina, above n 6; Plama Consortium v Bulgaria (Jurisdiction) (ICSID Case No ARB/03/24, 8 February 2005); Salini v Jordan (Award) (ICSID Case No ARB/02/13, 31 January 2006); Telenor v Hungary (Award) (ICSID Case No ARB/04/15, 13 September 2006); Garanti Koza LLP v Turkmenistan) (Jurisdiction) (ICSID Case No ARB/11/20, 3 July 3 2013) Bayindir Insaat v Pakistan (Jurisdiction) (ICSID Case No ARB/03/29, 14 November 2005); Emilio Augustin Maffezini v Spain (Jurisdiction) (ICSID Case No ARB/97/7, 25 January 2000); Gas Natural v Argentina (Jurisdiction) (ICSID Case No ARB/03/10, 17 June 2005); Siemens v Argentina (Award) (ICSID Case No ARB/02/8, 06 February 2007); White Industries Australia v India (Final Award) (UNCITRAL 30 November 2011).
14.
Dana H. Freyer and David Harlihy, ‘Most-Favoured Nation Treatment and Dispute Settlement in Investment Arbitration: Just How Favored in Most Favored?’ (2005) 20 ICSID Review Foreign Investment Law Journal 58-83; Stephen Fietta, ‘Most Favoured Nation Treatment and Dispute Resolution Under Bilateral Investment Treaties: A Turning Point’ (2005) 4 INTALR 132; Tony Cole, ‘The Boundaries of Most Favoured Nation Treatment in International Investment Law,’ (2012) 33 Michigan Journal of International Law, 537-586 at 573; Zachary Douglas, ‘The MFN Clause in Investment Arbitration: Treaty Interpretation of the Rails’ (2011) Journal of International Dispute Settlement 97–113; Organisation for Economic Cooperation and Development (OECD), ‘OECD Working Papers on International Investment 2004/02 Most Favoured Nation Treatment in International Law’ (Working Papers No 2004/02, OECD, 2004) 8; Also see, Georg Schwarzenberger, International Law as Applied by International Courts and Tribunals (Stevens Publication, 1957) 241; Stephen W. Schill, ‘Multilateralizing Investment Treaties through Most-Favoured-Nation Clauses,’ (2009) 27 Berkeley Journal of International Law, 496–506.
15.
Michael Waibel, ‘Demystifying the Art of Interpretation’ (2011) 22(2) The European Journal of International Law 571-588; Also see, Christian Djeffal, ‘Commentaries on the Law of Treaties: A Review Essay Reflecting on the Genre of Commentaries’ (2013) 24:4 The European Journal of International Law 1223-1238. Djeffal has identified three different commentaries advocating for three different approaches to interpret the concepts of ‘object and purpose’ mentioned in Article 31 and 32 of the VCLT.
16.
Martins Paparinskis, ‘MFN Clauses and International Dispute Settlement: Moving beyond Maffezini and Plama’ (2011) 26 (2) ICSID Review 14–58.
17.
The VCLT, above n 7, Article 31.
18.
Ibid, Article 31(1).
19.
The VCLT, above n 7, Article 31(1).
20.
Ibid, Article 31(2). Basic treaty means the treaty on the basis of which the cause of action or claim arose. The term ‘basic treaty’ in this sense was defined in, Anglo-Iranian Oil Co. (United Kingdom v Iran) (Preliminary Objection) [1952] ICJ Rep 93, at 109.
21.
The VCLT, above n 7, Article 31(3).
22.
Ibid, Article 31(4).
23.
The VCLT, above n 7, Article 32.
24.
Ibid, Article 32.
25.
The VCLT, above n 7.
26.
Waibel, above n 15, at 573.
27.
Ian Brownlie, Principles of Public International Law (6th ed, OUP, 2003), at 602.
28.
Waibel, above n 15, at 572.
29.
David S. Berry, ‘Hyper-Interpretation: Promise or Peril? In Shifting Sands of Treaty Interpretation (2008) 102 American Society of International Law Proceeding 411 at 417.
30.
Ibid.
31.
Berry above n 29.
32.
The VCLT, above n 7, Article 33 (4) provides as follows:

Except where a particular text prevails in accordance with paragraph 1, when a comparison of the authentic texts discloses a difference of meaning which the application of Articles 31 and 32 does not remove, the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted.
33.
Berry, above n 29, at 417.
34.
Waibel above n 15, at 573, the author has argued as follows:

The prevalent view amongst international lawyers is that international law is a force for good, designed to keep arbitrariness by national governments in check, to moderate power struggles in international affairs and to provide public goods. In this frame of mind, the more international law, the better;

Also see, Berry, above n 29, at 416, Berry has argued that

a breach of the rules of treaty interpretation could arise in a situation where a judge fabricates and then upholds the purpose of a treaty, despite the clear and contradictory evidence of both the intention of the drafters and the treaty text itself.
35.
J.G. Merrills, ‘Two Approaches to Treaty Interpretation,’ (1968–1969) Australian Yearbook of International Law, 55–82, at 55; for the comprehensive history of negotiation of the VCLT and preparatory materials, see, United Nations Conference on the Law of Treaties, ‘Official Records: Summary Records of the Plenary Meetings and of the Meetings of the Committee of the Whole,’ (United Nations, 1969), A/CONF.39/11, available at http://legal.un.org/docs/?path=../diplomaticconferences/1968_lot/docs/english/sess_1.pdf&lang=EF.
36.
Ibid, UN Official Record of the VCLT Negotiation, at page 177, paras 2–3. The report of the thirty-third meeting of the VCLT drafting committee observed regarding the approach preferred by the USA as it was already rejected by the committee as follows:

The most important issue raised in connexion with the subject of treaty interpretation was that of the primary aim of treaty interpretation. It was often asserted that it was to ascertain the common intention of the parties, independently of the text. That view had been subjected to fierce criticism in the debate on treaty interpretation in the Institute of International Law in the early 1950s and had ultimately been decisively rejected by the Institute. Parts of the USA representative's statement had seemed to be directed towards reviving the doctrine thus rejected.

The VCLT drafting committee contrasted the above approach suggested by the USA with the textual approach preferred by the United Kingdom as follows:

The United Kingdom delegation did not consider that there was any undue rigidity in ascribing paramount importance to the principle of textuality in treaty interpretation. As had already been pointed out by the representative of Uruguay, the dangers of the alternative doctrine had been persuasively presented by Sir Eric Beckett at the Institute of International Law when he had stated that there was a complete unreality in the references to the supposed intention of the legislature in the interpretation of the statute when in fact it was almost certain that the point which had arisen was one which the legislature had never thought of at all; that was even more so in the case of the interpretation of treaties.
37.
Ibid. As demonstrated in the above n 36, the preparatory materials of the VCLT clearly indicate that the member states rejected the formula proposed by the USA to ascertain common intention of treaty parties independent of the text. As other member states of the VCLT pointed out dangers associated with treaty interpretation by any supposed intention of treaty parties. Interpretation based on the supposed intent essentially indicates purposive interpretation although the term, ‘purposive’ is not used explicitly in the committee report quoted in the previous reference.
38.
See above n 36 on the United Kingdom’s suggestion identifying the underlying problems associated with interpreting treaties by the supposed intention of treaty parties.
39.
Berry, above n 29, at 417.
40.
The ILC, ‘Sixth Report on the Law of Treaties by Sir Humphrey Waldock, Special Rapporteur,’ (1966) II Yearbook of International Law Commission, 54, at 95–96, available at http://legal.un.org/ilc/publications/yearbooks/english/ilc_1966_v2.pdf.
41.
Ibid; also see, Okezie Chukwumerije, ‘Interpreting Most-Favoured-Nation Clauses in Investment Treaty Arbitrations’ (2007) 8 Journal of World Investment and Trade 597–646.
42.
See Chap. 2.
43.
Ibid, at 118.
44.
The ILC, Draft Articles, above n 7, Article 1.
45.
Stephen W. Schill, ‘Allocating Adjudicatory Authority: Most Favoured Nation Clauses as a Basis of Jurisdiction-A Reply to Zachary Douglas,’ (2011) 2 Journal of International Dispute Settlement 353–371.
46.
The ILC, Summary Conclusions on the Most Favoured Nations Clause, II Yearbook of the ILC (2015), part-two, available at http://legal.un.org/ilc/reports/2015/english/annex.pdf; Maffezini v Spain, above n 14. The Maffezini decision mainly gave rise to the controversy that whether IIA MFN clauses could apply to procedural and jurisdictional issues. For an overview of the MFN related issues, see chapter 1; The Maffezini case is reviewed in detail in chapter 5.
47.
Ibid.
48.
The ILC, Summary Report on MFN 2015, above n 46.
49.
See Chaps. 1 and 2.
50.
Marcin Nowakowski, ‘The Most Favoured Nation Clause in the Light of the Draft of International Law Commission’ (1984) XIII Polish Yearbook of International Law 95–116.
51.
The ILC, The 1978 Draft Articles with Commentaries, above n 8, 16–73. See Articles 2 and 3. Article 2 provides that,

‘granting State means a State which has undertaken to accord most-favoured-nation treatment;’ ‘beneficiary State means a State to which a granting State has undertaken to accord most-favoured-nation treatment; third State means any State other than the granting State or the beneficiary State.’
52.
Ibid, Articles 4 and 5. Article 4 is followed by Article 5 of the Draft Articles which further provides that MFN is a treatment ‘accorded by the granting state to the beneficiary state, or to persons or things in a determined relationship with that state, not less favourable than treatment extended by the granting state to a third state or to persons or things in the same relationship with that third state.’
53.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 16–73, at 23. The ILC commented as follows:

[A]lthough a most-favoured-nation pledge does not oblige the granting state to accord to the beneficiary state treatment more favourable than that extended to the third state, it does not exclude the possibility that the granting state may accord to the beneficiary state treatment more favourable than that extended to the third state, it does not exclude the possibility that the granting state may accord to the beneficiary state additional advantages beyond those extended to the most-favoured third state.
54.
Ibid.
55.
The ILC, the 1978 Draft Articles with Commentaries, above n 8.
56.
Ibid.
57.
Yannick Radi, ‘The Application of the Most-Favoured Nation Clause to the Dispute Settlement Provisions of Bilateral Investment Treaties: Domesticating the Trojan Horse’ (2007) 18 The European Journal of International Law 758-774. Radi argued that the source of the MFN right, that is the treaty containing it, is to be distinguished from the basis of the actual treatment which is the fact of according more favourable treatment to a third State. Radi further argued that, neglecting this distinction sometimes leads to the assertion that, in practice, the right of the beneficiary state to most-favoured-nation treatment derives from the treaty concluded by the granting state with a third state, which contains more favourable treatment. This approach is also supported by ILC’s Draft Articles on MFN. See ILC Draft Articles, above n 8, at 16-73. Article 20 of the Draft Articles provides that the rights under MFN clause arise at the moment when the relevant treatment is extended by the granting state to a third state or to persons or things in the same relationship with that third state.
58.
ILC, the 1978 Draft Articles with Commentaries, above n 8, at 25-45. Article 17 of the Draft Articles provides for the irrelevance of the fact that the treatment is extended to a third state under a bilateral or multilateral agreement.
59.
Ibid.
60.
Radi, above n 57, 758–774.
61.
Anglo-Iranian Oil Co. (United Kingdom v Iran), above n 20 at 109. The Court held that the treaty containing MFN clause is the basic treaty that establishes necessary juridical link to claim the benefits of MFN treatment. A third-party treaty, independent of and isolated from the basic treaty, cannot produce any legal effect in this situation as it is res inter alios acta.
62.
Ibid, at 109.
63.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 26.
64.
‘Pacta tertiis nec nocent nec prosunt’ means that treaties produce effects only as between the Contracting Parties. For the definition of this principle, see, the ILC, II Yearbook of International Law (1966), above n, 40, at 3.
65.
Agreement between the Imperial Government of Persia and the Anglo-Persian Oil Company, signed on 29 April 1933; Anglo-Iranian Oil case, above n 20, at 95–99.
66.
Treaty between the United Kingdom and Iran, signed on 4 March 1857. For reference of the treaty, see Anglo-Iranian Oil case, above n 20 at 108.
67.
Commercial Convention between the United Kingdom and Iran, signed on 9 February 1903; Anglo-Iranian Oil case, Ibid, at 98.
68.
Anglo-Iranian Oil case, above n 20, at 95–96.
69.
Declaration by Iran was signed on 2 October 1930 and ratified on 19 September 1932. Part of the Declaration is quoted in, Anglo-Iranian Oil case, ibid, at 103.
70.
Ibid, at 106.
71.
Anglo-Iranian Oil case, above n 20, at 106.
72.
Treaty of Friendship, Establishment and Commerce between Persia and Denmark, signed on 20 February 1934.
73.
Ibid, Article IV; Quotation taken from the Anglo-Iranian Oil case, above n 20 at 108.
74.
Ibid, Anglo-Iranian Oil case.
75.
Anglo-Iranian Oil case, above n 20, at 109.
76.
Ibid, at 110.
77.
Anglo-Iranian Oil case, above n 20, at 110.
78.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 41. The ILC has commented that this approach is consistent with Article 36, paragraph 1 of the VCLT, above n 7; Also see, Radi, above n 57.
79.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 27.
80.
Ibid, 23–27.
81.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, 23–27.
82.
Ibid, Articles 11, 12 and 13. Articles 11 and 12 contemplate that MFN clauses can be made subject to compensation. Article 13 contemplates that MFN clauses can be made subject to reciprocal treatment.
83.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 27. The ILC has commented that, ‘if the clause contains a restriction, the beneficiary State cannot claim any favours beyond the limits set by the clause, even if this extent does not reach the level of the favours extended by the granting State to a third State.’
84.
Cole, above n 14.
85.
The 1978 Draft Articles with Commentaries, above n 8, Article 21(1).
86.
Rights of Nationals of the United States of America in Morocco (United States v. France) (Judgment) [1952], ICJ 176–192.
87.
Treaty of Peace and Friendship between the United States and the Shereefian Empire, dated 16 September 1836, Articles 14 and 24 contained MFN clauses, Articles 20 and 21 provided for the scope of the consular jurisdiction. The clauses are quoted in Rights of the US Nationals in Morocco, ibid, at 188–190.
88.
Rights of the US Nationals in Morocco, above n 86.
89.
General Treaty between Her Majesty and the Sultan of Morocco, signed on 9 December 1856.
90.
Treaty of Commerce and Navigation between Spain and Morocco, signed in 1861.
91.
Rights of the US Nationals in Morocco, above n 86, at 190.
92.
Ibid.
93.
Rights of the US Nationals in Morocco, above n 86, 176-192. This stance is also supported in the 1978 Draft Articles with Commentaries by the ILC, above n 8 at 16-73. Article 21 provides that,

the right of the beneficiary State, for itself or for the benefit of persons or things in a determined relationship with it, to most-favoured-nation treatment under a most-favoured-nation clause is terminated or suspended at the moment when the extension of the relevant treatment by the granting State to a third State or to persons or things in the same relationship with that third State is terminated or suspended.
94.
Ibid, Rights of the US Nationals in Morocco, at 196.
95.
The 1978 Draft Articles with Commentaries, above n 8, Article 4. This categorisation in the context of IIAs was discussed in detail in the previous chapter, for details, see, Chap. 2.
96.
Ibid, at 20. The ILC commented that,

Most-Favoured-Nation Clauses have been customarily categorised 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.
97.
The 1978 Draft Articles with Commentaries, above n 8.
98.
Ibid, at 21.
99.
The 1978 Draft Articles with Commentaries, above n 8.
100.
Ibid, 21.
101.
The 1978 Draft Articles with Commentaries, above n 8.
102.
A.D. McNair, The Law of Treaties (Oxford Clarendon Press, 1961) 273. McNair argued that it is customary to speak of the most-favoured-nation clause, that there are many forms of the clause.
103.
The 1978 Draft Articles with Commentaries, above n 8, Articles 9 and 10.
104.
Ibid, Article 9.
105.
The 1978 Draft Articles with Commentaries, above n 8, Articles 10 and 9 (2).
106.
Anglo-Iranian Oil Co case, above n 20.
107.
The 1978 Draft Articles with Commentaries, 29; Christoph Schreur, ‘Sources of International Law: Scope and Application’ (Emirates Centre for Strategie Studies and Research, Emirates Lecture Series: 28, undated) 1-25 (2000). Schreur argued that consent of the states is the basis of obligations under international law. Therefore, states cannot be bound by something to which they have not given their consent; also see, VCLT, above n 7, preamble. The preamble of the VCLT provides that, ‘[n]oting that the principles of free consent and of good faith and the pacta sunt servanda rule are universally recognized’; McNair, above n 102.
108.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, Article 10(2).
109.
Ibid, at 31. See ILC’s Report on its thirtieth session. Examples were given as to what is meant by different categories of persons or things. The examples include merchants, commercial travellers, persons taken into custody, companies, vessels, distressed or wrecked vessels, products, goods, textiles, wheat, sugar, etc.
110.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, ILC provided some illustrations to explain what is meant by the same relationship. The illustrations included nationals, residents in the country, companies having their seat in the country, companies established under the law of the country, companies controlled by nationals, imported goods, goods manufactured in the country, products originating in the country, etc.
111.
Anglo-Iranian Oil Co case, above n 20. It was argued before the ICJ that, it was a contingent clause. The clause ‘acquires its content only when the Grantor State enters into relations with a third State and its content increases whenever fresh favours are granted to the third States.’ The quotation from the pleadings was taken from the, the ILC, the 1978 Draft Articles with Commentaries, above n 8, at 26.
112.
Ibid, the ILC, the 1978 Draft Articles with Commentaries, Article 10(1).
113.
Anglo-Iranian Oil Co case, above n 20, 110.
114.
Ibid.
115.
Cole, above n 14.
116.
Ibid.
117.
Anglo-Iranian Oil Co case, above n 20, ICJ Rep, 108–110. The Court held that,

in order that the United Kingdom may enjoy the benefit of any treaty concluded by Iran with a third party by virtue of a most-favoured-nation clause contained in a treaty concluded by the United Kingdom with Iran, the United Kingdom must be in a position to invoke the latter treaty.
118.
Ibid. The ICJ maintained that, ‘a third party treaty independent and isolated from the basic treaty, cannot produce any legal effect as between the United Kingdom and Iran: it is res inter alios acta.’
119.
Mark E. Viliger, Commentary on the 1969 Vienna Convention on the Law of Treaties (Martinus Nijhoff, 2009), 467.
120.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, Article 8.
121.
The Ambatielos Claim (Greece, United Kingdom of Great Britain and Northern Ireland) [1955] XII Reports of International Arbitral Awards, at, 83-153.
122.
Ibid, at 107.
123.
The Ambatielos Claim, above n 121.
124.
Treaty of Commerce and Navigation between Greece and Great Britain, signed on 10 November 1886. The treaty is attached to the Ambatielos Claim, Ibid, as Annex 12.
125.
Ibid.
126.
The Ambatielos Claim, above n 121, at 109-110. However, the MFN-based claim failed in this case for a different reason. The reason was that the claimant could not satisfy that it was getting a less favourable treatment under the national law of the respondent.
127.
Ibid.
128.
The Ambatielos Claim, above n 121.
129.
Ibid, at 107.
130.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, at 27.
131.
Ibid, Article 9(1) and (2).
132.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, Article 10.
133.
Ibid.
134.
The Ambatielos Claim, above n 121, Award, para 107.
135.
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 (2009), 241.
136.
Fietta, above n 14, 131–138.
137.
Wintershall v Argentina, above n 13, para 162. The tribunal held that, ‘[A] most favoured nation clause can only attract matters belonging to the same category of subject as that to which the clause itself relates-the issue being determined in accordance with the intention of the Contracting Parties deduced from a reasonable interpretation of the Treaty.’
138.
Ibid, para 101.
139.
Wintershall v Argentina, above n 13, para 101. The Tribunal cited it from George Schwazenberger, ‘The Most-Favoured-Nation Standard in British State Practice’ (1945) British Yearbook of International Law; For the opinion of the Umpire of the British-Venezuelan Mixed Claims Commission in the Aroa Mines case, see, ‘Reports of the International Arbitral Awards, Mixed Claims Commission Great Britain-Venezuela,’ dated 13 February and 7 May 1903, Volume IX, 349–533, available at http://legal.un.org/riaa/cases/vol_IX/349-533.pdf.
140.
Ibid.
141.
Andrew Paul Newcombe, Luis Paradell, Law and Practice of Investment Treaties: Standards of Treatment (Kluwer Law International, 2009) 204.
142.
See Chap. 2.
143.
See, Arnold McNair, The Law of Treaties (Columbia University Press, 1938) 285. McNair argued that, ‘[t]here is no such thing as the MFN clause: every treaty requires independent examination.’
144.
Yas Banifatemi, above n 135, 241, at 246. The author argued that,

Under this rule known as the Ejusdem Generis principle, the most-favoured nation standard is intended to protect beneficiaries in similar situations. This raises no difficulty when the object of the basic treaty and that of the third party treaty are not different in nature, which is the case for two treaties for the promotion and protection of investments.
145.
Ibid.
146.
MFN clauses in the IIAs can at best be categorised in some common types or models but that cannot replace the need for case-by-case consideration. See, the ILC, Summary Report on MFN 2015, above n 46, at 16–17. The ILC study group identified six types of obligations that can be created by MFN clauses. Also see, Newcombe, and Paradell, above n 141, at 204–205. The authors have mentioned about four models of MFN clauses in IIAs.
147.
PR Thulasidhass, ‘Most-Favoured-Nation Treatment in International Investment Law: Ascertaining the Limits through Interpretative Principles’ (2015) 7:1 Amsterdam Law Forum 3–24.
148.
The ILC, Summary Report on MFN 2015, above n 46.
149.
Ibid.
150.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, Article 5.
151.
Ibid, Article 9.
152.
The ILC, the 1978 Draft Articles with Commentaries, above n 8, Article 10.
153.
The ILC, Summary Report on MFN 2015, above n 46, at 25. The study group referred the Concurring and Dissenting Opinion of Professor Brigitte Stern in this respect in the case of Impergilo S.p.A v. Argentine Republic (ICSID Case No. ARB/07/17, 21 June 2011). The Study Group commented that, ‘substantive rights and procedural rights are different in international law, it is argued because unlike domestic law, a substantive right does not automatically carry with it a procedural right to compel enforcement.’
154.
Ibid.
155.
MTD v Chile, above n 13.
156.
Cole, above n 14. Cole argued that,

the standard approach to evaluating an MFN-based argument involves comparing the specific treaty provisions invoked by the investor…Such an approach relies upon a contention that each treaty provision in a treaty constitutes an identifiable form of treatment, independent of the other clauses in the treaty.
157.
The cases are discussed in Chaps. 4–6.
158.
WTO, Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), dated 16 January 1998, at para 181, available at https://www.wto.org/english/tratop_e/dispu_e/hormab.pdf.
159.
Isabelle Van Damme, ‘The Non-Politics of Interpreting Silence in the WTO Covered Agreements, in the Shifting Sands of Treaty Interpretation,’ (2008) 102 American Society of International Law Proceeding, 411 at 420–423.
160.
Ibid, at 423.
161.
Thulasidhass, above n 147, 3–24.
162.
Ibid.
163.
Thulasidhass, above n 147, 14–24.
164.
Siemens v Argentina, above n 13.
165.
Ibid, para 81. The case is discussed in detail in Chap. 5.
166.
Siemens v Argentina, above n 13.
167.
Thulassidhass, above n 147, 14–24.
168.
Rudolf Dozler and Margrete Stevens, Bilateral Investment Treaties (London: Kluwar Law International 1995) 17.
169.
Chap. 2.
170.
Cole, above n 14, 573–574. Cole has referred, Stephen M. Schwebel, ‘May Preparatory Work Be Used to Correct Rather than Confirm the ‘Clear’ Meaning of a Treaty Provision?’ In Jerzy Makarczyk ed, Theory of International Law at the Threshold of the twenty-first Century (1996) 541–546.
171.
Ibid.
172.
Cole, above n 14, 575.
173.
The Harvard Research in International Law, ‘Comment on its Draft Convention on the Law of Treaties’ (1935) 29 American Journal of International Law 946–973. The Harvard Research in International Law was established by Manley O Hudson who was a professor of International Law at Harvard Law School and later became the first chairman of International Law Commission in 1949. In 1929–1939, this research group drafted a number of International Conventions on different topics which were published in the American Journal of International Law. The ILC later used these drafts for its projects. For further information see, International Law Commission (ILC), About the Commission: Historical Antecedents (2015) http://legal.un.org/ilc/ilcintro.shtml.
174.
Ibid.
175.
Competence of the General Assembly for the Admission of a State to the United Nations (Advisory Opinion) [1950] ICJ Rep 4–8.
176.
Ibid.
177.
McNair, above n 102, 364–365.
178.
The Harvard Research, above n 173, 946–973.
179.
Ibid.
180.
Nuclear Tests Case (Australia v France) (Merits) [1974] ICJ Rep 253 para 46; Also see, The 1948 United Nations Charter, Article 2(2) provides that, ‘All Members, in order to ensure to all of them the rights and benefits resulting from membership, shall fulfil in good faith the obligations assumed by them in accordance with the present Charter,’ available at http://www.un.org/en/sections/un-charter/un-charter-full-text/.
181.
For example, see, Andrew D Mitchell, M Sornarajah and Tania Voon, Good Faith and International Economic Law (Oxford University Press, 2015).
182.
ICSID Convention, above n 45, Article 34(1), Rule 23(1).
183.
Methanex Corp v United States, Final Award of the Tribunal on Jurisdiction and Merits, Arbitration In accordance to 1976 UNCITRAL Rules, Final Award, dated 3 August 2005, para 54.
184.
Stephan W Schill and Heather L Bray, ‘Good Faith Limitations on Protected Investments and Corporate Structuring,’ in Andrew D. Mitchell, M. Sornarajah and Tania Voon (eds.), Good Faith and International Economic Law (Oxford: Oxford University Press, 2015) 88–116.
185.
Steven Reinhold, ‘Good Faith in International Law,’ (2013) 2 UCL Journal of Law and Jurisprudence 40, at 63.
186.
Bernardo M Cremades ‘Good Faith in International Arbitration,’ (2012) 27 American University International Law Review 761, at 788.
187.
Ibid.
188.
Inceysa Vallisoletana S.L. v Republic of El Salvador (Inceysa v El Salvador), ICSID Case No. ARB/03/26, Award, datad 2 August 2006, para 230.
189.
Ibid.
190.
Inceysa v El Salvador, above n 188, paras 175–176.
191.
Ibid, para 176.
192.
Austrian Airlines v Slovakia, above n 6, para 121.
193.
Cremades, above n 186, at 787.
194.
Chen Huiping,‘Expansion of Jurisdiction by ICSID Tribunals: Approaches, Reasons and Damages,’ (2011) 12 Journal of World Investment and Trade 671, at 683 and 686.
195.
Reinhold, above n 185 at 62.
196.
Ibid.
197.
Discussed in the concluding chapter.
198.
Charles Cheney Hyde, International Law Chiefly as Interpreted and Applied by the United States (2^nd rev. ed.), (Boston Little, Brown and Company, 1947) 1472.
199.
International Status of South-West Africa (Advisory Opinion) [1950] ICJ Rep 128-178. Judge Alvarez in his dissenting opinion in the 1950 Advisory Opinion on international status of South-West Africa observed that, ‘an isolated text may seem clear, but it may cease to be so when it is considered in relation to other texts on the same question and with the general spirit of the institution concerned. In the latter case, the spirit must take precedence.’
200.
Damme, above n 159, at 424.

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Tanjina Sharmin

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Sharmin, T. (2020). Principles of Interpretation. 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_3

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