Most Favoured Nation (MFN) clauses are integral components of international investment treaties, designed to ensure equitable treatment of foreign investors. They obligate states to extend the most favourable treatment they grant to investors of any other country to investors of the treaty partner. This article delves into the application of MFN clauses by investor-state arbitral tribunals, providing insights into their interpretation, scope, and implications for investors and states alike.
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| Language | : | English |
| File size | : | 1231 KB |
| Text-to-Speech | : | Enabled |
| Screen Reader | : | Supported |
| Enhanced typesetting | : | Enabled |
| Word Wise | : | Enabled |
| Print length | : | 584 pages |
MFN Clauses in Investment Treaties
MFN clauses vary in their language and scope, but they generally fall into two categories: national treatment MFN and international MFN. National treatment MFN clauses require states to treat foreign investors no less favourably than their own domestic investors. International MFN clauses, on the other hand, oblige states to extend the most favourable treatment accorded to investors of any third country.
Interpretation of MFN Clauses
Investor-state arbitral tribunals have developed a body of jurisprudence interpreting MFN clauses. These tribunals have held that MFN clauses are to be interpreted broadly and effectively, with the aim of promoting non-discrimination and providing a level playing field for foreign investors.
Tribunals have also recognized that MFN clauses are not absolute obligations. They may be subject to exceptions, such as national security measures or public Free Download considerations. Additionally, MFN clauses do not create a positive obligation to grant specific treatment. Instead, they merely require states to extend the treatment they already grant to other investors.
Scope of MFN Clauses
The scope of MFN clauses is often a subject of debate. Tribunals have held that MFN clauses can apply to a wide range of matters related to foreign investment, including:
- Taxation
- Expropriation
- Regulatory measures
- Contractual obligations
MFN clauses can also apply to both pre-investment and post-investment measures. However, they do not generally apply to diplomatic protection or the settlement of disputes between states.
Implications for Investors and States
MFN clauses have significant implications for both investors and states. For investors, MFN clauses provide a degree of protection against discriminatory treatment and ensure that they are treated as favourably as investors from any other country. This can increase investor confidence and encourage foreign investment.
For states, MFN clauses can limit their ability to adopt different policies towards foreign investors from different countries. This can make it more difficult to implement targeted measures to attract or protect specific investments. However, MFN clauses can also promote transparency and non-discrimination in international investment relations.
Most Favoured Nation (MFN) clauses play a vital role in international investment law. Their application by investor-state arbitral tribunals has created a body of jurisprudence that provides guidance for investors and states alike. By understanding the interpretation, scope, and implications of MFN clauses, investors can maximize their protection and states can ensure compliance with their international obligations.
About the Book
This article is based on the book "Application of Most Favoured Nation Clauses by Investor-State Arbitral Tribunals" published by Routledge in 2023. The book provides a comprehensive analysis of the application of MFN clauses by investor-state arbitral tribunals, drawing on case law, scholarly analysis, and practical examples. It is an essential resource for anyone interested in international investment law, dispute resolution, or the protection of foreign investment.
