To what extent, if any, are most favoured nation clauses able to be invoked by investment treaty claimants suing under one bilateral investment treaty in relation to procedural rights granted by another bilateral investment treaty?

Master's Thesis , 2009 , 32 Pages , Grade: B+

Law - European and International Law, Intellectual Properties

Since 1959, the year in which the first Bilateral Investment Treaty (hereinafter BIT) was concluded, the number of BITs has increased to roundly 2500. The rapid growth of that number spells out the outstanding role BITs nowadays play in the global investment protection regime. Typically the host country has not only entered into a BIT with one country but a number of other countries as well. Due to numerous reasons the BITs concluded by the host country often differ in their wording, scope and the guaranteed range of rights. In order to prevent a discrimination and to ensure a balanced competition in the country’s market with equal opportunities for all market players almost all BITs provide for a so-called Most-Favoured-Nation clause (hereinafter MFN clause). Subject to certain limits such a MFN clause, in principle, operates as follows: as soon as the host state accords a more favourable treatment to a third party in another BIT (third party treaty) the party of the basic treaty can rely on the MFN clause to demand the same treatment. Hence, the most favourable treatment agreed upon with one state automatically sets up the standard for the treatment of any other country given that its BIT contains a MFN clause. Although it might be problematic as to what extent a basic treaty can be altered by the operation of MFN clauses, it is commonly accepted that they principally can allow for the incorporation of more favourable substantial rights. However, most BITs do not only address substantial matters but provide for dispute settlement procedures as well. It was the year 2000 when an arbitration tribunal in fact dealt with such a claim for the first time in detail. The pendent dispute gave rise to a question that surprisingly has scraped a shadowy existence before: Are MFN clauses also able to import procedural rights from one BIT to another? Although the competent tribunal in the now-famous Maffezini decision argued in favour of an application with respect to procedural rights the issue today is still alien from being clarified, since other tribunals subsequently have expressly resisted following the Maffezini decision. The divergent decisions caused great legal uncertainty which is not least due to the textual breadth of the MFN clauses the different tribunals had to deal with.
The following essay seeks to “bring light into this legal darkness”.

Inhaltsverzeichnis (Table of Contents)

• Introduction
• The Relevant Case Law
  • Supporting Cases
    • Emilio Augustin Maffezini v Kingdom of Spain – the seminal case
    • Siemens A.G. v Argentine Republic
    • Gas Natural SDG, S.A. v Argentine Republic
    • Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v Argentine Republic
    • Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. and AWG Group Ltd. v Argentine Republic
  • Rejecting Cases
    • Tecnicas Medioambientales Tecmed S.A. v United Mexican States
    • Salini Costruttori v Jordan
    • Plama Consortium Ltd. v Republic of Bulgaria
    • Telenor Mobile Communications AS v. Republic of Hungary
• The general Ability of MFN Clauses to invoke dispute settlement mechanisms
• The Scope of a MFN Clause in a Particular Case
  • Is International Arbitration more Favourable than Dispute Settlement before the Domestic Courts of the Host State?
  • The Ejusdem Generis Principle - a First Coarse Filter
  • The Interpretation of a MFN clause
  • Distinction between procedural obstacles and the creation of jurisdiction
• Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This essay explores the extent to which Most Favored Nation (MFN) clauses in Bilateral Investment Treaties (BITs) can be invoked by investment treaty claimants to access procedural rights granted under a different BIT. The essay aims to clarify the legal uncertainty surrounding this issue by analyzing relevant case law and proposing a systematic approach to applying the relevant criteria.

• The application of MFN clauses to procedural rights in investment arbitration
• The significance of the Maffezini decision and its impact on subsequent case law
• The role of the Ejusdem Generis principle in interpreting MFN clauses
• The distinction between procedural obstacles and jurisdictional issues in the context of MFN clauses
• The limits and potential scope of applying MFN clauses to dispute settlement mechanisms

Zusammenfassung der Kapitel (Chapter Summaries)

• Introduction: This chapter introduces the topic of MFN clauses in BITs and their significance in the global investment protection regime. It highlights the potential for discriminatory treatment of investors from different countries due to variations in BITs and the role of MFN clauses in addressing such disparities. The chapter then focuses on the emerging issue of whether MFN clauses can be invoked to import procedural rights from one BIT to another, highlighting the legal uncertainty created by conflicting tribunal decisions.
• The Relevant Case Law: This chapter presents a comprehensive overview of the case law surrounding the invocation of MFN clauses for procedural rights. It analyzes both decisions supporting and rejecting such an application, providing a detailed overview of the arguments and reasoning employed by the tribunals. The analysis focuses on the seminal Maffezini decision and subsequent cases that have either followed or diverged from its approach.
• The general Ability of MFN Clauses to invoke dispute settlement mechanisms: This chapter examines the general legal principles governing the application of MFN clauses to dispute settlement mechanisms. It discusses the rationale behind the potential for invoking MFN clauses for procedural rights and explores the arguments for and against such an application, particularly in light of the evolving jurisprudence.
• The Scope of a MFN Clause in a Particular Case: This chapter delves into the criteria and limitations governing the application of MFN clauses in specific cases. It examines the key considerations for determining whether a procedural right under one BIT can be imported into another BIT through an MFN clause. These considerations include the relative favorability of different dispute settlement mechanisms, the application of the Ejusdem Generis principle, and the interpretation of MFN clauses in light of the specific provisions of the underlying BITs.

Schlüsselwörter (Keywords)

This essay delves into the complex realm of international investment law, focusing on the interpretation and application of Most-Favored-Nation (MFN) clauses in Bilateral Investment Treaties (BITs). The analysis centers around the legal controversy concerning the invocation of MFN clauses to access procedural rights granted under different BITs, examining key concepts such as dispute settlement mechanisms, jurisdictional issues, and the Ejusdem Generis principle. The essay explores the evolving jurisprudence surrounding these topics, drawing from relevant case law and offering a systematic approach to applying the relevant criteria.

• College: University of Auckland
• Course: International Arbitration
• Grade: B+
• Author: LL.M. Sebastian Röder (Author)
• Publication Year: 2009
• Pages: 32
• Catalog Number: V282056
• ISBN (eBook): 9783656765851
• ISBN (Book): 9783656765868
• Language: English
• Tags: Comparative Law, Commercial Law, International Arbitration