The Use of Most-Favoured-Nation Clauses to Import Substantive Treaty Provisions in International Investment Agreements

Facundo Pérez-Aznar

Journal of International Economic Law, 2017, vol. 20, issue 4, 777-805

Abstract: The present work considers the use of Most-Favoured-Nation (MFN) clauses within Bilateral Investment Treaties (BITs), or other International Investment Agreements (IIAs), to import provisions, not included in the IIA (such as fair and equitable treatment provisions or umbrella clauses), by investment arbitral tribunals. Many tribunals have allowed the use of MFN clauses for this purpose, imported the absent standard in the treaty, and have subsequently considered whether or not there was compliance with the imported provision. This study analyses whether this is a proper use of MFN clauses in IIAs. It first examines the practice of some investment tribunals of importing substantive provisions through MFN clauses. Secondly, it analyses whether MFN clauses can be used to import a substantive provision in order to include a new obligation and, at the same time, confer jurisdiction to decide on breaches of imported provisions. In doing so it explores the nature, scope, and limits of MFN clauses as well as the principle of consent to international jurisdiction. Thirdly, it considers how tribunals should proceed when faced with this type of argument, focusing on the interpretation of the elements of MFN clauses. It is suggested that typical MFN clauses included in IIAs should not be used to import treaty provisions.

Date: 2017
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