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?

Table of Contents

I. Introduction

II. The Relevant Case Law

A. Supporting Cases

1. Emilio Augustin Maffezini v Kingdom of Spain – the seminal case

(a) Exhaustion of local remedies condition

(b) Fork in the road clause

(c) Choice of a particular arbitration forum

(d) Precisely stipulated arbitration rules

2. Siemens A.G. v Argentine Republic

3. Gas Natural SDG, S.A. v Argentine Republic

4. Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v Argentine Republic

5. Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. and AWG Group Ltd. v Argentine Republic

B. Rejecting Cases

1. Tecnicas Medioambientales Tecmed S.A. v United Mexican States

2. Salini Costruttori v Jordan

3. Plama Consortium Ltd. v Republic of Bulgaria

4. Telenor Mobile Communications AS v. Republic of Hungary

III. The general Ability of MFN Clauses to invoke dispute settlement mechanisms

IV. The Scope of a MFN Clause in a Particular Case

A. Is International Arbitration more Favourable than Dispute Settlement before the Domestic Courts of the Host State?

B. The Ejusdem Generis Principle – a First Coarse Filter

C. The Interpretation of a MFN clause

D. Distinction between procedural obstacles and the creation of jurisdiction

V. Conclusion

Objectives and Research Themes

This work examines the extent to which Most-Favoured-Nation (MFN) clauses in Bilateral Investment Treaties (BITs) can be invoked to import procedural rights—specifically dispute settlement mechanisms—from one treaty into another. The research aims to resolve the legal uncertainty created by conflicting arbitral tribunal decisions regarding whether such clauses extend beyond substantive rights to procedural matters, and to propose a systematic framework for future assessments.

• Analysis of supporting vs. rejecting case law regarding the application of MFN clauses to procedural rights.
• Evaluation of the role of the ejusdem generis principle as a filter in treaty interpretation.
• Distinction between procedural obstacles and the fundamental requirement of state consent to arbitration.
• Development of a consistent, systematic approach for tribunals to determine the intended scope of MFN clauses.

Excerpt from the Book

Summary of Chapters

I. Introduction: This chapter highlights the rising importance of BITs in global investment protection and introduces the core problem: whether MFN clauses can be used to bypass dispute settlement regimes by importing more favorable procedural rights from other treaties.

II. The Relevant Case Law: This section provides a comprehensive review of arbitral decisions, categorizing them into cases that supported the extension of MFN clauses to procedural rights (e.g., Maffezini, Siemens) and those that rejected it (e.g., Tecmed, Salini, Plama, Telenor).

III. The general Ability of MFN Clauses to invoke dispute settlement mechanisms: This chapter argues that the distinction between substantive and procedural rights is not warranted in the context of MFN clauses, as both are essential to protect investors against discriminatory and ineffective judicial systems.

IV. The Scope of a MFN Clause in a Particular Case: This section develops a framework for interpretation, emphasizing the importance of treaty wording, the ejusdem generis principle as a filter, and the critical distinction between removing procedural obstacles versus the creation of jurisdiction through state consent.

V. Conclusion: The concluding chapter summarizes the proposed systematic approach, suggesting that while broad MFN clauses should generally be assumed to cover procedural rights, they cannot be used to override the fundamental requirement of state consent to arbitration.

Keywords

Most-Favoured-Nation Clause, MFN, Bilateral Investment Treaty, BIT, Investment Arbitration, ICSID, Dispute Settlement, Procedural Rights, Substantive Rights, Treaty Interpretation, State Consent, Ejusdem Generis, Investment Protection, Maffezini Decision, Treaty Shopping

Frequently Asked Questions

What is the core issue discussed in this book?

The book investigates whether Most-Favoured-Nation (MFN) clauses in Bilateral Investment Treaties allow investors to bypass the specific dispute settlement procedures defined in their basic treaty in order to adopt more favorable procedural rules found in other treaties.

What are the central themes of the work?

Central themes include the scope of MFN clauses, the tension between substantive and procedural treaty rights, the principles of treaty interpretation under the Vienna Convention, and the necessity of state consent for international arbitration.

What is the primary objective of the research?

The goal is to move beyond the current confusion caused by inconsistent arbitral rulings and to develop a consistent, systematic framework for future tribunals to evaluate whether an MFN clause can legitimately import procedural rights.

Which scientific method is employed?

The author employs a comparative legal analysis, contrasting the arguments and reasonings of various ICSID tribunal decisions to identify patterns, logical inconsistencies, and the evolution of legal thought on the application of MFN clauses.

What does the main body of the work cover?

It covers a detailed analysis of landmark cases such as Maffezini, Siemens, and Plama, evaluates the utility of the ejusdem generis principle, and establishes the limits of MFN clauses, particularly regarding the requirement for explicit state consent to arbitration.

Which keywords characterize this work?

Key terms include MFN clause, investment arbitration, treaty interpretation, dispute settlement, procedural rights, and state consent.

How does the author distinguish between "procedural obstacles" and "creation of jurisdiction"?

The author argues that while an MFN clause can remove "procedural obstacles" (like waiting periods) in a treaty where consent to arbitration already exists, it cannot be used to "create jurisdiction" (importing consent) where the host state has never explicitly agreed to arbitrate a specific type of dispute or forum.

Why does the author argue that the distinction between substantive and procedural rights is flawed?

The author contends that both substantive and procedural rights complement each other; a high level of substantive protection is effectively worthless if the investor is forced to pursue claims in a biased or ineffective domestic judicial system of the host state.