Most Favoured Nation Clause in Investment Treaties
62 Pages Posted: 12 Apr 2015
Date Written: April 10, 2015
International investment law has undergone through enormous changes within the course of the preceding century. Along with the growth of trade and commerce, BITs between Host State and the investors’ home State have been developed since the earliest of the twelfth century to serve the protection of investors’ rights and maintain the sovereignty of the Host States.
It is in the context of balancing the investor power and the Host State freedom that the application of the Most Favored Nation clauses to procedural rights to dispute resolution has become to prominence. Basically, the MFN clauses located in the basic treaty is a promise between the Home and Host States that any favorable conditions that have been accorded to any third-party shall also be granted to the counterparty to the treaty containing the MFN clause. On its face the inclusion of an MFN clause within an investment treaty might not seem problematic; however, the potential application of an MFN clause to dispute resolution procedures runs the risk of breaking the balance between investors’ rights and the State freedom that underlies the acceptability to States of investor-State arbitration.
Keywords: Most favoured nation, MFN, investment, treaties, alternative
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