Most-Favoured-Nation Treatment, Survival Clauses and Reform of International Investment Law

Abstract

In the last decade, international investment law has been on a trajectory of rapid evolution with reform high on agenda priorities. Reform requires a reconciliation of competing interests generally so difficult to achieve that it is often unclear which option constitutes ‘reform’ and which unwanted change. When political will is present, and contracting parties agree on reformed options, two particular treaty provisions, the most-favoured-nation treatment and survival clauses, can interfere with the process and become an impediment to changing the rules of the game. The most-favoured-nation treatment, a guarantee of non-discrimination present in the quasi-totality of investment treaties, can have far-reaching ramifications for newly-negotiated provisions, especially where international investment agreements confer pre-establishment rights and the clause expressly covers ‘all matters’ within a treaty. Survival clauses, a type of provision that extends the validity of an investment agreement beyond its termination, can delay the onset of the new options for an average of between five and twenty years after expiry of the treaty’s minimum period of application. The present contribution explores these two types of clause from the angle of their potential impact on reform of international investment law.

Keywords: Most-Favoured-Nation Treatment, MFN, Survival Clauses, Sunset Clauses, Reform of International Investment Law

JEL Classification: F02, F13, F21, F53, K41, K39, K40, K10, K33, K49, K12, K19, K20, K29, H70, E22, H87, F50, F52