Volume 25 (2007) / Issue 2
The Most-Favored-Nation (MFN) clause is a provision by which contracting States to a bilateral investment treaty (BIT) commit to afford to ‘investors’ under the BIT a treatment not less favourable than that extended to other foreign investors. In the Maffezini case in 2000, the arbitral tribunal held that international arbitration is inextricably linked to the treatment of foreign investors and on this basis that the MFN clause may also apply to dispute settlement clauses. Such solution renders available to ‘investors’ under a given BIT encompassing an appropriate MFN clause more favourable dispute settlement mechanisms offered by the contracting State under other BIT. However, in the arbitral tribunal’s view, some limits have to be associated to this principle for complying with policy of the concerned State in matter of international investment disputes settlement. Despite the flexibility of the solution adopted by the arbitral tribunal, the margin of uncertainty resulting thereof had drastic consequences in practice. The Maffezini case impacted both behaviours of those drafting new BIT or similar instruments and conducts of legal counsels seeking for their clients the most efficient legal ground for supporting their claims. In two very recent cases rendered in 2005 and 2006, namely Plama and Telenor, other ICSID arbitral tribunals considered that the MFN clause cannot prevail on the basic arbitration requirement which is the meeting of the parties’ consents to arbitrate. Consequently, arbitral tribunals constituted in these two recent cases were reluctant to set up a procedural bridge between two bilateral instruments and to consider possible the application of a specific dispute settlement clause provided for in a given BIT to disputes raised under the realm of another BIT. Consistently with this opinion, they held that an MFN clause must apply only to the ‘treatment of investments’ understood as ‘substantial’ not ‘procedural’ rights applicable thereto. However, taking into account the factual and procedural circumstances in which these cases were addressed as the weakness of some of their legal justifications, it would be burning steps to declare the end of the Maffezini case authority.
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