Inconsistency of MFN jurisprudence in international investment arbitration and fragmentation of international law

Abstract

The idea behind this paper is to test the MFN jurisprudence in investment arbitration against the claim that such jurisprudence is effectively a contributing factor to the fragmentation of international law in general. While a fraction of cases per se cannot cause the phenomenon of such a great magnitude, it still may serve as an inquiry into the causes of fragmentation of international law. If a relatively simple and well-established standard, such as Most-Favoured-Nation treatment can lead to different legal theories and opposing outcomes even within one system, there is a validity in argument that under different and more demanding circumstances interpretation will be even more prone to fragmentation. This article analyzes and compares with each other several famous MFN cases: Maffezini, Plama, RosInvest, Kilic and Garanti Koza and finds that there are binaries that are irreconcilable on several levels, on the level of legal theory employed or simply on the level of final outcomes of these cases. While different sub-systems of interpreting MFN clause tend to show certain consistency within their own paradigms there are evident clashes of different paradigms, which demonstrate the systematic fragmentation of interpretation of MFN clauses in international investment law.

Keywords

• most-favoured-nation clause
• mfn clause
• investment arbitration
• fragmentation