Civilizar (Jun 2009)
The surprising effects of the most favored nation clausule (MFN) in regards to foreign investment (a study of the jurisprudence of the International Center for Settlement of Investment Disputes –ICSID-)
Abstract
Nowadays, the Most Favored Nation (MFN) clause, which was incorporated almost automatically in Bilateral Investment Treaties (BIT) during the decades of 1960 and 1970, reveals a surprising dynamic. By means of different awards of the International Center for Settlement of Investment Disputes (ICSID) our article presents the “evolution” or change of conception that this clause has undergone. For this purpose it is necessary to analyze the clause mechanism, which a priori limited to importation of substantial provisions, seems to be implicitly authorized to insert procedural provisions too. The “new” feature of the MFN clause imposes a retrospective study of its principles, its wording and its aim. Such feature is not the consequence of modifications to the wording of the clause itself, but rather is the result of the assessments made by arbitrators, States and investors. That is why, the use of the MFN clause besides allowing a higher degree of liberalization in the investment sector, affects other structures of international law and highlights the role of States, investors and ICSID in the reinterpretation of MFN clause.
