Most Favoured Nation Treatment

On the history of the MFN clause, see Ustor (1969), Nolde (1924, 1932).

UNCTAD (2000, 2004, 2007, 2010).

Comprehensive Economic and Trade Agreement (CETA), between Canada, of the one part, and the European Union and its Member States, of the other part, signed 30 October 2016, published in the Official Journal of the European Union, OJ L 11, 14 January 2017, pp. 23–1079.

Cazala (2017).

Bolivia, Ecuador and Venezuela recently denunciated the ICSID Convention. See Cazala (2012).

See Cazala (2017) and especially: Australia-United-States of America FTA, 18 May 2004, Protocol on Investment to the New Zealand-Australia Closer Economic Relations Trade agreement, 16 February 2011, Brazil-Mozambique Cooperation and Investment Facilitation Agreement, 30 March 2015, Brazil-Angola Cooperation and Investment Facilitation Agreement, 1 April 2015, Acordo de Cooperaçao e Facilitaçao de Investimentos entre a Republica Federativa do Brasil e a Republica de Colombia, 9 October 2015, Investment Cooperation and Facilitation Agreement between the Federative Republic of Brazil and the Republic of Malawi, 25 June 2015, Acuerdo de Cooperacion y Facilitacion de Inversiones entre la Republica Federativa del Brasil y la Republica de Chile, 23 November 2015, Acuerdo de Cooperacion y Facilitacion de Inversiones entre la Republica Federativa del Brasil y los Estados Unidos Mexicanos, 26 May 2015.

Hanessian and Duggal (2015).

UNCTAD (2016), p. 9 and Cazala (2017).

Among numerous publications on MFN clause applicable to ISDS, see Stern (2005), Freyer and Herlihy (2005), Acconci (2008), Ben Hamida (2008), Rubins (2008), Banifatemi (2009), Institute of International Law (2013), Wordsworth and Brown (2015), Uchkunova and Temnikov (2015), Crépet Daigremont (2015) and Nikièma (2017).

US Model BIT, Art. 4: “1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory. 2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments” (2012).

CETA, Art. 8.6(2): “The treatment accorded by a Party under paragraph 1 means, with respect to a government in Canada other than at the federal level, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to investors of Canada in its territory and to investments of such investors”.

See in the present book the Chapter on National Treatment.

Tzanakopoulos (2014).

See Art. 7.10 of Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part, signed on 6 October 2010, entry into force on 15 December 2015, OJ L 127, 14.5.2011, pp. 1–1426.

Agreed text as of January 2016.

Titi (2016).

The GATS distinguishes between four modes of supplying services: cross-border trade, consumption abroad, commercial presence, and presence of natural persons. The third one, but also the last one, can be achieved though a foreign investment. As explained on the WTO website: “Commercial presence implies that a service supplier of one Member establishes a territorial presence, including through ownership or lease of premises, in another Member’s territory to provide a service (e.g. domestic subsidiaries of foreign insurance companies or hotel chains); and Presence of natural persons consists of persons of one Member entering the territory of another Member to supply a service (e.g. accountants, doctors or teachers) […]”. https://​www.​wto.​org/​english/​tratop_​e/​serv_​e/​gatsqa_​e.​htm#4.

CETA, Art. 11.2(3).

CETA, Art. 28.7(1).

CETA, Art.8.2(2) and 8.2(3).

CETA, Art. 8.15(5).

See Arts. XX of GATT and XIV of GATS.

United States – Standards for Reformulated and Conventional Gasoline, Appellate Body Report, 29 April 1996, WT/DS2/AB/R, pp. 26–27, United States – Import Prohibition of Certain Shrimp and Shrimp Products, Appellate Body Report, WT/DS58/AB/R, 12 October 1998, para. 150.

This possibility comes from a CJEU jurisprudence according to which BITs concluded by Member States with third States are not in conformity with EU law. The issue was concerning the clause on free transfer of capital: the clause did not allow EU Member States to restrict the free movements of capital. Restrictions on the free movement of capital might however be decided by the EU Council for political reasons. Thus the clause was incompatible with EU law. See Commission v. Austria, case C-205/06, 3 March 2009, Commission v. Sweden, case C-249/06, 3 March 2009 and Commission v. Finland, case C-118/07, 19 November 2009.

CETA, Art. 28.4(2)(a).

CETA, Art. 28.10: “If a right or obligation in this Agreement duplicates one under the WTO Agreement, the Parties agree that a measure in conformity with a waiver decision adopted by the WTO pursuant to Article IX of the WTO Agreement is deemed to be also in conformity with the duplicated provision in this Agreement”.

CETA, Art. 8.15(1)(a)(iv).

Annex I: Reservations applicable in the EU, 14 September 2016, Doc. 10973/16 ADD 11, p. 406.

The reservation specifies: “[a]n internal market on services and establishment means an area without internal frontiers in which the free movement of services, capital and persons is ensured. The right of establishment means an obligation to abolish in substance all barriers to establishment among the parties to the regional economic integration agreement by the entry into force of that agreement. The right of establishment shall include the right of nationals of the parties to the regional economic integration agreement to set up and operate enterprises under the same conditions provided for nationals under the law of the country where such establishment takes place. The approximation of legislation means: (a) the alignment of the legislation of one or more of the parties to the regional economic integration agreement with the legislation of the other party or parties to that agreement; or (b) the incorporation of common legislation into the law of the parties to the regional economic integration agreement. Such alignment or incorporation shall take place, and shall be deemed to have taken place, only at such time that it has been enacted in the law of the party or parties to the regional economic integration agreement”, see Annex II: Reservations applicable in the EU, 14 September 2016, Doc 10973/16 ADD 14, p. 117.

Annex II: Reservations applicable in Canada, 14 September 2016, Doc 10973/16 ADD 12, p. 28.

See Nolde (1932), Ustor (1975), pp. 13–21, Crépet Daigremont (2015).

See UNCTAD (n. 11).

See for example Maffezini v. Spain (n. 11), paras. 54–55: “[…] there are good reasons to conclude that today dispute settlement arrangements are inextricably related to the protection of foreign investors, as they are also related to the protection of rights of traders under treaties of commerce. […] such arrangements, even if not strictly a part of the material aspect of the trade and investment policy pursued by treaties of commerce and navigation, were essential for the adequate protection of the rights they sought to guarantee” (footnote omitted). In Austria Airlines v. Slovakia, the Tribunal denied the application of the MFN clause but admitted the equal importance of substantive and procedural rights: “[a]s a general matter, the Tribunal observes that it sees no conceptual reason why an MFN clause should be limited to substantive guarantees and rule out procedural protections, the latter being a means to enforce the former” (UNCITRAL Case, Award, 9 Oct. 2009, para. 124).

See for example RosInvestCo UK Ltd. v. The Russian Federation, Arbitration Institute of the Stockholm Chamber of Commerce, Case No. V079/2005, Award on Jurisdiction, Oct. 2005 and Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award, 3 July 2013.

Nevertheless, the application of the MFN clause to modify a procedural aspect has been admitted in most cases. It has however been denied in Wintershall Aktiengesellschaft v. Argentina, ICSID Case No. ARB/04/14, Award, 8 December 2008, ICS Inspection and Control Services Limited v. Argentina, PCA/UNCITRAL Case No. 2010-9, Award, 10 February 2012, Daimler Financial Services AG v. Argentina, ICSID Case No ARB/05/1, Award, 22 August 2012.

Stern’s Opinion rendered in Impregilo S.p.A. v. Argentine Rrepublic, ICSID Case No. ARB/07/17, Award, 21 June 2011, see also Crépet Daigremont (2015).

Faya Rodriguez (2008).

Reservations and exceptions to this provision are provided for in Art. 13.10 CETA.

See in the present book the chapter on the Notion of Investment.

Crépet Daigremont (2015), pp. 60–64.

ATA Construction, Industrial and trading Company v. Jordan, ICSID Case No. ARB/08/2, Award, 18 May 2010, Sergei Paushok, CJSC Golden East Company, CJSC Vostokneftegaz v. Mongolia, UNCITRAL Award, 28 April 2011, Hesham Talaat M. Al-Warraq v. Indonesia, Award, 15 December 2014.

United Parcel Service of America v. Canada, NAFTA/UNCITRAL, Award, 24 May 2007, ILM 2007: 919–955, ADF v. United States of America, NAFAT/ICSID No. ARB(AF)/00/1, Award, 9 January 2003.

Técnicas Medioambientales Tecmed, S.A. v. Mexico, ICSID Case No. ARB(AF)/00/2, Award, 29 May 2003, MCI Power Group and New Turbine, Inc. v. Equador, ICSID Case No. ARB/03/6, Award, 31 July 2007.

See MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Chile, ICSID Case No. ARB/01/7, Award, 25 May 2004 (about an obligation to accord licences), Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/8, Award, 6 February 2007 (about fair market value for the evaluation of a compensation), Bayindir Insaat Turizm Ticaret ve Sanayiti A.S. v. Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005, Award, 27 August 2009, Continental Casualty Company v. Argentine Republic, ICSID Case No. ARB/03/9, Decision on jurisdiction, 22 February 2006 (about capital transfers), Parkering-Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8, Award, 11 September 2007 (about the treatment during a call for tenders), Rumeli Telkom A.S. and Telsim Mobil Telekomikasyon Hizmetleri A.S. v. Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008 (to import treatment clauses) and LESI SpA and ASTALDI SpA v. Algeria, ICSID Case No. ARB/05/3, Award, 12 November 2008 (idem).

For example Occidental Exploration and Production Company v. Republic of Ecuador, LCIA case No. UN3467, Award, 1st July 2004, William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, INC. v. Canada, PCA case No. 2009-04, Award, 17 March 2015.

S.D. Myers Inc. v. Canada, UNCITRAL (NAFTA), First partial Award, 13 November 2000, ICSID Rep. 8(2005): 18-65, ILM 2001: 1408–1492, Pope & Talbot v. Canada, NAFTA, Award, 10 April 2001, ICSID Rep. 7(2005): 102–147, Marvin Roy Feldman Karpa v. Mexico, ICSID (NAFTA) No. ARB(AF)/99/1, Award, 16 December 2002, ICSID Rev. 2003: 488–594, ICSID Rep. 7(2005): 341–420, ILM 2003:625–682, Parkerings-Compagniet AS v. Lithuania (n. 53), Hesham Talaat M. Al-Warraq v. Indonesia (n. 48).

See Clayton v. Canada (n. 55), Parkerings-Compagniet AS v. Lithuania, S.D. Myers Inc. v. Canada and Pope & Talbot v. Canada (n. 57), Grand River Enterprises Six Nations, LTD. and al. v. United States of America, Award, 12 January 2011, Apotex Holdings Inc. and Apotex Inc. v. United States of America, NAFTA/ICSID Case No. ARB(AF)/12/1, Award, 25 August 2014.

Crépet Daigremont (2015).

See Art. 18 of the Treaty on the Functioning of the European Union: “Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited”. This disposition is not equivalent to a MFN clause and a national treatment clause.

See Art. 14 of the European Convention on Human Rights: “The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status”. According to the European Court on Human Rights, this provision forbids all differences of treatment, except those with an objective and reasonable justification (Case “relating to certain aspects of the laws on the use of languages in education in Belgium”, judgment (plen.), 23 July 1968, A6, para. 10).

Crépet Daigremont (2015).

Joint Interpretive Instrument, pt. 6(a), p. 5.