Central Asian Yearbook of International Law and International Relations

Article

MFN in BITs: The Deconstruction of State Consent to Dispute Settlement?

Keywords most favoured nation clauses, bilateral investment treaties, international investment law, international dispute settlement, international economic law, public international law
Authors Alberto Pecoraro
Author's information

Alberto Pecoraro
Alberto Pecoraro is Senior Lecturer of International Law, KAZGUU University (Astana, Kazakhstan).
  • Abstract

      In international law, all tribunals, whether arbitral or judicial, are of attributed jurisdiction. The attribution of this jurisdiction is based on state consent and is limited by the terms thereof. Yet the rigours of state consent to investment dispute settlement have been eroded through the broad interpretation of most favoured nation clauses (or MFN clauses) by investment tribunals. The question addressed by the present article is whether an investment treaty’s MFN clause may be used to alter the terms of state consent to international arbitration by incorporating a more favourable dispute settlement clause contained in a third treaty. Its conclusion is that where an MFN clause merely refers to “treatment” and “all matters”, an investor cannot rely thereon in order to avoid the conditions attached by a state to its standing offer to arbitrate. In any way, MFN clauses encompass treatment accorded within a contracting party’s territory, and, by definition, international arbitration lies outside of a state’s territory and control.

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