Development Of The New MFN Clause In The Field Of International Investment Law

The Most-favored-nation clause, as a mean to enforce the principle ofnon-discrimination, has played a pivotal role in promoting international contacts,especially international economic contacts. The Most-favored-nation clause originatesfrom the international trade law. At present, its application in international investmentlaw has attracted much more attention. The application of the most-favored-nationclause to state-investor disputes settlement mechanisms has been called its newdevelopment in international investment law, for it was widely acknowledged that themost-favored-nation clause can only apply to substantial matters and cannot apply toprocedural matters.The most-favored-nation clause, is contracting parties’ agreement concerning themost-favored-nation treatment. Its subject matters are decided by the consensus ofcontracting parties. A major of most-favored-nation clauses of investment treaties do notprovide for whether they apply to disputes settlement mechanism, which has given riseto a long-standing and heated discussion in practice. Firstly, this paper contends that,considering the most-favored-nation clause’s feature of openness and its function ofremedying defects, no matter according to the international customary rules of treatyinterpretation, which have been incorporated in the Vienna Convention or the evolutioninterpretation, the most-favored-nation clauses which do not provide for clearly theapplication to disputes settlement mechanism, should be interpreted to apply to disputessettlement mechanism. Secondly, due to the features of disputes settlement mechanisms,in order to making the most use of the most-favored-nation clause and avoiding thedisruptive treaty-shopping, the most-favored-nation should apply to the disputessettlement mechanism as a whole, instead of single disputes settlement provisions and aentire treaty. Thirdly, it is concluded that the standards of more favorer disputessettlement mechanism should be comprehensive assessment of the following factors:the term of negotiation, the access to international arbitration, the necessary conditionsprior to international arbitration and the scope of disputes, through the method of logicalanalysis of law.