MFN Treatment Clause Expands Application Issues In Investment Dispute Resolution Procedures

The MFN treatment clause arises from the equality and mutual benefit treaty of commercial trade and has long been considered as a clause under the “Treaty Law”,limiting its scope of application to substantive rights.However,the MFN clause was expanded in the ruling applicable to the dispute settlement procedure by decision on jurisdiction of Maffezini v.Kingdom of Spain,breaking the scope of the traditional provisions of the clause,and the dispute of the scope of application formed in the reason of the strongly opposed in the decision on jurisdiction of Plama Consortium Limited v.Republic of Bulgaria.From the surface point of view,this controversy is a specific ruling made by the International Investment Arbitration Tribunal in the face of different objects that need to be decided.All parties seem to emphasize the scope and significance of the MFN terms of application.From a deeper perspective,it is the dispute between the concerning different applicable interpretations of the MFN clauses in the ruling process and the different effects after the expansion.In the arbitral awards that have been supported,the investment arbitral tribunal has a somewhat unsatisfactory grasp of the interpretation rules.At the same time,the propensity protection for foreign investors is more obvious,so that the disputes in the interpretation process of the clauses impact the acceptance of the expanded application and has shaken the legitimacy of the interpretation process,the demonstration effect of the treaty interpretation and the neutrality and authority of the ICSID arbitral tribunal.Therefore,for the purpose of reducing the applicable disputes of the MFN clause,the relevant clauses should be formulated with a clear expression to limit the scope of application of this clause.The investment arbitral tribunal should adhere to the principle of good faith interpretation when interpreting the vague parts of the clause,use dynamic interpretation methods with caution and ultimately balance the interests of foreign investors with host countries.At the same time,China should also be alert to the status quo of the extension of the MFN status provisions,and take appropriate measures in light of the current bilateral investment treaties and foreign investment situations in China.