The investors. However, usage of the MFN clause arises

The
Effect of The MFN Clause to The Dispute Resolution Clauses in the BIT’s

?hsan Bahad?r Çelikta?1

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Abstract

The
controversial issue about the application of the Most Favored Nation clause (hereinafter “MFN clause”) to the dispute resolution provisions in Bilateral
Investment Treaties (hereinafter “BIT”)
is going to be discussed in this article. Is it possible to replace the dispute
resolution provisions in BIT’s through the MFN clause? This article considers
the scope of the MFN clause in light of the relevant cases and scholars
opinions. Additionally, the article is concerned about the rationale of adding
a MFN clause to the BIT’s. This article also suggests that the adoption of the
MFN clause in the BIT’s requires parties to show their intentions clearly.
Finally, the interpretation of the MFN clause is going to take place in the
article.

 

Introduction

According to GATT, the
most favored nation principle mainly aims to prevent discrimination in
international trade. Today, the MFN clause takes place in many different areas
such as international investment. The reason behind adopting MFN clause in
BIT’s is to protect investments and prevent discrimination between foreign
investors. However, usage of the MFN clause arises conflicts in international
investment law. Since the existence of MFN clause allows the party to be
treated equally as the more favored third party, the scope of the clause is
problematic.

The issue is whether the
MFN clause covers the dispute resolution clause in BIT’s or not. In other
words, is it possible to incorporate dispute resolution provisions of a third
party BIT’s through the MFN clause. The conflict especially exists when the
parties does not expressly show their intentions in the wording of treaties. If
the MFN clause explicitly excludes the dispute settlement provisions or clearly
lists the scope of the clause, then there shall be no need for interpretation.
However not every MFN clause contains such statements. Therefore, this kind of
clauses needs interpretation in order to reveal the intention of the parties
and determine to scope of the clause. Firstly, relevant cases are going to be
examined. Secondly, the systematic interpretation is going to take place.

 

1-     
Understanding
the Scope of the MFN Clause in BIT’s through relevant cases

 

 

 

 

 

 

 

1 Student at Bilgi University Law Faculty,
11451002