International Investment Law and Soft Law

International Investment Law and Soft Law

Edited by Andrea K. Bjorklund and August Reinisch

This important book examines the development of soft law instruments in international investment law and the feasibility of a ‘codification’ of the present state of this field of international economic law.

Chapter 9: Is the MFN Principle in International Investment Law Ripe for Multilateralization or Codification?

Andreas R. Ziegler

Subjects: law - academic, international economic law, trade law, international investment law


9. Is the MFN principle in international investment law ripe for multilateralization or codification? Andreas R. Ziegler* 1. INTRODUCTION The most-favoured-nation (MFN) principle, standard or treatment is a very traditional legal rule in international (economic) law. It has normally been included in treaties having an economic character for centuries. With regard to modern investment treaties and their predecessors (e.g. Treaties on Friendship, Commerce and Navigation or Establishment) this holds equally true. There is hardly a modern BIT that would not contain a reference to MFN and most multilateral or regional codification projects have included this principle. At the same time, it must be noted that the formulations used to incorporate this principle are by no means uniform. A wide variety of models and specific formulations exist. While it was in the past generally thought that this was a purely linguistic problem – more due to different traditions and pragmatism of the negotiators rather than to deliberate choice – recent case law has shown that the scope of the MFN principle can be construed in very different ways. It is thus by no means clear that all parties involved in a codification project would necessarily agree on the exact scope and interpretation to be given to a provision on MFN treatment. In addition, the experience with the observance of the MFN principle as contained in the most important multilateral treaty relating to economic activities – namely the WTO (and formerly the GATT of 1947) with regard to the...

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