The MFN clause in investment arbitration: Treaty interpretation off the rails

In this article the author revisits the vexed question of whether the jurisdiction of an international tribunal, established in accordance with the terms of the basic treaty, can be expanded by reference to the terms of a third treaty through the investor's reliance upon the MFN clause in the basic treaty. The recent line of cases suggesting that no general answer to that question can be provided in view of the nuanced differences in the wording of MFN clauses is considered and criticized as failing to pay adequate attention to the principles of general international law as mandated by Article 31(3)(c) of the Vienna Convention on the Law of Treaties. The application of those principles leads to a negative answer to the question. A claim for MFN treatment secures the treatment represented by the third treaty, it does not effect the automatic incorporation of the terms of the third treaty into the basic treaty before the investor files its claim. Moreover, for the investor to assert a claim for MFN treatment it must first accept the standing offer of international arbitration in accordance with the terms of the basic treaty and at that point an arbitration agreement comes into existence. The terms of that agreement cannot be amended retroactively at the suit of one of the parties. There is a fundamental distinction in general international law between the substantive obligations in a treaty, which are addressed to the state parties, and the provisions that create a jurisdictional mandate for an international tribunal, which are addressed to the tribunal and to the disputing parties, who enter into a relationship of procedural equality once arbitration proceedings have been commenced. This distinction must be respected by investment treaty tribunals in confronting the question of the scope of MFN clauses.