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Application of MFN to Extend the Jurisdiction of Arbitral Tribunals

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Application of Most-Favoured-Nation Clauses by Investor-State Arbitral Tribunals

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Abstract

Jurisdiction of international courts and tribunals refers to their power to decide international disputes. Investor-state arbitral tribunals derive their jurisdiction from the consent of states, and they are constituted by their mandate providers, the sovereign states. In this way, states subject themselves to a consensual system of investment dispute settlement by conferring power upon tribunals. Consequently, the lack of consent by a state means the lack of jurisdiction over the state. However, as has been previously discussed in Chaps. 1 and 5 of this book, since the Maffezini v Spain case in the year 2000, some investor-state tribunals have extended their jurisdiction by MFN clauses in IIAs, while others have rejected such an extension. The present chapter focuses more on the application of MFN for expanding four traditional dimensions of the jurisdiction of tribunals, namely: jurisdiction over specific persons (ratione personae), territorial (ratione loci), temporal (ratione temporis) and subject matters (ratione materiae). The chapter argues that MFN should not be applied to bypass consent of IIA party states conferring jurisdiction to the arbitral tribunals. The chapter also argues that extending jurisdiction by MFN can result in abuse of the arbitral process, ultimately undermining the integrity of investor-state arbitral tribunals. From the developing host-states’ perspective, the application of MFN to jurisdictional issues can cause their distrust in investor-state arbitration ultimately prompting them to exclude MFN or investor-state arbitration from new IIAs.

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Notes

  1. 1.

    For details on the definition of jurisdiction, see Chap. 5. Generally, on jurisdiction of investor-state arbitral tribunals, see, Zachary Douglas, The International Law of Investment Claims, (Cambridge University Press, first published in 2009) 4th printing 2012.

  2. 2.

    Garanti Koza LLP v Turkmenistan (Garanti Koza v Turkmenistan), ICSID Case No. ARB/11/20, Decision on the Objection to Jurisdiction for Lack of Consent, 3 July 2013, Majority Decision, para 21. See also, Eric de Brabandere, Investment Treaty Arbitration as Public International Law, (Cambridge University Press, 2016). The majority decision of the tribunal in Garanti Koza v Turkmensitan has quoted from, Christopher F Dugan, Don Wallace, Noah Rubins, and Borzu Sabahi, Investor-State Arbitration (Oceana TM, 2008) at 208, to establish this proposition. The quote is as follows: ‘questions concerning the consent of the parties to jurisdiction, in the context of a BIT arbitration, are generally governed by international law.’ The majority tribunal in Garanti Koza v Turkmenistan also cited other arbitral decisions such as, Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. Argentine Republic (Teinver v Argentina), ICSID Case No. ARB/09/1, Decision on Jurisdiction, 21 December 2012, para 176, and Daimler Financial Services AG v the Argentina Republic (Daimler v Argentina), ICSID Case No. ARB/05/1, Award on Jurisdiction, 22 August 2012, and observed as follows:

    Few propositions are as well established in international law as that ‘a State may not be compelled to submit its disputes to arbitration without its consent.’ The tribunal in Teinver v. Argentina called it a ‘fundamental requirement’ that ‘a State Party consent to jurisdiction. ‘It is equally accepted that a State’s consent is not to be presumed, but must be established by an express declaration or by actions that demonstrate consent.’

  3. 3.

    The Charter of the United Nations (UN Charter) and the Statute of the International Court of Justice (ICJ), (signed on 24 October 1945), United Nations Treaty Series Vol XVI, art 33(1); The Rules of ICJ Statute, Article 79.

  4. 4.

    The Case of S.S. Lotus, France v Turkey, Permanent Court of International Justice, (Judgment No. 9), 7 September 1927, PCIJ, Series 1, No. 10, paras 18–19. However, international obligations arising from some peremptory norms may bind states even without their consent. For example, obligation not to commit genocide. On this point, see, Ademola Abass, ‘Consent Precluding State Responsibility: A Critical Analysis,’ (2004) 53(1) The International and Comparative Law Quarterly, 211–225. For more details on the importance of consent by states, also see, J Shand Watson, ‘State Consent and the Source of International Obligation in the Jurisprudence of International Law: Classic and Modern Views,’ (1992) 86 American Society of International Law Proceedings, 108–112.

  5. 5.

    Generally, on this point, see Article 36 of the ICJ Statute, available at <http://legal.un.org/avl/pdf/ha/sicj/icj_statute_e.pdf>.

    Also see, H Christian A.W. Schulze, ‘Forum Non-Conveniences in Comparative Private International Law’ (2001) 118 South African Law Journal, 812.

  6. 6.

    The 1945 UN Charter, above n 3, Article 33.

  7. 7.

    Yuval Shany, Questions of Jurisdiction and Admissibility before International Courts (Cambridge University Press, 2015) 7–8.

  8. 8.

    This issue has been discussed before in Chaps. 1 and 5. The trend began with the arbitral decision in, Emilio Agustin Maffezini v The Kingdom of Spain (Maffezini v Spain), ICSID Case No ARB/97/7, Decision on Objections to Jurisdiction, 25 January 2000.

  9. 9.

    Typically, there are four dimensions of jurisdiction, namely ratione personae, ratione loci, ratione temporis and ratione materiae. A detail discussion on the meaning and definition of each of the jurisdictional dimensions is coming shortly.

  10. 10.

    This author, by an extensive research, has identified 23 publicly available investor-state arbitral decisions which have rejected the application of MFN to various dimensions of arbitral jurisdiction until 2018. According to the knowledge of this researcher, these are all of the publicly available decisions on this issue. However, pending cases are not studied. This chapter only studies cases in which tribunals have rendered a decision or Award. The search was mainly based on the website of Italaw <https://www.italaw.com/>, and United Nations Convention on Trade and Development (UNCTAD) Investment Policy Hub <http://investmentpolicyhub.unctad.org/>. The cases reviewed in Section 2 are as follows: Salini Costruttori S.P, A. and Italsrade S.p.A. v The Hashemite Kingdom of Jordan (Salini v Jordan), ICSID Case No. ARB/02/13, Decision on Jurisdiction, 9 November 2004; Plama Consortium Limited v Republic of Bulgaria (Plama v Bulgaria), ICSID Case No. ARB/03/24, Decision on Jurisdiction, dated 8 February 2008; Vladimir Berschader and Moise Berschader v The Russian Federation (Berschader v Russia), Arbitration Institute of the Stockholm Chamber of Commerce, Case No. 080/2004, Award dated 21 April 2006; Accession Mezzanine Capital L.P. and Danubius Kereskedohaz Vagyonkezwlo ZRT v Hungary (Accession Mezzanine v Hungary), ICSID Case No. ARB/12/3, Decision on Respondent’s Objection under Arbitration Rule 41(5), dated 16 January 2013; Austrian Airlines v The Slovak Republic (Austrian Airlines v Slovakia), UNCITRAL, Final Award, 9 October 2009; TZA Yap Shum v Republic of Peru (TZA Yap Shum v Peru), ICSID Case No. ARB/07/6, Decision on Jurisdiction and Competence, 19 June 2009 (This researcher has relied on the unofficial English translation of the Decision. The decision was originally written in Spanish. For the factual part, therefore, this researcher has relied mostly on the Decision on Annulment dated 12 February 2015 which is written in English.); Telenor Mobile Communications A.S. v The Republic of Hungary (Telenor v Hungary), ICSID Case No. ARB/04/15, Award, 13 September 2006; Quasar, Orgor, GBI, Alos SICA v The Russian Federation (Quasar, Orgor, GBI, Alos v Russia), Arbitration Institute of Stockholm Chamber of Commerce, Award, 20 July 2012 (the arbitral Award had follow-on proceedings). It was subjected to a review by the national court of Sweden, Sweden being the seat of arbitration); Tecnicas Medioambientales Tecmed S.A. v the United Mexican States (Tecnicas v Mexico), ICSID Case No. ARB (AF)/00/2, Award, 29 May 2003; M.C.I. Power Group L.C. and New Turbine INC v Republic of Ecuador (MCI Power Group v Ecuador), ICSID Case No. ARB/03/6, Award, 31 July 2007; Vanessa Ventures Ltd v The Bolivarian Republic of Venezuela (Vanessa v Venezuela), ICSID Case No. ARB (AF)/04/6, Award, 16 January 2013; Societe Generale v the Dominican Republic, In the matter of an arbitration under the UNCITRAL Arbitration Rules, LCIA Case No. UN 7927, Award on Preliminary Objections to Jurisdiction, 19 September 2008; European American Investment Bank (Euram) v Slovakia (Euram v Slovakia), PCA Case No. 2010–17, Decision on Jurisdiction, dated 22 October 2012; Ansung Housing Co Ltd v People’s Republic of China (Ansung Housing v China), ICSID Case No. ARB/14/25, Award, dated 9 March 2017; Beijing Urban Construction Group Co. Ltd v Republic of Yemen (Beijing Urban v Yemen), ICSID Case No. ARB/14/30, Decision on Jurisdiction, dated 31 May 2017; I.P. Busta & J.P. Busta v the Czech Republic (I.P. Busta v the Czech Republic), Arbitration Case v 2015/014, Arbitration Institute of the Stockholm Chamber of Commerce, Final Award, dated 10 March 2017; Sanum Investments Limited v The Government of the Lao People’s Democratic Republic (Sanum v Lao), PCA Case No. 2013–13, Award on Jurisdiction, dated 13 December 2013; Renta 4, Ahorro Emergentes, Ahorro Eurofondo, Rovime, Quasar, Orgor, GBI v The Russian Federation (Renta4 v Russia), SCC Arbitral Case, Award on Preliminary Objections, dated 20 March 2009 (the Award was accompanied by a dissenting opinion by Charles N. Brower); A11Y Ltd v Czech Republic, ICSID Case No. UNCT/15/1, Decision on Jurisdiction, dated 9 February 2017; Les Laboratoires Servier v Republic of Poland (Servier v Poland), UNCITRAL, Award, dated 14 February 2012; Yaung Chi OO Trading Pte Ltd v Government of the Union of Myanmar (Yaung Chi v Myanmar), ASEAN I.D. Case No. ARB/01/1, Award, dated 31 March 2003, (2003) 42 ILM 540; ST-AD GmbH (Germany) v The Republic of Bulgaria (ST-AD GmbH v Bulgaria), PCA, Award on Jurisdiction, dated 18 July 2013.

    This author has identified three publicly available investor-state arbitral decisions which have accepted the application of MFN to various dimensions of arbitral jurisdiction. According to the knowledge of this author, these are all of the publicly available decisions on this issue. However, pending cases are not studied. The cases reviewed in Section IV are as follows: Garanti Koza v Turkmenistan, above n 2 (the Award was accompanied by the Dissenting Opinion by Arbitrator Laurence Boisson de Chazournes, dated 3 July 2013); RosInvestCo UK Ltd v The Russian Federation (RosInvest v Russia), Arbitration Institute of the Stockholm Chamber of Commerce (SCC), Case No. Arbitration V079/2005, Award on Jurisdiction, 1 October 2007; Venezuela US, S.R.L Barbados v the Bolivarian Republic of Venezuela (Venezuela US Barbados v Venezuela), PCA Case No. 2013–34, Interim Award on Jurisdiction (on the Respondent’s Objection to Jurisdiction Ratione Voluntatis), 26 July 2016.

  11. 11.

    Cable TV v St. Kitts and Nevis, Award, 13 January 1997, (1998) 13 ICSID Review-Foreign Investment Law Journal 328, at 354–361; Convention on the Settlement of Investment Dispute between States and Nationals of Other States (ICSID Convention) (opened for signature on 18 March 1965), 575 United Nations Treaty Series 159, art 25; UNCTAD, ‘Dispute Settlement, 2.3 Consent to Arbitration,’ (UNCTAD/EDM/Misc.232/Add.2) (UN New York and Geneva, 2003); Also see, Filippo Fontanelli, ‘Jurisdiction and Admissibility in Investment Arbitration. A View from the Bridge at the Practice,’ 16 (2017) the Law and Practice of International Courts and Tribunals, 3–20 at 20. Filippo has argued that investor-state arbitral tribunals tend to be cautious not to overstep jurisdictional mandate because it is conferred to them by states.

  12. 12.

    UNCTAD, Ibid.; Michael Waibel, ‘Investment Arbitration: Jurisdiction and Admissibility,’ in M Bungenberg, J, Griebel, S. Hobe and A Renisch (eds), International Investment Law, A Handbook (2015) 1212.

  13. 13.

    Ibid., Waibel.

  14. 14.

    Waibel, above n 12.

  15. 15.

    For example, in the 2012 Draft Investment Law of Myanmar, the country purported to give consent to investor-state arbitration. However, Myanmar has revised the Draft in 2016 and omitted such consent. The 2012 Draft is available at: <https://www.dica.gov.mm/sites/dica.gov.mm/files/document\files/myanmar_investment_law_draft_as_of_06716_translated_by_kcy_14_july_2016.pdf>. For the 2016 revised draft, see, <https://www.dica.gov.mm/sites/dica.gov.mm/files/document-files/unofficial_translation_mil_20161019e.pdf>. On this point, also see, Luke Nottage, ‘The TPP Investor Chapter and Investor-State Arbitration in Asia and Oceania: Assessing Prospects for Ratification,’ (2016) 17(2) Melbourne Journal of International Law, 313.

  16. 16.

    Rudlof Dolzer, Impact of International Investment Treaties on Domestic Administrative Law, (2005) 37 New York University Journal of International Law and Politics, 953.

  17. 17.

    Waibel, above n 12.

  18. 18.

    Christoph Schreuer, Consent to Arbitration, in Oxford Handbook of International Investment Law, (Muchlinski, Ortino and Schreuer eds) (Oxford Handbook Online, September 2012); also see, Christoph Schreuer, ‘Jurisdiction and Applicable Law in Investment Treaty Arbitration,’ (2014), 1.1 McGill Journal of Dispute Resolution 2.

  19. 19.

    Garanti Koza v Turkmenistan, above n 2, Dissenting Opinion by Arbitrator Laurence Boisson de Chazourne, dated 3 July 2013, paras 41–43.

  20. 20.

    Ibid.

  21. 21.

    Within the framework of IIAs, investors are always the secondary right holders since the treaty is primarily concluded between two sovereign states. For details, see, Anne Peters, Beyond Human Rights: The Legal Status of Individuals in International Law (Cambridge University Press, 2016) 338.

  22. 22.

    Waibel, above n 12, 1261–1336.

  23. 23.

    The 1965 ICSID Convention, above n 11. Article 25 of the Convention explicitly provides for the four dimensions.

  24. 24.

    Ibid., Article 26.

  25. 25.

    The 1965 ICSID Convention, above n 11. Article 25 of ICSID Convention is silent on this. However, this requirement arises from the notion of ‘investment’ and is generally applicable to investor-state arbitration. For details, see, Michael Waibel, Sovereign Defaults before International Courts and Tribunals (Cambridge University Press 2011) 238–242.

  26. 26.

    Jurisdiction ratione temporis is a part of Customary International Law. For details, see Mavromatis Palestine Concessions case, Prevention and Punishment of Genocide, (Bosnia and Herzegovina v Yugoslavia), International Court of Justice, Preliminary Objections, Judgment, 11 July 1996, ICJ Rep 1996, 595 para 34; International Law Commission (ILC), Draft Articles on Responsibility of States for Internationally Wrongful Acts, 2001, the Yearbook of ILC, Vol II, Part 2, Art 13; The Vienna Convention on the Law of Treaties (VCLT) (signed in 1969), (entry into force on 27 January 1980), UN Treaty Series, Vol 1155, p 331, Art 28.

  27. 27.

    Ibid., Mavromatis Palestine case; also see Prevention and Punishment of Genocide, Ibid.

  28. 28.

    Waibel, above n 12.

  29. 29.

    Garanti Koza v Turkmenistan, above n 2.

  30. 30.

    Ibid.

  31. 31.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2.

  32. 32.

    Ibid.

  33. 33.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, paras 1–3.

  34. 34.

    Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Turkmenistan for the Promotion and Protection of Investments (the UK-Turkmenistan BIT) signed and entered into force on 9 February 1995.

  35. 35.

    Ibid., Article 8.

  36. 36.

    The UK-Turkmenistan BIT, above n 34.

  37. 37.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, para 15. It was not clear from the argument by the claimant as to why it considered ICSID arbitration more favourable. The decision of the majority tribunal summarised the position taken by the claimant, with reference to other more favourable IIAs referred by the claimant as follows:

    The Claimant’s argument that this Tribunal does have jurisdiction may be stated in equally summary form as follows:

    The MFN clause of the U.K.-Turkmenistan BIT assures the Claimant of treatment no less favorable than Turkmenistan accords to nationals or companies of any third State.

    Turkmenistan has consented, in its BITs with Switzerland, France, Turkey, and India, and in the Energy Charter Treaty (“ECT”), to either ICSID Arbitration or UNCITRAL Arbitration, at the election of the investor, with nationals or companies of those States.

    A treaty that consents to ICSID Arbitration is more favorable to an investor than one that does not, or, alternatively, a treaty that provides a choice between UNCITRAL Arbitration and ICSID Arbitration is more favorable to an investor than one that does not.

    Therefore, Turkmenistan’s consent to ICSID Arbitration is established by operation of the MFN clause of the U.K.-Turkmenistan BIT.

  38. 38.

    The UK-Turkmenistan BIT, above n 34, Article 3.

  39. 39.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, para 15.

  40. 40.

    The position of the claimant as summarised by the majority tribunal is quoted as verbatim in above n 37.

  41. 41.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, para 50.

  42. 42.

    Ibid., para 51, the tribunal referred the decision in Siemens v Argentina, ICSID Case No. ARB/02/8, Decision on Jurisdiction, dated 3 August 2004.

  43. 43.

    Effet utile requires treaty interpretation to be rendered in a way that no provision becomes nugatory or meaningless. For details on the interpretative principles, see Chap. 3.

  44. 44.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, para 52.

  45. 45.

    The stance was originally taken in Suez and Interagua v Argentina, ICSID Case No. ARB/03/17, Decision on Jurisdiction, dated 16 May 2006. The Granti Koza majority tribunal also referred to National Grid v Argentina, UNCITRAL Case, Decision on Jurisdiction, dated 20 June 2006 to stress on the point that the VCLT does not establish a different rule of interpretation for different clauses.

  46. 46.

    Garanti Koza v Turkmenistan, Majority Decision, above n 2, paras 37–38.

  47. 47.

    Ibid., para 54.

  48. 48.

    Garanti Koza v Turkmenistan, Dissenting Opinion by Arbitrator Laurence Boisson de Chazournes, dated 3 July 2013, above n 19.

  49. 49.

    Ibid., Dissenting Opinion, paras 1–4.

  50. 50.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 19, paras 6–7.

  51. 51.

    Ibid.

  52. 52.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 19.

  53. 53.

    Ibid., para 7, the Arbitrator, on this point referred Armed Activities on the Territory of the Congo (New Application: 2002) (Democratic Republic of the Congo v Rwanda), ICJ Reports 2006, p 39, para 88; Also, Case Concerning mutual assistance in criminal matters (Djibouti v France) ICJ Reports 2008, p 2004, para 62.

  54. 54.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 19, para 11; Case concerning the Auditing Accounts between the Kingdom of the Netherlands and the French Republic pursuant to the Additional Protocol of 25 September 1991 to the Convention on the Protection of the Rhine against Pollution by Chlorides, PCA, Arbitral Award, 12 March 2004, para 62.

  55. 55.

    Ibid.

  56. 56.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 19.

  57. 57.

    Ibid., para 12.

  58. 58.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 19, para 12.

  59. 59.

    Venezuela US Barbados v Venezuela, above n 10.

  60. 60.

    Ibid.

  61. 61.

    Venezuela US Barbados v Venezuela, above n 10, paras 1–3.

  62. 62.

    Agreement between the Government of Barbados and the Government of the Republic of Venezuela for the Promotion and Protection of Investments (the Barbados-Venezuela BIT), signed on 15 July 1994, (entered into force on 31 October 1995).

  63. 63.

    The 1965 ICSID Convention, above n 11.

  64. 64.

    Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the Centre, available at <https://icsid.worldbank.org/en/Documents/icsiddocs/AFR_English-final.pdf>.

  65. 65.

    The 1994 Barbados-Venezuela BIT, above n 62, Article 8.

  66. 66.

    Ibid.

  67. 67.

    Venezuela US Barbados v Venezuela, above n 10, para 81.

  68. 68.

    Ibid., para 53.

  69. 69.

    Venezuela US Barbados v Venezuela, above n 10, para 53.

  70. 70.

    Ibid., para 58.

  71. 71.

    Venezuela US Barbados v Venezuela, above n 10, para 58.

  72. 72.

    Ibid., see, the Decision para 91, footnote 59. The claimant cited a number of more favourable BITs as summarised by the tribunal from the memorial of the claimant as follows:

    Canada-Venezuela BIT, Article XII(4); Czech Republic-Venezuela BIT, Article 8; Ecuador-Venezuela BIT, Article IX(3); Lithuania-Venezuela BIT, Article 7; Portugal-Venezuela BIT, Article 8(2); Uruguay-Venezuela BIT, Article 9; Iran-Venezuela BIT, Article 11(2) (RLA-26); Venezuela-Belarus BIT, Article 8(2) (C-37); Venezuela-Cuba BIT, Article 9(3) and Protocol, Article 3; Venezuela-Vietnam BIT, Article 8(2) (C-39); Russia-Venezuela BIT, Article 9(2).

  73. 73.

    Interpretation of Peace Treaties with Bulgaria, Hungary and Romania (second phase), Advisory Opinion, 18 July 1950, 1950 ICJ Reports 221, para 229. The ICJ held that breach of a treaty obligation cannot be remedied by creating any dispute settlement mechanism which is not contemplated in the treaty. It specifically mentioned that, ‘it is the duty of the Court to interpret the Treaties, not to revise them.’

  74. 74.

    Venezuela US Barbados v Venezuela, above n 10, para 59.

  75. 75.

    Ibid., para 59.

  76. 76.

    Venezuela US Barbados v Venezuela, above n 10, the decision was accompanied by a dissenting opinion by Arbitrator Marcelo G Kohen.

  77. 77.

    Venezuela US Barbados v Venezuela, above n 10, para 102.

  78. 78.

    Ibid., paras 109–112.

  79. 79.

    Venezuela US Barbados v Venezuela, above n 10, Dissenting Opinion of Professor Marcelo G. Kohen, 26 July 2016.

  80. 80.

    Ibid., para 2.

  81. 81.

    Venezuela US Barbados v Venezuela, Dissenting Opinion, above n 79, para 3.

  82. 82.

    Ibid., para 11.

  83. 83.

    Accession Mezzanine v Hungary, above n 10.

  84. 84.

    Ibid.

  85. 85.

    Accession Mezzanine v Hungary, above n 10, paras 1–4.

  86. 86.

    Ibid., para 38; Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Hungarian People’s Republic (the UK-Hungary BIT), signed on 9 March 1987, (entry into force on 28 August 1987).

  87. 87.

    Ibid., the 1987 UK-Hungary BIT.

  88. 88.

    Accession Mezzanine v Hungary, above n 10, paras 48–55.

  89. 89.

    Ibid., para 56, and para 38.

  90. 90.

    Accession Mezzanine v Hungary, above n 10, para 56.

  91. 91.

    Ibid., para 51; ICSID Convention, above n 11.

  92. 92.

    Accession Mezzanine v Hungary, above n 10, paras 51–56.

  93. 93.

    MCI Power Group v Ecuador, above n 10.

  94. 94.

    Ibid.; Agreement between the United States of America and the Republic of Ecuador Concerning the Encouragement and Reciprocal Protection of Investments (the US-Ecuador BIT), signed on 27 August 1993, (entry into force on 11 May 1997).

  95. 95.

    Ibid.

  96. 96.

    MCI Power Group v Ecuador, above n 10, paras 47–48.

  97. 97.

    Ibid., para 36.

  98. 98.

    MCI Power Group v Ecuador, above n 10, para 39.

  99. 99.

    Ibid., para 121; Agreement between the Government of the Republic of Ecuador and the Government of the Argentine Republic For Promotion and Reciprocal Protection of Investments (Argentina-Ecuador BIT), signed on 18 February 1994, (entry into force on 1 December 1995) (presently terminated).

  100. 100.

    MCI Power Group v Ecuador, above n 10, para 121.

  101. 101.

    Ibid., para 123.

  102. 102.

    MCI Power Group v Ecuador, above n 10, para 126.

  103. 103.

    Ansung Housing v China, above n 10.

  104. 104.

    Ibid., para 1.

  105. 105.

    Agreement between the Government of the People’s Republic of China and the Government of the Republic of Korea on the Promotion and Protection of Investments (the Korea-China BIT), (signed on 7 September 2007), (entry into force on 1 December 2007).

  106. 106.

    Ibid., Article 9(7).

  107. 107.

    Ansung Housing v China, above n 10, paras 130–133.

  108. 108.

    Ibid., para 125.

  109. 109.

    Ansung Housing v China, above n 10, para 137.

  110. 110.

    Ibid., para 138.

  111. 111.

    A11Y Ltd v Czech Republic, above n 10, Decision on Jurisdiction.

  112. 112.

    Ibid., paras 1–3.

  113. 113.

    These facts are taken from A11Y Ltd v Czech Republic, above n 10, Award, dated 29 June 2018, paras 32–64.

  114. 114.

    Ibid.

  115. 115.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, para 1.

  116. 116.

    Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Czech and Slovak Federal Republic for the Promotion and Protection of Investments (the UK-Czech and Slovak Republic BIT), signed on 10 July 1990, (entry into force on 26 October 1992).

  117. 117.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, paras 38–41.

  118. 118.

    Ibid., para 43; Agreement on Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic (the 1991 Netherlands-Czech BIT), signed on 29 April 1991, (entry into force on 1 October 1992), Article 8.

  119. 119.

    The 1990 UK-Czech and Slovak BIT, above n 116, Article 2(3).

  120. 120.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, para 74.

  121. 121.

    Ibid., para 75.

  122. 122.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, para 76.

  123. 123.

    Ibid., para 77.

  124. 124.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, para 86.

  125. 125.

    Ibid., para 95.

  126. 126.

    A11Y Ltd v Czech Republic, Decision on Jurisdiction, above n 10, para 104.

  127. 127.

    Ibid., para 107.

  128. 128.

    Venezuela US Barbados v Venezuela, above n 10, Dissenting Opinion of Professor Marcelo G. Kohen, 26 July 2016.

  129. 129.

    Chester Brown, A Common Law of International adjudication (Oxford University Press, 2007) 61–63; Nottebohm (Liechtenstein v Guatemala), Preliminary Objections, ICJ Rep. 1955, 4, 111–119; Interpretation of the Greco-Turkish Agreement, Advisory Opinion, (1928) PCIJ (Ser. B) No. 16 (19) 20; See, Treaty of Amity, Commerce and Navigation, between His Britannic Majesty and the United States of America (Treaty of London of 1794). The treaty embodied the doctrine of competence-competence. Generally on the task of investor-state arbitral tribunals to assess their own jurisdiction, also see, Filip Balcerzak, ‘Human Rights Context of Jurisdiction and Admissibility in Investor-State Arbitration,’ in Investor-State Arbitration and Human Rights (Brill, 2017) 100–148.

  130. 130.

    Ibid.

  131. 131.

    The Hague Convention 1907 (signed on 18 October 1907), (entry into force on 26 January 1910) Article 73.

  132. 132.

    The ICJ Statute, above n 3, Article 36(6).

  133. 133.

    The ICSID Convention, above n 11, Article 41(1).

  134. 134.

    Ibid.

  135. 135.

    The ICSID Convention, above n 11.

  136. 136.

    The UNCITRAL Arbitration Rules (as revised in 2010), Art 23(1), available at <https://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-2010-e.pdf>.

  137. 137.

    The ICSID Convention, above n 11, under Article 42(1).

  138. 138.

    Ibid., Art 42(1).

  139. 139.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 48.

  140. 140.

    Anne Van Aaken, ‘Control Mechanisms’ in Zachary Douglas, Joost Pauwelyn and Jorge Vinuales (eds), The Foundations of International Investment Law: Bringing Theory into Practice (Oxford University Press, 2014); BG Group Plc v Argentina, UNCITRAL, Award on the Merits, 24 December 2007.

  141. 141.

    The ICSID Convention, above n 11.

  142. 142.

    Case Concerning Mutual Assistance in Criminal Matters (Dibouti v France), ICJ Reports 2008 p 203, para 60.

  143. 143.

    Dibouti v France, Ibid.; Armed Activities on the Territory of the Congo (New Application: 2002) Democratic Republic of Congo v Rwanda, Jurisdiction and Admissibility, Judgment, I.C.J. Reports 2006, p 18; Corfu Channel (United Kingdom v Albania), Preliminary Objection, Judgment 1948, ICJ Reports 1947–1948, p 27; Application of the Convention on the Prevention and Punishment of the Crime of Genocide, above n 26, para 40; Rights of Minorities in Upper Silesia (Minority Schools), Judgment No. 12, 1928, PCIJ Series A, No. 15, p 24; Anglo Iranian Oil Co. (United Kingdom v Iran), Preliminary Objections, Judgment, ICJ Reports 1952, pp 113–114.

  144. 144.

    ST-AD GmbH v Bulgaria, above n 10, Award on Jurisdiction, dated 18 July 2013.

  145. 145.

    Ibid., paras 1–3.

  146. 146.

    Federal Republic of Germany and Bulgaria Treaty Concerning the Reciprocal Encouragement and Protection of Investments (Bulgaria-Germany BIT), signed on 12 April 1986 (entry into force on 10 March 1988).

  147. 147.

    ST-AD GmbH v Bulgaria, above n 10, paras, 173–193; paras 334–349.

  148. 148.

    Ibid.

  149. 149.

    ST-AD GmbH v Bulgaria, above n 10, paras, 173–193; paras 334–349.

  150. 150.

    Ibid.

  151. 151.

    ST-AD GmbH v Bulgaria, above n 10.

  152. 152.

    Ibid., para 337.

  153. 153.

    ST-AD GmbH v Bulgaria, above n 10.

  154. 154.

    Ibid.

  155. 155.

    ST-AD GmbH v Bulgaria, above n 10, paras 345–348.

  156. 156.

    Ibid., para 398.

  157. 157.

    ST-AD GmbH v Bulgaria, above n 10, para 402.

  158. 158.

    Ibid., para 402.

  159. 159.

    ST-AD GmbH v Bulgaria, above n 10, para 402.

  160. 160.

    Renta4 v Russia, above n 10. Award on Preliminary Objections, dated 20 March 2009, the Award was accompanied by a dissenting opinion by Charles N. Brower which will be discussed shortly.

  161. 161.

    Ibid., Agreement for the Promotion and Reciprocal Protection of Investments between Spain and the Soviet Union (the Spain-USSR BIT), signed on 26 October 1990, (entry into force on 28 November 1991).

  162. 162.

    Renta 4 v Russia, above n 10, paras 1–4.

  163. 163.

    Ibid., para 20.

  164. 164.

    The 1991 Spain-USSR BIT, above n 161.

  165. 165.

    Ibid., Article 10, Quoted in verbatim in Renta 4 v Russia, above n 10, para 5.

  166. 166.

    Renta 4 v Russia, above n 10, paras 13, and 20.

  167. 167.

    Agreement between the Government of the Kingdom of Denmark and the Government of the Russian Federation Concerning the Promotion and Reciprocal Protection of Investments (Denmark-Russian Federation BIT), signed on 4 November 1993, (entry into force on 26 August 1996), Article 8.

  168. 168.

    The 1991 Spain-USSR BIT, above n 161, Article 5; the clause is quoted in verbatim in Renta 4 v Russia, above n 10, para 68.

  169. 169.

    Ibid., the 1991 Spain-USSR BIT, Article 5.

  170. 170.

    Renta 4 v Russia, above n 10, para 105.

  171. 171.

    Ibid., para 106.

  172. 172.

    Renta 4 v Russia, above n 10, paras, 119, and 155.

  173. 173.

    Renta 4 v Russia, above n 10, Separate Opinion by Charles N. Brower, dated 20 March 2009, para 3.

  174. 174.

    Ibid., para 15.

  175. 175.

    Renta 4 v Russia, above n 10, Separate Opinion by Charles N. Brower, above n 173, para 23. Brower relied on the following work of Schill to assert this view: Stephan W. Schill, ‘Fair and Euitable Treatment under Investment Treaties as an Embodiment of the Rule of Law,’ IILJ Working Paper 2006/6 (Global Administrative Law Series), pp 18–19, 26–27.

  176. 176.

    Servier v Poland, above n 10, Award, para 1.

  177. 177.

    Ibid., para 1.

  178. 178.

    Agreement between the Republic of France and the Republic of Poland for the Encouragement and Reciprocal Protection of Investments (France-Poland BIT), signed on 14 February 1989, (entry into force on 10 February 1990); Servier v Poland, above n 10, para 6.

  179. 179.

    Ibid., Servier v Poland.

  180. 180.

    The 1989 France-Poland BIT, above n 178, Article 4(1).

  181. 181.

    Servier v Poland, above n 10, para 8.

  182. 182.

    The Interim Award is not publicly available. The present discussion is based on the tribunal’s reflection on the Interim Award in its Award, dated 14 February 2012, above n 10, a redacted version of the Award is publicly available.

  183. 183.

    Servier v Poland, above n 10, para 511.

  184. 184.

    Ibid., para 511..

  185. 185.

    Servier v Poland, above n 10, para 519.

  186. 186.

    Yaung Chi v Myanmar, above n 10.

  187. 187.

    Ibid., paras 1–4.

  188. 188.

    Yaung Chi v Myanmar, above n 10, para 4.

  189. 189.

    Ibid., para 6.

  190. 190.

    Yaung Chi v Myanmar, above n 10, paras 7 and 8.

  191. 191.

    Ibid., para 82.

  192. 192.

    Yaung Chi v Myanmar, above n 10, para 83, Agreement between the Republic of the Philippines and the Government of the Union of Myanmar for the Promotion and Reciprocal Protection of Investments (the 1998 Myanmar-Philippines BIT), signed on 17 February 1998, (entry into force on 11 September 1998).

  193. 193.

    Yaung Chi v Myanmar, above n 10, para 83.

  194. 194.

    Transglobal Green Energy, LLC and Transglobal Green Panama, S.A. v. Republic of Panama (Transglobal v Panama) (ICSID Case No. ARB/13/28), Award, 2 June 2016, paras 103–108. However, MFN was not an issue in this case.

  195. 195.

    A discussion on the abuse of process is coming shortly.

  196. 196.

    H Christian A.W. Schulze, ‘Forum Non-Conveniences in Comparative Private International Law,’ 118 South African Law Journal (2001), 812. Schulze explained the rationale in the general context of international commercial arbitration; Also, because, ‘in international law, consent is a formal principle of legitimacy.’ For more details, see, Frank J. Garcia and Lindita Ciko, Theories of Justice and International Economic Law in John Linarelli (ed) Research Handbook on Global Justice and International Economic Law (Edward Elgar, 2013) 54–95.

  197. 197.

    Mihaly International Corporation v Democratic Socialist Republic of Sri Lanka (Mihaly v Sri Lanka), ICSID Case No. ARB/00/2, Award, 25 March 2002, para 24. This case dealt with an issue slightly different from the application of MFN in this regard. The decision has established the general importance of consent by the host-state. Also see, Societe Generale In Respect of DR Energy Holdings Limited and Empresa Distribuidora De Electricidad Del Este, S.A. v the Dominican Republic (Societe Generale v the Dominican Republic), Award on Preliminary Objections to Jurisdiction, 19 September 2008, para 110. The tribunal held that treaty shopping to be legitimate must be a bona fide transaction and ‘not devised to allow a national of a state not qualifying for protection under a treaty to obtain an inappropriate jurisdictional advantages otherwise unavailable by transferring its rights.’

  198. 198.

    Ibid., Mihaly v Sri Lanka, para 24. The tribunal held as follows:

    A claim under the ICSID Convention with its carefully structured system is not a readily assignable chose in action as shares in the stock-exchange market or other types of negotiable instruments, such as promissory notes or letters of credit.

  199. 199.

    Alejandro Faya Rodriguez, ‘Most-Favoured-Nation Clause in International Investment Agreements-A Tool for Treaty Shopping,’ 25 Journal of International Arbitration (2008), 89, 100.

  200. 200.

    Telenor v Hungary, above n 10, para 93.

  201. 201.

    Ibid., para 16.

  202. 202.

    Telenor v Hungary, above n 10, para 16.

  203. 203.

    Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on Universal Service and Users’ Rights Relating to Electronic Communications Networks and Services, available at <https://ec.europa.eu/digital-single-market/en/news/universal-service-directive>.

  204. 204.

    Ibid.

  205. 205.

    Agreement between the Government of the Kingdom of Norway and the Government of the Republic of Hungary on the Promotion and Reciprocal Protection of Investments (the Norway-Hungary BIT), signed on 8 April 1991, (entry into force on 4 December 1992).

  206. 206.

    Telenor v Hungary, above n 10, paras 1–17.

  207. 207.

    Ibid., para 18.

  208. 208.

    Telenor v Hungary, above n 10, para 20.

  209. 209.

    The 1991 Norway-Hungary BIT, above n 205, Article IV.

  210. 210.

    Telenor v Hungary, above n 10, para 56.

  211. 211.

    Ibid., para 81.

  212. 212.

    Telenor v Hungary, above n 10, para 91.

  213. 213.

    Ibid., para 92.

  214. 214.

    Telenor v Hungary, above n 10, para 93.

  215. 215.

    Ibid., para 94.

  216. 216.

    Telenor v Hungary, above n 10, para 95.

  217. 217.

    Ibid., para 93.

  218. 218.

    Telenor v Hungary, above n 10, para 94.

  219. 219.

    Salini v Jordan, above n 10.

  220. 220.

    Ibid., para 1.P.

  221. 221.

    Salini v Jordan, above n 10, para 16.

  222. 222.

    Ibid., paras 19–22, Agreement between the Government of the Hashemite Kingdom of Jordan and the Government of the Italian Republic on the Promotion and Protection of Investments (Italy-Jordan BIT), signed on 21 July 1999, (entry into force on 17 January 2000).

  223. 223.

    Ibid., Salini v Jordan, above n 10, para 30.

  224. 224.

    Basic BIT means the treaty based on which the cause of action arose.

  225. 225.

    Agreement between the Government of the Hashemite Kingdom of Jordan and the Government of the Italian Republic on the Promotion and Protection of Investments (ItalyJordan BIT), signed on 21 July 1999, (entry into force on 17 January 2000), Article 9(2).

  226. 226.

    Salini v Jordan, above n 10, para 23.

  227. 227.

    Treaty between the Government of the United States of America and the Government of the Hashemite Kingdom of Jordan Concerning the Encouragement and Reciprocal Protection of Investment (USA-Jordan BIT), signed on 2 July 1997, (entry into force on 28 January 1998).

  228. 228.

    Ibid.

  229. 229.

    Salini v Jordan, above n 10, para 43.

  230. 230.

    Ibid., para 115. Maffezini v Spain, above n 8, this case was reviewed in Chap. 5.

  231. 231.

    Salini v Jordan, above n 10, para 115.

  232. 232.

    Ibid., paras 117–118.

  233. 233.

    Ibid., para 93.

  234. 234.

    Stephan W. Schill, ‘Multilateralizing Investment Treaties through Most-Favoured-Nation Clauses’ (2009) 27 Berkeley Journal of International Law 496–506; Also see, Stephan W. Schill, ‘Notes and Comments: MFN Clauses as Bilateral Commitments to Multilateralism: A Reply to Simon Batifort and J. Benton Heath,’ (2017) 111:4 The American Journal of International Law, 914–935.

  235. 235.

    As discussed in Chaps. 4 and 5.

  236. 236.

    Herve Ascensio, ‘Abuse of Process in International Investment Arbitration’ (2014) 13 Chinese Journal of International Law, 763. For some examples of cases, see Phoenix Action Ltd v the Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009; Europe Cement Investment & Trade v Republic of Turkey, ICSID Case No. ARB (AF)/07/2, Award, 13 August 2009; Cementownia Nowa Huta S.A. v Republic of Turkey, ICSID Case No ARB (AF)/06/2, Award, 17 September 2009.

  237. 237.

    The VCLT 1969, above n 26. Article 31(1) provides that a treaty shall be interpreted in good faith. The requirement to engage in dispute settlement procedure in good faith is also required by WTO. See, WTO, Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2 of the WTO Agreement, Article 3(10), available at: https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm. Similar requirements can be found in The United Nations Convention on the Law of the Sea, signed on 10 December 1982, (entry into force on 16 December 1994), Article 300; The European Union Convention for the Protection of Human Rights and Fundamental Freedoms, signed on 4 November 1950, (entry into force on 3 September 1953), Article 35(3)(a). The meaning of good faith will be discussed in more detail in section III.

  238. 238.

    Emmanuel Gaillard, ‘Abuse of Process in International Arbitration,’ (2017) ICSID Review, 1–21, at 2.

  239. 239.

    Ibid.

  240. 240.

    Vaughan Lowe, Overlapping Jurisdiction in International Tribunals, (1999) 20 Australian Yearbook of International Law, 191, at 202.

  241. 241.

    Judge Rosalyn Higgins, Separate Opinion in, Legality of Use of Force (Serbia and Montenegro v United Kingdom), Preliminary Objections, Judgment, ICJ Reports 2004, 1359, para 10. Judge Higgins acknowledged the general judicial character of international courts and tribunals. The separate opinion is available at: <https://www.icj-cij.org/files/case-related/113/113-20041215-JUD-01-03-EN.pdf>.

  242. 242.

    ICSID Convention, above n 11, 1965, available at: <https://icsid.worldbank.org/en/Documents/icsiddocs/ICSID%20Convention%20English.pdf>, Arbitration Rules, Rule 41(2) provides that ‘The Tribunal may on its own initiative consider, at any stage of the proceeding, whether the dispute or any ancillary claim before it is within the jurisdiction of the Centre and within its own competence.’

  243. 243.

    ICSID Additional Facility Rules, Articles 45 and 35, available at

    <https://icsid.worldbank.org/en/Documents/icsiddocs/AFR_English-final.pdf>; Also see, Gaffney, above n 5, at 515.

  244. 244.

    ICSID Convention, above n 11, Article 52(1) (b).

  245. 245.

    UNCITRAL Model Law on International Commercial Arbitration, 24 ILM 1312 (1985) 1985, Art 34(2)(a)(iii); also see, UNCITRAL Arbitration Rules, 1976, UN General Assembly Resolution, 31/98, adopted by the General Assembly on 15 December 1976, available at <https://www.uncitral.org/pdf/english/texts/arbitration/arb-rules/arb-rules.pdf>.

  246. 246.

    ICSID Additional Facility Rules, above n 243.

  247. 247.

    IIAs often provide various choices for the settlement of investment disputes, for details, see, Giorgio Sacerdoti, ‘Investment Arbitration under ICSID and UNCITRAL Rules; Prerequisites, Applicable Law, Review of Awards,’ (2004) 19 ICSID Review-Foreign Investment Law Journal, 1.

  248. 248.

    Paul Michael Blyschak, ‘State Consent, Investor Interests and the Future of Investment Arbitration: Reanalyzing the Jurisdiction of Investor-State Tribunals in Hard Cases’ (2009) 9 Asper Review International Business & Trade Law, 99, at 152. Also see, New York Convention on the Recognition and Enforcement of Arbitral Awards, 10 June 1958, 330 UNTS 38, No. 4739 (entry into force on 7 June 1959) Article V (1) (c), and UNCITRAL Model Law on International Commercial Arbitration, 24 ILM 1312 (1985) 1985 Art 34(2)(a)(iii). Both the New York Convention and UNCITRAL Model Law provide that local courts may vacate an arbitral Award if the Award had dealt with a dispute not contemplated by the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; also see the Intern-American Convention on International Commercial Arbitration, 30 January 1975 OASTS No. 42 [Panama Convention] available at <http://www.oas.org/juridico/english/treaties/b-35.htm>. The New York and Panama Conventions are similar in this regard although Panama Convention applies only to arbitrations arising from commercial transactions.

  249. 249.

    Ibid.

  250. 250.

    Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge University Press, 2001) under Art 52, para 135–136.

  251. 251.

    Blyschak, above n 248, 150. Blyschak affirmed that ‘the most important form of excess of powers occurs when a tribunal exceeds the limits of its jurisdiction.’ The author added, ‘where a state believes that an ICSID tribunal erred by finding jurisdiction where no such jurisdiction was intended to exist, it may apply to have an Award made by that tribunal rendered null and void.’

  252. 252.

    Philippe Pinsolle, ‘Jurisdictional Review of ICSID Awards’ (2004) 5 Journal of World Investment and Trade 613 at 620.

  253. 253.

    Blyschak, above n 248, at 120.

  254. 254.

    Jan Paulsson, The Denial of Justice in International Law (Cambridge: Cambridge University Press, 2005) at 228–262; G. Van Harten & M. Loughlin, ‘Investment Treaty Arbitration,’ (1997) 14 Journal of International Arbitration, 103 at 117; Hong Lin Yu & Lawrence Shore, ‘Independence, Impartiality, and Immunity of Arbitrators-U.S. and English Perspectives,’ (2003) 52 International & Comparative Law Quarterly 935.

  255. 255.

    Chen Huiping, ‘Expansion of Jurisdiction by ICSID Tribunals: Approaches, Reasons and Damages,’ (2011) 12 Journal of World Investment and Trade 671, at 684.

  256. 256.

    Susan D. Franck, ‘The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions’ (2005) 73 Fordham Law Review 1521; John P. Gaffney, ‘Abuse of Process in Investment Treaty Arbitration’ (2010), 11 Journal of World Investment & Trade 515.

  257. 257.

    VCLT, above n 26.

  258. 258.

    See, Chap. 3.

  259. 259.

    Ibid.

  260. 260.

    The Permanent Court of Arbitration, Case concerning the Auditing Accounts between the Kingdom of the Netherlands and the French Republic pursuant to the Additional Protocol of 25 September 1991 to the Convention on the Protection of the Rhine against Pollution by Chlorides, Award, 12 March 2004, para 62.

  261. 261.

    Ibid., para 63.

  262. 262.

    Garanti Koza v Turkmenistan, Dissenting Opinion, above n 48.

  263. 263.

    See Chap. 3 for details.

  264. 264.

    RosInvest v Russia, above n 10, Award on Jurisdiction, 1 October 2007.

  265. 265.

    Ibid. The fact is taken from the Final Award of the case dated 12 September 2010 since the Final Award has discussed the fact in more details than the Award on Jurisdiction dated 1 October 2007.

  266. 266.

    RosInvest v Russia, above n 10. Final Award, above n 265, section C.I. paras 1–7.

  267. 267.

    Ibid., section C.I. paras 1–7; Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Union of Soviet Socialist Republics for the Promotion and Reciprocal Protection of Investments (The UK-Soviet Republics BIT), signed on 6 April 1989, (entry into force on 3 July 1991).

  268. 268.

    Ibid., The UK-Soviet Republics BIT.

  269. 269.

    RosInvest v Russia, Final Award, above n 265, para 2.

  270. 270.

    Ibid., para 3.

  271. 271.

    The 1989 UK-Soviet Republics BIT, above n 267, Article 8.

  272. 272.

    RosInvest v Russia, Award on Jurisdiction, above n 10, Section G.I., para 30.

  273. 273.

    Ibid., para 78.

  274. 274.

    The Denmark-Russian Federation BIT, above n 167.

  275. 275.

    Ibid., Article 8.

  276. 276.

    The 1989 UK-Soviet Republics BIT, above n 267. Article 3(2) provided as follows:

    Neither Contracting Party shall in its territory subject investors of the other Contracting Party, as regards their management, maintenance, use, enjoyment or disposal of their investments, to treatment less favourable than that which it accords to investors of any third State.

  277. 277.

    RosInvest v Russia, Award on Jurisdiction, above n 10, para 88.

  278. 278.

    Ibid., para 128.

  279. 279.

    RosInvest v Russia, Award on Jurisdiction, above n 10, para 130.

  280. 280.

    Ibid., para 131.

  281. 281.

    RosInvest v Russia, Award on Jurisdiction, above n 10, para 132.

  282. 282.

    Ibid., para 132.

  283. 283.

    Euram v Slovakia, above n 10.

  284. 284.

    Ibid., the 1990 Austria-Slovakia BIT, signed on 15 January 1990, (entry into force on 01 January 1991).

  285. 285.

    Ibid.

  286. 286.

    Euram v Slovakia, above n 10, para 408.

  287. 287.

    Ibid., para 439.

  288. 288.

    Euram v Slovakia, above n 10.

  289. 289.

    Ibid., para 445.

  290. 290.

    Euram v Slovakia, above n 10, para 445.

  291. 291.

    Ibid., para 446.

  292. 292.

    Societe Generale v the Dominican Republic, above n 10.

  293. 293.

    Ibid.

  294. 294.

    Societe Generale v the Dominican Republic, above n 10, para 2.

  295. 295.

    Ibid., para 17.

  296. 296.

    Agreement between the Government of the French Republic and the Government of the Dominican Republic on Encouragement and Reciprocal Protection of Investments (France-Dominican Republic BIT), signed on 14 January 1999, (entry into force on 23 January 2003).

  297. 297.

    Ibid., Article 1.

  298. 298.

    Societe Generale v the Dominican Republic, above n 10, para 17.

  299. 299.

    Ibid., para 17.

  300. 300.

    Free Trade Agreement between Central America, the Dominican Republic, and the United States of America (CAFTA), signed on 5 August 2004, (entry into force on 1 January 2009).

  301. 301.

    Societe Generale v the Dominican Republic, above n 10, para 40.

  302. 302.

    Ibid., para 41.

  303. 303.

    Societe Generale v the Dominican Republic, above n 10, para 41.

  304. 304.

    Quasar, Orgor, GBI, Alos v Russia, above n 11, Arbitration Institute of Stockholm Chamber of Commerce, Award, 20 July 2012. The arbitral Award had follow-on proceedings. It was subjected to a review by the national court of Sweden (Sweden being the seat of arbitration).

  305. 305.

    Russian Federation v GBI, Orgor, Quasar, Alos SICA V S.A, Stockholm District Court, Department 4, Case No. T 15045-09, Judgment, 11 September 2014.

  306. 306.

    The Russia-Spain BIT, signed on 26 October 1990, (entry into force 28 November 1991); Quasar, Orgor, GBI, Alos v Russia, above n 10, Award.

  307. 307.

    See the Judgment of the District Court, above n 305 for the English translation of the treaty. The treaty was drafted originally in Russian and Spanish.

  308. 308.

    Ibid., Judgment, Stockholm District Court, p 5.

  309. 309.

    The Judgment of the District Court, above n 305, 17.

  310. 310.

    The Award was challenged in the Stockholm Court because the seat of arbitration was Stockholm as the arbitration was commenced under the arbitration rules of Stockholm Chamber of Commerce.

  311. 311.

    The Judgment of the District Court, above n 305.

  312. 312.

    Russia v GBI, Alos, Orgor and Quasar SICA, SVEA Court of Appeal, Department 02, Case No. T9128-14, Judgment, dated 18 January 2016.

  313. 313.

    Ibid., 9.

  314. 314.

    Vanessa v Venezuela, above n 10.

  315. 315.

    Ibid., paras 49–105.

  316. 316.

    Vanessa v Venezuela, above n 10, paras 49–105.

  317. 317.

    Ibid.

  318. 318.

    Vanessa v Venezuela, above n 10, para 109.

  319. 319.

    Ibid., para 131.

  320. 320.

    Vanessa v Venezuela, above n 10, para 133.

  321. 321.

    Ibid., para 133.

  322. 322.

    See Chap. 5.

  323. 323.

    See Chap. 4.

  324. 324.

    Anglia Auto v the Czech Republic, above n 10.

  325. 325.

    Ibid., paras 1–5; The UK-Czech and Slovak Republic BIT, above n 116.

  326. 326.

    Anglia Auto v the Czech Republic, above n 10, para 3.

  327. 327.

    The UK-Czech and Slovak Republic BIT, above n 116. Article 5 prohibited unlawful expropriation. Article 2(2) guaranteed FET and full protection and security to foreign investors.

  328. 328.

    Anglia Auto v the Czech Republic, above n 10, para 189.

  329. 329.

    Ibid., para 163.

  330. 330.

    The UK-Czech and Slovak Republic BIT, above n 116, Articles 3(1) and (2).

  331. 331.

    Anglia Auto v the Czech Republic, above n 10, para 191.

  332. 332.

    Ibid.

  333. 333.

    RosInvest v Russia, above n 10. Award on Jurisdiction.

  334. 334.

    Ibid.

  335. 335.

    For details on the primary and supplementary means of treaty interpretation, see Chap. 3.

  336. 336.

    For more details, see Chap. 5.

  337. 337.

    Ibid.

  338. 338.

    For more details, see Chap. 5.

  339. 339.

    Austrian Airlines v Slovakia, above n 10.

  340. 340.

    Ibid., Agreement between the Republic of Austria and the Czech and Slovak Federal Republic Concerning the Promotion and Protection of Investments (the Austria and the Czech and Slovak Federal Republic BIT), signed on 15 October 1990, (entry into force on 1 October 1991).

  341. 341.

    Austrian Airlines v Slovakia, above n 10, para 26.

  342. 342.

    Ibid., paras 67–68.

  343. 343.

    Austrian Airlines v Slovakia, above n 10, paras 92–93.

  344. 344.

    Agreement between the Czech and Slovak Republic and the Kingdom of Denmark on Support and Mutual Protection of Investments (the Denmark-Slovakia BIT), signed on 6 March 1991, (entry into force on 19 September 1992).

  345. 345.

    Austrian Airlines v Slovakia, above n 10.

  346. 346.

    The 1991 Austria and the Czech and Slovak Federal Republic BIT, above n 340, Article 3 (1).

  347. 347.

    Austrian Airlines v Slovakia, above n 10, para 77.

  348. 348.

    Ejusdem generis requires an application of MFN to matters similar to those explicitly referred in the clause. For details on the principle, see Chap. 3.

  349. 349.

    Austrian Airlines v Slovakia, above n 10, para 111.

  350. 350.

    Arbitrator Charles N Brower provided dissenting opinion, dated 9 October 2009.

  351. 351.

    Austrian Airlines v Slovakia, above n 10, para 135.

  352. 352.

    Ibid., para 131, Anthony Aust, Modern Treaty Law and Practice, (Cambridge University Press, 2007), 248–249.

  353. 353.

    Austrian Airlines v Slovakia, above n 10, para 121.

  354. 354.

    Arbitrator Charles N Brower was one of the arbitrators who supported application of MFN to procedural prerequisites to arbitration in some cases as it was found in Chap. 5.

  355. 355.

    Austrian Airlines v Slovakia, above n 10, Separate Opinion of Charles N. Brower, dated 9 October 2009.

  356. 356.

    Ibid.

  357. 357.

    TZA Yap Shum v Peru, above n 10, Decision on Jurisdiction and Competence, dated 19 June 2009. This researcher has relied on the unofficial English translation of the Decision. The decision was originally written in Spanish. For the factual part, therefore, this author has relied mostly on the Decision on Annulment, dated 12 February 2015 which is written in English.

  358. 358.

    Ibid.

  359. 359.

    TZA Yap Shum v Peru, above n 10, Decision on Annulment, dated 12 February 2015, paras 44–45.

  360. 360.

    Agreement between the Government of the Republic of Peru and the Government of the People’s Republic of China Concerning the Encouragement and Reciprocal Protection of Investments (the China-Peru BIT), signed on 9 June 1994, (entry into force on 1 February 1995).

  361. 361.

    TZA Yap Shum v Peru, Decision on Annulment, above n 357, para 49.

  362. 362.

    The 1994 China-Peru BIT, above n 360, Article 8(3).

  363. 363.

    Ibid., Article 3(2).

  364. 364.

    The 1994 China-Peru BIT, above n 360, Article 3(3).

  365. 365.

    TZA Yap Shum v Peru, Decision on Jurisdiction, above n 10, paras 201–217.

  366. 366.

    Ibid., para 204.

  367. 367.

    TZA Yap Shum v Peru, Decision on Jurisdiction, above n 10, para 116.

  368. 368.

    Ibid., para 116.

  369. 369.

    I.P. Busta v the Czech Republic, above n 10.

  370. 370.

    Ibid., paras 1–6.

  371. 371.

    I.P. Busta v the Czech Republic, above n 10; the 1990 UK-Czech and Slovak Republic BIT, above n 116.

  372. 372.

    The 1990 UK-Czech and Slovak Republic BIT, above n 116, Under Article 8(1), the tribunal could exercise jurisdiction only for breaches of Article 2(3), 4, 5 and 6 of the basic BIT which, respectively, contained a promise for the promotion and protection of investments, compensation for losses, protection from unlawful expropriation and repatriation of investments and returns.

  373. 373.

    I.P. Busta v the Czech Republic, above n 10, paras 164–166.

  374. 374.

    Venezuela US Barbados v Venezuela, above n 10.

  375. 375.

    Ibid.

  376. 376.

    Venezuela US Barbados v Venezuela, above n 10.

  377. 377.

    Ibid., para 4 of the basic BIT dispute settlement clause.

  378. 378.

    Venezuela US Barbados v Venezuela, above n 10, para 126.

  379. 379.

    Garanti Koza LLP v Turkmenistan, above n 2.

  380. 380.

    Ibid.

  381. 381.

    Garanti Koza LLP v Turkmenistan, above n 2.

  382. 382.

    VCLT, above n 26, Article 9(1).

  383. 383.

    Sanum v Laos, above n 10.

  384. 384.

    Ibid.

  385. 385.

    Agreement between the Government of the People’s Republic of China and the Government of the Lao People’s Democratic Republic Concerning the Encouragement and Reciprocal Protection of Investments, (the China-Laos BIT), signed on 31 January 1993 (entry into force on 1 June 1993).

  386. 386.

    Sanum v Laos, above n 10.

  387. 387.

    Ibid., para 39.

  388. 388.

    Sanum v Laos, above n 10, para 358.

  389. 389.

    Also see, Georges Abi-Saab, Abaclat and Others v the Argentine Republic, ICSID Case No. ARB/07/5, Dissenting Opinion to the Decision on Jurisdiction and Admissibility, 4 August 2011, paras 7–8.

  390. 390.

    Venezuela US Barbados v Venezuela, above n 10, Dissenting Opinion.

  391. 391.

    Ibid.

  392. 392.

    RosInvest v Russia, Award on Jurisdiction, above n 10; For generally on treaty interpretation by international courts and tribunals being ultra vires (beyond power) in case if the rules under the VCLT are not complied with, see, David S. Berry, ‘Hyper-Interpretation: Promise or Peril? In Shifting Sands of Treaty Interpretation (2008) 102 American Society of International Law Proceeding 411 at 416.

  393. 393.

    Venezuela US Barbados v Venezuela, above n 10.

  394. 394.

    Garanti Koza v Turkmenistan, above n 2.

  395. 395.

    For details on the Rule, see Chap. 4.

  396. 396.

    Ibid.

  397. 397.

    See Chap. 4.

  398. 398.

    Ibid.

  399. 399.

    The ILC, Draft Articles on Most-Favoured-Nation Clauses, with Commentaries, text adopted by the International Law Commission at its thirtieth session, Yearbook of the International Law Commission, 1978, vol. II, Part Two, p. 30, paras 10–11.

  400. 400.

    See Chap. 2 for details.

  401. 401.

    Berschader v Russia, above n 10.

  402. 402.

    Ibid., paras 1–2.

  403. 403.

    Berschader v Russia, above n 10.

  404. 404.

    Ibid., para 2.1; Belgium, Luxembourg and Union of Soviet Socialist Republics, Agreement Concerning the Reciprocal Promotion and Protection of Investments (with protocol) (The 1989 BIT between Belgium, Luxembourg and Russia), signed on 9 February 1989, (entry into force on 18 August 1991).

  405. 405.

    Ibid., the 1989 BIT between Belgium, Luxembourg and Russia. Expropriation was covered in Article 5 of the basic BIT.

  406. 406.

    Berschader v Russia, above n 10, para 4.2.4.

  407. 407.

    Ibid.

  408. 408.

    Berschader v Russia, above n 10, para 4.2.4.

  409. 409.

    Ibid., para 5.5.2 (175).

  410. 410.

    Berschader v Russia, above n 10.

  411. 411.

    Ibid., para 5.5.2 (178).

  412. 412.

    Berschader v Russia, above n 10, para 178.

  413. 413.

    Belgium, Luxembourg and Union of Soviet Socialist Republics, Agreement Concerning the Reciprocal Promotion and Protection of Investments (with protocol) (The 1989 BIT between Belgium, Luxembourg and Russia), signed on 9 February 1989, (entry into force on 18 August 1991), Article 2.

  414. 414.

    Berschader v Russia, above n 10, para 185.

  415. 415.

    Ibid., para 185.

  416. 416.

    Berschader v Russia, above n 10, para 185.

  417. 417.

    Ibid., para 195.

  418. 418.

    Berschader v Russia, above n 10, para 197.

  419. 419.

    Ibid., paras 200–202.

  420. 420.

    Berschader v Russia, above n 10, para 206.

  421. 421.

    Tanjina Sharmin, ‘Should MFN Clauses Exclude Dispute Resolution within Investment Treaties?-An Evaluation of Australian Stance’ (2017) 35 Australian Yearbook of International Law, 123–155.

  422. 422.

    Ibid.

  423. 423.

    August Reinisch, ‘How Narrow are Narrow Dispute Settlement Clauses in Investment Treaties?’ (2011) 2(1) Journal of International Dispute Settlement, 115–174.

  424. 424.

    Ibid., 134.

  425. 425.

    For example of the expansive interpretation of MFN in this context, see RosInvestCo UK v Russia, above n 10, paras 128–132; For example of the expansive interpretation of dispute settlement clause to cover indirect expropriation, see Tza Yap Shum v Republic of Peru, above n 10, para 153. However, in Tza Yap Shum, the tribunal rejected the application of MFN but still expanded its jurisdiction by interpreting the dispute settlement clause broadly.

  426. 426.

    The term correction is used by Renisch, above n 423. However, this author acknowledges that there are contrary views on this point.

  427. 427.

    For example, in National Grid PLC v The Argentine Republic, (UNCITRAL) Decision on Jurisdiction, 20 June 2006, para 80, the tribunal justified the application of MFN to dispute settlement by the object and purpose of the BIT to promote foreign investments. This case was reviewed in detail in Chapter 5; also see Venezuela US, S.R.L v the Bolivarian Republic of Venezuela, above n 10, para 59. In this case, also the claimant argued that jurisdiction can be extended by MFN to further the object and purpose of the BIT to promote foreign investments, and the tribunal upheld the contention.

  428. 428.

    Stephan W. Schill, ‘System-Building in Investment Treaty Arbitration and Lawmaking,’ 12(5) German Law Journal 1083.

  429. 429.

    Harish Lauterpacht, ‘The Absence of an International Legislature and the Compulsory Jurisdiction of International Tribunals,’ (1930) 11 British Year Book of International Law, 134, at 137, 157, at 135. Lauterpacht quoted the following observation by Lord Balfour at the first assembly of the league of nations during the discussions on the inclusion of the principle of obligatory arbitration in the state of the Permanent Court of International Justice:

    Remember that this Court is set up to administer a system of international law…this Court is brought into existence not to change it or reform it, but simply to administer it…A rigid interpretation…, nevertheless has to be administered by a Court which, in administering it with strict regard to law with which it has to deal, but without any power of showing that larger vision which is sometimes given to statesmen and politicians, may affect interests so profoundly concerning the very existence of that state, that your whole machine would be destroyed before that state would submit itself voluntarily to legal destruction.

    See Documents concerning the Action by the Council of the League under Article 14 of the Covenant, 274, First Assembly, Plenary Meetings, p 488. The quotation is taken from Lauterpacht.

  430. 430.

    Reinisch, above n 423.

  431. 431.

    Plama v Bulgaria, above n 10.

  432. 432.

    Ibid., para 1.

  433. 433.

    Plama v Bulgaria, above n 10, para 21.

  434. 434.

    The Energy Charter Treaty, signed on 17 December 1994, (entry into force on 16 April 1998).

  435. 435.

    Agreement between the Government of the People’s Republic of Bulgaria and the Government of the Republic of Cyprus on Mutual Encouragement and Protection of Investments (Bulgaria-Cyprus BIT), signed on 12 November 1987, (entry into force on 18 May 1988).

  436. 436.

    Ibid., Article 4(1).

  437. 437.

    United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules 1976, Adopted by the UN General Assembly Res No. 31/98 1976.

  438. 438.

    Agreement between the Government of the Republic of Finland and the Government of the Republic of Bulgaria on the Promotion and Protection of Investments (Bulgaria-Finland BIT), signed on 3 October 1997, (entry into force on 16 April 1999).

  439. 439.

    Hereinafter, these types of clauses will be referred as ‘neutral clauses.’

  440. 440.

    Bulgaria - Cyprus BIT, above n 435, Article 3.

  441. 441.

    Plama v Bulgaria, above n 10, para 36.

  442. 442.

    Ibid.

  443. 443.

    Plama v Bulgaria, above n 10, para 36.

  444. 444.

    Ibid., para 36.

  445. 445.

    Plama v Bulgaria, above n 10, para 184.

  446. 446.

    Ibid., para 193.

  447. 447.

    Plama v Bulgaria, above n 10, para 219.

  448. 448.

    Sir Ian Sinclair, The Vienna Convention on the Law of Treaties, (Manchester University Press, 1984, 2nd ed) at 130; Ibid., para 193.

  449. 449.

    Will be discussed in the concluding chapter.

  450. 450.

    See Chap. 7.

  451. 451.

    See, for example, Australia-US Free Trade Agreement, signed 18 May 2004 (entered into force 1 January 2005); AustraliaMalaysia Free Trade Agreement, signed 22 May 2012 (entered into force 1 January 2013); Economic Partnership Agreement between Japan and Philippines, signed 9 September 2006 (entered into force 11 December 2008).

  452. 452.

    Ibid.

  453. 453.

    This author has checked and found that all 23 tribunals rejecting MFN were constituted of three members (for each case). That means, 69 (23 X 3) arbitrators are supposed to be involved in these 23 cases. However, some arbitrators had repeated appointment. For example, Arbitrator Brigitte Stern was appointed in four cases amongst these 23. Professor Zachary Douglas was appointed in two cases. Arbitrator Charles N. Brower was appointed in four cases (but gave dissenting opinion on MFN in two cases). Arbitrator Bernardo Cremades was involved in two cases. On the other hand, amongst the three cases in which MFN succeeded, two were accompanied by dissenting opinions. Arbitrator Laurence Boisson de Chazournes gave dissenting opinion in Garanti Koza v Turkmenistan, above n 2, and Arbitrator Marcelo G. Kohen gave dissenting opinion in Venezuela US Barbados v Venezuela, above n 10. Excluding these two arbitrators, in these three cases, a total number of seven arbitrators (each tribunal being constituted of three members excluding the dissenting arbitrators) supported the stance that MFN could apply to jurisdictional issues.

  454. 454.

    Garanti Koza v Turkmenistan, above n 2, para 40.

  455. 455.

    Ibid., and Venezuela US Barbados v Venezuela, above n 10.

  456. 456.

    As discussed in section of this chapter, the application of MFN to various dimensions of jurisdiction of arbitral tribunals was rejected in 23 cases. Amongst them only in Renta 4 v Russia, above n 10, and in Austrian Airlines v Slovakia, above n 10, Arbitrator Charles N. Brower gave dissenting opinion by holding the view that MFN could apply to jurisdictional issues. It was found in Chapter 5 that Arbitrator Charles N Brower also supported the application of MFN to procedural prerequisites to arbitration in a number of cases..

  457. 457.

    Austrian Airlines v Slovakia, above n 10.

  458. 458.

    De jure means, recognised in law. Some scholars argue for the existence of a de facto (in fact) precedent system in investor-state arbitration. For details, on de facto precedent, see, L Reed, ‘The De Facto Precedent Regime in Investment Arbitration: A Case for Proactive Case Management’ (2010) 25(1) ICSID Review 95.

  459. 459.

    The rule of stare decisis is generally observed in domestic legal systems some of which sometimes recognise decisions given by the supreme judiciary of the country to be binding on lower courts in any subsequent case.

  460. 460.

    Decisions from investor-state arbitral tribunals rather bind only the disputing parties. See, ICSID Convention, above n 11, Article 53(1) that the decisions bind only the disputing parties. For more details, see Amco v Indonesia, ICSID Case No. ARB/81/1, Decision on Annulment, 16 May 1986, para 44; G Kaufmann-Kohler, ‘Arbitral Precedent: Dream, Necessity, or Excuse’ (2007) 23(4) Arbitration International 357; August Reinisch, ‘The Role of Precedent in ICSID Arbitration’ (2008) Austrian Arbitration Yearbook 495.

  461. 461.

    Stephan W. Schill, ‘Multilateralizing Investment Treaties through Most-Favoured-Nation Clauses’ (2009) 27 Berkeley Journal of International Law 496–506. Schill has supported the power of MFN clauses to multilateralise any IIA provision. On the other hand, some scholars have rejected the power of MFN to multilateralise IIA dispute settlement provisions without rejecting the multilateralising power of MFN for other substantive provisions in IIAs. For details, see the literature review in Chap. 1.

  462. 462.

    RosInvest v Russia, Award on Jurisdiction, above n 12, para 132.

  463. 463.

    Tecnicas v Mexico, above n 10.

  464. 464.

    Ibid.

  465. 465.

    Agreement on the Promotion and Reciprocal Protection of Investments between the Kingdom of Spain and the United Mexican States (Spain-Mexico BIT), signed on 23 June 1995, (entry into force on 18 December 1996), (terminated on 3 April 2008).

  466. 466.

    Tecmed v Mexico, above n 10, para 35.

  467. 467.

    Ibid., paras 35–40.

  468. 468.

    Tecmed v Mexico, above n 10, paras 35–40.

  469. 469.

    Ibid., para 40; The 1995 Spain-Mexico BIT, above n 465.

  470. 470.

    Tecmed v Mexico, above n 10, para 48.

  471. 471.

    Ibid., para 54.

  472. 472.

    Tecmed v Mexico, above n 10, para 69.

  473. 473.

    Ibid., para 69.

  474. 474.

    Tecmed v Mexico, above n 10, para 69.

  475. 475.

    Ibid., para 69.

  476. 476.

    Tecmed v Mexico, above n 10, para 69. The observation of the tribunal was based on the observation of the Maffezini tribunal in its Decision on Jurisdiction, pp 25–26, 62–63.

  477. 477.

    Beijing Urban v Yemen, above n 10.

  478. 478.

    Ibid., para 1; The China-Yemen BIT, signed on 16 February 1998 (entry into force on 10 April 2002).

  479. 479.

    Beijing Urban v Yemen, above n 10, para 110.

  480. 480.

    The 1998 China-Yemen BIT, above n 478, Article 3(1).

  481. 481.

    Beijing Urban v Yemen, above n 10, para 116.

  482. 482.

    Zachary Douglas, ‘The MFN Clause in Investment Arbitration: Treaty Interpretation Off the Rails’ (2011) 2 Journal of International Dispute Settlement 97–113.

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Sharmin, T. (2020). Application of MFN to Extend the Jurisdiction of Arbitral Tribunals. In: Application of Most-Favoured-Nation Clauses by Investor-State Arbitral Tribunals. International Law and the Global South. Springer, Singapore. https://doi.org/10.1007/978-981-15-3730-1_6

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