Toss out the baby and put the water to bed: on MFN clauses and the significance of treaty interpretation

uchkunova, inna; temnikov, oleg;

The present article presents a study of past awards dealing with the
question as to whether a recourse-to-national-courts requirement provided for in some bilateral investment treaties (BITs) may be bypassed by operation of a mostfavoured- nation (MFN) clause contained in the same BIT. We posit that a more careful application of the rules of treaty interpretation contained in Articles 31 and 32
of the Vienna Convention on the Law of Treaties will reconcile the discrepancies existing in case law. Given the hierarchy built into Articles 31 and 32, where the ordinary meaning of terms such as �all matters� does not appear to be ambiguous or absurd, supplementary means of interpretation�for example, the circumstances of conclusion of the BIT�may not supplant this meaning. Taking into account also
the taxonomy of cases developed by the UNCTAD we conclude that the majority of cases accept the possibility of overcoming the local courts requirement on the basis of an MFN clause.