Geneva, 27 January, 2011 - A new UNCTAD study provides an overview of key issues arising from most-favoured-nation (MFN) clauses in international investment agreements (IIAs).
MFN, which is a basic principle in World Trade Organization agreements, also occurs in IIAs, where it calls upon countries not to discriminate among investors from different countries. Limited exceptions tend to be allowed, however.
The study, "Most-Favoured-Nation Treatment"(1), is the first volume in UNCTAD´s second edition of its "Series on Issues in International Investment Agreements": This seminal series aims to assist developing countries to participate more effectively in negotiations on IIAs. Legal issues related to MFN have evolved significantly over the past decade, particularly in light of an increasing number of arbitration awards arising from the settlement of disputes between investors and governments. These awards raise novel issues and challenges for the interpretation of existing IIAs and the negotiation of future ones. The MFN sequel provides a comprehensive update to the first edition issued in 1999.
The new MFN study contains an explanation of MFN treatment and highlights key issues that arise for negotiators, including regarding the clause´s scope and application to the liberalization of investment and protection of foreign investors. The report provides policy options designed to minimize inconsistent wording and interpretations of MFN provisions, with a view to fostering the predictability of the legal framework for international investment and, ultimately strengthening the development dimension of the IIA regime.
