The most favoured nation clause: the evolution of its interpretation as regards its application to the dispute resolution mechanisms

Abstract

The most favoured nation clause, a typical clause in bilateral investment traties, was used, for the past few decades, for the exclusive purpose of importing” into the scope of protection of a certain treaty other more favourable substantive clauses foreseen in different treaties. However, since 2000, the number of investment arbitrations in which the matter of including mechanisms of dispute resolution – of procedural character – in the scope of application of said clauses was dealt with suffered a significant rise. The Maffezini v. Spain was a landmark case as it was the first case ever in which this issue arose, being subject to a positive answer, albeit with reservations, by the arbitral tribunal. Since then, arbitration case law has not been unanimous, shifting from adhering to the Maffezini doctrine to its repeal. Despite the apparent contradiction in case law, some signs of convergence as to the specific way in which this type of clauses should be interpreted.