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THE WORK OF THE INTERNATIONAL LAW COMMISSION IN 2015, BUSINESS AS USUAL?

2.8 The Most-Favoured-Nation clause

The ILC reconstituted the Study Group on the Most-Favoured-Nation clause, which

finalized its report. The Commission received and welcomed with appreciation the final

report on the work of the Study Group

and endorsed the summary conclusions of the

Group.

The Final Report of the Study Group on the Most-Favoured-Nation clause,

which will be published in an annex to the Report of the ILC, is a long study divided in

three major parts. Part I provides the background, including the origins and purpose of

the work, the ILC’s prior work on the 1978 Draft Articles on the Most-favoured-nation

clause, and subsequent developments. Part II addresses the contemporary relevance

of and issues concerning MFN clauses, including, in the context of the GATT and

the WTO, other trade agreements and investment treaties. It also surveys the different

approaches in the case law to the interpretation ofMFNclauses in investment treaties. Part

III analyzes,

inter alia

, policy considerations relating to the interpretation of investment

agreements, implications of investment dispute settlement as “mixed arbitration”, and

factors relevant in the interpretation of MFN clauses.

It is worth mentioning the six conclusions adopted by the Commission as a

whole. (1) The core provisions of the 1978 draft articles

continue to be the basis for

interpretation and application of MFN clauses today. However, they do not provide

answers to all the interpretative issues that can arise with MFN clauses. (2) The

interpretation of MFN clauses is to be undertaken on the basis of the rules for the

interpretation of treaties as set out in the Vienna Convention on the Law of Treaties.

(3) The central interpretative issue in respect of the MFN clauses relates to the scope

of the clause and the application of the

ejusdem generis

principle. (4) The application

of MFN clauses to dispute settlement provisions in investment treaty arbitration,

rather than limiting them to substantive obligations, brought a new dimension

to thinking about MFN provisions and perhaps consequences that had not been

foreseen by parties when they negotiated their investment agreements. (5) Whether

MFN clauses are to encompass dispute settlement provisions is ultimately up to the

States that negotiate such clauses. Explicit language can ensure that a MFN provision

does or does not apply to dispute settlement provisions. Otherwise the matter will

be left to dispute settlement tribunals to interpret MFN clauses on a case-by-case

basis. (6) The interpretative techniques reviewed in the report of the Study Group are

designed to assist in the interpretation and application of MFN provisions.

The Commission commended the final report to the attention of the General

Assembly and encouraged its widest possible dissemination. It also expressed to the

See doc. A/CN.4/L.852 (2015).

See doc. A/CN.4/L.866 (2015), pp. 3-4.

See YILC, 1978, vol. II (Part Two), pp. 16-72.

See doc. A/CN.4/L.866 (2015), §§ 11-16.