Investor Presentaiton
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INVESTOR-STATE DISPUTE SETTLEMENT: A SEQUEL
State's sovereign assets cannot be seized absent an explicit waiver
of execution immunity. A State's commercial assets will likely be
subject to execution in any State that has adopted the restrictive
theory of immunity.
S. MFN clause: impact on ISDS
The most-favoured-nation (MFN) obligation is included in most
investment treaties. An MFN clause requires a State to grant
investors covered by the IIA treatment no less favourable than it has
accorded to investors from any third country. MFN treatment is a
relative obligation; the treatment accorded to a third party must be
compared to the treatment accorded to the covered investor. In
addition, the comparators must be "in like circumstances";
otherwise there is no basis for the comparison and a claim will
fail.
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With respect to ISDS, the MFN obligation has given rise to
controversy about whether the MFN clause can be used to invoke
more favourable ISDS provisions from other treaties concluded by
the respondent State. This question has spawned unpredictable
decisions.
The issue first arose in Maffezini v. Spain, in which the
Argentinean claimant sought to avoid an 18-month period, as
specified in the Argentina-Spain BIT (upon which the claim was
brought), during which the investor was supposed to seek local
remedies. The investor argued that the MFN clause in the
Argentina-Spain BIT entitled it to better treatment granted in IIAs to
placed on sale." Article 21(1). The Convention is not yet in force but can
be seen as codification of customary international law on sovereign
immunity.
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For the detailed discussion of the MFN obligation and relevant treaty
and arbitral practice, see UNCTAD, 2010c.
UNCTAD Series on International Investment Agreements IIView entire presentation