Most-Favoured-Nation Clauses and preconditions for ISDS: The Argentinian Experience

Abstract

In recent years, the negotiation and conclusion of international investment agreements (IIAs) in Latin America has been signalling to a change in dispute settlement clauses, favouring alternative dispute settlement mechanisms prior to investor-state arbitration, when the latter are present at all in those agreements. This trend is illustrated, among others, in the Brazilian experience with the Cooperation and Facilitation Investment Agreements (CFIAs), the negotiations on the creation of a regional dispute settlement centre under the auspices of the Union of South American Nations (UNASUR), the Mercosur Protocol, some recently signed Bilateral Investment Agreements (BITs) in the region and amendments to national arbitration laws for disputes involving the State. The article contraposes this recent experience with another, too, common trend in recent agreements, related to the latter: the modification of the most-favoured-nation (MFN) clause, often found in BITs. Using the Argentinian experience as a guidance to arbitral tribunals’ previous and present decisions regarding such a clause and highlighting the importance of alternative dispute settlement mechanisms for the development of international investment law, this article will shed light into the importance of the MFN clauses to uphold equality in investor-state disputes among countries and combat the idea that MFN clauses prevent alternative dispute settlement resolutions from being effective.