THE IMPACT OF THE MAFFEZINI DECISION ON THE INTERPRETATION OF MFN CLAUSES IN INVESTMENT TREATIES

The Maffezini decision is the first decision, in the realm of investment treaty arbitration, which deals with the question of whether the effect of most favored nation (MFN) clauses, embedded in investment treaties, extends to dispute resolution clauses in the same treaties. In the Maffezini case, the ICSID tribunal had to decide whether the investor, who by invoking the MFN clause of the basic treaty to bypass the waiting period which was provided by the same treaty, was to be allowed to do so. The ICSID tribunal’s decision to this question contained a finding which stated that: “dispute settlement arrangements are inextricably related to the protection of foreign investors.” Relying on this finding of the Maffezini tribunal, many investors, who sought access to arbitration, brought cases before arbitral tribunals with the expectation that, although the applicable basic treaty did not provide for arbitration, the MFN clause in the same treaty would enable them to sue the host State before an arbitral tribunal. However, ICSID tribunals have not as of yet inferred consent to arbitration where there was no explicit consent in the basic investment treaty. ICSID tribunals have followed the logic of the finding of the Maffezini case only in cases where investors sought to bypass minor procedural conditions, such as waiting periods for submitting a dispute to arbitration. Yet, in the RosInvest decision, which is a relatively new decision by a Stockholm Chamber of Commerce tribunal, a more favorable dispute resolution clause of a third party treaty was imported to enable the investor to resort to arbitration where the State parties to the basic investment treaty did not expressly consent to arbitration. This decision which already has attracted support, overrides the Maffezini decision, and thus seems to be the vanguard of a new episode in interpreting MFN clauses embedded in investment treaties.