Redefining the substantive and procedural protections of Most Favoured Nation clauses in Bilateral Investment Treaties (BITs)
Njeru, Patricia Wangui
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The MFN Clause has been subject to a change in interpretation an application following a series of cases arising from the both courts and tribunals. This study evaluates the history of the MFN Clause and contrasts it to its contemporary interpretation and application. The core objective is to ascertain the role of the MFN clause with regards to BITs. This will inform the recommendations on the potential redefinition of the clause or the removal of the protection from BITs in its entirety. The scope of the study will be limited to BITs as they are the key tool utilized to further development thorough foreign direct investment in developing countries. As such it is more often than not the case that -the two parties in the BIT are a developed state and a developing state. The key methods used to obtain the findings are desktop research of cases seen to provide the most cogent justification for the conditional extension of the MFN clause. The major finding was, the large acceptance of the substantive protection of MFN clauses, may be extended to include procedural advantages. This extension is justified where it is proved to provide more favourable conditions for investment. A narrow application of the clause in such an instance would be classed as a breach of the inextricable rights owed to investors under the BIT. This study suggests that the best remedy for this potentially detrimental application of the clause would be either to adopt an expressly open or limited MFN clause. However, the best possible remedy would be to do away with the MFN Clause in the context of BITs and never have to worry about the-inclusion of provisions from 3rd party BITs.