CYIL 2015

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 36 and endorsed the summary conclusions of the Group. 37 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 38 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. 39 The Commission commended the final report to the attention of the General Assembly and encouraged its widest possible dissemination. It also expressed to the

36 See doc. A/CN.4/L.852 (2015). 37 See doc. A/CN.4/L.866 (2015), pp. 3-4. 38 See YILC, 1978, vol. II (Part Two), pp. 16-72. 39 See doc. A/CN.4/L.866 (2015), §§ 11-16.

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