Most-favored-nation treatment in investment arbitration: is it possible to use the GATS?

The question whether it is possible to apply the provisions of most-favored-nation treatment to investor-State dispute settlement has been a topical issue for a number of years. The practice of international investment tribunals does not give an unequivocal answer as to whether dispute settlement provisions which are more favourable from the investor’s viewpoint may be imported from other international investment agreements made by the host State. For example, in Maffezini v. Spain the arbitral tribunal came to the conclusion that this was possible, whereas a number of other tribunals have not supported this approach. This question becomes even more complicated when a foreign investor tries to use not investment treaties but other international agreements which also regulate foreign investments and contain a most-favored-nation clause. Such an attempt was made in Menzies Middle East and Africa S.A. and Aviation Handling Services International Ltd. v. Republic of Senegal, which was brought to the International Centre for Settlement of Investment Disputes (ICSID). Although there was no investment agreement concluded between Senegal and investor’s home State, the claimant asserted that the ICSID tribunal was competent to hear the case because the possibility of ICSID arbitration was foreseen in Senegal’s treaties with third countries, and so Senegal’s consent could be extended to the dispute under consideration by means of the most-favored-national provision contained in Art.II of the General Agreement on Trade in Services. This article analyzes the arbitral award rendered in the Menzies case. It discusses weak points in the tribunal’s position while at the same time agreeing with its general conclusion.

About the author: Marina Trunk-Fedorova – Candidate of Sciences (Ph.D.) in Law, Associate Professor, Department of Administrative and Financial Law, Saint Petersburg State University, Saint Petersburg, Russia.

Citation: Trunk-Fedorova M. (2023) Rezhim naibol’shego blagopriyatstvovaniya v investitsionnom arbitrazhe: vozmozhno li ispol’zovat’ GATS?: Kommentariy k resheniyu MTsUIS po delu Menzies Middle East and Africa S.A. and Aviation Handling Services International Ltd. v. Republic of Senegal [Most-favored-nation treatment in investment arbitration: is it possible to use the GATS? Commentary on the ICSID decision in Menzies Middle East and Africa S.A. and Aviation Handling Services International Ltd. v. Republic of Senegal]. Mezhdunarodnoe pravosudie, vol. 13, no. 1, pp. 29–39. (In Russian).

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