• Korea Trade Review
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• v.42 no.4
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• pp.139-157
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• 2017

Whether an investor can invoke a dispute settlement procedure stipulated in other BIT based on the MFN clause in the original BIT is an important issue. There is a difference in the interpretation of MFN clause in which the scope of the treatment stipulates the slightly different contents for each investment treaty. Therefore, this study considered ICSID arbitration cases related to the applicability of MFN clause for investment dispute settlement provisions. There are two different approaches for the applicability of MFN clause by arbitral tribunals. At first, the expanded interpretation of the MFN clause can be applied to procedural regulations, in that the purpose of the investment treaty is to protect foreign investors and to ensure their status. So, foreign investors can invoke a BIT of a third country that is advantageous to them. Second, the limited interpretation of the MFN clause can not be applied to procedural regulations. Without explicit regulation, the term treatment can not be considered to include dispute resolution provisions. And the BIT that the host state has concluded with third country is a treaty that applies only to the contracting party, so it can not be used by foreign investors of other nationality. Therefore, this study suggests concretely stipulating the scope of MFN clause under the investment treaty, highlighting that certain restrictions should be applied to the MFN clause. Furthermore, it is required continually investigating and analyzing the database of the scope of MFN clause.

• Journal of Korea Trade
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• v.24 no.2
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• pp.15-30
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• 2020

Purpose - This paper investigates the theories and practices of Most-Favored-Nation (MFN) clauses. The MFN clause became a controversial issue during the past two decades, especially in the context of investment arbitration. This paper aims to clarify a reasonable way to apply MFN clauses. It in particular focuses on the territoriality requirements and the scope of investment activity which are common features included in most of investment treaties. Design/methodology - This paper analyses two investment arbitration cases, Ansung Housing and Beijing Urban Construction. Through the case study, this paper reveals limitations of the currently dominant views on the operation of MFN clauses. It then tries to reconstruct the system of MFN application within the relevant arbitration principles. Findings - Tribunals of recent investment arbitration as represented in the two cases above employed strict literal interpretation of the treaty provisions, especially of the phrase "in its territory". This paper finds a more functional interpretation is appropriate and consistent with theories of public international law and developments of global economy. Originality/value - Existing studies either stuck to literal interpretation or suggested more flexible interpretation of the phrase "in its territory" without full explanation. This paper tries to fill the gap in the existing discussion by analyzing legal foundations and theoretical structure for an effective interpretation of MFN clauses.

• Journal of Arbitration Studies
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• v.23 no.3
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• pp.127-147
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• 2013

Korea is, after China, the Asian country with the largest number of concluded investment treaties. One of the protections that Korean investment treaties frequently afford to foreign investors and their investment is the so-called "umbrella clause," which requires the host state of the investment to observe the commitments that it has undertaken toward the foreign investor or its investment. This is a potentially very powerful protection. Umbrella clauses, however, have proven to be amongst the most controversial provisions in investment treaties, giving rise to diverging interpretations by tribunals and commentators that are still not reconciled today.