The MFN clause under the OIC Agreement: Analysis of Itisaluna Iraq LLC and Others v Republic of Iraq

Abstract

The Most Favored Nation (MFN) clause is one of the core protections envisaged in international investment agreements. It is intended to provide equal treatment among foreign investors and guarantee that they receive the same level of protection from the host state. Nevertheless, there is a lack of jurisprudence constante on the scope of its application in investment treaty arbitration (ITA). While extending the scope of the MFN clause to substantive protection is preponderantly accepted in ITA, albeit increasingly criticized, the debate on its application to dispute resolution provisions remains progressively heated. This article delves into the nuanced debate surrounding the scope of the MFN clause, particularly in relation to dispute resolution provisions. First, it begins by examining the controversial dichotomy of the MFN application to procedural matters. Afterwards, it explores the common principles of interpretation that play a pivotal role in shaping the interpretation of the MFN clauses. Second, it analyzes the recent Award rendered in Itisaluna Iraq LLC v the Republic of Iraq whereby the tribunal, by majority, declined its jurisdiction on the ground that the MFN clause as stipulated in the Organization of Islamic Co-operation Agreement (OIC) cannot be used to import dispute resolution provisions from bilateral investment treaties concluded between Iraq and other countries