RosInvest v. Russian Federation: Arbitral Tribunal uses Most Favoured Nation (MFN) clause to rule that it has jurisdiction over RosInvest's expropriation claims against Russia.
Summary and business impacts
In October 2007, a Tribunal constituted under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) ruled in favour of English company RosInvest. It held that RosInvest could use the MFN clause of the UK-Soviet Bilateral Investment Treaty (BIT), read with the wider arbitration clause contained in the Denmark-Russia BIT, to argue that the Tribunal should accept jurisdiction. In contrast to previous arbitral decisions, the Tribunal in this case found no difference between a procedural and a substantive protection in a BIT in terms of the extent of the MFN clause.
MFN clauses automatically and directly incorporate any more favourable treatment granted to third parties into the more limited BIT in question. This interpretation of an MFN clause therefore potentially affords investors the full range of protections provided in all BITs signed by the host state in question. Parties should nevertheless be careful to approach the question of whether an MFN clause will be applicable to procedural clauses on a case-by-case basis, as each BIT should be interpreted according to its own wording.