Universal Scale Tipping towards Balance-Applying the MFN Clauses in China-related Investment Arbitration: A New Haven School Reading

Abstract

The extension of MFN clauses to dispute settlement under BITs is one of the most controversial areas in investment treaty law. Currently, the area is divided into two streams of case law. The award in Tze Yap Shum v Peru and other recent Chinese investment arbitral awards did not side the Maffezini stream. The question on which stream works the best for China is complicated and essentially a balancing exercise. This article examines the question from a Chinese perspective and adopts the analytical framework of the New Haven School. It identifies the issue of comparability of more preferential treatment as the key criterion in determining the question. It reviews the previous case law and assesses the economic, social and cultural factors shaping the Chinese investment policy. From there, the article seeks to discover if the current law helps fulfil China’s policy goals and proposes recommendations accordingly.