Rethinking Ethiopia's Bilateral Investment Treaties in light of Recent Developments in International Investment Arbitration
| Author | MB Hailu, TE Kassahun |
| Position | PhD Candidate (Martin Luther University, Germany), LL.M (University of Western Cape), LL.B (Addis Ababa University), Lecturer Addis Ababa University, College of Law and Governance Studies, School of Law. Email: martha.b.hailu[at]gmail.com - PhD Candidate, Bocconi University, Milan-Italy, LL.M (Business Law) Addis Ababa University, LL.M (... |
| Pages | 117-144 |
117
Rethinking Ethiopia’s Bilateral Investment
Treaties in light of Recent Developments in
International Investment Arbitration
Martha Belete Hailu♣ and Tilahun Esmael Kassahun ♣♣
Abstract
International investment law is dynamic. As treaty practice and jurisprudence
in the area constantly develop, global standards are always in the making.
Rethinking Ethiopia’s Bilateral Investment Treaties (BITs) is thus a natural
response to evaluate the status of the country’s obligations under the regime of
global investment standards. This article briefly evaluates the concept of Most
Favored Nation (MFN) treatment, in relation to the nature or purpose of MFN
clauses and its interaction with dispute resolution provisions contained in BITs.
In doing so, the article evaluates the different scenarios of ‘treaty shopping’
whereby an investor can possibly use BITs signed by Ethiopia and a state other
than the investor’s home state, to benefit from treaty obligations entered by
Ethiopia with other partners. A review of Ethiopian BITs indicate that in almost
all of the BITs, the MFN clause is phrased in general terms and leaves leverage
to raise competing interpretations and creating a matrix of obligations thereby
stretching the country’s obligations under the respective agreements. This calls
for revising the broad and incoherent application of the MFN standard
contained in various BITs signed by Ethiopia with the aim to laying down a
coherent investment treaty framework.
Key words
Most Favored Nation, Bilateral Investment Treaties, Investment
Arbitration, Umbrella Clause, Standard of Treatment
DOI http://dx.doi.org/10.4314/mlr.v8i1.4
♣ PhD Candidate (Martin Luther University, Germany), LL.M (University of Western
Cape), LL.B (Addis Ababa University), Lecturer Addis Ababa University, College of
Law and Governance Studies, School of Law. Email: martha.b.hailu[at]gmail.com
♣♣ PhD Candidate, Bocconi University, Milan-Italy, LL.M (Business Law) Addis
Ababa University, LL.M (International Economic Law and Policy, IELPO)
University of Barcelona. The author teaches at Haramaya University College of Law
and is currently on study leave. He can be reached at:
tilahun.kassahun[at]phd.unibocconi.it
The Authors are grateful for the comments they received from the internal and external
reviewers. All errors remain ours.
118 MIZAN LAW REVIEW, Vol. 8, No.1 September 2014
Introduction
International investment law is one of the most dynamic fields of international
economic law. It is also one of the fields of international law discourse that is
subject to continuous policy debate. This comes as no surprise considering the
growing importance being given to protecting the flow of international
investment and how deeply its contents are inserted in domestic policy making
processes. The system is also influenced by the dynamics of globalization and
global governance, and by various economic reforms resulting in investment
disputes. In effect, the rules and principles of the regime are a flux. Treaty
practice and jurisprudence in the area constantly develop and global standards
are always in the making. Rethinking Ethiopia’s Bilateral Investment Treaties
(BITs) within this context is thus a natural response to evaluate the status of the
country’s obligations under the regime of evolving global investment standards.
However, it will be a disservice to attempt to evaluate the entire framework
of BITs signed by Ethiopia in such short article. Rather, for the moment, the
authors chose to examine one of the topical and hotly debated issues in the area;
the dynamism in relation to the concept of Most Favored Nation (MFN)
treatment. In particular the article addresses the nature and purpose of the clause
and its interaction with dispute resolution provisions contained in BITs by
taking recent developments in international investment dispute settlement.
Generally the aim of this article is to show how recent application of MFN
provision contained in basic treaty to benefit an investor from dispute settlement
provisions contained in another comparator treaty is paving new grounds of
application of the standard with the effect of stretching the country’s obligations
under the respective agreements.
The article thus attempts to elucidate the policy coherence pursued in this
line. In making this evaluation, an attempt is made to review all BITs signed by
Ethiopia and important international jurisprudence on the issue. In the
meantime, it is also to be seen that case law and academic literature on the topic
present constantly diverging stream of opinion. Thus, while the article attempts
to be comprehensive in this regard, it does not claim to cover all ground.
The first section of the article provides a general observation on the
development of BITs, by also putting the Ethiopian experience in context.
Section Two discusses the nature, purpose and scope of the MFN clause in
International Investment Agreements and also introduces the debate on its scope
of application to and its interaction with dispute resolution provisions contained
in BITs, which is the main subject matter of this article. Section Three deals
with the types of MFN questions raised in the debate in the context of the rules
contained under BITs sighed by Ethiopia. And finally, some observations of
arbitral practice are highlighted in Section Four with a brief conclusion in the
end.
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