Most Favored Nation Clauses and their Potential Effect on Ethiopia’s Bilateral Investment Treaties: Substantive Protections, Perspectives and Stepping the Reconsiderations

Abstract

Under the disguise of MFN treatment, claims to import protections from third party BITS by overriding the independently negotiated basic BITs with home state has caused the purpose and scope of MFN clauses in BITs to be contested. Substantive protections are among the subjects of MFN based allegation. Supplemented with international investment tribunals’ blessings to liberal MFN clauses having loose components, host states are repeatedly exposed to international litigations and payments of damage for the violation of unconsented protections. In response to this, the wake up calls by international organizations has led states to reconsider the context of their BITs’ MFN clauses.  Up-to-date, Ethiopia has signed 35 BITs. All the BITs grant MFN treatment. Thus, this piece of writing aims to examine the MFN clauses under Ethiopian BITs against the divisive international investment law jurisprudences on using MFN clauses to shop substantive rights. Accordingly, it has been found out that Ethiopian BITs MFN clause have major problems in incorporating key components. This would subject the BITs to importation claims and put the country at the most disadvantageous position exposing it to unintended litigation. Thus, it is recommended that Ethiopia is required to either cautiously   reconsider the BITs in light of the suggested options of incorporating MFN clauses or to their abrogation at all. This calls for policy-level decision, relatively clear guidance informing the country’s position to the issue with farsighted negotiation efforts.