Today's big ISDS news is the NAFTA Chapter 11 award in the Clayton/Bilcon case (award here, dissent here). The tribunal found violations of Article 1105 (minimum standard of treatment) and Article 1102 (national treatment). The dissenter focused his reasoning on Article 1105, but dissented from both findings.
Others might have more to say, but I just wanted to mention one aspect of the majority's reasoning on national treatment.
Canada argued:
(c) Nationality-Based Discrimination
653. According to the Respondent, even if the Investors were to demonstrate that the treatment they were accorded was objectively less favorable than that accorded to other domestic or foreign investors, they have failed to demonstrate that they were accorded this treatment because of their nationality as required by Articles 1102 and 1103. The Respondent rejects the Investors’ interpretation of Articles 1102 and 1103 that, it argues, require the contracting parties to provide the “‘best’ treatment, i.e. treatment no less favorable than every single domestic investor”.
As I read it, the tribunal approached this aspect of the claim as follows (see paras. 685-725). Rather than compare the treatment of all domestic investors to that of all foreign investors in like circumstances, it compared the treatment of one foreign investor (Clayton/Bilcon) to several domestic investors who were in like circumstances. Because the treatment of the one foreign investor was worse than that of the domestic investors (and all of the other elements were also satisfied), the tribunal found a violation of national treatment. It did not directly address the "best treatment" point, but implicitly seems to have rejected Canada's view.
It's a long decision with complicated facts, and I've only given it a quick read, but that's how it appeared to me.
As I've said before, I'm skeptical of an approach to national treatment that does not look at the entire group of investors (or products). Here's an example to illustrate why, from the trade context. Let's say there was a U.S. automobile regulation that affected the imported Volkswagen Passat more negatively than it affected the domestically-made Ford Focus. Should that regulation violate the national treatment obligation based on this different treatment of products of different nationalities? To me, the answer is clearly no. You need to look at the entire range of "like" domestic and imported products. Of course, it's noteworthy that one imported product is treated worse than one domestic product, but all that evidence does is make me want to do a more comprehensive comparison to see if nationality-based discrimination actually exists. Selectively looking at evidence from just a few products or investors is not sufficient.
Arwel Davies has a new paper on this issue here. I've only gotten part way through his paper, but I think he might have a somewhat different view than mine in the investment context.
