On 26 June 2026, the Swedish Supreme Court handed down its ruling in Case No. T 9380-24, answering a question that has long split international arbitral tribunals: can an investor rely on a most-favoured-nation (“MFN”) clause in an investment treaty to import a dispute resolution clause of another treaty?
Background
MFN clauses, common in bilateral investment treaties (“BITs”), oblige a host state to treat protected investors no less favourably than investors of any other country. This allows investors to invoke and rely on stronger protections that the host state might have (or later have) in place via other investment treaties with other states.
Arbitral tribunals, however, have long been divided over whether MFN clauses not only allow an investor to import substantive treaty protections, but also allow an investor to import another treaty’s more favourable dispute resolution provisions. If so, this could allow the investor to, for example, swap the seat of the arbitration to which a dispute would be subject. Some tribunals and scholars have found that this is possible, while others argue that a state’s consent to a dispute resolution forum is a separate matter and that such consent must be given expressly.
The case before the Swedish Supreme Court
In 2019, a dual UK-Georgian national, initiated an arbitration before the SCC Arbitration Institute (“SCC”) against Georgia under the UK-Georgia BIT, claiming damages connected to enforcement measures against his company. The treaty stipulated that disputes were to be resolved before the International Centre for Settlement of Investment Disputes in Washington (“ICSID”), not the SCC in Stockholm. However, the investor’s dual nationality made him ineligible to pursue claims against Georgia before ICSID, given that the ICSID Convention provides that nationals cannot pursue ICSID claims against their own countries. In a bid to overcome this rule, the claimant invoked the MFN clause of the UK-Georgia BIT, and sought to use that to import the SCC arbitration offered by Georgia in a different BIT, namely the Georgia-BLEU BIT.
The SCC appointed an arbitral tribunal, and in 2022 the arbitral tribunal found by a majority that it had jurisdiction to hear the case. Georgia challenged this decision and in November 2024, the Svea Court of Appeal reversed the arbitral tribunal’s decision, holding that equating ICSID and the SCC would, in practice, remove any meaningful limits on the application of MFN clauses and hollow out the treaty’s chosen, exclusive forum.
The Swedish Supreme Court has now tried the case.
The key legal question
Does an MFN clause in a BIT also carry over to dispute settlement mechanisms, so as to supply consent to a dispute resolution mechanism not laid out in the applicable BIT, but in a different, comparator treaty (here, the SCC rather than ICSID)?
The Swedish Supreme Court’s ruling
In its judgment, the Supreme Court held that an MFN clause, in principle, can carry over to dispute resolution provisions and supply a state’s consent to a different forum given in a different treaty. However, certain criteria must be fulfilled, according to the Court.
In summary, and somewhat simplified:
- Firstly, the Court noted that a state cannot be subjected to arbitration without its unequivocal consent. But, according to the Court, such a consent does not need to be given in any particular form. The Court thereby found that, in principle, it is possible for a state to consent to a certain type of arbitration set out in a different treaty, by way of an MFN clause. The Court says that such an application can be a “foreseeable consequence of the state’s own actions”.
- Secondly, the Court emphasised that an assessment must be made on a case-by-case basis, considering the circumstances and the individual treaty at hand. The Court stated that whether an MFN clause applies to the dispute resolution provision is, thus, a question of treaty interpretation under the principles laid out in Articles 31–32 of the Vienna Convention. An express indication that the clause does (or does not) extend to dispute resolution is normally decisive, according to the Court. In this context, it noted that the scope of MFN clauses is normally limited to the types of rights set out in that same treaty (referred to as the principle of ejusdem generis). Yet, the Court stated where both the applicable treaty and comparator treaty are BITs that contain ISDS clauses which refer to well-established arbitral mechanisms, the ejusdem generis principle will rarely bar such an application.
- Thirdly, it needs to be determined which dispute resolution mechanism is more favourable. Here, the Court stated that such a test is to be made using objective standards, without consideration to the individual investor’s personal preferences. Further, it held that there should be an overall assessment of whether the dispute resolution mechanism of the comparator treaty is more favourable, stating that it is not sufficient that isolated elements of the mechanism may be more favorable. Here, the Court noted that one established arbitral mechanism can rarely be considered objectively more favourable than another; but a treaty that offers a choice between several fora is, generally, more favourable than one confined to a single forum – particularly where the comparator treaty’s options also include the same forum set out in the applicable treaty.
- Lastly, the Court explained that where the comparator treaty is more favourable, the investor automatically and immediately obtains that treatment and may commence arbitration as provided there. Yet, the Court noted that the comparator treaty’s mechanism then applies in its entirety, including any conditions that are more burdensome for the investor than those of the applicable treaty.
Applying these general holdings to the case at hand, the Supreme Court found the following:
- In interpreting the applicable treaty (the UK-Georgia BIT), the Court gave particular weight to the fact that the wording of the MFN clause explicitly stated that the clause was to be applied to an enumerated list of articles, which included the BIT’s dispute resolution mechanism. Thus, the Court found that the MFN clause did cover also dispute resolution mechanisms.
- When comparing the mechanisms of the two different treaties, the Court found that while “the ICSID system has certain distinctive features”, SCC arbitration is still “of the same nature” and thereby comparable – meaning that the MFN clause of the UK-Georgia BIT can be used to import the SCC arbitration
mechanism granted in the Georgia-BLEU BIT.
- Lastly, when assessing whether the dispute resolution mechanism in the Georgia-BLEU BIT is in fact more favourable, the Court considered three factors:
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- The comparator BIT gave investors a choice of several fora, while the UK-Georgia BIT only provided for ICSID arbitration. In this aspect, the Court found that this made the comparator (Georgia-BLEU) BIT more favourable;
- The difference in so-called cooling-off period, where the comparator BIT notably provided for a longer period and thus was considered less favourable by the Court; and
- The fact that the UK-Georgia BIT also provided for an option to use mediation, unlike the comparator BIT. Also in this respect, the Court considered the UK-Georgia BIT more favourable.
- Yet, in spite of two out of three factors pointing towards the comparator BIT being less favourable, the Supreme Court still found that, on balance, the comparator BIT was more favourable, clearly giving particular weight to the choice of arbitral fora. Here, the Court noted for an investor in the claimant’s position (i.e. having also Georgian citizenship), it would not have been able to pursue an arbitration claim if it were not for the choice of forum (given that ICSID arbitration is not possible when being a citizen of the host state, see Art. 25 of the ICSID Convention).
- The Swedish Supreme Court held that Article 3 of the Georgia–UK BIT, read together with Article 10 of the Georgia–BLEU BIT, could give the SCC arbitral tribunal jurisdiction over the dispute. However, it left it to the Court of Appeal to determine whether the specific requirements in the Georgia–BLEU BIT were satisfied, remitting the case to the Court of Appeal.
Why this matters
Even if the Supreme Court emphasised that every treaty must be interpreted individually, and provided prongs for how the assessment is to be made, the Court’s ruling establishes a wide, quite generous interpretation of MFN clauses with respect to dispute resolution mechanisms under Swedish law.
Although Sweden has no formal doctrine of stare decisis, the Swedish Supreme Court’s sole purpose is to provide guiding precedents, and Swedish courts tend to follow the Swedish Supreme Court’s case-law faithfully. As such, arbitral tribunals seated in Sweden need to consider this new judgment when assessing its own jurisdiction.
This case may also have ripple effects beyond Sweden, given that the SCC is one of the world’s leading arbitration institutes and many of its arbitrations are seated in Sweden. The SCC is provided as a forum for investor-state disputes in 121 BITs and in the Energy Charter Treaty. Also considering the wider debate on this question under international law, the Swedish Supreme Court’s decision may be invoked as a non-binding, yet persuasive, authority on the application of MFN clauses before arbitral tribunals and courts globally. Nevertheless, we expect the wider debate to continue.
