In the case at hand, an investor commenced arbitration against Georgia, relying on the Bilateral Investment Treaty (BIT) between the U.K. and Georgia. The BIT in question provides for disputes to be resolved before ICSID. However, because the investor holds dual citizenship in both the United Kingdom and Georgia, ICSID’s jurisdiction is restricted.
Yet, by virtue of the Most-Favoured-Nation (MFN) clause in the BIT, the investor sought to invoke the dispute resolution clause of a different treaty (the Georgia-BLEU BIT) and initiated arbitral proceedings before the SCC Arbitration Institute, seated in Stockholm, thereby attempting to bypass the jurisdictional limitations of ICSID.
The SCC arbitration panel ruled that it had jurisdiction to try the case. Georgia then filed a motion with the Svea Court of Appeal in Stockholm, asking the court to rule that the arbitral tribunal lacked jurisdiction. Georgia argued, inter alia, that its standing offer in the BIT does not extend to SCC arbitration and cannot be broadened through the MFN clause.
In November 2024, the Svea Court of Appeal rendered its judgment and sided with Georgia, finding that the MFN clause could not be construed as importing a dispute resolution provision from a different treaty. This decision has also been reported in GAR.
The Swedish Supreme Court is expected to address the question of whether an MFN clause extends to dispute settlement so as to confer consent to a different arbitral forum (i.e., SCC instead of ICSID).
For investors seeking to rely on arbitration seated in Sweden, the Supreme Court’s ruling may be highly influential: it will clarify how Swedish courts define the limits of the MFN clause in this context, and may influence strategies for investment treaty arbitration in the future.
In addition, the case is likely to provide guidance on an important issue of international investment law. International jurisprudence is somewhat divided with respect to the scope and application of MFN clauses – see e.g. the International Law Commission’s report from 2015.
Vinge’s International Disputes team is monitoring the case closely.
James Hope,
Kateryna Lazarchuk,
Nils Ivars
