The Jurisdiction-Limiting MFN Clause
Kara S. Smith
Most-favored-nation (MFN) provisions have formed the center of a jurisdictional dispute that has plagued international arbitration for the past two decades. Since the Maffezini decision in 2000, holding that MFN clauses can be used to import jurisdictional provisions, the international arbitral system has seen a long succession of inconsistent and irreconcilable arbitral decisions, some following Maffezini’s approach and others rejecting it. The result is a jurisdictional crisis in international arbitration that has consumed opposing parties’ time and money, undermined the international arbitral system’s legitimacy, and called into question the very reasons for the system’s existence.
However, a glimmer of hope has emerged: A new variety of MFN clauses has begun to appear that explicitly specify that they do not apply to procedural issues. Despite their potential to solve one of international arbitration’s most intractable problems, these jurisdiction-limiting MFN clauses have largely escaped serious analysis. This Note fills this gap in scholarship by providing the first academic analysis focused exclusively on these new jurisdiction-limiting provisions, analyzing the trend towards the increased use of these provisions, the form the provisions take, their reception in arbitrated cases, and the implications that these provisions carry.
