CONTEMPORARY EURASIA VIII (2) ContEurVIII2 | Page 14

CONTEMPORARY EURASIA VIII (2)
batch of Chinese BITs (most of the BITs signed before 1995) follow the
practice adopted in the first Chinese Model BIT 39 and do not contain an
NT clause. Statistically, less than half of all Chinese treaties contain an
NT clause. The Armenia – China BIT follows the earlier Chinese BIT
practice and does not contain an NT clause. 40 The absence of an NT
clause allows both of the contracting parties to maintain full discretion
upon providing a differential level of treatment and protection to
domestic and foreign. 41 Thus, it does not guarantee that foreign investors
will not be discriminated against compared to domestic companies.
Most-Favoured-Nation Treatment Clause
The Most-Favoured-Nation (MFN) clause ensures a level playing
field and the equality of competitive conditions among foreign investors
that seek to make investments in a host state, by eliminating
discrimination based on national considerations. 42 MFN clauses ensure
that the host state provides not less favorable treatment to investors
originating from a foreign country than is provided to any other third
state in the agreed space of relation covered by the treaty. 43 MFN is a
relative standard, meaning that the scope of the clause is based on the
host state’s conduct towards third state investors. 44 Thus, as soon as the
state provides more favorable treatment to a third state, it is automatically
extended to all the other states that it has a treaty with. Consequently, if
the state does not provide better treatment to any third state, the MFN
clause does not have any practical importance.
The BITs signed between China and Armenia contains an MFN
clause. However, it has limitations that can significantly restrict the scope
of MFN clauses. First of all, the Armenia-China BIT adopts a post-
establishment MFN clause, which applies only to investments that have

treatment for foreign investment in China: A changing landscape," ICSID review 27, no. 1
(2012): 120-144, etc.
39 First Model BIT has been adopted by MOFCOM in the early 1980s.
40 Armenia – China BIT (1992).
41 Lei Cai, "Where does China Stand: the Evolving National Treatment Standard in BITs?"
The Journal of World Investment & Trade 13, no. 3 (2012): 374.
42 UNCTAD, Most-Favored-Nation Treatment (UNCTAD Series on Issues in
International Investment Agreements II, New York and Geneva, 2010, 30).
43 Organisation for Economic Co-operation and Development. International investment
law: a changing landscape; a companion volume to international investment perspectives.
OECD, 2005: 128.
44 Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law
(Oxford University Press, 2012, 206).
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