(i) Subject-matter scope: investors/investments

MFN treatment under IIAs generally extends to investors and

their investments. However, the MFN treatment clause may restrict
the beneficiaries, for instance, by extending MFN treatment only to
investors. The approach taken has important consequences given
that investors and investments, although directly interlinked, are
formally different subjects and may enjoy different rights under the
IIA.

(ii) Substantive scope: pre/post-establishment

Pre-establishment MFN treatment covers the entry conditions of
investment, conferring rights to the investor both at the moment the
investment is effectively materializing and prior to that point, i.e.
while it is still in the making. The host State shall accord the
covered foreign investor treatment which is no less favourable than
that it accords to any third foreign investor of different nationality as
regards any such entry conditions (for instance, access to given
sectors of the economy or limits of foreign equity participation in
specific activities). The obligation applies across the board, which
means that no existing or future measures may discriminate the
covered investor another foreigner, unless specific
reservations are taken by the Contracting Parties. The conditions
applicable to entry and establishment will be defined by the IIA and

perspective, the conditions to entry become more transparent and

predictable, as the entry regime is regulated by the IIA itself and not
subject to changes.7 MFN treatment in the pre-establishment phase
seeks to avoid preferential access or a selective liberalization that
would benefit some foreign investors and not others. Excluding
some investors from the benefit of MFN treatment, could create

UNCTAD Series on International Investment Agreement II