chapter  7
The relative standards of treatment
Pages 54

An important feature of international investment law is promoting cross-border capital flow by means of host states’ offers of protection to foreign investors and investments. Bilateral investment treaties (“BITs”) and the investment chapters of free trade agreements (“FTAs”), as well as multilateral treaties involving foreign investments contain, almost without exception, most-favored-nation (“MFN”) treatment and national treatment (“NT”).1 Both of these are actually relative standards of treatment because by nature they provide foreign investors and their investments with treatment equivalent to that provided to either parties from a third country or nationals of the host state. In other words, even though country X and country Y may both provide foreign investors MFN treatment and NT, the actual standard of such treatment may differ in the two countries. By offering a standard of treatment that differs from that offered by other countries, a host state is not in violation of international obligations. As such, the relative standards of treatment differ from the absolute standards of treatment, which are judged against international standards under international law, including BITs.