The interpretation of Article 1105 of the North American Free Trade Agreement or the NAFTA has generated and will generate many controversies regarding the meaning of its first paragraph. Given this provision's open language, the controversies and doubts are understandable. According to Meg N. Kinnear, Andrea Bjorklund and John Hannaford, the positions regarding the notion of the objective standard can be summarized as follows: states that are traditionally capital exporters support the notion of an objective standard implying a minimal level of protection for their individuals investing abroad. On the other hand, less developed states support the theory according to which the protection provided to foreign investors should, at most, attain the level of protection provided to nationals of the host country. The difficulty of the NAFTA's provision lies in its novelty (which implies interpretations and clarifications) and the determination of its place among other standards and concepts.
[...] In the same way, even though the interpretation of Article 1105 is by nature evolving, when investors take their decision based on the initial meaning of this article, the latter should be applied to their potential dispute and not the meaning as it may follow from different Notes of Interpretation. Once again, the difficulty lies in the fact that the Notes of Interpretation may be viewed as expressing policy concerns and choices (which was clearly the case for the 2001 Notes) and may have more the nature of amendments rather than the nature of simple clarifications. [...]
[...] From a logical point of view, one might be more septic towards this position: after all, BITs are meant to define higher standards of protection and a treaty such as NAFTA should be interpreted according to the principles mentioned in the Vienna convention. It appears that an extensive interpretation of Article 1105 changes the very nature of the NAFTA treaty and goes beyond its aims. For these reasons, the Notes of Interpretation dated July appear to have more the nature of an amendment than of a simple interpretation and clarification. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
