The topic of the most-favoured-nation clause was first raised in 1964 when the Commission was examining the question of treaties and third States. After considering the matter, the Commission concluded that it did not think it advisable to deal with the most-favoured-nation clause in the codification of the general law of treaties, although it felt that such clauses might at some future time appropriately form the subject of a special study.

Extracts from The Work of the International Law Commission, 6th ed., vol. 1

At its nineteenth session, in 1967, in view of the manageable scope of the topic, of the interest expressed in it by representatives in the Sixth Committee and of the fact that the clarification of its legal aspects might be of assistance to the work of the United Nations Commission on International Trade Law, the Commission decided to place on its programme of work the topic of the most-favoured-nation clause in the law of treaties.

By resolution 2272 (XXII) of 1 December 1967 (E, F, S, R, C, A), the General Assembly recommended that the Commission should study the topic of most-favoured-nation clauses in the law of treaties.

The Commission considered this topic at its twentieth, twenty-first, twenty-fifth, twenty-seventh, twenty-eighth and thirtieth sessions, in 1968, 1969, 1973, 1975, 1976 and 1978, respectively. The Commission appointed Endre Ustor and Nikolai A. Ushakov as the successive Special Rapporteurs for the topic at its nineteenth and twenty-ninth sessions, in 1967 and 1977, respectively. In connection with its consideration of the topic, the Commission had before it the working paper and reports of the Special Rapporteurs, [1]  information provided by Governments and international organizations [2]  as well as a document prepared by the Secretariat. [3]  

At its twentieth session, in 1968, after a general discussion on the matter, the Commission instructed the Special Rapporteur, Mr. Ustor, not to confine his studies to the domain of international trade but to explore the major fields of application of the clause. The Commission considered that it should clarify the scope and effect of the clause as a legal institution in the context of all aspects of its practical application.

The Commission proceeded with the first reading of the draft articles at its twenty-fifth, twenty-seventh and twenty-eighth sessions, in 1973, 1975 and 1976. At its twenty-eighth session, in 1976, the Commission decided to transmit the draft articles adopted on first reading, through the Secretary-General, to Governments of Member States for their observations in accordance with articles 16 and 21 of its Statute.

The General Assembly, in resolution 31/97 of 15 December 1976 (E, F, S, R, C, A), welcomed the completion of the first reading of the draft articles and recommended that the Commission should conclude the second reading of them at its thirtieth session in the light of comments received from Member States, from organs of the United Nations which had competence on the subject matter and from interested intergovernmental organizations. This recommendation was reiterated by the Assembly in its resolution 32/151 of 19 December 1977 (E, F, S, R, C, A).

At its thirtieth session in 1978, the Commission re-examined the draft articles on the basis of the first report submitted by the new Special Rapporteur, Mr. Ushakov, [4]  comments received from Member States and international organizations and proposals submitted by certain members of the Commission for additional articles as follows: article 21 bis, “The most-favoured-nation clause in relation to arrangements between developing countries”; [5]  article A, “The most-favoured-nation clause and treatment extended in accordance with the Charter of Economic Rights and Duties of States”; [6]  article 21 ter “The most-favoured-nation clause and treatment extended under commodity agreements”; [7]  article 23 bis “The most-favoured-nation clause in relation to treatment extended by one member of a customs union to another member” [8]  and article 28 entitled “Settlement of disputes” with an annex. [9]

At the same session, the Commission adopted the final text of thirty draft articles, with commentaries, on most-favoured-nation clauses. [10]  

In considering the relationship between the most-favoured-nation clause and the different levels of economic development, the Commission found that the operation of the clause in the sphere of economic relations, with particular reference to the developing countries, was not a matter that lent itself easily to codification of international law in the sense in which that term was used in article 15 of the Statute of the Commission, because the requirements for that process described therein, namely, extensive State practice, precedents and doctrine, were not easily discernible. The Commission, therefore, attempted to enter into the field of progressive development by adopting, inter alia, article 24, which was based on the proposal for a new article 21 bis mentioned above. The Commission, however, did not agree on the appropriateness of including in its final draft further provisions based on the two proposals for additional articles A and 21 ter and decided instead to bring their texts to the attention of the General Assembly so that Member States might take them into account as appropriate when undertaking the final codification of the topic. With regard to the question of most-favoured-nation clauses in relation to customs unions and similar associations of States, on which a proposal for a new article 23 bis had been submitted, the Commission, bearing in mind the inconclusiveness of the comments made thereon and the lack of time, agreed not to include an article on a customs union exception in the final draft. It was understood that the silence of the draft articles could not be interpreted as an implicit recognition of the existence or non-existence of such a rule but should, rather, be interpreted to mean that the ultimate decision was one to be taken by the States to which the draft was submitted, at the final stage of the codification of the topic. Likewise, the Commission decided not to include in its final draft a provision on the settlement of disputes such as that contained in the proposal for an additional article 28 but to refer the question to the General Assembly and Member States, and, ultimately, to the body which might be entrusted with the task of finalizing the draft articles. [11]

The Commission decided, in conformity with article 23 of its Statute, to recommend to the General Assembly that the draft articles should be recommended to Member States with a view to the conclusion of a convention on the subject. [12]

The General Assembly, by its resolution 33/139 of 19 December 1978 (E, F, S, R, C, A), inter alia, invited all States, organs of the United Nations which have competence on the subject matter and interested intergovernmental organizations to submit their written comments on the draft articles on most-favoured-nation clauses adopted by the International Law Commission as well as on those provisions relating to such clauses on which the Commission was unable to take decisions. The Assembly also requested States to comment on the Commission’s recommendation regarding the conclusion of a convention on the subject. The Assembly reiterated these invitations at its thirty-fifth, thirty-sixth, thirty-eighth and fortieth sessions, in 1980, 1981, 1983 and 1985. [13]

By its decision 43/429 of 9 December 1988, the General Assembly, noting the complexity of codification or progressive development of the international law on most-favoured-nation clauses, and considering that additional time should be given to Governments for thorough study of the draft articles and for determining their respective positions on the most appropriate procedure for future work, decided to include the item in the provisional agenda of its forty-sixth session, in 1991.

The General Assembly, at its forty-sixth session, in 1991, gave further consideration to the topic. In its decision 46/416 of 9 December 1991, the Assembly, having noted with appreciation the valuable work done by the Commission on the most-favoured-nation clauses, as well as the observations and comments of Member States, of organs of the United Nations, of the specialized agencies and of interested intergovernmental organizations, decided to bring the draft articles on most-favoured-nations clauses, as contained in the report of the Commission on the work of its thirtieth session, [14]  to the attention of Member States and interested intergovernmental organizations for their consideration in such cases and to the extent as they deemed appropriate.

---