The Swedish Supreme Court has set aside a Svea Court of Appeal decision which had denied jurisdiction to an SCC arbitral tribunal in an investment treaty dispute between ZO and Georgia. ZO, who holds both British and Georgian nationalities, commenced an SCC arbitration alleging Georgia had breached the UK–Georgia bilateral investment treaty (“<span class="news-text_medium">BIT</span>”). The BIT provides exclusively for ICSID arbitration. However, ICSID rules do not permit a dual national to bring a claim against one of their states of nationality.
ZO therefore relied on the BIT’s most favoured nation (“<span class="news-text_medium">MFN</span>”) clause to invoke the dispute settlement provisions of the Belgium–Luxembourg Economic Union–Georgia BIT. The latter treaty permits arbitration before the SCC Arbitration Institute, among other available forums.
In its jurisdictional award, the SCC tribunal found it had jurisdiction on the basis of the MFN clause in the UK–Georgia BIT. Georgia then applied to the Svea Court of Appeal, seeking, among other relief, a declaration it had not consented to SCC arbitration.
The Court of Appeal held the tribunal lacked jurisdiction. In its view, the MFN clause could not be used to import the dispute resolution mechanism in the Belgium–Luxembourg Economic Union–Georgia BIT. ZO appealed to the Supreme Court.
The Supreme Court reversed the Court of Appeal decision. It held where the base treaty provides only one arbitral forum, while the comparator treaty gives the investor a choice of several forums, the ability to choose is objectively more favourable. This was particularly so because the forum available under the base treaty also remained available under the comparator treaty. The Court concluded Georgia’s consent to SCC arbitration resulted from the combined operation of the MFN clause and the more favourable dispute settlement provision in the comparator treaty.
The Supreme Court emphasised an investor relying on a dispute settlement clause in a comparator treaty must comply with the mechanism in full, including all procedural conditions-precedent to arbitration. As the Court of Appeal had not considered whether those requirements under the Belgium–Luxembourg Economic Union–Georgia BIT had been satisfied, the Supreme Court remitted the case to that court.
The ruling confirms an MFN clause can lead an investor to a different arbitral forum. The Court regarded this as a foreseeable consequence of a state’s treaty-making. The particular wording of the MFN clause remains decisive, however, in determining the scope of the state’s consent to arbitrate.
<span class="news-text_medium">Case:</span> <span class="news-text_italic-underline">ZO v Georgia</span>, Case No. T 9380-24, Swedish Supreme Court, 26 June 2026 (Swedish language).
