Similarity / In Like Circumstances

The phrase “like circumstances/similar situations”, also referred to as the “likeness” test, appears in the formulation of national treatment (NT) and most favoured nation (MFN) provisions.¹ See further National treatment and Most favoured nation treatment. 

Some treaties contain a narrower formulation, referring to “identical” circumstances/situations.² Other treaties, however, include no such language.³ Similar wording is spelled out in the World Trade Organization (WTO) agreements, referring to “like” products and services.⁴

The “likeness” test denotes that the allegedly discriminatory measures (in the context of national or most favoured nation treatment, arbitrary and/or discriminatory treatment, fair and equitable treatment and expropriation) adopted vis-à-vis a foreign investor or investment should be compared with those adopted towards a similarly situated national or foreign investor or investment (i.e. a comparator).⁵ 

Even in the absence of the “like circumstances” wording, particularly in provisions prohibiting discriminatory measures or the fair and equitable standard, tribunals assumed that the discriminatory treatment inquiry requires the identification of a similarly situated comparator(s).⁶ 

It is generally agreed that the determination of whether investors are similarly situated or in like circumstances is a fact and context-sensitive inquiry.⁷ 

Investors bear the burden of establishing that their investments are “in like circumstances” with the identified comparator(s).⁸ Some tribunals have held that once the investor establishes an appropriate comparator on a prima facie basis, the burden of proof may shift to the respondent to rebut the evidence.⁹

Tribunals have devised different criteria for determining a proper comparator. 

Some considered that a proper comparator is limited to investors or investments operating in the same business or economic sector.¹⁰ To this extent, in assessing “likeness”, tribunals take into account various factors including the competitive relationship between the claimant and the identified domestic or foreign comparator¹¹ (including the possible substitutability of the investors’ products),¹² the legal and factual circumstances of the investor or investment,¹³ and considerations of public policy/interest.¹⁴

More broadly, other tribunals compared the treatment accorded to the allegedly prejudiced investor or investment with all local producers.¹⁵

In particular, tribunals have refused to qualify the circumstances as similar where:

1. the investors participated in the same legal proceedings, but their respective situations differed;¹⁶
2. the investors had competing interests in the same industry, but their respective activities¹⁷ or the scale and scope of their operations differed;¹⁸ or
3. the investors operated in the same business sector, but the framework or type of their investments were different.¹⁹

If no “identical” comparator is found, the treatment accorded to the investor or investment could be compared to that accorded to a “less like” comparator.²⁰

On the other hand, where an identical comparator is identified, any “less like” comparator will be irrelevant.²¹

Case law is divided on the relevance of WTO case law. While some tribunals rejected the relevance of the test of “like products” as set out in Articles I and III of the General Agreement on Tariffs and Trade (GATT) for the determination of what constitutes “like circumstances” in the context of investment treaties,²² others have used this test as interpretive guidance, while, at the same time, acknowledging the autonomous and distinct nature of the “likeness” test as understood under investment treaties.²³ 

If the investor or investment is not found not to be “in like circumstances” to the identified comparator(s), no treaty breach for discrimination related standards may be established.²⁴

Dolzer, R. and Schreuer, C., Principles of International Investment Law, 2^nd ed., 2012.

Newcombe, A. and Paradell, L., Law and Practice of Investment Treaties: Standards of Treatment, 2009. 

Ortino, F., The Impact of Amicus Curiae Briefs in the Settlement of Trade and Investment Disputes, in Meessen, K.M. (ed.), Economic Law as an Economic Good: Its Rule Function and its Tool Function in the Competition of Systems, 2009, pp. 301-316.

Ziegler, A.R. and Gratton, L.P., Standards of Treatment, in Muchlinski, P.T., Ortino, F. and Schreuer, C. (eds.), The Oxford Handbook of International Investment Law, 2008, pp. 259-303.

Baetens, F., Discrimination on the Basis of Nationality: Determining Likeness in Human Rights and Investment Law, in Schill, S.W. (ed.), International Investment Law and Comparative Public Law, 2010, pp. 279-315.

Kurtz, J., The Merits and Limits of Comparativism: National Treatment in International Investment Law and the WTO, in Schill, S.W. (ed.), International Investment Law and Comparative Public Law, 2010, pp. 243-278.

Ortino, F., Non-Discriminatory Treatment in Investment Disputes, in Dupuy, P.M. and Others (eds.), Human Rights in International Investment Law and Arbitration, 2009, pp. 344-366.

Anozie, N., Legal Analysis of the Scope of ‘Like Circumstances’ Concept under NAFTA National Treatment of Investments Obligation, 2017. 

Dolzer, R., National Treatment: New Developments, in Making the Most of International Investment Agreements – A Common Agenda, Symposium Co-organized by ICSID, OECD and UNCTAD, 2005. 

Sesin, A., The Standard of National Treatment in the Investor-State Dispute Settlement Practice, Cambridge International Law Journal, 2017.

Kurtz, J., The Use and Abuse of WTO Law in Investor – State Arbitration: Competition and its Discontents, European Journal of International Law, 2009, pp. 749-771. 

Bjorklund, A.K., The National Treatment Obligation, in Yannaca-Small, K. (ed.), Arbitration Under International Investment Agreements: A Guide to the Key Issues, 2nd ed., 2018, pp. 532-561.