In 2015, The Only Way is Down (TOWID) was incorporated in the State of Uluz as a limited liability public company. The company's directors did not seek listing on any stock exchange. The company's shares were owned by two Uluz nationals (Mr. Madlingozi and Mr. Asad) and two American nationals (Mr. MacDonald and Mr. Jennings). The Uluz nationals each held 26 percent of the shares and the American nationals held 24 per cent each. All four men sat on the board of the company, but Mr. Jennings was appointed Chair of the Board for a five year period and held the casting vote. Mr. Madlingozi and Mr. Asad are the directors of the company and are responsible for daily operations and Mr MacDonald and Mr. Jennings live in New York with their families. The board meets every two to three weeks by Skype and four times a year in South Africa given the close involvement of the two American shareholders in the business. TOWID operates a diamond mine in an outer province of Uluz.

Women's Act 2018 In January 2018, and for the first time, an opposition government was elected on a platform of improving human rights and social democracy. One of its campaign promises was to require affirmative action quotas for women. The country had a well-developed business sector but only 10 percent of management and 3 percent of board members were women. In January 2018, the Women's Act was passed by the Uluz Parliament. It required that 40 per cent of board directors be women. The rule applied to publicly listed companies and other public companies with either an annual turnover of $US250 million or an independently assessed market capitalization that exceeded $US500 million. The legislation required that board membership reflect the new law's requirements by 31 December 2020. If a relevant company had not achieved the quota by this date, a penalty of $US 20 million a year for noncompliance would be imposed or the State could choose not to award necessary regulatory approvals, including licenses. By 2020, a company would lose its incorporated status if it did not comply with the law.

National Treatment in U.S. Model BIT:

1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

Most Favored Nation Treatment in U.S. Model BIT:

1.Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

1. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investment.

Questions:

Based on your knowledge of international investment law and quoted provisions above:

• Does the Women's Act 2018 violate the principle of national treatment (on the grounds that it was easier for domestic investors to conform to the new rule) (10 pts)?
• Does the Women's Act 2018 violate the most-favored nation principle (since the investment treaty between Uluz and China explicitly exempts Chinese companies from any performance requirement) (15 pts)?