Nationality of Physical PersonsNationality of Physical Persons

Nationality and Investment Treaty Claims

London, Friday 6 May 2005

Devashish Krishan

Nationality and Investment Treaty Claims

London, Friday 6 May 2005

Devashish Krishan

Nationality of Physical PersonsNationality of Physical Persons

• 1875 – “I am an Englishman”

• Continental influence – Napoleonic Code

• World War I – nationality as dominant concept politically and legally

whereby individual (non-State entity) acquired the

standing/capacity/capability to derive international interests and rights

under international law

• No coherent international approach – failure of 1930 Hague

Convention

• BIT context – economically speaking, nationality crucial to the benefit

for the home State under the BIT

Proof of NationalityProof of Nationality

• International Tribunal is a judge of its own competence; can order

production of evidence

• No rules in ICSID Convention/UNCITRAL Rules/BITs

• Proposal in ICSID – To allow decision by Home State’s

Government to control would be to give too much power to the

Investor’s state

• Burden of Proof is on Claimant and claims are inadmissible in

absence of proof of nationality (Expropriated Religious Properties

award, 1920)

Proof of Nationality (Contd.)Proof of Nationality (Contd.)

• Absent coherent rules on nationality in a given legal system, int’l

tribunals have determined that persons have had the nationality

of a State on the basis of its own judgment, even though it may

not have been entirely clear whether the law of that State

regarded them as nationals (Cayuga Indians award (G.B.)/USA,

1926), and sometimes even when they were not regarded as

citizens for domestic purposes (Kahane (successor)/Parisi and

the Austrian State decision, 1929-30)

• Tribunals have declined jurisdiction on the basis of nationality

when the individual may have been regarded as a national for

domestic purposes (Soufraki/UAE award)

Proof of Nationality (Contd.)Proof of Nationality (Contd.)

• Nationality proof is a question of fact that arises when the question of law is answered in the affirmative – does the individual have the standing/capacity/capability to invoke BIT rights, including arbitration, under the applicable law? This is question of jurisdiction rationae materiae primarily, which is determined by an analysis of rationae personae.

• Distinct from the question of whether the Tribunal/ICSID Centre had jurisdiction rationae personae (to investigate Claimant’s standing as opposed to the question of standing itself). This question answered under the provisions of Article 25, ICSID or absence thereof – Can the Centre/Party transmit the claim to the contracting host State triggering the latter’s obligation to answer to the ICSID Secretariat/UNCITRAL arbitration?

Proof of Nationality (Contd.)Proof of Nationality (Contd.)

• The Tribunal in Soufraki/UAE, looked to Int’l law which points to

Municipal Law which points to relevant criteria. The Tribunal

looks to the fact of whether the potential Claimant satisfies such

criteria and adopts the finding as a matter of fact, not law.

• Therefore, nationality is determined as a question of international

law using Municipal law as a question of fact.

• No determination of the nationality concept as used domestically

is made – the individual’s status as a national for domestic

purposes remains unchanged. The Tribunal only makes a

determination on his/her status as a national for international

purposes.

X

Individual Initiates ClaimAgainst B

A B

BIT Party 1 – Home State(Claimant)

BIT Party 2 – Host State(Respondent)

Bilateral Investment Treatywith investor-State arbitration

X1 – Local CourtsNo Int’l Law esp. Economic

Law; maybe human rights andJus cogen rights

X2 – Int’l rightsStraightforward claimFeldman/Mexico

C

Any Third State

X3 – International interests/rightsSoufraki/U.A.E.

X4 – Dual national of A and BChampion Trading and others/EgyptIran/US Claims Tribunal Case A/18Canevaro claim, 1910 ICSID Convention Article 25(1)(a)

X5 – Dual national of A and CNottebohm caseFlegenheimer claimNorth Transsylavania Nationality caseOlguin/Paraguay

X6 – Dual national of B and C

X7 – Triple national of A, B and C

X8 – Stateless nationalCayuga Indians arbitrationKahane (successor) case

Multiple NationalityMultiple Nationality

• X4 to X7 are the only situations where interpretation is needed

• Nationality key that opens first door to consent by delimiting it

• Hurdles – (a) ICSID (positive and negative rule); (b) BIT (any additional

rules); (c) Other Int’l Law principles of nationality

• BIT/ad hoc arbitration – absent express provision, no limits on

jurisdiction in terms of nationality. Consent still necessary

• Outer limits of ICSID jurisdiction – agreement between individual and

host State as to his nationality not to be binding; Consent is the

cornerstone of ICSID jurisdiction

• “National of a contracting State” – means no question of theories of

“master” or “effective” nationality – minimum criteria to invoke

jurisdiction

“Effective Nationality” Theory“Effective Nationality” Theory

• “Effective Nationality” – Nottebohm Case: Expansive or narrow

view?

• “Effective link” should only operate in favour of defendant state with which the individual has a closer connection that with the Claimant state: the absence of an effective link is relevant to negating the existence of nationality only in particular circumstances.

End thoughtsEnd thoughts

• Is there a distinction between nationality for arbitral jurisdiction, particularly

ICSID, and for capacity/standing/capability to hold BIT rights, including

right to arbitrate?

• Soufraki – what was violated was the element of consent, not the element

of nationality in ICSID Article 25.

• X is a national of A and B (B being defendant State) – would the analysis

under ICSID Convention and BIT/UNCITRAL Rules ad hoc arbitration lead

to same result?

• Is the doctrine of effective nationality under Nottebhom dictum apposite to

BIT arbitration? Is it in harmony with the teleological purpose prescribed by

Article 31, VCLT?

CasesCases

• Cayuga Indians case (G.B. /USA), (1926) RIAA Vol. 6, 173.• Kahane (Successor)/Parisi and the Austrian State, Case No. 131,

Annual Digest 5 (1929-1930), 213.• Soufraki/United Arab Emirates, ICSID award.• Expropriated Religious Properties, (1913) RIAA Vol. 1, 7.• Feldman/Mexico, NAFTA Award.• Nottebohm case, ICJ Rep. 1955, 4.• Flegenheimer claim (USA/Italy) 1958 I.L.R. 91.• North Transsylvania Nationality case, 1971 I.L.R. 43.• Olguin/Paraguay, ICSID award.• Champion Trading and others/Egypt, ICSID award.• Case No. A/18, 5 Iran-U.S.C.T.R. 251.• Canevaro claim (Italy/Peru – 1910), RIAA Vol. 11, 397.