Academic journal article Suffolk Transnational Law Review

Passport, S'il Vous Plait? Investment Treaty Protection and the Individual Investor's Citizenship

Academic journal article Suffolk Transnational Law Review

Passport, S'il Vous Plait? Investment Treaty Protection and the Individual Investor's Citizenship

Article excerpt

When contemplating the protections afforded to private investors by Free Trade Agreements (FTAs) or Bilateral Investment Treaties (BITs)--and the concomitant right to pursue investor-state arbitration before bodies such as the International Centre for Settlement of Investment Disputes (ICSID)--we usually think of rights and claims held by corporate investors. The recent flurry of ICSID jurisprudence and literature on the topic of corporate nationality, (1) however, has overshadowed another powerful source of BIT/FTA protection, namely, rights held by individual investors.

This article will focus on the evolution of ICSID and other international jurisprudence concerning an individual investor's ability to bring investor-state claims. It will reveal the evolution of a relatively coherent and predictable framework for determining whether a natural person is entitled to protection under applicable BITs, FTAs, or other sources of international economic law.

I. INDIVIDUAL INVESTOR RIGHTS: AN OVERVIEW

Historically, individual claimants have played an important role in developing international investment law. Several of the more important cases of the Permanent Court of International Justice and International Court of Justice (ICJ) on investor protection were "diplomatic protection" claims brought by states on behalf of individual investors. (2) Numerous cases before "mixed claims" or ad hoc commissions were also brought by or on behalf of individuals. (3) During the 1980s, the Iran-United States Claims Tribunal occasionally adjudicated cases where claimants were individuals, not corporations. (4)

Claims by natural persons also occupy an important place in ICSID arbitration. (5) According to the ICSID website, of approximately 152 concluded cases, 17 involved individuals as the sole or lead claimant. Currently, 17 pending ICSID cases (of a total of 122 pending) involve an individual as the sole or lead claimant. (6) In several other ICSID cases, an individual claimant has proceeded jointly with a corporate claimant. (7)

The advent of the ICSID/BIT arbitral system has largely eclipsed the past system of states pursuing "diplomatic protection" claims. Nevertheless, such cases still do arise from time to time. In Ahmadou Sadio Diallo, (8) the Republic of Guinea, exercising its right of diplomatic protection in respect of one of its individual citizens, brought claims against the Democratic Republic of Congo (DRC) based on its alleged mistreatment of an individual Guinean investor--including the DRC's alleged expropriation of a Congolese company owned by that citizen. The ICJ held that it had jurisdiction to adjudicate certain of these claims, (9) but candidly acknowledged that today "the role of diplomatic protection [is] somewhat faded, as in practice recourse is only made to it in rare cases where treaty regimes do not exist or have proved inoperative." (10)

The availability of investment protection for an individual often depends on showing that he/she has a particular nationality. Over the last sixty years, various cases have addressed the applicable test for ascertaining an investor's nationality. In the last decade, these rules have been highly tested and refined in the ICSID context.

II. DEVELOPMENT OF RULES CONCERNING CITIZENSHIP AND NATIONALITY OUTSIDE OF THE ICSID CONTEXT

A. The Nottebohm Case and the "Effective Link" Test

The 1955 Nottebohm Case (11) is perhaps the best known international case to address individual investor nationality. In the early part of the twentieth century, Mr. Nottebohm, a German citizen, emigrated to Guatemala and later acquired numerous investments there. In October 1939, shortly after World War Two began in Europe, Mr. Nottebohm purported to relinquish his German citizenship and adopted that of a neutral country, Liechtenstein, without ever having established a residence in Liechtenstein. But Mr. Nottebohm was not treated as a neutral by the Guatemalan government. …

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