Dual nationality refers to simultaneous possession of two nationalities1 by the same individual investor (natural person) or foreign companies (juridical persons).2 The foreignness of the “investment” is determined by the investor’s nationality in order to be subject to investment protections.3 The investor’s nationality determines from which treaties it may benefit.
The problem of dual nationality often arises in investor-State disputes in the jurisdictional phase4 and is usually settled through the application of traditional principles of international law,5 that do not seem to prohibit dual nationals from bringing claims against their own State.6 Nonetheless, the principle of have been referred to in order to determine the nationality of the investor in a case.7 Some tribunals have however refused to apply it.8 For a more in-depth analysis, see Dominant and Effective Nationality.
Dolzer, R. and Schreuer, C. (eds.), Principles of International Investment Law, 2nd ed., Oxford University Press, 2012.
Multiple nationality of investors refers to simultaneous possession of more than two nationalities by the same investor. Bilateral and regional investment agreements aim to provide benefits only to investors originating in the jurisdictions of treaty partners. According to World Investment Report 2016, more than 40 per cent of foreign affiliates worldwide have multiple passports. This fact implies that the nationality of investors in, and owners of foreign affiliates is becoming increasingly blurred. The blurring of investor nationality has important implications for national and international investment policies. The effectiveness of foreign ownership restrictions, for example, is called into question if a domestic majority owner is itself owned by other foreign investors; international agreements negotiated based on one bilateral dimension lose focus if treaty benefits de facto accrue to many nationalities.
David R. Aven, Samuel D. Aven, Carolyn J. Park, Jeffrey S. Shiolena, Giacomo A. Buscemi, David A Janney and Roger Raguso v. The Republic of Costa Rica, ICSID Case No. UNCT/15/3, Final Award, 18 September 2018; Enrique and Jorge Heemsen v. the Bolivarian Republic of Venezuela, PCA Case No. 2017-18, Award on Jurisdiction, 29 October 2019; Dawood Rawat v. Republic of Mauritius, PCA Case No. 2016-20, Award on Jurisdiction, 6 April 2018; Domingo García Armas, Manuel García Armas, Pedro García Armas and others v. Bolivarian Republic of Venezuela, PCA Case No. 2016-08, Laudo Sobre Jurisdicción, 13 December 2019; Michael Ballantine and Lisa Ballantine v. The Dominican Republic, PCA Case No. 2016-17, Final Award, 3 September 2019; Alberto Carrizosa Gelzis, Enrique Carrizosa Gelzis, Felipe Carrizosa Gelzis v. Republic of Colombia, PCA Case No. 2018-56, Award, 7 May 2021, paras. 183-188; Fernando Fraiz Trapote v. Bolivarian Republic of Venezuela, PCA Case No. 2019-11, Final Award, 31 January 2022, paras. 391, 395-398.
Eudoro Armando Olguin v. Republic of Paraguay, ICSID Case No. ARB/98/5, Award, 26 July 2001, para 61; Victor Pey Casado and President Allende Foundation v Republic of Chile, ICSID Case No. ARB/98/2, Award, 8 May 2008, para. 415; Rupert Joseph Binder v. Czech Republic, Award on Jurisdiction, 6 June 2007, para. 58; Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1, Interim Decision on Preliminary Jurisdictional Issues, 6 December 2000, paras. 35-36; Champion Trading Company and Ameritrade International, Inc. v. Arab Republic of Egypt, ICSID Case No. ARB/02/9, Decision on Jurisdiction, 21 October 2003, para. 57; Waguih Elie George Siag & Clorinda Vecchi v. Arab Republic of Egypt, ICSID Case No. ARB/05/15, Decision on Jurisdiction, 11 April 2007, para. 198; Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010, paras. 69-75.
The European Union nationality was not considered as one creating a situation of dual nationality. See:
Hydro Energy 1 S.à r.l. and Hydroxana Sweden AB v. Kingdom of Spain, ICSID Case No. ARB/15/42, Decision on Jurisdiction, Liability and Directions on Quantum, 9 March 2020, para. 464; OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain, ICSID Case No. ARB/15/36, Award, 6 September 2019, para. 357; Infracapital F1 S.à r.l. and Infracapital Solar B.V. v. Kingdom of Spain, ICSID Case No. ARB/16/18, Decision on Jurisdiction, Liability and Directions on Quantum, 13 September 2021, para. 222.
Carlos Sastre and others v. United Mexican States, ICSID Case No. UNCT/20/2, Procedural Order No. 2 (Decision on Bifurcation), 13 August 2020, para. 63; Alberto Carrizosa Gelzis, Enrique Carrizosa Gelzis, Felipe Carrizosa Gelzis v. Republic of Colombia, PCA Case No. 2018-56, Award, 7 May 2021, para. 181.
Article 25(2)(a) on natural persons contains positive and negative requirements. Positive being that the investor must have the nationality of the other Contracting State at the relevant time. Negative meaning that the investor cannot have the nationality of the host State at the relevant time,10 or even be controlled by nationals of the host State.11 According to this article, ICSID tribunals are allowed to hear claims by investors holding the nationality of a signatory State on the condition that they do not hold the nationality of the host State against which the claim is being brought. Article 25(2)(b) on juridical persons was interpreted as having the same limitation on dual nationals12 but this interpretation did not receive a full consensus by arbitral tribunals.13
Waguih Elie George Siag & Clorinda Vecchi v. Arab Republic of Egypt, ICSID Case No. ARB/05/15, Decision on Jurisdiction, 11 April 2007, para. 142; Ioan Micula and others v. Romania (I), ICSID Case No. ARB/05/20, Decision on Jurisdiction and Admissibility, 24 September 2008, para. 85; Abaclat and others (formerly Giovanna a Beccara and others) v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011, para. 257; Vladislav Kim and others v. Republic of Uzbekistan, ICSID Case No. ARB/13/6, Decision on Jurisdiction, 8 March 2017, paras. 188-189; Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010, para. 61.
To this extent, tribunals have barred claims from dual nationals having the nationality of the host State.14 The only exception permitted by the Centre concerns the situation in which, for the purpose of making its investment, a foreign investor was required to create a company under local law but that company is controlled by the foreign investor. In this case, Article 25(2)(b) of the ICSID Convention stipulates that the State may expressly agree to consider this local company as a foreign company.15 Another exception suggested in practice is if the exclusion of dual nationals would lead to an absurd result (i.e. when the host State applies the jus sanguinis rules for its nationality).16 See further Nationality of investor, Relevant date and Control/Ownership.
Champion Trading Company and Ameritrade International, Inc. v. Arab Republic of Egypt, ICSID Case No. ARB/02/9, Decision on Jurisdiction, 21 October 2003, para. 59; Waguih Elie George Siag & Clorinda Vecchi v. Arab Republic of Egypt, ICSID Case No. ARB/05/15, Award, 1 June 2009, para. 288; Nations Energy, Inc. and others v. Republic of Panama, ICSID Case No. ARB/06/19, Award, 24 November 2010, para. 376.
The majority of other arbitration rules do not provide for such a prohibition which is indicated in ICSID Rules. UNCITRAL Arbitration Rules do not regulate the issue of dual nationality. When the applicable rules are silent on the issue, tribunals have turned to the applicable international investment treaty.17 (See Sections IV and V).
Treaties may stipulate the determinative criterion in order to prevent further interpretations.18 As the lex specialis, they are considered as the source that trumps regarding the rules surrounding dual nationality.19 Some BITs incorporate a similar rule as ICSID Convention Article 25(2)(a). For instance, the Canada-Venezuela BIT expressly excludes dual nationals from its realm of protection and stipulates that an investor cannot possess the citizenship of the host State of the investment.
The question arises in case that an investment treaty is silent on the question of standing of dual nationals. In these cases, should dual nationals get protection as “investors” of both treaty parties, protection only as “investors” of the State of “effective” or “dominant” nationality, or no treaty protection at all?20
CAFTA-DR-USA (2004), Art. 10.28; Benin - Canada BIT (2013), Art. 1; Armenia – Korea, Republic of BIT (2018), Art. 1(viii)(b)(i); Morocco – Rwanda BIT (2016), Art. 1(2)(i); India- Uruguay BIT (2008), Art. 1(c); Singapore- Turkey FTA (2015), Art. 12.1; Iran, Islamic Republic of- Slovakia BIT (2016), Art. 1(3); US- Colombia TPA (2012), Art. 10.28; Oman –US FTA (2009), Art. 10.27; Nicaragua – Taiwan Province of China FTA (2008), Art. 10.28; Australia-Chile FTA (2009), Art. 2.1(o).
UNCITRAL Arbitration Tribunals have different points of view in this regard. The UNCITRAL tribunal of Eduardo Grebler, Guido Tawil and Rodrigo Oreamuno held that dual Venezuelan-Spanish nationals Serafín García Armas and his daughter, Karina García Gruber, had standing to sue Venezuela under the Spain-Venezuela BIT over the alleged expropriation of their food retail and distribution business in the country. The tribunal rejected the application of customary rules of nationality in the BIT sphere, and declined to inquire into the claimants’ effective or dominant nationality (see Garcia Armas and Garcia Gruber v. Venezuela, Decision on Jurisdiction). In the García Armas case, Venezuela relied on the customary international law principle of ‘effective and dominant’ nationality to argue that the claimants could not invoke their Spanish nationality against Venezuela because it was merely formalistic, in contrast with their deeper actual ties to Venezuela (Mr. García Armas was born in Spain in 1944, moved to Venezuela in 1961, acquired Venezuela nationality in 1972, and allegedly lost his Spanish nationality between 1978 and 2004; Ms. García Gruber was born in Venezuela in 1980 and obtained Spanish nationality in 2003).
See also Fernando Trapote v. Venezuela, Final Award:
Serafín García Armas and Karina García Gruber v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-03, Decision on Jurisdiction, 15 December 2014, for. 199; Fernando Fraiz Trapote v. Bolivarian Republic of Venezuela, PCA Case No. 2019-11, Final Award, 31 January 2022, paras. 258-259.
V. Interpretation of investment treaties by tribunals in the silence of the applicable arbitration rules
In Ballantine v. Dominican Republic the Tribunal used the test of “dominant and effective nationality” under the DR-CAFTA. In this case, the dispute revolved around the question of whether the Ballantines could demonstrate that their United States nationality was "dominant and effective." In a majority award, the Tribunal found that the claimants’ dominant and effective nationality was that of the Host State (Dominican Republic) and that the Tribunal therefore lacked jurisdiction to hear the dispute under CAFTA-DR. The DR-CAFTA is one of the few treaties to allow claims by dual nationals against one of the countries of their nationality (the host country) if and only if the claimant’s “dominant and effective nationality” is that of the non-host country (Article 10.28 of the DR-CAFTA).21 It should be noted that the Tribunal in this case established that the CAFTA-DR did not “prescribe [specifically] the factors that may be considered to determine the dominance and effectiveness."22 This appeared to be the first time that an international investment arbitral tribunal dealt with the “dominant and effective” test.23
Subsequent tribunals have applied the dominant and effective nationality test. See i.e.: Fernando Trapote v. Venezuela, Final Award.
Sánchez, G., Reflections on the first application of the “dominant and effective nationality” test in international investment arbitration, International Economic Law and Policy Blog, 16 September 2019; Fernando Fraiz Trapote v. Bolivarian Republic of Venezuela, PCA Case No. 2019-11, Final Award, 31 January 2022, paras. 391, 395-398.
In Serafin Garcia Armas and Garcia Gruber v. Venezuela, claims by dual nationals against Venezuela under investment treaties prompted various decisions. The arbitral tribunal upheld its jurisdiction over the claims on the basis that this case was not submitted to ICSID arbitration. A referral to the ICSID system in the BIT does not automatically entail an application of the restriction to dual nationals that can be found under Article 25 the of ICSID Convention.24 It was one of the first decisions dealing in detail with investment treaty claims by dual nationals against one of their States of nationality when the treaty is silent on the issue. While a domestic annulment procedure was ongoing before the French courts, the arbitration continued in parallel, and in April 2019 the arbitral tribunal rendered its final award in favor of the Claimants, finding that Venezuela had breached the Treaty.25 However, on 3 June 2020, the Paris Court of Appeal annulled the Serafín García Armas jurisdiction decision in full.26
See also Fernando Trapote v. Venezuela, Final Award.
Serafín García Armas and Karina García Gruber v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-03, Decision on Jurisdiction, 15 December 2014, paras. 191-195; Fernando Fraiz Trapote v. Bolivarian Republic of Venezuela, PCA Case No. 2019-11, Final Award, 31 January 2022, paras. 313-315, 317-321.
Serafín García Armas and Karina García Gruber v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-03, Judgment of the Paris Court of Appeal, 25 April 2017, paras. 24, 26, 52; Serafín García Armas and Karina García Gruber v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-03, Judgment of the French Court of Cassation, 13 February 2019, paras. 10-11; Serafín García Armas and Karina García Gruber v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-03, Award, 26 April 2019.
The Manuel Garcia Armas and others v Bolivarian Republic of Venezuela case with an UNCITRAL tribunal, had a different approach and claimed it did not have jurisdiction to hear claims against Venezuela.27 It interpreted the inclusion of the ICSID institution as one of the possible forums as excluding dual nationals from the definition of “investor” under the Spain-Venezuela bilateral investment treaty.28 Other tribunals followed the same interpretation.29
A different case of dual nationality may arise when one of the two States of a dual national claims against a third State and the latter pleads that the other nationality is the effective or dominant nationality. A substantial jurisprudence supports the principle of the inopposibility of the nationality of a third State in an international claim.30
Crawford, J., Principles of Public International Law, Oxford University Press, 2012, p. 1313
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