Standing refers to the litigants’ legal interest in advancing or defending a particular claim.1 It entails an inquiry into whether it is appropriate for the parties to appear on their respective ends of the proceedings, in light of the circumstances of the substantive relationship underlying the dispute.2
II. Relation to jurisdiction ratione personae and admissibility of claims
Tribunals usually treat standing as closely related to jurisdiction ratione personae, as the State’s consent to arbitration typically frames the claimant’s standing.3 In ICSID cases, tribunals normally consider the issue also in light of Article 25 of the ICSID Convention, which provides that “[t]he jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State . . . and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre.”4 Whether a determination of lack of standing is a matter going to the jurisdiction of the tribunal5 or the admissibility of the claim6 is not settled.7
III. Standing of investors in international investment arbitration
A. Covered investors who have made a covered investment
The standing of investors typically depends on the existence of a legitimate interest in prosecuting specific claims.8 Tribunals have predominantly upheld claimants’ standing upon finding that the claimant is an investor, national of another contracting State (see Nationality of Investor) or otherwise covered by an investment agreement or domestic investment protection law, and that the investment is likewise protected under such applicable treaty9 or domestic law.10 Tribunals occasionally inquire also into the claimant’s relationship with the damages claimed,11 showing special caution when the claimant’s connection to such damages appears to be too remote.12
B. Privity of contract
Investment tribunals have almost unanimously held that shareholders have standing to appear as claimants in investment arbitration proceedings involving subsidiaries incorporated in the territory of the respondent state.14 Absent treaty language to the contrary,15 whether the shareholding is direct or indirect,16 or represents a majority or minority stake17 is normally viewed as being immaterial to the issue of standing. The extent of such standing,18 however, has led to some debate. Some tribunals have allowed shareholders to claim for losses suffered by their subsidiaries, holding that such losses entail a dollar-for-dollar injury to the claimant’s investment, as made through the local subsidiary.19 Other tribunals have limited shareholders’ standing to claim for damages suffered by the subsidiary only to the extent that such damages constitute also a direct damage to the shareholder, normally manifested as a diminution in value of the claimant’s shares.20
D. Critial date
The relevant date to assess the jurisdiction of a tribunal under international law is that of the initiation of the proceedings and subsequent developments do not deprive a tribunal of jurisdiction.21 This general rule has been applied by investment tribunals to assess the standing of claimants.22
E. Continuous ownership
It has been debated whether–as a condition of standing–the investor must own the investment on the date of initiation of the proceedings. Tribunals have generally answered that question in the negative, finding that the claimant must have controlled the investment at the time of the measures complained of in the arbitration, regardless of whether it is still in control of the investment at the moment of institution of the proceedings, or thereafter.23 A minority view, however, has held that standing is contingent upon the claimant’s ownership of the investment at the time of the institution of arbitral proceedings.24 Some tribunals have criticised this minority approach as problematic: on that view, the continuous-ownership requirement has no basis on the ICSID Convention or, generally, on the applicable treaties; and application of that rule would deny adequate recourse to investors claiming compensation from expropriation or measures tantamount to expropriation.25
F. Beneficial ownership
The holder of a beneficial interest in an investment has standing to claim for losses arising out of damages to such investment. Authority is split as to whether the beneficial owner’s standing excludes that of the holder of mere title over the investment, e.g., a trustee.26 Some tribunals have found that only the beneficial owner has standing,27 whereas others, finding that no requirement of beneficial ownership exists generally in international investment law, have also recognized standing with respect to the title holder.28
G. Equitable and other policy considerations
Even if the investor and its investment would be covered by the language of the relevant instrument, tribunals have refused to grant standing to investors who bring claims in abuse of process or lacking good faith.29 Similarly, some tribunals have held that investors enforcing rights related to illegal investments or, generally, who appear before the tribunal with unclean hands, lack standing.30
IV. Standing of States in international investment arbitration
Some tribunals have found that a respondent State does not have standing to sue or be sued when the consent to arbitration was given by a subdivision not authorized to do so under international law–and, in ICSID Arbitration, pursuant to Article 25 of the ICSID Convention.31 In treaty–based arbitration, the standing of a State to assert claims against an investor–generally, counterclaims–has been found to depend on the specific language of the applicable treaty32 and, in a majority of cases, also on the existence of a close connection between the primary claim and the counterclaims.33
Demirkol, E.C., Admissibility of Claims for Reflective Loss Raised by the Shareholders in Local Companies in Investment Treaty Arbitration, ICSID Review-Foreign Investment Law Journal, Vol. 30, Issue 2, 2015.
Del Vecchio, A., International Courts and Tribunals, Standing, Max Planck Encyclopedia of Public International Law, 2010.
Paulsson, J., Jurisdiction and Admissibility, in Aksen, G., and Briner, R. (eds.), Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in honour of Robert Briner, 2005.
Pearsall, P.W. and Manners-Weber, D., Covered Investors, in Legum, B. (ed.), The Investment Treaty Arbitration Review, 4th ed., 2019.
Valasek, M.J. and Dumberry, P., Developments in the Legal Standing of Shareholders and Holding Corporations in Investor-State Disputes, ICSID Review-Foreign Investment Law Journal, 2011.
Wehland, H., Chapter 8: Jurisdiction and Admissibility in Proceedings under the ICSID Convention and the ICSID Additional Facility Rules, in Baltag, C. (ed.), ICSID Convention after 50 Years: Unsettled Issues, 2016.
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