II. Jus standi before international courts and tribunals
Sovereign States as subjects of international law have jus standi before international adjudicatory bodies. Prior to the advent of investor-State-dispute-settlement (ISDS), international dispute settlement mostly involved State-to-State investment disputes in the form mainly of mixed claims commissions and diplomatic protection.2
Physical and legal persons were traditionally considered not to be subjects of international law. Absent ISDS, such persons could only have their investment claims espoused before an international adjudicatory body by their State of nationality acting on their behalf in diplomatic protection. The alternative would be raising claims before domestic courts.3
III. Jus standi in investor-State dispute settlement
A. Arbitral tribunal's jurisdiction
Direct access to justice is a typical characteristic of ISDS. By agreeing on ISDS clauses in their treaties, States consent to the resolution of investment disputes with the investors of the other contracting party via international arbitration.4 The investor accepts this open offer by filing a request for arbitration, and provided it meets the requirements set forth under the treaty it has jus standi before the arbitral tribunal.5 Arbitral tribunals have analysed just standi as a preliminary matter in their decisions on jurisdiction6 and admissibility,7 or sometimes joined it to the merits.8
1. Burden and standard of proof
The burden of proof in establishing standing follows the general rule of onus probandi actori incumbit, hence the claimant bears the initial burden.11 However, this may shift to the respondent if it advances objections to the claimant’s or its own standing.12 See further Burden of proof, Section III.B.
a. Definition of "investor"
The investor must meet the requirements under the treaty definition of “investor”.15 The investor must be a national of the contracting party other than the host State.16 Different criteria apply to physical and legal persons.17 As to ICSID arbitral tribunals, they assess this requirement under the investment agreement as well as Article 25 of the ICSID Convention.18 See further Nationality of investor, Jurisdiction ratione personae, Dual nationality.
In the context of trusts and fiducies, some arbitral tribunals have held that only the owner of the beneficial interest may be considered as the investor.19 Other arbitral tribunals have refused to read this requirement into the investment agreement and held instead that legal ownership also qualifies.20
Furthermore, arbitral tribunals have so far denied objections to jus standi based on EU membership in intra-EU ECT disputes.21 See further Intra-EU claims as an objection to jurisdiction.
b. Definition of "investment"
The investment must fall under the definition of “investment” - tendentially broad.22 While Article 25 ICSID Convention, for example, does not include a definition of investment,23 bilateral investment treaties (BITs) and multilateral investment treaties (MITs) usually include any kind of assets and provide non-exhaustive lists of examples.24 Case-law varies depending on the wording of the treaty.25
Treaty definitions of “investment” commonly include ownership and control by the investor.26 The requirement of continuous ownership and/or control remains debated, but most arbitral tribunals have excluded that investors need to own the investment when arbitral proceedings are initiated.27 Others have upheld a more stringent standard.28
Treaty definitions of “investment” usually refer to directly as well as indirectly owned or controlled assets. Case-law, therefore, generally allows shareholders to raise claims in their own rights,29 but tends to deny jus standi to entities not closely related to the investment.30 See further Shareholders, Minority shareholders, Indirect ownership, Indirect claims, Direct claims.
3. Other relevant provisions under the treaty
Other treaty provisions or principles of public international law may play a role in arbitral tribunals’ decisions on whether the investor enjoys treaty protection.
4. Investment restructuring and the investor’s right to assert claims
B. Privity of contract and rules of attribution of conduct
1. Privity of contract on the investor's side
Privity of contract establishes that a subject must be a party to a contract to sue or be sued under that contract,36 but in ISDS it is often the local subsidiary of the investor that concludes the investment contract. While the local subsidiary has no jus standi as per the treaty, the investor might lack privity of contract.37 Case-law is not definitely settled on this issue, especially considering the variety of possible factual circumstances. But an investor owning or controlling (directly or indirectly) an investment, has reasons to argue that it has jus standi before the arbitral tribunal for the State’s alleged interferences with the investment contract amounting to a violation of investment treaty standards.38 And investors may have standing on behalf of related entities depending on the treaty language, hence the host State’s consent to arbitration, and the specific circumstances of the case.39 See also Section III.C.2. above on shareholder claims.
2. Attribution of conduct on the host State's side
a. Attribution of conduct
A State entity or a State-owned enterprise (lacking jus standi before the investment treaty arbitral tribunal) may also be a party to the investment contract.40 Customary international law rules of attribution codified under the International Law Commission (ILC)’s Draft Articles on Responsibility of States for International Wrongful Acts apply, although these are open to interpretation as a variety of possible real-life business scenarios must be taken into account.41 See further State-owned enterprise, Sovereign investor, Attribution.
b. State's subdivisions
If the consent of the host State is expressed by one of its subdivisions or agencies, provided the host State had approved or under Article 24(3) ICSID Convention notified that such approval was not required, investors may also bring claims against the host State’s subdivisions or agencies directly.42 See further Consent to arbitration, Section V.B.
The host State’s right to raise counterclaims against an investor depends on the wording of the investment agreement, the consent instrument of the parties and a qualified connection between the counterclaim and the main claim(s). Arbitral tribunals have further considered privity of contract and come to different conclusions depending on treaty language and the specific circumstances of the case.43 See further Counterclaims, Section IV.
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Baltag, C., The ICSID Convention: A Successful Story: The Origins and History of the ICSID, in Baltag, C. (ed.), ICSID Convention after 50 Years: Unsettled Issues, 2017, pp. 1-24.
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Crawford, J. and Mertenskoetter, P., The Use of the ILC’s Attribution Rules in Investment Arbitration, in Kinnear, M., Fischer, G.R., Almeida, J.M. and Torres, L.F. (eds.), Building International Investment Law: The First 50 Years of ICSID, 2015, pp. 27-42.
Clasmeier M., Arbitral Awards as Investments: Treaty Interpretation and the Dynamics of International Investment Law, International Arbitration Law Library, 2016.
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Gastrell, L. and Le Cannu, J-P, Procedural Requirements of ‘Denial-of-Benefits’ Clauses in Investment Treaties: A Review of Arbitral Decisions, ICSID Review - Foreign Investment Law Journal, 2015, pp. 78-97.
Harris, D.J., Cases and Materials on International Law, 2006.
Jagusch, S., Restructuring Investments to Achieve Investment Treaty Protection, in Kinnear, M., Fischer, G.R., Almeida, J.M. and Torres, L. F. (eds.), Building International Investment Law: The First 50 Years of ICSID, 2015, pp. 175-190.
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ICSID, ICSID, History of the ICSID Convention: Documents Concerning the Origin and Formulation of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Vol. II Part 1, 1968.
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