The Nationality of Corporate Investors under International Investment Law

Securities

The Nationality of Corporate Investors under International Investment Law

By Anil Yilmaz Vastardis
Hart Publishing October 2020

Specifications

ISBN-13
9781509933594
Publisher
Hart Publishing
Publication
October 2020
Format
Hardback
Jurisdiction
U.K. ? Countri(es) for reference only

Also available as

Paperback

Details

This monograph offers a detailed and distinctive analysis of corporate nationality under international investment law, covering the ICSID Convention and the investment treaty framework. It takes the reader back to the basics threading through the concepts of jurisdiction, nationality, and corporate personality to give a clear context to the discussion of corporate nationality under international investment law, at a time when international investment is dominated by multinational business enterprises operating in a globalised economy.

The book examines different understandings of corporate personality and nationality under a selection of major jurisdictions and public international law. It also offers an in-depth analysis of approaches found in ICSID arbitral awards and in investment treaty practice, distilling the problematic areas and discussing the impacts of the areas of concern. It evaluates the techniques developed to address problems and puts forward suggestions for effective and balanced solutions to the questions of corporate nationality and personal scope of investment protection.

Table of Contents

Introduction
I. A case against the expansionist approach to personal scope of IIL protections
A. Reciprocity:
B. Consent and bargain
II. Structure of the analysis
A. Fundamental elements of corporate nationality in IIL: Conditions of access to protection, nationality and corporate personality
B. Understanding corporate nationality
C. Exposing the fault lines and the way forward
Part I – Fundamental elements of corporate nationality in IIL: Conditions of access to protection, nationality and corporate personality
Chapter 1 - Access to international investment protection: ICSID, Investment Treaties and Institutional Arbitration Rules
I. Access to International Investment Arbitration
A. Jurisdiction under the ICSID Convention
B. ICSID Convention Article 25 Requirements
C. Investment Arbitration Outside the ICSID Convention ('Non-ICSID Investment Arbitration')
II. Conditions for Access to Investment Treaty Protection
III. Conclusion
Chapter 2 - Nationality as a legal bond in International Law: a story of disagreement over the relevance and meaning of 'genuine link'
I. Nationality of Individuals
A. Acquisition of Nationality by Individuals and Its Legal Consequences
B. Recognition and enforceability of nationality under international law on diplomatic protection
C. Individual investors' nationality under International Investment Law
D. Concluding observations
II. Nationality of objects:
A. Ships and aircrafts
B. Corporations
III. Conclusion
Chapter 3- Distinguishing features of corporations for purposes of nationality
I. The Corporation as a Fictional Creature of the Law
A. Origin and Purpose of Corporations
B. Separate Legal Personality and the Principle of Limited Liability
C. Abandoning the Fiction and Piercing the Corporate Veil
D. Veil Piercing in Domestic Laws
i) Disregarding limited liability
ii) Disregarding the separate legal personality
II. Connecting a Corporation to a State through Lex Societatis
A. Theory of Incorporation
B. The Real Seat Theory
III. The corporation in a global economy: Multinational enterprises, shell corporations, and regulatory havens
IV. Conclusion
Part II – Understanding Corporate Nationality
Chapter 4 - Corporate Nationality in the context of diplomatic protection and war-time sanctions
I. Determining corporate nationality under the principles of diplomatic protection
A. Barcelona Traction Case
B. ELSI Case
C. Diallo Case
D. State Practice and Post-Conflict Claims Commissions
E. The ILC Draft Articles on Diplomatic Protection
II. Control Criterion for Domestic Wartime Sanctions
III. Conclusion
Chapter 5 – Corporate Investors' Nationality under the ICSID Convention and Investment Treaties
I. The ICSID Convention Article 25(2)(b) requirement: Objective but rarely addressed
A. Investment without a locally incorporated entity: The first part of Article 25(2)(b)
i) ICSID Arbitral Decisions
B. The second part of Article 25(2)(b): Foreign-controlled host state entities
i) Nationality of the host state entity
ii) Indicators of control and the investment ownership structure
iii) Parties' agreement on foreign control
II. How do investment treaties link corporate investors to states?
A. 'Nationals'
B. 'Investors', 'Enterprises', and 'Companies'
III. Conclusion
Part III – Problems and solutions
Chapter 6 - Exposing the Fault Lines
I. Methodological Flaws
A. Blurred Lines between the ICSID Convention's Jurisdictional Requirements and Investment Treaty Clauses on Personal Scope
B. Impact of the Meaning of 'Investment' on the Assessment of Nationality
C. The Impact of Temporal Scope on the Assessment of Nationality
i) Timing of treaty or nationality shopping
ii) Investments 'made' in the territory of the host state
II. Erosion of the Concept of 'Nationality'
A. Decreasing Importance of Nationality for Corporations – Is Nationality the Right Connecting Factor?
B. Differential Treatment of Treaty-Shopping for Individual Investors' v Corporate Investors' Nationality
III. Ramifications of the Methodological and Interpretative Flaws
A. Parallel claims
i) Diplomatic intervention
ii) Multiple arbitration claims
B. Damage to the Legitimacy of International Investment Arbitration
IV. Conclusion
Chapter 7- Evaluation of responses to nationality shopping and the way forward
I. Abuse of rights – a solution as difficult as the problem itself
II. Denial of Benefits Clauses
A. The procedure for invoking DoB clauses
B. Substantial business activity
III. Way forward: Restoring conceptual and methodolgical rigour to analysing corporate investors' nationality
A. Why the Real Seat standard?
B. Real seat distinguised from statutory seat and registered address
C. Application of the real seat standard in IIL
D. Nationality determined with reference to 'control'
i) Indirect Ownership by Natural Persons
ii) State-Owned Enterprises as Investors
iii) Investments involving multiple layers of corporate ownership
IV. Conclusion
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