Standing of Locally Incorporated Entities in International Investment Law and the Notion of “Foreign Control”

Under customary international law, a state’s ability to espouse the claims of its nationals andsubsequently file a suit against another state is limited by the rule of incorporation.1 This has beenclear at least since the seminal decision of the International Court of Justice in Barcelona Traction,where it was decided that Belgium could not seek recourse against Spain by espousing the claimsof Belgian stockholders in Barcelona Traction, a Canadian company.2 Equally, claims by locallyincorporated entities against the host state are not possible under customary international law.3 Thestrict incorporation test has nevertheless become obsolete, if not thrust aside, by the emergence ofinvestment treaties. In fact, the unprecedented and drastic change brought about by investmenttreaties is all the more evident when considering the whole new array of nationality rules they havesolidified. Investment treaties allow for shareholder claims explicitly or by reference toshareholding as one of the covered forms of investment.4 Some investment treaties go a stepfurther by allowing locally incorporated entities to directly file a claim against the host state, provided that such entities are controlled by nationals or legal entities of the other ContractingParty.5 Claims by locally incorporated entities are also provided for under the International Centrefor Settlement of Investment Disputes Convention (“ICSID Convention”).6 However, the ICSIDConvention, unlike investment treaties, allows for such claims by reference to a “foreign control”test. Setting out from this premise, this Article does not intend to touch upon all of the nationalityrules encountered in modern international investment law. Rather, it focuses on the standing oflocally incorporated entities. In particular, it asks whether locally incorporated entities controlledby nationals of the host state qualify as covered investors, and if so, whether there is a differencebetween ICSID and non-ICSID claims. In a nutshell, this Article establishes that when a locallyincorporated entity files a claim against the host state (the state of its incorporation), the operationof the foreign control test under the ICSID Convention enables an investment tribunal tounlimitedly pierce the corporate veil and assess whether the locally incorporated entity is ultimatelycontrolled by nationals of the host state. In this case, an ICSID tribunal will have to deny thevesting of its jurisdiction because the locally incorporated entity cannot satisfy the foreign controltest.7 This principle was first introduced in 2008 by the tribunal in TSA Spectrum v. Argentina andhas recently solidified in the rulings of Burimi v. Albania and National Gas v. Egypt.8 On thecontrary, when nationals of the host state ultimately control a locally incorporated entity but decideto file a claim against the host state through an intermediate company, incorporated in the otherContracting State, the locally incorporated entity is treated as an investment of the intermediateentity.9 In this case, an ICSID tribunal cannot pierce the corporate veil and assess whether theintermediate company is ultimately controlled by nationals of the host state

On Territoriality and International Investment Law: Applying China\u27s Investment Treaties To Hong Kong And Macao

To date, investor-state tribunals have been preoccupied with a range of issues revolving around the territorial application (territoriality) of international investment agreements (IIAs). The importance, as well as the various forms such issues take, has recently been highlighted in the decision of the Singapore High Court (SGHC) in Laos v. Sanum. In this case, the SGHC was asked by Laos to set aside an earlier arbitral award (in Sanum v. Laos), filed by a Macanese legal entity and rendered under the China-Laos bilateral investment treaty (BIT). In approaching the matter, the SGHC set aside the award on the grounds that the China-Laos BIT did not extend to Macao. This decision has provoked mixed feelings, as it may weigh heavily against the territorial application of Chinese IIAs to Hong Kong and Macao. At the same time, from an academic perspective, the decision provides an opportunity to delve deeper into the territorial elements inherent to jurisdiction ratione personae as this pertains to international investment law. Within this setting, this article seeks to provide a conceptual framework for analyzing future investor-state arbitration disputes under IIAs where similar territorial application issues may arise. This article is nevertheless limited to issues of jurisdiction ratione personae. Therefore, the territorial nexus of investments, particularly as it pertains to cases involving sovereign bonds, is not addressed in this article. In addition, this article does not intend to address territorial issues connected to the so-called nationality planning and treaty shopping techniques as well as the various approaches followed in piercing the corporate veil of foreign investors. To be more precise, while this article deals with issues of jurisdiction ratione personae in general, it mainly focuses on the nationality of legal entities to the extent it relates to the notion of territory

International litigation and the dissaggregation of disputes: Ukraine/Russia as a case study

This article explores the phenomenon of ‘disaggregation’ of disputes in international law, that is, the carving up of broader disputes into discrete legal claims based on different international legal rules and subject to the jurisdiction of different international tribunals. In particular, its focus is on certain under-explored consequences of this phenomenon for the jurisdiction of international tribunals, asking whether the relationship between the specific claims and the broader dispute might affect the jurisdiction of the tribunals. Employing the ongoing Ukraine/Russia dispute, which has yielded multiple claims before different international tribunals, the article offers an original analysis of these jurisdictional questions. It presents three approaches discernible from case law where tribunals face claims over which they appear to have jurisdiction that implicate a broader dispute over which they do not. The article ends with a consideration of possible explanations for why a tribunal might follow one approach over the others in any given case

Integrating multi-disciplinary discussion in clinical practice

Interstitial lung diseases are very heterogeneous. We present a case of usual interstitial pneumonia pattern on high resolution computed tomography of the chest that was diagnosed successfully after multi-disciplinary discussion. Pulmonologists should be aware of the pitfalls in the diagnostic management of interstitial lung diseases, especially in cases with atypical clinical presentation and systemic signs and symptoms

State Succession and Devolution Agreements Revisited: A Note on Sanum v. Laos

In a recent judgment, the Singapore Court of Appeal quashed a prior judgment of the Singapore High Court, which had decided to set aside an arbitration award on the basis that the China–Laos bilateral investment treaty (bit) does not apply to Macao. The judgment of the Court of Appeal is significant inasmuch as it involves a thorough examination of the international law principles governing the law of State succession in respect of part of territory, the relative effect of treaties in the context of devolution agreements, and the relationship between the critical date rule (or intertemporal principle) and the interpretive norm of subsequent agreement or practice. Above all, the dialogue between the Singaporean courts and the arbitral tribunal (whose award was sought to be set aside) raise a number of interesting issues in respect of the territorial application of investment treaties in general and Chinese investment treaties in particular. It also bears noting that this dialogue and its impact on future cases has to be filtered through subsequent developments, most notably a statement issued by China’s Ministry of Foreign Affairs to the effect that the Court of Appeal judgment was incorrect.</jats:p