I would like to receive chapter by chapter,
and if it’s possible I want Chapter two (Corporate Nationality under ICSID Convention) within 5 days.
Research Proposal:
Corporate Nationality under ICSID and UAE Bilateral Investment Treaties
Name: ……………………………
ID Number: ………………….
Course: ………………………….
Course Instructor: ……………………………
08 July 2017
Table of Contents
Abstract 3
Background and Research Rationale 3
Research Problem 4
Research Questions 5
Research Methodology 5
Scope 7
Analytical Framework: 7
Preliminary Literature Review 7
Research Outline: 14
Chapter One: General Introduction 14
Chapter Two: Corporate Nationality under ICSID Convention 14
Chapter Three: Corporate Nationality under UAE Bilateral Investment Treaties 15
Chapter Four: Analysis & Conclusion 17
Research Timeline 18
Bibliography 20
Abstract
Given the legal difficulties both individual and corporate investors have faced in transacting international business transactions due to their citizenship, this research proposal aimed at extensively analysing the concept of ‘nationality of investors’ under ICSID and UAE bilateral investment treaties. The proposal outlines the background and rationale for this study and proposes the use of desk-based research for collecting, and analysing the issues (including treaties, arbitral awards, and major writings) surrounding the concept of nationality of investor’s under investment treaty arbitration. The proposal further provides for a preliminary literature review on some of the key issues of study with a Gant Chart showing the research timeline.
Background and Research Rationale
Nationality of investors is significant for several purposes. Substantive standards guaranteed in a treaty only apply to privileged investors . Typically, citizens of states party to a treaty are privileged. Additionally, the jurisdiction of an international tribunal is defined, inter alia, by the nationality of the claimant. Particularly, in the event that the host state consent to jurisdiction is offered via a treaty, it only applies to citizens of a state that is party to the treaty . For one to gain access to dispute settlement in accordance with the ICSID Convention, negative and positive nationality requirement exist. It becomes a requirement that an investor be a citizen of a state that is signatory of ICSID Convention. In addition, the investor must not be a citizen of the host state.
The need to research nationality of investors under ICSID and UAE investment treaties is necessary given the complexity of arrangements concerning nationality of corporations. There also exists indication that even in cases involving dual nationality of investors; tribunals do not apply the doctrine of dominant or effective nationality . Complexity of investor nationality was evident in the case of Micula v. Romania where the Tribunal rejected a request to rely on a genuine link test even though only a single nationality was at issue. Whereas some treaties use siege social (the main seat of business or incorporation) for corporate nationality, some go beyond the formal requirements of the seat or incorporation. There is the requirement of intricate bond of economic substance between the states whose nationality investor’s claim and the corporate investors. Understanding these legal procedures require the kind of research that this thesis purposes to undertake.
Research Problem
Given the complexity that comes with issues of nationality of investors (especially corporate investors), this research aims at unveiling the meaning of “nationality of corporate investors” under ICSID Convention. Further, the research shall look into the legal aspects of what constitute “investors” under ICSID. In this regard, the research intends to evaluate the dilemma that might arise between UAE BIT(s) definition of corporate nationality and ICSID’s conception of corporate nationality. UAE is currently a signatory to over 50 bilateral investment treaties. Therefore the need for coherent and predictable nationality test in UAE treaty practice is undoubtedly paramount. For instance, according to China- UAE bilateral investment treaty, corporate nationality can be purely determined by place of incorporation, while according to UAE-Greece BIT both countries have adopted incorporation and ‘effective economic activity tests.
Research Questions
The research questions posed by the thesis are as follows:
To what extent can United Arab Emirates (UAE) redesign its bilateral investment treaty regime to a more favourable and predictable corporate nationality test?
a. What is the litmus test for determining corporate nationality under ICSID investment treaty regime?
b. What is the possibility of regarding as investors both under ICSID and UAE treaties the enterprises that are organized or instituted under UAE law but controlled under non-UAE entities?
Research Methodology
Doctrinal legal research would be adopted in conducting the research. The method otherwise referred to as blackletter law focusses on library based pattern of research which entails analysis of legal materials such as Conventions, bilateral investment treaties, arbitral awards, cases, text books and journal articles. For instance, in chapter two, the research would analyse early cases relating international minimum standard regarding protection of investment, Similarly, chapter three shall analyse treaty provisions relating to nationality of corporate investors and how those provisions were interpreted by investment treaty tribunals. Indeed, authoritative views of major publicists in the area such as Dolzer&Schreuer, Sornarajah, etc shall be highlighted to illuminate discussion on both legal and policy implications of the current conception of corporate nationality test in investment treaty regime. In a nutshell, both primary legal sources and secondary legal sources will relied upon and utilised in conducting the research and responding to the pertinent research question.
Furthermore, in order to understand the nationality issues of investors under ICSID and UAE investment treaties, this research proposes to undertake a secondary research. Collection of information for the final compilation of the research report will involve the use of desk-based research. This implies that the data will be collected from existing resources. Considering the scope of study in this research, conducting a primary research may be too costly and time-consuming. Concerning the legal implications of accessing some information that may be relevant in carrying out a primary research on the nationality of investors under ICSID and UAE investment treaties, the researcher settled for secondary research that will require little time, resources and legal impediments.
The concept of nationality of investors has been widely discussed and researched. Therefore, this research will use the vast available library material on the research topic to summarize, collate and synthesize available information as they relate to the specific cases of UAE and ICSID. Relevant academic legal books will be consulted to help gather sufficient information to answer the research question. Additionally, the research will be compiled based on journal articles concerning nationality of investors and UAE and ICSID investment treaties. Further, a number of case laws will guide the discussion and compilation of the report. Other than the case laws, relevant authentic websites with direct relation to t nationality of investors under ICSID and UAE investment treaties will be used. Among the websites that will be used are the Westlaw databases, Kluwer Arbitration, ICSID website etc.
Scope
The research shall consider cases and BITs concerning UAE nationals and any other country in the world.
Analytical Framework:
This research will adhere to the concept of legal certainty and predictability which holds that the law needs to provide those subject to it with the capacity to control their conduct. In conducting the study, it will be necessary to ensure that as the researcher assesses the litmus test for determining corporate nationality under ICSID investment treaty regime, the research adheres to legal certainty which is an internationally recognized core requirement for the rule of law.
Preliminary Literature Review
In 1965, a treaty was sponsored by the World Bank aiming at providing foreign investment by creating a suitable way of solving disputes in relation to investments. After several meetings, the Washington Convention was able to come up with an organization meant to solve the investments disputes. It was called International Centre for The Settlement of Investment Disputes (ICSID). After it formed, all its cases were under the government’s consents in relation to their relation to their legislation on investor protection.
Most states have investor protection laws. The laws relatively, provide protection against uncompensated expropriation and nationalization. The laws also have an offer to submit to the ICSID arbitration. Any counsel for an investor must be able to read the legislation carefully in order to fathom what they require in the acceptance of the state’s offer.
Pursuant to Article 41 (1) of the ICSID Convention, the Tribunal has the responsibility of judging whether it is competent to handle a case brought before it. The provision and Rule 41 of the ICSID Arbitration Rules requires that the Tribunal makes a decision whether a dispute presented before it falls under its jurisdiction or not. For instance, in the case of Soufraki v UAE, the Tribunal had to determine whether or not the claimant was a national of Italy in accordance with Article 25(2)(a) of the convention. The Tribunal also had to decide whether the claimant belonged to the category of investors to whom the respondent of the case had offered consent to ICSID arbitration pursuant to BIT.
Relevant law to the case dictates that the jurisdiction of the Center extends to any legal dispute that arises directly under an investment between a contracting state and a national of another contracting state. Parties to the dispute must consent in writing to bow to the Center. Upon consenting to submit to the Center, none withdraws its consent unilaterally. In Soufraki v UAE,the Tribunal recognized that it was difficult for Mr. Soufraki to reconstruct his actual residence during within 12-13 months since business interests spanned continents and was in a constant travel. The Tribunal further recognized that had Mr. Soufraki been advised properly, he would have easily reacquired Italian nationality by placing timely application. According to the findings of the case, the claimant was not a national of Italy under Italian laws at the two dates relevant to the case (on 18th June 2002 when a Request for Arbitration by the claimant was registered with ICSID and on 16th May 2002 when the parties consented to ICSID arbitration). Therefore, the Tribunal did not have the jurisdiction to handle the case.
Acts of intimidation and harassment of investors based on political or other social contexts of a state infringe a number of provisions of the Treaty. Article 2 of the treaty advocates for the protection and promotion of investments. It requires that the investments of investors of contracting parties shall enjoy full security and protection within the territory of another contracting party at all times. Article 3 provides that each contracting party should accord returns and investments fair and equitable treatment within its territory. The fair and equitable treatment should include management, disposal and enjoyment of their investments, maintenance and management. Under chapter 5 of the Treaty concerning expropriation, it is provided that investments of contracting parties shall not be nationalized or subjected to measures bearing equivalent weight to expropriation or nationalization.
On the basis of facts presented in the case of Saluka v Czech Republic, the claimant considered Czech Republic to have acted in a discriminatory, inequitable, unfair and expropriatory manner that it deemed breach of obligations under the Treaty. The claimant claimed that the respondent had acted in breach of Articles 3 and 5. The claimant, therefore, requested in its memorial that a declaration be made that Czech Republic had breached Article 3 of the Treaty by not according Saluka’s investment an equitable and fair treatment. Additionally, the claimant demanded a declaration that the respondent had acted against the requirements of Article 5 of the Treaty by depriving the claimant of its investments in unlawful manner without just compensation commensurate to the value of its investment. Further, Saluka requested the Tribunal to direct Czech Republic to compensate it for the damages it suffered following breach of the Treaty including the damages that may be determined by the Tribunal upon assessing the claimant’s further submission. The Tribunal’s jurisdiction was to first analyse the arguments of both parties before making its ruling. Tribunal’s jurisdiction is governed by Articles 8.1 and 1 of the Treaty. Upon hearing and assessing all submissions, the Tribunal concluded that the claimant’s shareholding of IBP shares was indeed an investment within the meaning of the Treaty. In respect, it ruled that it had the jurisdiction to hear the claims brought before it under arbitration procedure outlined in Article 8 of the Treaty.
In the case of TokiosTokeles v Ukraine, the claimant accused state bodies of Ukraine for committing a series of unfolded, unlawful and illegitimate acts directed towards the investments of TT. TokiosTokeles claimed that the state agencies of Ukraine committed actions that were connected by unity of wrongful purpose and intent on the part of government officials of meddling with the ventures of TokiosTokeles (Taki Spravy). The Ukranian government goal of intentional damage to Taki Spravy was realized through a number of measures that the state agencies implemented with a view of ultimately achieving an illegitimate political goal (punishing Taki Spravy for showing support for an opposition politician, YuliaTymoshenko). The entire series of acts that were committed by the Ukrainian government against the complainant is rife with violations of Ukrain’s Laws, BIT and the International Law. The actions and their attendant violations add up to a single whole that consist of premeditated, intentional, destruction of Taki Spravy’s reputation and business operations.
Various legal systems use different methods to determine whether a person or investor is of the nationality of a particular state. The most common criteria used is that of incorporation or the main seat of the business.
It is a convention that deals with people from the host state but under control by the people from another nationality. In order for the article to be applied, it is a requirement that it is between the investor and the host state and it may be in an indenture between the investor and the host state .
An investor needs to arrange and plan its investment in a way that it is assured of thoroughgoing protection under prevailing treaties. This can be carried out through the founding of an organization that has good treaty relationships with the host nation. Nationality planning is not illegal but it has its limits .
Research Outline:
This section discusses the structural arrangement of the thesis. The thesis is divided into four chapters. An insight into the content of the chapters are provided as follows:
Chapter One: General Introduction
1.1 Background
1.2 Research Problem
1.3 Research Question
1.4 Analytical Framework
1.5 Methodology
1.6 Research aim
1.7 Scope
1.8 Literature Review
1.9 Research Outline
Chapter Two: Corporate Nationality under ICSID Convention
This chapter discuss the protection of investors is a significant role of international law. Traditionally, some level of protection was attained through diplomatic protection. The primary idea behind the diplomatic protection was that an injury to a national of a state surmounted an injury to state itself. This kind of protection suffered the main weakness of offering no protection to foreign investors. ICSID Convention provided a solution to the lack of protection for foreign investors by providing protection to investments of individuals and corporates legally considered as nationals of contracting states. Article 25 (2) (b) of the Treaty (ICSID Convention) offers the meaning of the national of another contracting state as:
…any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention…
Chapter Three: Corporate Nationality under UAE Bilateral Investment Treaties
Chapter three will deliberate Bilateral Investment Treaty refers to an agreement between two governments on terms and conditions by which citizens of each of the contracting parties may carry out their investments in the territory of the other. Typically, BIT obliges each government to accept investments from the citizens of the other and treat such investments with the same fairness as those of nationals of the state. States that get into such bilateral agreements have the responsibility to ensure that investors are not expropriates without sufficient compensation and that they submit any disputes they have with an investor to arbitration through ICSID. Presently, the United Arab Emirates has 24 BITs with countries such as Germany, China, the United Kingdom, South Korea, Italy, France, Finland and Austria among others.
An example of BITs between UAE and other states is the Italy-UAE BIT that was signed on 22 January 1995 and came into effect on 29 April 1997. The BIT that is currently in force and does not give any of the two states the right to regulate / regulatory autonomy. It provides definitions of important investment terms that regulate the bilateral agreement and refers to the need for adherence to state laws of both parties. Among other fundamental clauses, the BIT defines post-establishment Most-Favoured-Nation (MFN) treatment clauses and emphasises on economic integration agreements, procedural issues and taxation treaties. Although the BET does not outline exhaustive and indicative list of FET elements, Fair and Equitable Treatment (FET) is an essential clause guiding the Italy-UAE BIT.
By getting a suitable nationality, states have been able to create plans to counteract procedures that are in need of the protection of particular treaties. , One known method is to create a relationship of pecuniary substance between the state and the organization. Another method is the denial of benefits clause into the treaty that allows jurisdiction. Under the clause, states have a right to keep the profits that come from a treaty to a corporation in a state with no commercial association. Article 17(1) provides that each contracting party has the right to repudiate the advantage of this party to a legal entity if citizens or nationals of a third state own or control such entry and if that entity has no considerable business goings-on in the area of the contracting party which it is prearranged.
A vast majority of cases consider investors as companies. Although there exists the issue of protecting individuals in international law, the relevant actors in international investment cases usually appear in the form of juridical persons. Shareholders who may themselves be companies own corporations. Even though shareholders may or may not control the operations of a corporation, they are owners of the company, and are therefore legal investors. Nonetheless, legal implications of shareholders as investors under international laws are intricate.
Chapter Four: Analysis & Conclusion
This chapter exchanges views at the different cases in the preliminary literature review reveals the deep-rooted complexity in understanding the concept and meaning of “nationality of corporate investors” under ICSID Convention. Even though there are properly laid-out regulations on nationality of investors under the ICSID Convention, ruling on disputes concerning nationality of corporates is never straight-forward. The mere fact that an investor claims nationality of a state signatory to the ICSID Convention does not automatically qualify a dispute between the investor and another state signatory to the Convention solvable by the Tribunal. Pursuant to Article 41 (1) of the ICSID Convention, the Tribunal has the responsibility of judging whether it is competent to handle a case brought before it. The provision and Rule 41 of the ICSID Arbitration Rules requires that the Tribunal makes a decision whether a dispute presented before it falls under its jurisdiction or not. The case of Soufraki v UAE is a perfect example where the Tribunal had to determine whether or not the claimant was a national of Italy in accordance with Article 25(2)(a) of the convention. The Tribunal also had to decide whether the claimant belonged to the category of investors to whom the respondent of the case had offered consent to ICSID arbitration pursuant to BIT. Additionally, determination of whether a state has acted in breach of Articles 3 and 5 take into account laws of the country accused of acting in a ddiscriminatory, inequitable, unfair and expropriatory manner. The case of Saluka v Czech Republic provides a perfect case study of this fact.
Upon conducting blackletter law on library based pattern of research which shall entail analysis of legal materials such as Conventions, bilateral investment treaties, arbitral awards, cases, text books and journal articles, the findings will be analysed. For instance, in chapter two, the research would analyse early cases relating international minimum standard regarding protection of investment. Discussion and assessment of the findings should bring the reader to an understanding of the research questions and effectively cover the objectives of the research.
Research Timeline
The research timeline is as presented in the Gant Chart below:
Task
Activity by Weeks/Months from the start of the project
May
2017
June
2017
July
2017
August
2017
September 2017
Proposal
Collection of
Presentation of
Completion of Discussion and
Bibliography
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Brown, Chester, and Kate Miles. Evolution in Investment Treaty Law and Arbitration. Cambridge: Cambridge University Press, 2011.
Dolzer, Rudolf, and Christoph Schreuer. Principles of international investment law.Oxford University Press, 2012.
Eudoro A. Olguín v. Republic of Paraguay, ICSID Case No.ARB/98/5, Decision on Jurisdiction, August 8, 6 I.C.S.I.D. Rep. 156 (2000).
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Mason, Edward S., and Robert E. Asher. The World Bank since Bretton Woods: The origins, policies, operations, and impact of the international bank for reconstruction and development and the other members of the World Bank group: The international finance corporation, the international development association [and] the international centre for settlement of investment disputes. Brookings Institution Press, 2010.
Micula v. Government of Romania, 104 F. Supp. 3d 42 (D.C. 2015).
Moses, Margaret L. The principles and practice of international commercial arbitration.Cambridge University Press, 2012.
Redfern, Alan, and Martin Hunter.International Arbitration. 2009
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Soufraki v. United Arab Emirates, ICSID Case No.ARB/02/7, Award, 12 I.C.S.I.D. Rep. 158 (2004).
Schreuer, Christoph. “Shareholder protection in international investment law.” URL: http://www. univie. ac. at/intlaw/pdf/csunpublpaper_2. pdf(д