In recent decades transnational companies investing in
emerging markets have done so through complex structures of shell holding
companies. These companies usually have limited ties with the states of their
incorporation. The determination of their nationality is of utmost importance
for the applicability of investment treaty protection and the jurisdiction of
an international tribunal. The aim of this article is to identify the rules and
considerations that should be applied by a tribunal when determining
nationality of an investor in an investor-state arbitration. In particular,
this article considers whether a genuine or effective link between an investor
and a state of its purported nationality is required in investor-state
arbitration. The major argument against application of a genuine link
requirement under international law rules on diplomatic protection in
investment disputes appears to be a lex specialis relationship between general international law and a specific
investment treaty: specific language in a treaty should prevail over general
international law. However, many investment treaties lack clear language on
nationality requirements of an investor. Moreover, treaty protection is
sometimes claimed by investors who endeavour to abuse the system of treaty
protection by hiding their nationality behind a corporate veil. In such
circumstances, the principle of good faith could provide some assistance.