Public Law Studies Quarterly

Denial of Benefits Clause and its Role in Limiting Nationality Planning in Investment Arbitration Caselaw

Document Type : Article

Authors

Pouria Askary 1
Niloofar Saeedi 2

1 Associate Prof., Department of Public and International Law, Faculty of Law and Political Science, Allameh Tabataba’i University, Tehran, Iran

2 Ph.D. Student in Public International Law, Faculty of Law and Political Science, Allameh Tabataba’i University, Tehran, Iran

https://doi.org/10.22059/jplsq.2021.318546.2698
Abstract
The large number of investment treaties and the diversity in their content, have made foreign investors to search for a favorable treaty and benefit from the protection of such a treaty by changing the nationality strategy. Large numbers of investment treaties and variety in their content have encouraged many investors to search for a desirable treaty and access such treaty with strategic change of nationality. This process, called known as nationality planning, increases investors protection under the treaty and the possibility of disputes against the host state. Including Denial of Benefits clause is one of the solutions of states for limiting third state or host state investors’ strategic access to treaty. This clause can potentially deprive third state investors from the treaty. Although, using this clause depends on various procedural and substantive requirements. Therefore, it is Because of that it is important to assess, by analyzing investment treaties and arbitration judgements, how arbitrations interpret procedural and substantive requirements of DOB and the impact of this interpretation on limiting Nationality Planning by analyzing investment treaties and arbitration judgements? Treaties and judgments analysis indicates that formulation of DOB causes doesn’t include different forms of nationality planning and also, arbitration interpretations of this clause, usually, makes it difficult for host states to apply it successfully.

Keywords

nationality planning
denial of benefits clause
bilateral investment treaty
foreign investment arbitration

  1. English

    1. A) Books
    2. Baumgartner, Jorun (2016), Treaty Shopping in International Investment Law, UK, Oxford University Press.
    3. Dolzer, Rudolf & Schreuer, Christoph H. (2008). Principles of International Investment Law, New York, Oxford University Press.
    4. Nikièma, Suzy H. (2012), Definition of Investor, Canada, International Institute for Sustainable Development.
    5. Sornarajah, M, (2015), Resistance and Ghange in the International Law on Foreign Investment, UK, Cambridge University Press.

     

     

    1. B) Articles
    2. Blyschak, Paul M. (2011), ‘Yukos Universal v. Russia: Shell Companies and Treaty Shopping in International Energy Disputes’, Richmond Journal of Global Law & Business, Vol.10, No.2, pp.179-210.
    3. Feldman, Mark (2012), ‘Setting Limits on Corporate Nationality Planning in Investment Treaty arbitration’, ICSID Review, Vol.27, No.2, pp. 281–302.
    4. Gaukrodger, David & Gordon, Kathryn (2016), ‘Investor- State Dispute Settlement: A Scoping Paper for the Investment Policy Community’, OECD Working Papers on International Investment, No 2012.
    5. Lee, Chieh (2016), ‘Resolving Nationality Planning Issue through the Application of the Doctrine of Piercing the Corporate Veil in International Investment Arbitration’, Contemporary Asia Arbitration Journal, Vol.9, No.1, pp.87-128.
    6. Zhang, Xiao-Jing (2013), ‘Proper Interpretation of Corporate Nationality under International Investement Law to Prevent Treaty Shopping’, Contemporary Asia Arbitration Journal, Vol.6, No.1, pp.49-73.

     

    1. C) Teses
    2. Oke, Davis (2018), Towards Limiting Treaty Shopping in International Investment Law and Arbitration: A Critical Analysis of the Effectiveness of the Denial of Benefits Clause’, A thesis submitted to The University of Birmingham for the degree of Ph.D.

     

    1. D) Votes
    2. Amto v. Ukraine, SCC Case No. 080/2005, Final Award, 26 March 2008.
    3. Empresa Eléctrica v. Ecuador, ICSID Case No. ARB/05/9, Award, 2 June 2009.
    4. Generation Ukraine v Ukraine, ICSID Case No. ARB/00/9, Award, 16 September 2003.
    5. Guaracachi America and Rurelec v. Bolivia, PCA Case No. 2011-17, Award, 31 January 2014.
    6. Masdar Solar & Wind Cooperatief v. Spain, ICSID Case No. ARB/14/1, Award, 16 May 2018.
    7. NextEra Energy v Spain, ICSID Case No ARB/14/11, Decision on Jurisdiction, 12 March 2019.
    8. Pac Rim v El Salvador, ICSID Case No ARB/09/12, Decision on Jurisdictional Objections, 1 June 2012.
    9. Petrobart v Kyrgyz Republic, SCC Case No 126/2003, Award, 29 March 2005.
    10. Plama v Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction, 8 February 2005.
    11. Ulysseas v Ecuador, UNCITRAL, Interim Award, 28 September 2010.
    12. Veteran Petroleum v Russia, PCA Case No AA228, Interim Award on Jurisdiction and Admissibility, 30 November 2009.
    13. Yukos Universal v Russia, PCA Case No AA227, Interim Award on Jurisdiction and Admissibility, 30 November 2009.

    E) Treaties

    1. ASEAN Comprehensive Investment Agreement, 26 February 2009.
    2. Armenia–Singapore BIT, 1 October 2019.
    3. Belarus-India BIT, 24 September 2018.
    4. CAFTA-DR, 5 August 2004.
    5. Energy Charter Treaty (ECT), 16 April 1998.
    6. Hong Kong-UAE BIT, 16 June 2019.
    7. Morocco-Japan BIT, 8 January 2020.
    8. Netherlands-Dominican BIT, 3 March 2006.
    9. NAFTA, 1 January 1994.

     

    References In Persian:

    1. A) Articles
    2. Ghamami, Majid; Sedighi, Reyhaneh, (2018). ‘Denial of Benefits Clause in Investment Treaties’, Private Law Studies Quarterly, Vol.48, No.1, pp. 115-131. DOI: 10.22059/JLQ.2018.212397.1006788 (In Persian).
Public Law Studies Quarterly
Volume 53, Issue 4
Winter 2024
Winter 2024
Pages 1741-1762

  • Receive Date 05 February 2021
  • Revise Date 01 September 2021
  • Accept Date 08 November 2021

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