0 1LL.M. (New York University), M.Phil., LL.M. and Dr.iur. in International Law (University of Vienna); Legal Advisor, Federal Chancellery of Austria, Vienna. He may be contacted at: ‹email@example.com).
CaseConceminytheBarcelonaTraction,LiyhtandPowerCompany,Limited(Belgiumv.Spain) (hereinafter BarcelonaTraction), LC.J. Reports 1970, paragraph 70. 2 Ibid., at paragraph 89. Ibid., at paragraph 56.
a Pia Acconci, DeterminingtheInternationallyRelevantLinkbetweena StateandaC:orporateIrwestor-RerernTrendsconcerningtheApplicationofthe"GCIlllilleLink"Test, 5J.W.I.T. 1, 139, at 148 (February 2004). 5 Done at Washington, D.C., 18 March 1965, and entered into force 14 October 1966; 1 IcsiD Reports 3. Article 25(2)(a) deals with natural persons. 6 Recent awards in this respect include ContinentalCasualtyCompanyv.17uArgentineReyublic, IcsiD Case No. ARB/03/9, Dccision onjurisdiction, 22 February 2006, paragraph 82, available at: ; and Suez,SociedadGerteral deAguas deBarcelonaS.A.,andInterAguasServiciosIntegralesdelAguaS.A.v.TheArgentineRepublic, ICSID Case No. ARB/03/17, Decision on Jurisdiction, 16 May 2006, paragraph 50, available at: . 7AzurixCorporationv.TheArgentineRepublic, ICSID Case No. ARS/O1/12, Decision on Jurisdiction, 8 December 2003, paragraphs 63 and 65; available at: �http://ita.law.uvic.ca/documents/ Azurix Jurisdiction_OOO.pdf>. " See Christoph Schreuer, ShareholderProtectioninInternationalInvestmentLaw, 2(3) Transnational Dispute Management 8-9 (2005) and the cases referred to; Stanimir A. Alexandrov, l7re"BabyBonrnofTreaty-basedArbitratioiisandtheJurisdictionofICSIDTribunals:Shareholdersas"Investors"andJurisdictionRationeTemyoris, 4 The Law and Practice of International Courts and Tribunals 19, at 30 (2005) ("In sum, it is beyond doubt that shareholders have Standing in ICSID to submit separate Claims and independent from the claims of the corporation."). 9 Christoph Schreuer, TheIcs1DConvention:ACommentary, Article 25, paragraphs 462-464 (2001). 10 Ibid., at paragraph 468.
" Chittharanjan F. Amerasinghe, Interpretationof Article25(2)(b)oltheIcsidConvention, in Richard B. Lilich and Charles N. Brower (eds.), InternationalArbitrationintdre2lstCentury:Towards'judicializatioti"andUniformity? 223, at 241 (1994) ("The approach should indine towards intcrpreting the concept of `control' always infavoremjurisdictionis, since the parties have already agreed to invoke the jurisdiction of IcsW ."). 12 Schreuer, supra note 9, at paragraph 563. See also Christoph Schreuer, AccesstoICSIDDisputeSettlement forlocallyincorporatedcompanies, in Friedl Wciss, Erik Denters, and Paul de Waart (eds.), InternationalEconomicLawwishaHumaanFace 497, at 509 (1998). 13 See Article 17(1) Energy Charter Treaty (ECT) ("Each Contracting Party reserves the right to deny the advantages of this Part to a legal entity if citizens or nationals of a third state own or control such entity and if that entity has no substantial business activities in the Area of the Contracting Party in which it is organized."); Article 1113(2) North American Free Trade Agreement (NAFTA); Article 17(2) United States Model BIT. '4 TokiosTokelesv.Ukraine(TokiosTokeles), ICSID Case No. Anti/02/18, Decision on Jurisdiction, 29 April 2004, paragraph 3; available at: . 15 Ibid., at paragraphs 1 and 2. 16 Ibid., at paragraphs 21 and 22.
17 Ibid., at paragraph 55. 18TokiosTokelesv.Ukraine,DissentingOpinionofProperWeil, paragraph 21; available at: Tokios Tokeles,DissentingOpinion)."Panevezys-SaldutiskisRailwayCase(Estoniav.Lithuania), P.C.Ij. 1939, Series A/B, No. 75, paragraph 16. 20NottebohmCase(Lierhtensteinv.Guatemala), LC.J. Reports 1955, paragraph 22.
zrBarcelonaTraetio/l,supra note 1, at paragraph 70. zzBareelollaTraction,SeparateOpinionofJudgeFitzmaurice,supra note 1, at paragraphs 79-84. See also Lucius C. Caflisch, TheProtectioii ofCorporateInvestmentsAbroadintheLightcftheBarcelonaTractionCase, 31 Zeitschrift ftir Ausländisches Öffentliches Recht und Völkerrecht 162, at 178 (1971); Okan Beygo, NationalityofCorporationsinInternationalClaimsArisinqoutofForeignInvestmentDisputes, 46 Revue Hcllcnique de Droit International 33. at 54 (1993); Sir Arthur Watts, Nationalityofclaims:somerelevantcoiicepts, in Vaughan Lowe and Malgosia Fitzmauricc (eds.), FiftyYearsof theInternationalCourtof Justice, 424, at 432 (1996). BarcelonaTraction,SeparateOpinionofjudgejesstip,supra note 1, at paragraphs 170-171. z^BarcelonaTraction,SeparateOpinionsof Judgesl'adillaNervoandGros,supra note 1, at paragraphs 254 and 280- 283, respectively. z5 Acconci, supra note 4, at 145-146. 26 Konrad Ginther, Nationalityof Corporations, 16 Österreichische Zeitschrift für Öffentliches Recht 27, at 80 (1965) (concluding his analysis by stating that "it may be called a principle of law recognised with regard to the nationality of corporations that there tnust exist a yenuinelink between the corporation and the state clairning the former as a national for purposes of diplomatic protection" (emphasis original); Caflisch, supra note 22, at 177; Christopher Staker, DiplomaticProtectionofPrivateBusinessCompanies:DeterminingCorporatePersonalityforInternational LawPurposes, 61 British Yearbook of International Law 155, at 159 (1990); lan Brownlie, PrinciplesofPublicInternational Law 465 (6th ed., 2003) (adding that "a caution is needed against easy acceptance of any general proposition as a definitive summary of the law. Much dcpcnds on the terms of the relevant agreements").
27BarcelonaTraction,supra note 1, at paragraph 90. 28CaseConcerningElettrollicaSiculaS.p.A.(UnitedStatesv.Italy), IC.J. Reports 1989, paragraphs 64 and 69 (hereinafter Ei st). Unlike BarcelonaTraction, the ELsi case was not decided on the basis of customary international law but concemed the application ofthe Friendship, Conunerce and Navigation (FcN) Treaty ofthe United States and Italy. Nevertheless, some commentators argued that the Court in ELSI retreated from BarcelonaTraction as to the diplomatic protection of shareholders. See, for example, Sean Murphy, TheELSICase:AnInvestmentDisputeattheInternationalCourtof Justice, 16 Yale Journal of International Law 391, at 393 (1991); F.A. Mann, ForeignInvestmentintheInternationalCourtofJustice:T7ieEL�1Case, 86 Americau Journal of Intemational Law 92, at 97-98 (1992). FcN treaties are predecessors of BITS, common mainly before the Second World War. While many ofthe substantive BIT provisions may be traced to FcN treaties, the FcN treaties lack one important protection-they do not provide for investor-State dispute settlement. See, for example, Kenneth J. Vandevelde, UnitedStatesInvestmentTreaties:PolicyandPractice, 14-22 (1992). 29 International Law Comniission, Fifty-eighth session, DraftartidesonDiplomaticProtectionadoptedbytheDraftingCommitteeonsecondreading, Article 9, A/CN.4/L.684 (2006). See also John Dugard, Seventhreportondiplomaticprotection, A/CN.4/567, paragraphs 52-55 (2006); International Law Commission, Fifty-eighth session, DiplomaticProtectiott---Commentsandobservationsreeeived fromGovemments, 27-29, A/CN.4/561 (2006). At this point, it seems worthwhile to mention that former Draft Articles were less explicit on thc subject. See, for example, International Law Commission, Fifty-sixth Session. DraftarticlesadoptedbytheDrajiingCommitteeonfirstreading, Article 9, A/CN.4/L.647 (2004) ("For the purposes of diplomatic protection, the State of nationality means the State under whose laws the corporation was formed and in whose territory it has its registered officc or the seat of its management or similar connection.").
30 See in this context also the concept of the "pseudo-foreign corporation" introduced by Elvin R. Latty, Pseudo-ForeignCorporatiotis, 65 Yale Law Journal 137-173 (1955). The essence of this doctrine is the question of application of local law to corporations essentially local in character but incorporated in a forcign State. The problem has also been extensively discussed in Gennany in die context of the United States-Germany FcN Treaty. Article 7ocv, paragraph 5 of this Treaty deals with the recognition of corporations incorporated in the other State. It is acknowledged that there has to be a genuine link. Thus, a pseudo-foreign corporation incorporated in the United Statcs without a genuine link may not be recognized by Germany, particularly in case such a corporation docs not engage in any business activities in Germany. An incorporation in the United States merely to circumveut corporation law is deemed to be an abuse of rights which leads to non-recognition. German courts have regularly mled that such corporations need not be recognized. See, for example, Bundesgerichtshof, Judgment of 29 January 2003-vm ZR 155/02 and Judgment of 10 October 2004-t ZR 245/01. See also Carsten T. Ebenroth and Birgit Bippus, DieAnerkennungsproblematikimInternationalenGesellschaftsrecht, 41 Neue Juristische Wochenschrift 2137-2146 (1988). Gennany does not have a bilateral investment treaty with the United States; see: Barcelona TractionRevisited:Foreign-OumedandControlledCompanies, in Yoram Dinstein and Mala Tabory (eds.), InternationalLaw ataTimeofPerplexity, 699, at 706 (1989). See also Ignaz Seidl-Hohenveldem, DieEntwicklungderdiplomatischmProtektion für juristischePersonen, 16-17 (1991). At this point, it should also be noted that the Court in BarcelonaTraction merely mentioned some situations in which the corporate veil may be lifted but arguably did not intend to provide an exhaustive list ("for instance"). See supra at note 3 and accompanying text. azTokiosTokeles,DissentingOpinion,supra note 18, at paragraph 30.
3' Sir Robert Jennings and Sir Arthur Watts (eds.), Oppenheim'sInternationalLaw, Vol. I, 516-518 (9th ed., 1992). It should bc pointed out that these rules apply to natural persons; however, as just mentioned, one may at least broach the issue of applying thc pnnciple to juridical persons as well. 3aRestatement(Third)of theForeignRelationsLagof theUnitedStates, §213 n.2 (1986). Compare that Statement with the stricter formulation of the 1(,.j in the BarcelonaTraction case: "The wealth of practice already accumulated on the subject in municipal law indicates that the veil is lifted, for instance, toprevelltthemisuseo_f theprivi/�qesof legalpersonality..."BarcelonaTractioll,supra note 1, at paragraph 56 (cmphasis added). 35 Francisco Garcia-Amador, Louis Sohn and Richard Baxter, RecentCodificationoftheLawofStateResponsibility forInjuriestoAlietis 83 (1974). See also Lucius C. CaAisch, LaProtectiondessocierescommercialesetdesinteretsindirectsendroitinternationalpublic 140 (1969) (stating that "la 'nationalite' conferce a unc entite par la legislation de l'Etat demandeur sur la base du critere de l'incorporation perd son cffectivitc et, partant, son opposabilite, quand l'entite est contrölee, directement ou indirectement, par des individus ressortissants de l'Etat defendeur"). 36MonteBlancoRealStateCorp., Decision No. 37-B (American-Mexican Claims Commission of 1942), reprinted in Report to the Secretary of State 191, 195 (1948). It should be noted that the Icj in BarcelonaTraction negated the status of arbitral decisions as sources of international law; sec BarcelonaTraction,supra note 1, at 40. International publicists, however, persuasively criticized this determination and tended to recognize claims commissions decisions as sources of international law. See, for example, W. Michael Reisman, NullityandRevision 555 (1971); Richard B. Lilich, TheRigidityof Barcelona, 65 Americanjournal of International Law 522, at 525 (1971).
37S.S."I'mAlone"(Canadav.UnitedStates), Special Agreement, Convention of 23 January 1924 between the United States and Great Britain to Aid in the Prevention of Smuggling of Intoxicating Liquors into the United States, 3 R.I.A.A. 1610, 1617-1618 (1935). See also Caflisch, supra note 35, at 108-111. 3" See Article 4 of the Convention reprinted in 3 R.I.A.A. 1611-1613. One commentator, however, criticized the Decision by arguing that the Commissioners in the 1'mAlone case gave virtually no reasons for their conclusions. See Sir Gerald Fitzmaurice, TheCaseof theI'mAlone, 17 British Yearbook of Intemational Law 82, at 95 (1936). 39DecisionoftheChile-UnitedStatesCommissionurithregard totbedisputeconcerrrinRresponsi6ility forthedeathsofLetelierandMoffitt, 11 January 1992, Separate Concurrent Opinion of Commissioner Vicuna, 31 I.L.M. 17-18 (1992). 4° Francisco Orrego Vicuna, ChanginyApproarhestotlieNationafityofClaitnsintheContextofDiplantaticProtertionandInternationalDisputeSettlement, 15 IcsiD Review-Foreign Invcstment Law Journal 340, at 360 (2000). Thus, as a matter of policy, one may be critical of the approach endorsed here, namely to stress, if not to reinforce, the position of the State in the international system.
4�BarcelonaTrnction,supra note 1, at paragraph 90. 4z Chittharanjan F. Amerasinghe, JurisdirtionRationePersonaeundertheConventionontheSettlementof InvestmentDisputes6etweenStatesandnationalsofotherStates, 47 British Yearbook of International Law 227, at 244-245 (1974-1975); Beygo, supra notc 22, at 69. ;3 Aron Broches, TheConventionontheSettlernentofInvestmentDisputesbetweenStatesandNationalsofOtherStates, 136 Recueil des Cours 331, at 349-350 (1972). 44 Ole Spiermann, IndividualRights,StateInterestsandthePowerto Waive/C�/DJurisdictionunderBilateralInvestmentTreaties, 20 Arbitration Intemational 179, at 202 (2004). 4S It should be noted that in the context of natural persons, ICSID tribunals have rejected the importance of "effective nationality", particularly in the context ofArticle 25(2)(a) ("[A]ny person who ... also had the nationality of the Contracting State party to the dispute is excluded from the possibility of bringing his dispute under the arbitration procedure of the Convention."). See, for cxample, ChampionTradingCompany,AmeritradeInternational,Inc. JamesT.Wahba, johnB.WahbaatidTimothyT.Wahbav.ArabRepublicof Egypt, ICSID Case No. ARβ/02/9, Decision on Jurisdiction, 21 October 2003; available at Champion Trading). But see also the most recent United States Model Bm, which states that "a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality"; Treaty between the govemment of the United States of America and the governmcnt of [country] concerning the encouragement and reciprocal protection of investment, available at: . A claimant under the BIT would, ofcourse, still have to satisfy the requirements ofArticle 25(2)(a) ofthe Convention. '� See supra Introduction, at notes 9 and 10. See also Amerasinghe, supra note 42, at 255. According to another commentator, however, "therc are good grounds for holding that the test of corporate nationality is the nationality of the majority of the shareholders of the company". See Muthu-Cumaraswamy Sornarajah, StateResponsibilityandBilateralInvestmentTreaties, 20 Journal of World Trade Law 79, at 88 (1986).
47 See, for example, CableTelevisionof Nevis,LtdandCableTelevisionofNevisHoldings,Ltdv.FederationofSt.Christopher(St.Kitts)andNevis, ICSID) Case No. Aat;/95/2, Award of 16 December 1996, 13 IcSiD Review- Foreign Investment Law Journal 328 (1998). Compare Amazu A. Asouzu, AReviewandCritiqueof ArbitralAuardsonArtide25(2)(b)of theIcsiDConvention, 3 J.W.I. 3, 397, at 406 (June 2002). 48VaccumSattProductsLtdv.Covernmentof theRepublicof Ghana, ICSID Case No. ARB/92/1, Award of 16 February 1994, 9 IcsiD Review-Foreign Investment Law Journal 72, paragraph 36 (1994). Compare Aron Broches, DenyingICSlD'sJurisdiction-TheAwardinVacuumSaltProductsLimited, 13 Journal of Intemational Arbitration 21-30 (1996). 4vAmcoAsiaCorporationandOthersv.RepublicofIndonesia, IcsiD Case No. ArZS/81/1, First Award, 20 November 1984, reprinted in 1 ICSID Reports 413, paragraph 14 (1985). 50SociitiOuestAfricailledesBeton.sIndustrielsv.Senegal, IcsiD Case No. Alts/82/1, Award of 25 February 1988, reprinted in 2 IcsiD Reports 190 (1994). On the subject of reconciling these two decisions, see Schreuer, supra note 9, at 563; Robert Wisner and Nick Gallus, NationalityRequirementsinInvestor-StateArbitration, 5 J.W.I.T. 6, 927, at 935-936 (December 2004); Omar E. Garcia-Bolivar, ForeignInvestmentDisputesunderICSID--AReviewof itsDecisionson Jurisdiction, 5 J.W.I.T. 1, 187, at 199 (February 2004). 51 AutopistaConcesionada deVenezuela,C.A.v.BolivarianRepublicofVenezuela, IcsiD Case No. ApB/00/5, Decision on Jurisdiction, 27 September 2001, paragraph 116; available at:
5z Asouzu, supra note 47, at 419. 5'WenaHotelsLimitedv.ArabRepublicofEgypt, l(�sii) Case No. Atttt/98/4, Summary of Minutcs of the Session ofthe Tribunal held in Paris on 25 May 1999, 41 LL.M. 881, at 887. 54 Id. 55 Id. 56 Ibid., at 888.
51Mr.FranzSedelmayerv.TlreRussianFederation(throughtheProcurementDepartmentofthePresidentoftheRussianFederation), Arbitration Award of 7 July 1998 rendered at the Placc of Arbitration Stockholm, Sweden, at 58; available at: . In his Dissenting Opinion, the arbitrator appointed by the Russian Federation, Professor Zykin, came to the opposite conclusion, distinguishing the present case from the Lesr case. See Dissenting Opinion of Arbitrator Professor Ivan S. Zykin, anncxcd to the SedelnrayerAward. See also Schreuer, supra note 8, at 16 (noting that the significance of the Sedelmayer case is limited., mainly because the "reasoning in the majority decision is not particularly strong"). sR ChampionTrading,supra note 45, at 3.4.1. 1. 51 Wisncr and Gallus, supra note 50, at 929.
6" AquasdelTunari,S.A.v.RepublicofBolivia, ICSID Case No. Aits/02/3, Decision on Respondent's Objections to Jurisdiction of 21 October 2005, paragraph 332 (footnote omitted); availablc at: ,http://www.worldbank.orglicsid/cases/ AdT _Dccision-cn.pd6 (hereinafter AguasdelTunan). 61 AguasdelTunari,DeclarationofJoseLuisAlberro-Semerena, paragraphs 8, 22, and 40. 62 S.D.Meyersv.GovemnentofCanada(CINC:I'1'RAL), Partial Award of 13 November 2000, paragraph 229; available at: .
63LoewenGroup,Inc.&RayL.oewenv.UnitedStatesof America, ICSID Case No. ARβ(AF)/98/3, Award of 25 June 2003, paragraph 223; available at: . On the central issue in Loewen, see, for cxample, Jan Paulsson, ContinuousNationalityinLoewen, 20 Arbitration International 213-215 (2004). � See supra at note 29.
05 TokiosTokeles,suprn note 14, at paragraphs 27. Though obvious, it seeks important to note this because it shows, at least in this author's reading, that the Tribunal may have fallen ahort of intcrprcting the terms of the treaties "in their context and in light of [their] object and purpose". 66 Ibid., at paragraph 28. 67 Ibid., at paragraphs 30 and 31. Referring to the Preamble of the BIT ("intensify economic coopcration to the Mutual benefits of both States" and "create and maintain favourable conditions for investmcnt of invcstors of one State in thc tcrritory of the other State"), the Tribunal found that "the object and purpose of the Ukraine-Lithuania BIT is to providc broad protection of investors and their investments". Ibid., at paragraph 31. �s See Articlc 17(1) E(:T; Article 1113(2) NAFTA; Article 17(2) United States Model BIT. In the Decision on Jurisdiction in the PlamaConsortium case, the Tribunal had to interpret Article 17 Echt. With regard to the scope of Article 17 ECT, it concluded that thc denial of bcncfits rule applied only to advantages under Part 111 (i.e. the provisions on investment promotion and protection) but not to Article 26 of part v of the ECT (i.e. the provisions on the settlement of disputes between an investor and a contracting party) and that, therefore, the Respoudent's case on Article 17(1) EcT could not support a complaint to the jurisdiction of the Tribunal in that case. PlamaConsortiumLimitedv.RepublicofBulyaria, ICSID Case No. AKB/03/24, Decision on Jurisdiction, 8 February 2005, paragraphs 147 and 151; available at: �http://www.worldbank.org/icsid/cases/plama-decision.pdf>. See also Eduardo Savarese, InvestmentTreatiesandtheInvestor'sRighttoArbitration-BetweenBroadenillgandLilllitillgICSIDJurisdictian, 7 J.W.LT. 3. 407-421 (June 2006). GYTokiosTokefes,supra note 14, at paragraph 36. 7U Ibid., at paragraph 38. 71 Ibid., at paragraph 40.
'z Ibid., at paragraph 42 (footnote onitted). '3 Ibid., at paragraph 43. 74 Ibid., at paragraph 44. 75 Ibid., at paragraph 50. 'h Ibid., at paragraph 52. At this point, the Tribunal conceded that some tribunals have taken a distinctive approach. It singled out SGsSncieteGenerale deSurveillanceS.A.v.lslamieRepublicof Pakistan, Decision on Jurisdiction of 6 August 2003, ICSID Case No. ARB/01/03, 42 I.L.M. 1290, in which that Tribunal excluded contract claims from the scope of"disputes" that could bc submitted to ICSID arbitration. Ibid., at paragraphs 161-162. " Ibid., at paragraph 54. See suyra Introduction, at note 3 and accompanying text. 78TokiosTokeles,supra note 14, at paragraph 56.
79 See supra at note 31. 1 . 80 See supra at note 29. 81 To be sure, the question of lifting the corporate veil did not necd to be raised in the E�sr case because the shareholders were already protected by the provisions of the Fcn Treaty, the applicability of which was at stake. But see Et..si,SeparateOpinionofjudgeOd�i,supra note 28, at paragraphs 86 etseq. (arguing that notwithstanding the provisions of the F<:N Treaty, the rights of thc two U.S. companies in thc case stayed the same and were not breached by the rcquisition order because it did not affect the "direct rights" of the corporations as shareholders of thc Italian company). 82 See supra Section iv, at note 63 and accompanying text. 83TokiosTokeles,supra note 14, at paragraph 65. 84 TokiosTokeles,DissentingOpinion,supra note 18, at paragraph 5. R5 Reportof theExecutiveDirectorsontheConverrtion; available at: .
8(>TokiosTokeles,DissentingOpinion,suprn note 18, at paragraph 14. 87 Ibid., at paragraph 16. 88 Ibid., at paragraph 19. 89 Ibid., at paragraph 20. 1)0 Kenacth J. Vandevelde, TheEcofioniicsof BilateralInvestmentTreaties, 41 Harvard International Law Journal 469, at 492 (2000). 91TokiosTokeles,DissentingOpinion,supra note 18, at paragraph 21.
1)2 Ibid., at paragraph 23. 9.1 Ibid., at paragraph 29. "aWasteManagement,Inc.v.UnitedMexicanStates, ICSID Case No. ARB(AF)/00/3, Final Award, 30 April 2004, paragraph 85; available at: . But see the Statement of the Icj in Ei-si,suyra note 28, at paragraph 50 (noting that without any explicit expression ofthe intention ofthe parties to thc treaty it is impossible through the provisions of a treaty to dispense with a customary rulc of international law); sec also Schreuer, supra note 9, at 278-279 and 332. 95 Wisner and Gallus, supra note 50, at 944. 96 Alexandrov, supra note 8, at 37. y� Ibid., at 40.
9s See supra Sections m and m. 19 Schreuer, supra notc 8, at 17.
100 According to Professor Chander, the important question is "Do We the People retain the powcr to review international issues through ordinary political processes?" and to that the answer is yes: "[international law perntits the people (at least the peoples of economically powerful states) to review, revise and reject its rules." Anupam Chander, GlobalizationandDistrust, 114 Yale Law Joumal 1193, at 1226-1227 (2005). 101 Andrea K. Bjorklund, ReconcilingStateSovereigntyandIrtvestor13rotectiotiinDenialofJusticeClaims, 45 Virginia Joumal of International Law 809, at 882 (2005). See generally Susan D. Franck, 77teLeqitimacyCrisisinInvestmentTreaty.Arbitration:PrivatizingPublicInternationalLawthroughInconsistentDecisions, 73 Fordham Law Review 1521-1625 (2005); but see also Jan Paulsson, DenialofJusticeinInternationalLaw 241-246 (2005) (suggesting that concems about legitimacy issues are overstated and premature). 1�2 Harold. H. Koh, WhyDoNationsObeyInternationalLaw? 106 Yalc Law Journal 2599, at 2651 (1997). An overvicw of international legal compliance is given in Markus Burgstallcr, 77teories ofCompliarrcemitltInternationalLaw (2005). 1111 Ronald Dworkin, Law'sEmpire 217 (1986). 104TokiosTokeles,DissentingOpinion,supra note 18, at paragraph 23. t°5 Gus Van Harten and Martin Loughlin, InvestmentTreatyArbitrationasaSpeciesof GlobalAdministrativeLaw, 17 European Journal of International Law 121, at 139 (2006).
'°�ReportoftheExecutiveDirectors,supra note 85, at paragraph 9. 107HusseinNuamanSoufrakiv.TheUnitedArabEmirates, ICSID Case No. ARH/02/7, Award of 7 July 2004, paragraph 45; available at: http://ita.Iaw.uvic.ca/documents/Soufraki-000.pdf�. �°s Ibid., at paragraph 83. See in this respect also thc Decision in ChampionTrading,supra note 45, discussed supra at notes 58 and 59 and accompanying text. 109 See, for example, Anthony C. Sinclair, Natiollalityof Individual lnvestorsinIcsiDArbitration-TheAwardinSoufrakiv.TheUnitedArabEmirates, 1 (2) Transnational Dispute Management (2004). 1111 See, for example, Abraum Chayes and Antonia H. Chayes, 77:eNewSovereignty:CompliancewithInternationalR��1datoryAgreements 1-28 (1995); Kal Raustiala, FormandSubstanceinInternationalAgreements, 99 American Journal of International Law 581, at 607 (2005). But see Eric A. Posner and John Yoo, JudicialIndependenceinInternationalTribunals, 93 Califomia Law Review 1-74 (2005) (arguing that the only effective international tribunals are "dependent", i.e. those staffed byjudges closely controllcd by governments, whereas "independent" tribunals, i.c. those similar to domestic courts, pose a danger to international co-operation, preventing international tribunals from being effective).
111 Bjorklund, snpra note 101, at 887. According to signalling theory, there may be a connection between the cost of signals and the reliability or honesty of sigmals. Signalling thcory was developed by Michael Spence, JobMarketSignalling, 87 Quarterly Journal of Economics 355-374 (1973). 112 More broadly, Goldsmith and Posner recently stressed the limits of international law by arguing that States obey international law, including international judicial decisions, merely when it is in their self-interest. Jack L. Goldsmith and Eric A. Posner, TheLimitsof InternationalLaw (2005), provoking much criticism; see, for example, Oona A. Hathaway and Ariel N. Lavinbuk, BookReview:RationalismandRevisionisminInternationalLaw,119 Harvard Law Review 1404-1443 (2006). 113 Pierre Lahve, TheFirst"WorldBank"Arbitration(HolidayInruv.Moroccor-SomeLegalProblems, 51 British Yearbook of International Law 123, at 141 (1980). "° Australia-United States Free Trade Agreement, 18 May 2004; available at: http://ww-w.dfat.gov.au/trade/ negotiations/us.html>. 115 William S. Dodge, Investar-StateDisputeSettlementBetweenDevelopedCountries:ReflectionsontheAustralia-UnitedStatesFree7'radeAgreement., 39 Vanderbilt Journal of Transnational Law 1, at 3 (2006). NAFTA Chapter Eleven allows for investor-State dispute settlement and marked thc first instance of an investment treaty between two capital-cxporting countries. 116 Barton Legum, TheInnovationofItivestor-StateArbitrationUnderNAFTA, 43 Harvard International Law Journal 531, at 537 (2002). Sovereignty implications are discussed in detail in Chris Tollefson, GamesWithoutFrontiers:InvestorClaimsandCitizenSubmissionsUndertheNAFTARegime, Yale Journal of Intemational Law 141-191 (2002).
� As of 25 January 2006, the last date on which it was updated by Icsm, the List of Contracting States and other Signatories of the Convention comprised 155 States, 143 of which had deposited their instruments of ratification. See the IcsiD Website, at: . ��R Schreuer, supra note 9, at paragraph 488.