Nationality of Corporate Investors and International Claims against the Investor's Own State

CaseConceminytheBarcelonaTraction,LiyhtandPowerCompany,Limited(Belgiumv.Spain) (hereinafter Barcelona Traction), LC.J. Reports 1970, paragraph 70. 2 Ibid., at paragraph 89. Ibid., at paragraph 56.

a Pia Acconci, Determining the Internationally Relevant Link between a State and a C:orporate Irwestor-Rerern Trends concerning the Application ofthe "GCIlllille Link" 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 Continental Casualty Company v. 17u Argentine Reyublic, IcsiD Case No. ARB/03/9, Dccision onjurisdiction, 22 February 2006, paragraph 82, available at: <http://ita.law.uvic.ca/ documents/ContinentalCasualty-Jurisdiction.pdf>; and Suez, Sociedad Gerteral de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction, 16 May 2006, paragraph 50, available at: <http://ita.law.uvic.ca/documents/Suez-Jurisdiction.pdf>. 7 Azurix Corporation v. The Argentine Republic, 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, Shareholder Protection in International Investment Law, 2(3) Transnational Dispute Management 8-9 (2005) and the cases referred to; Stanimir A. Alexandrov, l7re "Baby Bonrn of Treaty-based Arbitratioiis and the Jurisdiction of ICSID Tribunals: Shareholders as "Investors" and Jurisdiction Ratione Temyoris, 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, The Ics1D Convention: A Commentary, Article 25, paragraphs 462-464 (2001). 10 Ibid., at paragraph 468.

" Chittharanjan F. Amerasinghe, Interpretation of Article 25(2)(b) olthe Icsid Convention, in Richard B. Lilich and Charles N. Brower (eds.), International Arbitration in tdre 2lst Century: Towards 'judicializatioti" and Uniformity? 223, at 241 (1994) ("The approach should indine towards intcrpreting the concept of `control' always in favorem jurisdictionis, since the parties have already agreed to invoke the jurisdiction of IcsW ."). 12 Schreuer, supra note 9, at paragraph 563. See also Christoph Schreuer, Access to ICSID Dispute Settlement for locally incorporated companies, in Friedl Wciss, Erik Denters, and Paul de Waart (eds.), International Economic Law wish a Humaan Face 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 Tokios Tokeles v. Ukraine (Tokios Tokeles), ICSID Case No. Anti/02/18, Decision on Jurisdiction, 29 April 2004, paragraph 3; available at: <http://ita.law.uvic.ca/documents/Tokios-Jurisdiction.pdf>. 15 Ibid., at paragraphs 1 and 2. 16 Ibid., at paragraphs 21 and 22.

17 Ibid., at paragraph 55. 18 Tokios Tokeles v. Ukraine, Dissenting Opinion of Proper Weil, paragraph 21; available at: <http://ita.law.uvic.ca/documents/tokio';-dissenting_opinion.pd6 (hereinafter Tokios Tokeles, Dissenting Opinion). " Panevezys-Saldutiskis Railway Case (Estonia v. Lithuania), P.C.Ij. 1939, Series A/B, No. 75, paragraph 16. 20 Nottebohm Case (Lierhtenstein v. Guatemala), LC.J. Reports 1955, paragraph 22.

zrBarcelonaTraetio/l,supra note 1, at paragraph 70. zz Bareelolla Traction, Separate Opinion of Judge Fitzmaurice, supra note 1, at paragraphs 79-84. See also Lucius C. Caflisch, The Protectioii of Corporate Investments Abroad in the Light cf the Barcelona Traction Case, 31 Zeitschrift ftir Ausländisches Öffentliches Recht und Völkerrecht 162, at 178 (1971); Okan Beygo, Nationality of Corporations in International Claims Arisinq out of Foreign Investment Disputes, 46 Revue Hcllcnique de Droit International 33. at 54 (1993); Sir Arthur Watts, Nationality ofclaims: some relevant coiicepts, in Vaughan Lowe and Malgosia Fitzmauricc (eds.), Fifty Years of the International Court of Justice, 424, at 432 (1996). Barcelona Traction, Separate Opinion ofjudgejesstip, supra note 1, at paragraphs 170-171. z^ Barcelona Traction, Separate Opinions of Judges l'adilla Nervo and Gros, supra note 1, at paragraphs 254 and 280- 283, respectively. z5 Acconci, supra note 4, at 145-146. 26 Konrad Ginther, Nationality of 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 yenuine link 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, Diplomatic Protection of Private Business Companies: Determining Corporate Personality for International Law Purposes, 61 British Yearbook of International Law 155, at 159 (1990); lan Brownlie, Principles of Public International 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. 28 Case Concerning Elettrollica Sicula S.p.A. (United States v. Italy), IC.J. Reports 1989, paragraphs 64 and 69 (hereinafter Ei st). Unlike Barcelona Traction, 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 Barcelona Traction as to the diplomatic protection of shareholders. See, for example, Sean Murphy, The ELSI Case: An Investment Dispute at the International Court of Justice, 16 Yale Journal of International Law 391, at 393 (1991); F.A. Mann, Foreign Investment in the International Court ofJustice: T7ie EL�1 Case, 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, United States Investment Treaties: Policy and Practice, 14-22 (1992). 29 International Law Comniission, Fifty-eighth session, Draft artides on Diplomatic Protection adopted by the Drafting Committee on second reading, Article 9, A/CN.4/L.684 (2006). See also John Dugard, Seventh report on diplomatic protection, A/CN.4/567, paragraphs 52-55 (2006); International Law Commission, Fifty-eighth session, Diplomatic Protectiott---Comments and observations reeeived from Govemments, 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. Draft articles adopted by the Drajiing Committee on first reading, 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-Foreign Corporatiotis, 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, Die Anerkennungsproblematik im Internationalen Gesellschaftsrecht, 41 Neue Juristische Wochenschrift 2137-2146 (1988). Gennany does not have a bilateral investment treaty with the United States; see: <http://www.state.gov/e/eb/ifd/2006/61981 .htm). 31 Giorgio Sacerdoti, Barcelona Traction Revisited: Foreign-Oumed and Controlled Companies, in Yoram Dinstein and Mala Tabory (eds.), International Law at a Time of Perplexity, 699, at 706 (1989). See also Ignaz Seidl-Hohenveldem, Die Entwicklung der diplomatischm Protektion für juristische Personen, 16-17 (1991). At this point, it should also be noted that the Court in Barcelona Traction 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. az Tokios Tokeles, Dissenting Opinion, supra note 18, at paragraph 30.

3' Sir Robert Jennings and Sir Arthur Watts (eds.), Oppenheim's International Law, 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. 3a Restatement (Third) of the Foreign Relations Lag of the United States, §213 n.2 (1986). Compare that Statement with the stricter formulation of the 1(,.j in the Barcelona Traction case: "The wealth of practice already accumulated on the subject in municipal law indicates that the veil is lifted, for instance, to prevellt the misuse o_f the privi/�qes of legal personality ..." Barcelona Tractioll, supra note 1, at paragraph 56 (cmphasis added). 35 Francisco Garcia-Amador, Louis Sohn and Richard Baxter, Recent Codification of the Law of State Responsibility for Injuries to Alietis 83 (1974). See also Lucius C. CaAisch, La Protection des socieres commerciales et des interets indirects en droit international public 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"). 36 Monte Blanco Real State Corp., 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 Barcelona Traction negated the status of arbitral decisions as sources of international law; sec Barcelona Traction, 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, Nullity and Revision 555 (1971); Richard B. Lilich, The Rigidity of 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'm Alone case gave virtually no reasons for their conclusions. See Sir Gerald Fitzmaurice, The Case of the I'm Alone, 17 British Yearbook of Intemational Law 82, at 95 (1936). 39 Decision ofthe Chile-United States Commission urith regard to tbe dispute concerrrinR responsi6ility for the deaths of Letelier and Moffitt, 11 January 1992, Separate Concurrent Opinion of Commissioner Vicuna, 31 I.L.M. 17-18 (1992). 4° Francisco Orrego Vicuna, Changiny Approarhes to tlie Nationafity of Claitns in the Context of Diplantatic Protertion and International Dispute Settlement, 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, Jurisdirtion Ratione Personae under the Convention on the Settlement of Investment Disputes 6etween States and nationals of other States, 47 British Yearbook of International Law 227, at 244-245 (1974-1975); Beygo, supra notc 22, at 69. ;3 Aron Broches, The Convention on the Settlernent of Investment Disputes between States and Nationals of Other States, 136 Recueil des Cours 331, at 349-350 (1972). 44 Ole Spiermann, Individual Rights, State Interests and the Power to Waive /C�/D Jurisdiction under Bilateral Investment Treaties, 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, Champion Trading Company, Ameritrade International, Inc. James T. Wahba, john B. Wahba atid Timothy T. Wahba v. Arab Republic of Egypt, ICSID Case No. ARβ/02/9, Decision on Jurisdiction, 21 October 2003; available at <http://www.worldbank.org/icsid/cases/champion-decision.pd6 (hcreinaftcr 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: <http://ita.law.uvic.ca/documents/USmodelbitnov04.pdf>. 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, State Responsibility and Bilateral Investment Treaties, 20 Journal of World Trade Law 79, at 88 (1986).

47 See, for example, Cable Television of Nevis, Ltd and Cable Television of Nevis Holdings, Ltd v. Federation of St. Christopher (St. Kitts) and Nevis, ICSID) Case No. Aat;/95/2, Award of 16 December 1996, 13 IcSiD Review- Foreign Investment Law Journal 328 (1998). Compare Amazu A. Asouzu, A Review and Critique of Arbitral Auards on Artide 25(2)(b) of the IcsiD Convention, 3 J.W.I. 3, 397, at 406 (June 2002). 48 Vaccum Satt Products Ltd v. Covernment of the Republic of 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, Denying ICSlD's Jurisdiction-The Award in Vacuum Salt Products Limited, 13 Journal of Intemational Arbitration 21-30 (1996). 4v Amco Asia Corporation and Others v. Republic of Indonesia, IcsiD Case No. ArZS/81/1, First Award, 20 November 1984, reprinted in 1 ICSID Reports 413, paragraph 14 (1985). 50 Sociiti Ouest Africaille des Beton.s Industriels v. 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, Nationality Requirements in Investor-State Arbitration, 5 J.W.I.T. 6, 927, at 935-936 (December 2004); Omar E. Garcia-Bolivar, Foreign Investment Disputes under ICSID-- A Review of its Decisions on Jurisdiction, 5 J.W.I.T. 1, 187, at 199 (February 2004). 51 Autopista Concesionada de Venezuela, C.A. v. Bolivarian Republic of Venezuela, IcsiD Case No. ApB/00/5, Decision on Jurisdiction, 27 September 2001, paragraph 116; available at: <http://www.worldbank.org/icsid/cases/ decjuris.pdfi.

5z Asouzu, supra note 47, at 419. 5' Wena Hotels Limited v. Arab Republic of Egypt, 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: <http://wv.-x.investmeiitclaims.coiii/decisioiis/Sedeliiiayer-Riissi�i-JtirisdictioiiandFiiialAward- 7Jull998.pdf>. 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 Champion Trading, supra note 45, at 3.4.1. 1. 51 Wisncr and Gallus, supra note 50, at 929.

6" Aquas del Tunari, S.A. v. Republic of Bolivia, 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 Aguas del Tunan). 61 Aguas del Tunari, Declaration ofJose Luis Alberro-Semerena, paragraphs 8, 22, and 40. 62 S.D. Meyers v. Govemnent of Canada (CINC:I'1'RAL), Partial Award of 13 November 2000, paragraph 229; available at: <http://www.dfait-maeci.gc.ca/tna-nac/documents/myersvcanadapartialaward _final_13-1 1-00. pdf#>.

63LoewenGroup,Inc.&RayL.oewenv.UnitedStatesof America, ICSID Case No. ARβ(AF)/98/3, Award of 25 June 2003, paragraph 223; available at: <http://www.state.gov/documents/organization/8744.pdf>. On the central issue in Loewen, see, for cxample, Jan Paulsson, Continuous Nationality in Loewen, 20 Arbitration International 213-215 (2004). � See supra at note 29.

05 Tokios Tokeles, 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 Plama Consortium 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. Plama Consortium Limited v. Republic of Bulyaria, 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, Investment Treaties and the Investor's Right to Arbitration-Between Broadenillg and Lilllitillg ICSID Jurisdictian, 7 J.W.LT. 3. 407-421 (June 2006). GY Tokios Tokefes, 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 SGs Snciete Generale de Surveillance S.A. v. lslamie Republic of 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. 78 Tokios Tokeles, 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, Separate Opinion ofjudge Od�i, supra note 28, at paragraphs 86 et seq. (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. 83 Tokios Tokeles, supra note 14, at paragraph 65. 84 Tokios Tokeles, Dissenting Opinion, supra note 18, at paragraph 5. R5 Report of the Executive Directors on the Converrtion; available at: <http://www.worldbank.org/icsid/basicdoc/ partB-section03.htm>.

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, The Ecofioniics of Bilateral Investment Treaties, 41 Harvard International Law Journal 469, at 492 (2000). 91 Tokios Tokeles, Dissenting Opinion, supra note 18, at paragraph 21.

1)2 Ibid., at paragraph 23. 9.1 Ibid., at paragraph 29. "a Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Final Award, 30 April 2004, paragraph 85; available at: <http://ita.law.uvic.ca/documents/laudo ingles.pdf>. 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, Globalization and Distrust, 114 Yale Law Joumal 1193, at 1226-1227 (2005). 101 Andrea K. Bjorklund, Reconciling State Sovereignty and Irtvestor 13rotectioti in Denial ofJustice Claims, 45 Virginia Joumal of International Law 809, at 882 (2005). See generally Susan D. Franck, 77te Leqitimacy Crisis in Investment Treaty. Arbitration: Privatizing Public International Law through Inconsistent Decisions, 73 Fordham Law Review 1521-1625 (2005); but see also Jan Paulsson, Denial ofJustice in International Law 241-246 (2005) (suggesting that concems about legitimacy issues are overstated and premature). 1�2 Harold. H. Koh, Why Do Nations Obey International Law? 106 Yalc Law Journal 2599, at 2651 (1997). An overvicw of international legal compliance is given in Markus Burgstallcr, 77teories of Compliarrce mitlt International Law (2005). 1111 Ronald Dworkin, Law's Empire 217 (1986). 104 Tokios Tokeles, Dissenting Opinion, supra note 18, at paragraph 23. t°5 Gus Van Harten and Martin Loughlin, Investment Treaty Arbitration as a Species of Global Administrative Law, 17 European Journal of International Law 121, at 139 (2006).

'°�ReportoftheExecutiveDirectors,supra note 85, at paragraph 9. 107 Hussein Nuaman Soufraki v. The United Arab Emirates, 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 Champion Trading, supra note 45, discussed supra at notes 58 and 59 and accompanying text. 109 See, for example, Anthony C. Sinclair, Natiollality of Individual lnvestors in IcsiD Arbitration-The Award in Soufraki v. The United Arab Emirates, 1 (2) Transnational Dispute Management (2004). 1111 See, for example, Abraum Chayes and Antonia H. Chayes, 77:e New Sovereignty: Compliance with International R��1datory Agreements 1-28 (1995); Kal Raustiala, Form and Substance in International Agreements, 99 American Journal of International Law 581, at 607 (2005). But see Eric A. Posner and John Yoo, Judicial Independence in International Tribunals, 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, Job Market Signalling, 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, The Limits of International Law (2005), provoking much criticism; see, for example, Oona A. Hathaway and Ariel N. Lavinbuk, Book Review: Rationalism and Revisionism in International Law, 119 Harvard Law Review 1404-1443 (2006). 113 Pierre Lahve, The First "World Bank" Arbitration (Holiday Inru v. Moroccor-Some Legal Problems, 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-State Dispute Settlement Between Developed Countries: Reflections on the Australia- United States Free 7'rade Agreement., 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, The Innovation of Itivestor-State Arbitration Under NAFTA, 43 Harvard International Law Journal 531, at 537 (2002). Sovereignty implications are discussed in detail in Chris Tollefson, Games Without Frontiers: Investor Claims and Citizen Submissions Under the NAFTA Regime, 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: <http://www.worldbank.org/icsid/constate/c-states-en.htm>. ��R Schreuer, supra note 9, at paragraph 488.