The treatment of dual nationals in Investor-State Dispute Settlement (ISDS) has been a contentious issue, with varying approaches adopted by tribunals and courts. Recently, French courts have weighed in on the matter, with several decisions suggesting that dual nationals may still bring claims under investment treaties, even if they possess the nationality of the host state. The International Centre for the Settlement of Investment Disputes Convention, which governs many investment treaties, excludes dual nationals from bringing claims against their own state. However, not all investment treaties incorporate this exclusion, leading to uncertainty & divergent approaches by tribunals and courts.
In two recent decisions, French courts have taken a permissive approach to dual nationals’ claims. In Maya Dangelas & Ors. v Vietnam, the Paris Court of Appeal dismissed Vietnam’s application to annul a jurisdictional award, holding that the US-Vietnam Trade Relations Agreement does not preclude dual national claims. Similarly, in Ibrahim Aboukhalil v Senegal, the Court of Cassation refused to set aside the judgment of the Court of Appeal, which had dismissed Senegal’s dual nationality objection.
These decisions suggest that French courts are willing to allow dual nationals to bring claims under investment treaties, even if they possess the nationality of the host state. This approach is at odds with the more restrictive approach adopted by some other tribunals and courts, which have applied the principle of dominant and effective nationality to exclude dual nationals’ claims.
The principle of dominant and effective nationality is rooted in customary international law, which provides that a state may not exercise protection on behalf of its nationals against a state that regards the individual as its own national. However, this principle may not be applicable in the context of investment treaties, which create a legal framework that is lex specialis, or special law, that takes precedence over customary international law.
The divergent approaches adopted by tribunals and courts have led to a precarious situation, leaving the fate of dual nationals’ claims uncertain. An effective possible measure to harmonize the practice and achieve the objective of avoiding dual national claims is for the treaties to incorporate this exclusion expressly. This is reinforced by the fact that recent treaties incorporate such express restrictions on dual national claims and require an assessment of the effective nationality of the person to determine if it qualifies as an investor for protection.
However, treaty modification is a long-drawn process, and until then, the question of dual national claims will remain open. Meanwhile, it will be interesting to see how these judicial pronouncements would impact the tribunal practice when dealing with dual national claims. After all, the tribunals would want to avoid the risk of awards being set aside on this ground.
