Consent and nationality are two concepts of deep significance in ICSID jurisprudence. Consent forms a fundamental pillar of ICSID jurisdiction, and counsel for would-be ICSID claimants regularly advise their clients to express their consent to arbitrate as early as possible. Nationality is an equally core component of ICSID jurisdiction, with the place of incorporation test achieving pre-eminence for determining when a claimant is an ‘investor’ under an applicable investment treaty.
The recent Award in Venoklim v Venezuela revisited these two old chestnuts of ICSID jurisdiction, with noteworthy results.
On consent, the Venoklim Award considered the effect of Venezuela’s denunciation of the ICSID Convention on the jurisdiction that an ICSID tribunal has over a dispute to which the investor consented after notification of Venezuela’s denunciation, but within the six months before that denunciation took effect. This situation had been much discussed in scholarship. Some authors had opined that jurisdiction would only exist over a dispute in which the State had denounced the Convention if the investor had expressed its consent before the denunciation was notified. Others argued that the consent could be expressed during the six month period. Still others concluded that the consent could be given at any point while the State’s consent was extant – which in the case of investment treaties could be long after the denunciation of the Convention had taken effect. The Venoklim Award, while not dealing with many aspects of this debate, held that the expression by an investor of its consent during the six month period meant that its consent was given in a timely manner to establish ICSID jurisdiction. During this period, the denouncing State was still an ICSID Contracting State and its consent to ICSID arbitration subsisted, which consent could be ‘accepted’ and ‘perfected’ by the investor’s consent.
Notable though this finding will be for investors who see a State against which they wish to commence ICSID arbitration suddenly denounce the ICSID Convention, the Venoklim Award is equally notable for its treatment of the issue of nationality. The Dutch claimant was owned and controlled by a Venezuelan company. As a result, Venezuela argued that these facts meant the project in issue was a domestic investment, which should not receive the protections that the claimant invoked under the Venezuelan Investment Law, Dutch-Venezuela BIT and ICSID Convention. The Tribunal agreed. It held that the claimant was not a foreign investor as required by the Venezuelan Investment Law and, eye-catchingly, that the Dutch claimant was not a national of an ICSID Contracting State other than ICSID because, in reality rather than form, it was a domestic Venezuelan investor. In reaching this latter finding, the Tribunal relied on the oft-discussed, but oft-rejected, dissenting opinion of Prosper Weil in Tokios Tokeles v Ukraine. By giving new currency to such a proposition, the Tribunal may have lit the fuse on a new wave of objections by States to the way in which jurisdiction ratione personae over such “foreign structured” claimants operates under the ICSID Convention.
– Lucas Bastin, Arbitration Barrister & Public International Law Specialist