Research and development in private law

Research and development in private law

Claims Brought by Dual Nationals Sharing the Nationality of the Host State in International Investment Arbitration

Articles in Press

Document Type : Original Article

Authors
Mostafa Afrazandeh
MOHAMMAD JAVAD ABDOLLAHI
Department of Law, Kho.C., Islamic Azad University, Khomeinishahr, Iran
10.22034/jpl.2025.2073611.1250
Abstract
Foreign investment is widely recognized as one of the most influential drivers of economic growth and sustainable development, particularly in developing countries that often face capital shortages. Consequently, many states, through the negotiation and conclusion of bilateral investment treaties (BITs), endeavor to create more favorable, predictable, and secure conditions for investors of the contracting parties. These treaties generally aim not only to protect the substantive rights of investors but also to provide reliable dispute settlement mechanisms. In this regard, because foreign investors are frequently reluctant to rely on domestic courts of host states—perceiving them as potentially biased in favor of the host government—recourse to international arbitration as an impartial and neutral forum has become a fundamental feature of BITs. Within this framework, one of the most controversial issues has been the admissibility of claims submitted by dual nationals who simultaneously hold the nationality of the host state. The question of whether such individuals may appear as claimants in international investment arbitration has long generated debate. ICSID tribunals, in reliance on the explicit rule contained in Article 25(2)(a) of the ICSID Convention, have consistently declined jurisdiction over such claims, thereby excluding them from access to ICSID arbitration. In contrast, other arbitral forums have not followed this rigid exclusion. Depending on the language of the relevant treaty, as well as other considerations such as the doctrine of dominant and effective nationality, they have often taken a more flexible and case-specific approach. The findings of this study, based on a library-oriented method and a careful examination of arbitral practice, confirm that while ICSID tribunals have strictly rejected claims by dual nationals sharing nationality with the host state, other arbitral institutions, including tribunals constituted under the UNCITRAL Rules, have rendered decisions tailored to the circumstances of each dispute. This divergence of practice highlights the complexity, sensitivity, and continuing importance of the dual nationality issue in the broader framework of international investment arbitration.
Keywords
ICSID
UNCITRAL
dual nationals
bilateral investment treaty (BIT)
host state
 
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