Dual Nationality in Treaty Disputes

by Tahmidur Remura Wahid | Sep 27, 2025 | Uncategorized | 0 comments

Investor, National, or Both? Dual Nationality in Treaty Disputes — A TRW Law Firm Guide (Dhaka • London • Dubai)

Executive Summary

Global mobility, diaspora investment, and cross-border corporate structures mean more investors hold two (or more) nationalities. Investment treaties, however, were designed around a simpler binary: a foreign investor vs. a host State. Dual nationality disrupts that binary and raises hard questions:

Can a dual national bring a claim against one of their own States if they also hold the other treaty Party’s nationality?
Do ICSID and UNCITRAL tribunals treat dual nationals differently?
Should tribunals import diplomatic protection rules (e.g., predominant/effective nationality) when the treaty is silent?
How do structuring choices (place of incorporation, passports used at entry, tax residence, habitual residence) shape jurisdiction ratione personae?

This TRW Law Firm guide distils the doctrine and the practical playbook—drawing on our cross-border disputes team in Bangladesh, the United Kingdom, and the UAE. We explain how tribunals have approached dual nationality, including recent awards addressing Spain’s BITs and claims by dual Spanish–Latin American nationals, and then convert the jurisprudence into concrete steps for investors, funds, and corporates that need to protect investments while avoiding jurisdictional traps.

Bottom line: the text of the treaty, the chosen forum (ICSID vs. UNCITRAL ad hoc), and evidence of personal and commercial ties (habitual residence, centre of interests, taxation, family, business footprint) will decide whether a dual national qualifies as an “investor” and whether a tribunal asserts jurisdiction. Drafting and structuring up front beats litigating identity after a dispute arises.

For a broader overview of preparing and prosecuting complex cross-border disputes, see our International Arbitration page.

1) Why Dual Nationality Matters Now

Diaspora capital: Bangladesh-origin families deploy capital from hubs like London, Dubai, Singapore, and Toronto, often with multi-passport households.
Treaty reliance: Protections (fair & equitable treatment, expropriation, MFN, full protection & security, free transfer) are available only to qualifying “investors” of the other Contracting State.
Forum choice: ICSID (Washington Convention) and UNCITRAL (ad hoc) differ materially on dual nationality. ICSID Convention Article 25(2)(a) bars claims by dual nationals of both the home and the host State. Outside ICSID, tribunals turn to treaty text, systemic integration (VCLT 31), and sometimes the predominant nationality test to fill gaps.
Structuring: Holding companies in the UK or UAE (with robust treaty networks) can be decisive—but the natural person’s status and conduct still matter if the claim is brought personally, and denial-of-benefits or ownership/control filters may apply to corporate claims.

2) Nationality in Investment Treaties: Building Blocks

2.1 Jurisdiction ratione personae hinges on treaty definitions

Most BITs define “investor” as a natural person who is a national of one Contracting Party making or owning an investment in the territory of the other. Key variables:

Silence on dual nationality (many older BITs).
Express exclusion of claims by dual nationals vis-à-vis their own State (some modern BITs).
Forum clauses (ICSID vs. UNCITRAL/ICC/LCIA), which import different background rules.

2.2 Forum matters

ICSID Convention: If the claimant is a dual national of both States (home and host), ICSID jurisdiction is excluded—even if the treaty text is silent.
UNCITRAL ad hoc: No Convention bar. Tribunals look to the treaty text, object and purpose, and general international law where appropriate.

2.3 Treaties as lex specialis

When a BIT is detailed about who qualifies as an “investor,” tribunals tend to privilege the BIT’s text over general customary rules (e.g., diplomatic protection limitations), unless the treaty expressly imports them.

3) Two Modern Approaches in UNCITRAL Arbitrations

Recent tribunals examining claims involving Spain and Latin-American dual nationals illustrate two complementary interpretive paths that both led to jurisdiction over dual nationals.

3.1 Path A — Treaty-text primacy / lex specialis

Core idea: If the BIT’s ordinary meaning, context, and negotiating history show no exclusion of dual nationals, a tribunal may uphold jurisdiction without resort to diplomatic protection rules.

What tribunals look for:
The text: does “a national of one Party” necessarily exclude a national of both?
Negotiating history or parallel treaties: did the States know how to exclude dual nationals and choose not to here?
The object and purpose: protection of cross-border investors, predictability, and non-discrimination.
Result: If the treaty is intentionally open, a tribunal can find that dual nationals qualify—treaty as lex specialis.

3.2 Path B — Systemic integration & predominant nationality (when the treaty is silent)

Core idea: Where the BIT is silent and the forum is UNCITRAL, some tribunals apply VCLT Article 31(3)(c) to consider relevant rules of international law and then use the predominant/effective nationality test to decide if a dual national is truly “foreign” to the host State.

Predominant nationality indicators:
Habitual residence and centre of life/economic interests
Family ties, public life engagement, and national attachment
Employment, business operations, financial interests
Tax residence, social security contributions
Passport usage is not decisive if outweighed by other ties
Result: If non-host nationality is predominant, jurisdiction can be affirmed.

Practical takeaway: Under UNCITRAL, dual nationals can often proceed if the BIT’s text doesn’t exclude them or if they can demonstrate predominant foreign nationality vis-à-vis the host State. Under ICSID, dual nationality vis-à-vis the host is a hard bar.

4) The Doctrinal Tension: Diplomatic Protection vs. Investor–State Arbitration

Classical rule (diplomatic protection): A State can’t espouse claims of a dual national against the other State of that person’s nationality, unless the effective nationality is the espousing State.
ISDS evolution: Investor–State arbitration de-links claims from diplomatic espousal; the treaty confers direct standing.
Tribunal responses:
If the treaty is clear, it operates as lex specialis, and customary diplomatic protection limits may be set aside.
If the treaty is silent and the forum is UNCITRAL, some tribunals allow customary law to fill gaps—often through predominant nationality.

5) What This Means for Investors: Five Scenarios

Scenario 1 — Dual national brings a claim under an UNCITRAL clause; BIT silent on dual nationality

Strategy: Prepare a predominant nationality dossier: residence, taxes, family, centre of interests, business seat, voting records, community roles. Minimise reliance on host-State passport in investment-entry documents.
Risk: If evidence tilts toward the host nationality, jurisdiction may fail.

Scenario 2 — Dual national brings an ICSID claim; dual nationality includes the host State

Result: No jurisdiction under Article 25(2)(a), even if the BIT is silent.
Workaround: Consider UNCITRAL under the same consent clause (if available), or restructure the claim through a qualifying company (see corporate path below), subject to denial-of-benefits and ownership/control tests.

Scenario 3 — BIT’s text and history suggest no exclusion of dual nationals

Strategy: Emphasise treaty lex specialis character and States’ conscious choice not to exclude dual nationals. De-emphasise diplomatic protection case law.

Scenario 4 — Corporate structuring through London or Dubai

Strategy: Incorporate a UK or UAE vehicle that genuinely owns and controls the investment (board meetings, banking, accounting, staff, decision-making). Choose a BIT with favourable definitions and no onerous denial-of-benefits clause.
Caution: Tribunals look at substance over form; mere mailbox entities can trigger denial-of-benefits or fail ownership/control tests.

Scenario 5 — Mixed family passports; assets and life in host but capital from abroad

Strategy: If a natural-person claim is contemplated, normalise non-host ties (tax, residence permits, voting, professional affiliations) well before disputes arise. Alternatively, channel the investment through a genuine third-country company as claimant.

6) Drafting & Transaction Playbook (Before a Dispute Exists)

6.1 Choose the forum wisely

Prefer UNCITRAL (or institutional arbitration) where dual nationality risk exists; avoid ICSID if the claimant might be dual with the host.
Include a most-favoured-forum or alternative rules clause if the treaty allows multiple forums.

6.2 Stabilise the “foreignness” of the investor

For natural persons: evidence of habitual residence, tax filings, centre of interests, and public life in the non-host State.
For companies: real seat of management, substance (directors, staff, accounts), banking, and decision logs in the UK or UAE.

6.3 Investment-entry hygiene

Use non-host passports for visas, registrations, licences when feasible.
Keep a clean file: applications, immigration records, tax IDs, lease and utility contracts, schooling, medical registrations—these are jurisdictional exhibits later.

6.4 Corporate structuring

If using a UK vehicle: ensure effective management in London (board calendars, counsel opinions, auditors, bank accounts, substance).
If using a UAE vehicle: consider ADGM/DIFC for common-law framework and reliable corporate documentation; ensure substance (office, staff, governance).

6.5 Mitigate denial-of-benefits

Study the BIT’s DoB clause; avoid mailbox profiles.
Document substantial business activities in the vehicle’s State (contracts, payroll, office, tax submissions).

7) Litigation Strategy: Building the Jurisdictional Record

For UNCITRAL cases with treaty silence (predominant nationality likely relevant):

Habitual residence: multi-year leases, utility bills, phone contracts, voter rolls, immigration records.
Centre of interests: business ownerships, directorships, payroll, bank statements, local memberships.
Family ties: spouse/children residence, schooling, community involvement.
Tax and social security: assessments, filings, contributions.
Travel & passport use: travel history reconciled with residence; explain any host-passport usages.
Narrative consistency: witness statements that match documents; keep a chronology and bundle ready for early phase objections.

For treaty-text primacy cases (lex specialis argument):

Textual analysis: show term “investor” does not exclude dual nationals; examine multilingual texts.
Negotiating history: minutes, aide-mémoire, successive BIT practice showing States knew how to exclude dual nationals.
Object & purpose: investor protection, predictability, neutrality—undermined if dual nationals are blanket-barred absent express language.

8) Host-State Defences & How to Prepare

ICSID bar: If ICSID is chosen and the claimant has host nationality, expect immediate Article 25 objection.
Predominant nationality: Host will argue claimant’s ties are overwhelmingly domestic; prepare counter-matrix.
Abuse of process / treaty shopping: If restructuring occurred after the dispute was foreseeable, a tribunal may decline jurisdiction; establish a timeline showing business-driven reasons for the structure.
Denial-of-benefits: Host asserts claimant is a shell controlled by third-country nationals with no substantial activity; keep substance files.
Fork-in-the-road / waiver: Watch for prior domestic litigation and waivers embedded in treaty consent.

9) London & Dubai as Strategic Anchors

London (UK)

Treaty structuring: English corporate vehicles can anchor claims under UK BITs, many of which remain favourable.
Arbitration seat: London offers a sophisticated judiciary, pro-arbitration enforcement, and interim measures support.
Evidence & counsel: English-law opinions on nationality, corporate control, and effective management carry significant weight.

Dubai (UAE)

Corporate platform: ADGM/DIFC give common-law courts and high-quality corporate records—useful for proving substantial activity.
Regional reach: For MENA assets and counterparties, Dubai is a practical base for witnesses, documents, and enforcement.

Dhaka (Bangladesh)

Origin of investment: Many claimants will have Bangladesh-origin capital; assembling tax, banking, and remittance evidence in Dhaka often proves centre of interests outside the host State.
Government engagement: Where appropriate, we align BIDA, Bangladesh Bank, and Ministry records with the arbitral narrative.

10) Decision Tree — Are You a Qualifying “Investor”?

What forum is available?

ICSID only → If dual with host: no jurisdiction. Consider UNCITRAL alternatives in the treaty.
UNCITRAL available → Proceed to text analysis.

What does the BIT say?

Express exclusion of dual nationals vis-à-vis their own State → likely no jurisdiction for natural persons.
Silent/ambiguous → Prepare either lex specialis argument (text/history) or predominant nationality dossier (or both, in the alternative).

Do you meet the predominant nationality test?

Yes (habitual residence, centre of interests, taxes, family outside host) → stronger jurisdiction case.
No → consider corporate claimant route with substance in UK/UAE.

Any denial-of-benefits or abuse risk?

If restructuring occurred pre-dispute and the vehicle has substance, risk is reduced.
If post-dispute or nominal presence only, expect objections.

11) Corporate Route vs. Natural-Person Route

Route	Pros	Cons	When to Choose
Natural Person	Simpler identity; control evident; direct harm narrative	ICSID bar if dual with host; predominant nationality scrutiny at UNCITRAL	Strong non-host ties; clean treaty text; early investment-entry hygiene
Corporate Vehicle (UK/UAE)	Avoids personal dual-nationality hurdles; leverages favourable BIT network; clearer ownership/control tests	Denial-of-benefits risk; need substantial activity and timing free from abuse	Medium/large tickets; multi-jurisdiction assets; capacity to build substance

12) Common Pitfalls and How to Avoid Them

Using the host passport for investment licences while later claiming foreign nationality: build a paper trail explaining necessity and preserving the foreign identity in parallel.
Mailbox companies with no auditors, staff, or real board: invest in substance (office, payroll, contracts).
Late restructuring after governmental measures arise: restructure early; document commercial motives.
Ignoring tax and social security footprints: they are powerful predominant nationality indicators—plan them.
Overlooking denial-of-benefits clauses: engage them explicitly in the structuring memo and ensure qualifying activity.

13) Procedural Tips for Counsel Teams

Phase early: Expect a jurisdiction bifurcation; front-load nationality evidence.
Multilingual treaty analysis: Identify differences in language versions that support broader investor coverage.
Experts: Retain public international law experts on nationality and diplomatic protection; corporate governance experts for control/substance.
Witnesses of fact: Prepare credible testimony on residence, business commitments, and family life in the non-host State.
Chronology discipline: A one-page timeline with passport usages, visas, tax filings, school enrolments, leases, board minutes, and bank openings often wins or loses jurisdiction.

14) Key Takeaways for Boards & Investment Committees

Forum choice first: If a natural person could be dual with the host, don’t lock yourself into ICSID.
Treaty text rules: Where the BIT doesn’t exclude dual nationals, a text- and context-first approach can carry jurisdiction.
If in doubt, prove “predominant” foreign nationality: residence, taxes, family, and centre of interests.
Corporate path works—but only with substance and timely structuring.
London + Dubai + Dhaka: Use the tri-hub to align evidence, forum, and enforcement.

15) Structured Summary Table

Topic	What It Decides	Practical Test	Risk Controls	TRW Support
Forum (ICSID vs. UNCITRAL)	If dual-with-host person can sue	ICSID Article 25(2)(a) is a bar; UNCITRAL allows treaty-text & predominant nationality analysis	Draft multi-forum clauses; prefer UNCITRAL when dual-national risk exists	Treaty and forum mapping; clause drafting
Treaty Text vs. Custom	Whether lex specialis overrides diplomatic protection rules	If text/history don’t exclude dual nationals, tribunal may accept jurisdiction	Capture travaux, parallel practice; multilingual analysis	Treaty analytics; submissions
Predominant Nationality	Who you “really” are for the dispute	Residence, centre of interests, family, taxes, public ties (passport use is secondary)	Build dossier years in advance; normalise non-host ties	Evidence build; expert reports
Corporate Vehicle	Alternative to natural-person claim	Ownership/control; substantial activities; DoB clauses	Substance (board, staff, banking), timing (pre-dispute), documented business rationale	UK/UAE corporate structuring; compliance
Denial-of-Benefits	Host’s shield against shells	Substantial business activity in home State	Audited accounts, payroll, office lease, contracts, tax filings	Substance planning; audit trail
Abuse of Process	Bars restructuring after dispute	Foreseeability timeline	Early structuring; contemporaneous memos	Timeline curation; advocacy
London/Dubai Seats	Procedure & enforcement support	Pro-arbitration courts, interim measures, recognition	Choose seat to match assets/witnesses; keep licensing options	Seat selection; playbooks

How TRW Law Firm Helps (Dhaka • London • Dubai)

Pre-dispute structuring: Treaty and forum analysis; UK/UAE vehicle formation with substance; denial-of-benefits risk management.
Evidence architecture: Predominant nationality dossiers; investment-entry hygiene; multilingual treaty analysis and travaux.
Arbitration strategy: Jurisdictional memorials, bifurcation tactics, expert selection, witness preparation.
Enforcement: Seat selection (London/ADGM/DIFC), interim relief, asset tracing, licence-conditioned collections.

Start a conversation with our cross-border team via International Arbitration.

Contact TRW Law Firm

Tahmidur Remura Wahid (TRW) Law Firm

Dhaka (Head Office): House 410, Road 29, Mohakhali DOHS
Dubai: Rolex Building, L-12, Sheikh Zayed Road
London: 330 High Holborn, London WC1V 7QH, United Kingdom

Phone: +8801708000660 · +8801847220062 · +8801708080817
Email: [email protected] · [email protected] · [email protected]

We advise investors, funds, multinationals, and States on complex treaty disputes, with a particular focus on jurisdictional strategy, nationality issues, and enforcement.

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