Since the provision on the settlement of disputes in the BIT offers to the investor a choice between local courts and ICSID arbitration only, we have to look to these two sources for a definition of investor that is relevant to the needs of the present case. Evidently, in the former alternative of settling disputes in local courts, one will simply have to look at what the laws of State X indicate. In the latter alternative of ICSID arbitration, we naturally look to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Washington, 18 March 1965 (hereafter referred to as the ICSID Convention).
Article 25(2)(b) of the ICSID Convention clarifies what kinds of juridical persons may be considered investors. This Article lays out two classes of juridical persons that may be deemed as investors: firstly, any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration; secondly, any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.
[...] at para (“Barcelona Traction”). Republic, and Mobil Corporation e.a. v. Bolivarian Republic of Venezuela is that the restructuring must not have occurred after a problem with the investment has arisen. In this sense, there should be no problem of abuse since no dispute has yet arisen over the client's investments in State X. The only minor stumbling block is the idea fleshed out by the Tribunal in Pac Rim Cayman LLC c. El Salvador that it is not so much whether a dispute has arisen, but how foreseeable a specific dispute was. [...]
[...] Finally, concerning possible denial of benefits, two questions have to be answered. Firstly, does the State Y subsidiary have any “substantial business activities” in State In other words, was it established solely for the purpose of being a shell company? This has not been specified, but seeing that the subsidiary seems to be in existence already in State maybe we can presume that it has some business activities there. Secondly, should the investment be traced back ultimately to the parent-company in France (that is to say, the client), is there any breach in diplomatic relations between France and State or any other reason why benefits of investments in State X should be denied to French companies? [...]
[...] Auth parties is reasonable and the purposes of the Convention have not been abused (for example in cases of fraud or misrepresentation)” (para. 116), it is what the Contracting States have agreed to that counts. In the BIT concerned, it is specified that all investments controlled “directly or indirectly” by “natural or juridical persons” that are nationals of a Contracting Party are protected. Although there is no further detail provided as to what this actually means, we might gain a better understanding of all this through case law. [...]
[...] 264) Hence, this provides additional reassurance that the State Y subsidiary would be considered a legitimate investor. In other words, the corporate veil would not be pierced just because the State Y subsidiary was not the ultimate controller. Therefore, assuming that there is agreement between the Contracting Parties that the company incorporated in State X will be treated as a national of State the present case should rightly fulfil the two conditions necessary for the second prong of Article 25(2)(b). [...]
using our reader.