Investment Tribunal disregards place of incorporation due to lack of French connection



In a recently published decision issued by an arbitral tribunal acting under the auspices of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) (available in French only), the Tribunal declined to exercise jurisdiction over the claim brought by French-incorporated real estate company Société Civile Immobilière de Gaëta against the Republic of Guinea under Guinea’s investment code. The Tribunal found that, in the absence of a definition of “investor” in Guinea’s investment code, the Claimant’s ties to France, including the place of incorporation, were insufficient to provide it with standing in an ICSID arbitration.


The dispute arose from a lease entered into between the Claimant and the Guinean Government in 1997 in relation to the development of a retail complex. The complex was officially launched in 2008. Following political unrest in Guinea, the Government and the Claimant entered into a tax dispute and a Guinean court ordered the seizure of the Claimant’s assets. In 2011 the Government and the Claimant settled the tax dispute and the seized assets were released. In 2012 the Government disregarded the settlement agreement and Guinea’s President ordered the requisition of the complex.

In November 2012, the Claimant commenced arbitration under the ICSID Convention claiming damages from Guinea. The claim was brought under Guinea’s 1987 investment code which provides that disputes between the Guinean State and nationals of other States, unless otherwise agreed by the parties, shall be governed by the ICSID Convention, so long as the investor satisfies the nationality requirements of the ICSID Convention. The ICSID Convention requires diversity of nationality and provides standing only to investors who are nationals of a contracting State other than the State hosting the investment.

The Respondent objected to the Tribunal’s jurisdiction on the basis that the Claimant was not a foreign investor. The Respondent argued that the Claimant did not have the French nationality as it did not carry on any commercial activity in France, its office in France was fictitious and the Claimant was nothing more than a shell company.

The parties were in agreement that French law applied to the question of the nationality of the Claimant and that, pursuant to French law, there is a rebuttable presumption that a company incorporated in France is a French company. That presumption is rebuttable where it is established that a company is actually managed from another State. The Respondent’s position was that the Claimant had to be considered a Guinean company according to French law, as it had no genuine link with France and conducted all of its activities in Guinea.


The Tribunal found that the Claimant’s activities were focused in Guinea and legal formalities such as company meetings took place in France only sporadically. The Tribunal also found that the majority of the Claimant’s contracts were concluded in Guinea, where most of the Claimant’s assets were also held, and its business was primarily concerned with real estate located outside of France. These circumstances could not justify international law protection on the grounds invoked by the Claimant.

The Tribunal disagreed with the Respondent that the Claimant was a shell company, but agreed that the Claimant could not be considered a French company for the purpose of obtaining standing in an ICSID arbitration against the Republic of Guinea. The Tribunal held that it lacked personal and subject-matter jurisdiction.


Generally, applicable treaties or domestic laws put emphasis on the legal test of incorporation in determining corporate nationality for purposes of standing in investment arbitrations. In addition, arbitral tribunals typically seek to establish an active relationship between the claimant-investor and its alleged investment as a condition for their jurisdiction. This is the first known case where the Tribunal disregarded the claimant’s place of incorporation in examining corporate nationality. The Tribunal’s reliance on economic factors is novel in a case commenced by a foreign-incorporated claimant, but it is not unknown in ICSID cases commenced by foreign-controlled and locally-incorporated claimants that are ultimately owned by nationals of the host State.

The Tribunal’s decision highlights the importance of prospective legitimate corporate planning aimed at maximising investment protection under international law.

The French language decision is available here.