The Legal Standing of Shareholders Before Arbitral Tribunals: Has Any Rule of Customary International Law Crystallised?

23 Pages Posted: 25 Aug 2010

See all articles by Patrick Dumberry

Patrick Dumberry

University of Ottawa - Civil Law Section

Date Written: August 25, 2010


States have concluded thousands of bilateral investment treaties (“BITs”) in the 1990s that regulate the treatment of foreign investors and their investments in the host State where an investment is made. These investment treaties provide foreign investors with an unprecedented level of substantive legal protection over and above the usual protections otherwise available to them. BITs also offer groundbreaking procedural benefits to foreign investors by allowing them to submit their disputes with the host State directly to an international arbitral tribunal.

One area of the law on foreign investments where significant new developments have occurred in recent decades is the legal standing of shareholders of corporations investing abroad to submit claims to arbitral tribunals constituted under investment treaties. The focus of this Article is not to systematically analyse the legal standing of shareholders under these treaties. This Article focuses instead on whether or not any rule of customary international law has emerged concerning the protection of shareholders and their legal standing before arbitral tribunals.

This paper argues that no such customary rule has crystallized. This is mainly because the scope and extent of legal protection offered to corporations and shareholders under BITs are not consistent enough to constitute the basis for any custom rule. Thus, there are some important inconsistencies between BITs with respect to how they specifically define “investor” and the nationality of corporations. There is also no evidence of any opinio juris in the context of investment treaties. Moreover, any such customary rule would be contrary to the general principle that corporations lack any automatic jus standi before international tribunals in the absence of specific State consent. It would also be contrary to the principle that an arbitral tribunal cannot exceed its powers.

Keywords: Bilateral Investment Treaties, Bits, Shareholders, Custom, Customary International Law, Arbitration

JEL Classification: K33

Suggested Citation

Dumberry, Patrick, The Legal Standing of Shareholders Before Arbitral Tribunals: Has Any Rule of Customary International Law Crystallised? (August 25, 2010). Michigan State University College of Law Journal of International Law, Vol. 18, No. 3, pp. 353-374, 2010. Available at SSRN:

Patrick Dumberry (Contact Author)

University of Ottawa - Civil Law Section ( email )

57 Louis Pasteur Dr


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