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ICSID Award of April 11, 2007, Waguih Elie George Siag and Clorinda Vecchi vs. The Arab Republic of Egypt, ICSID Case No. ARB/05/15

Title
ICSID Award of April 11, 2007, Waguih Elie George Siag and Clorinda Vecchi vs. The Arab Republic of Egypt, ICSID Case No. ARB/05/15
Content

INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES WASHINGTON, D.C.

 

IN THE PROCEEDING BETWEEN

WAGUIH ELIE GEORGE SIAG AND CLORINDA VECCHI

(CLAIMANTS)

and
T
HE ARAB REPUBLIC OF EGYPT

(RESPONDENT)

(ICSID Case No. ARB/05/15)

________________________________________________

DECISION ON JURISDICTION

 

________________________________________________

Members of the Tribunal

Prof Michael Pryles, Arbitrator
Prof Francisco Orrego Vicuña, Arbitrator Mr David A R Williams QC, President

Secretary of the Tribunal

Ms Milanka Kostadinova

Representing the Claimants: Mr Reginald R Smith
Mr R Doak Bishop
Mr Kenneth R Fleuriet King & Spalding
LLP

Representing the Respondent:
H E Counselor Milad Sidhom Boutros President of the Egyptian State Lawsuits Authority
and
Prof Dr A Kamal Aboulmagd
Mr Hazim A Rizkana
Helmy, Hamza & Partners/Baker & McKenzie, Egypt

TABLE OF CONTENTS
[...]

 

I. PROCEDURE

A. Registration of the Request for Arbitration

  1. On 26 May 2005, Mr Waguih Elie George Siag and Ms Clorinda Vecchi (“Mr Siag” and “Ms Vecchi,” collectively “the Claimants”) filed with the International Centre for Settlement of Investment Disputes (“ICSID” or “the Centre”) a Request for Arbitration (“the Request”) directed against the Arab Republic of Egypt (“Egypt” or “the Respondent”). The Request invoked the ICSID arbitration provision of Article 9 of the Agreement for the Promotion and Protection of Investments between the Republic of Italy and the Arab Republic of Egypt dated 2 March 1989 (the “BIT”).

  2. The Centre, on 2 June 2005, in accordance with Rule 5 of the ICSID Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings (the “ICSID Institution Rules”) acknowledged receipt of the request and on the same day transmitted a copy to Egypt and to the Egyptian Embassy in Washington, D.C.

  3. Thereafter, Egypt by letter to ICSID dated 29 June 2005 objected to the registration of the Request on the grounds that the dispute was outside the jurisdiction of ICSID. The Claimants responded by letter of 8 July 2005 stating that the objections raised by Egypt were entirely without merit. ICSID received further correspondence on this issue from Egypt dated 1 August 2005 and from the Claimants dated 4 August 2005.

  4. The Request was registered by the Centre on 5 August 2005, pursuant to Article 36(3) of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (“the ICSID Convention”) and on the same day the Acting Secretary-General, in accordance with ICSID Institution Rule 7, notified the parties of the registration and invited them to proceed to constitute an Arbitral Tribunal as soon as possible.

B. Constitution of the Arbitral Tribunal and Commencement of the Proceeding

 

  1. Following the registration of the Request by the Centre, the parties agreed on a three-member Tribunal. The parties agreed that each would appoint an arbitrator and that the third arbitrator, who would be the president of the Tribunal, would be appointed by agreement of the two party appointed arbitrators.

  2. The Claimants appointed Professor Michael Pryles, a national of Australia, Level 18, 333 Collins Street, Melbourne, Australia and the Respondent appointed Professor Francisco Orrego Vicuña, a national of Chile, Abenida El Golf 40, Piso 6, Santiago, Chile.

  3. The two party appointed arbitrators appointed as President of the Tribunal, Mr David A R Williams QC, a national of New Zealand, Bankside Chambers, Level 22, 88 Shortland Street, Auckland, New Zealand.

  4. All three arbitrators having accepted their appointments, the Centre by a letter of 10 January 2006 informed the parties of the constitution of the Tribunal, and that the proceeding was deemed to have commenced on that day, pursuant to Rule 6(1) of the ICSID’s Rules of Procedure for Arbitration Proceedings (“the ICSID Arbitration Rules”). The parties were further informed that Ms Milanka Kostadinova, Senior Counsel at ICSID, would serve as Secretary of the Tribunal.

 

C. Written and Oral Procedure

 

9. In accordance with ICSID Arbitration Rule 13(1), after consulting with the parties and the Centre, the Tribunal scheduled a first session, in Paris for 24 March 2006. By letter of 16 March 2006, the Claimants advised that no agreement between the parties had been reached on the procedural matters identified in the provisional agenda for the first session, which had been sent to them by the Tribunal’s Secretary. The Claimants set out their comments on a suggested procedural timetable including how the Respondent’s objections to jurisdiction should be dealt with. By letter dated 20 March 2006, the Respondent set forth its agreement that the language of the arbitration should be English and also expressed its views as to an appropriate timetable for the determination of its objections to jurisdiction.

  1. At the first session of the Tribunal, held in Paris on 24 March 2006, the procedural issues were discussed and agreed. All the conclusions were reflected in the written minutes of the session, signed by the President and the Secretary of the Tribunal and provided to the parties, as well as all Members of the Tribunal. It was agreed that the Respondent’s objections to jurisdiction would be treated as a preliminary question. A schedule for the filing of memorials and for the holding of a hearing on jurisdiction in Paris on 8-9 August 2006 was agreed.

  2. It was agreed at the first session that the Claimant would file its Memorial on the Merits in advance to any objections to jurisdiction the Respondent wished to file. Pursuant to the agreed schedule the Claimants filed their Memorial on the Merits on 12 May 2006 along with the Witness Statements of Waguih Elie George Siag dated 8 May 2006 and Dr Mustafa Abou Zeid Fahmy dated 2 May 2006.

  3. The Respondent filed a Memorial on Jurisdiction dated 12 June 2006 along with the Expert Opinion of Dr Hafiza El Haddad and the Joint Expert Opinion of Prof Dr Mohamed El-Said El-Dakkak and Prof Dr Okasha Mohamed Abdel Aal. The Claimants submitted a Counter-Memorial on Jurisdiction dated 12 July 2006 supported by the Expert Opinion of Prof. Fouad A Riad dated 10 July 2006 and the Expert Opinion of Prof W Michael Reisman dated 12 July 2006.

  4. This was followed, on 24 July 2006, by a Reply on Jurisdiction from the Respondent and Supplementary Expert Opinion of Dr Hafiza El Haddad dated 24 July 2006. The Claimants then filed a Rejoinder on Jurisdiction dated 4 August 2006 and the Expert Opinion of Prof. Fouad A Riad dated 1 August 2006 and the Expert Opinion of Prof. W Michael Reisman dated 31 July 2006.

  5. A hearing on jurisdiction was held in Paris on 8-9 August 2006, during which Mr Reginald R Smith, Mr Kenneth R Fleuriet and Mr R Doak Bishop addressed the Tribunal on behalf of the Claimants and Dr A Kamal Aboulmagd and Mr Hazim A Rizkana addressed the Tribunal on behalf of the Respondent. No witnesses were called for cross-examination. Counsel for both parties presented oral submissions and answered questions from members of the Tribunal.

  6. At the hearing, counsel for the Respondent made an application to file additional material after the conclusion of the hearing. After considering oral submissions by both sides the President granted the application on these terms:

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So against that background the respondent’s application to adduce additional material, specifically to supply copies of all the cases on the Article 10(3) issue referred to by the Professor this morning, along with any further submissions of counsel derived from those cases [...] that application will be admitted, on the basis that it must be supplied within 21 days from today’s date.

[...]

The Claimant’s will have the right within a further 21 days, to respond to the materials adduced by the respondent, either, at their option, by way of further submissions from counsel or by way of further expert evidence, should they elect to adduce such evidence. They can either do one or the other, or both.1
16. Pursuant to the permission granted at the hearing on 29 August 2006, Egypt filed its Submission in Relation to the Non-Applicability of Article 10(3) of the Egyptian Nationality Law No. 26 of 1975. On 11 September 2006, the Claimants filed their Reply to Egypt’s Post-Hearing Submission. In their Reply submission the Claimants objected that Egypt’s post-hearing submission exceeded the permission granted by the Arbitral Tribunal in that it contained submissions that were not derived from the additional cases which counsel for Egypt had sought permission to submit at the hearing. Given its findings set out below the Tribunal does not consider it necessary to rule on this objection.

 

II. BACKGROUND FACTS

 

  1. According to the Request, in 1989 the Egyptian Ministry of Tourism sold a parcel of property on the Gulf of Aqaba to a company called Siag Touristic Investments and Hotels Management Company (“Siag Touristic”), which is owned principally by the Claimants. Siag Touristic is an Egyptian joint stock company. The purpose of the sale was to permit Siag Touristic to develop a tourist resort on the property. Development commenced on the property. However, in 1996 the property was confiscated by the Egyptian Government. Although the Claimants obtained relief from the Egyptian courts this was ignored by the Egyptian Government.

  2. The Claimant seeks a declaration that the Respondent has violated the BIT, international law and Egyptian law, compensation for all damages suffered, costs and an award of compound interest.

  1. The BIT has the objective of creating favourable conditions for greater economic cooperation between Italy and Egypt, particularly for investments by one Contracting State in the territory of the other. It is recognized that the encouragement and reciprocal protection under international agreements of such investments will be conducive to the stimulation of business initiative and will increase prosperity in both Contracting States. The BIT provides a number of guarantees and protections to investors including: (1) fair and equitable treatment of investments; (2) a prohibition against unreasonable or discriminatory measures; (3) most favoured nation treatment of investments; (4) most favoured nation treatment of activity in connection with investments; (5) full protection; (6) a prohibition against measures that limit the right of ownership, possession, control, or enjoyment of investments; and (7) a prohibition against direct or indirect nationalization or expropriation, or measures having an equivalent effect, except for a public purpose in the national interest and against payment of adequate and fair compensation calculated at market value. Article 9 of the BIT is devoted to dispute resolution and provides, inter alia, the right of investors to resort to arbitration pursuant to the ICSID Convention.

  2. Egypt ratified the ICSID Convention on 3 May 1972. Italy did so on 29 March 1971.

  3. Article 25(1) and 25(2)(a) of the ICSID Convention provides as follows:

    (1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.

    (2) “National of another Contracting State” means:

    (a) any natural person who 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 as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute.

  4. The texts of certain relevant provisions of the Egyptian Nationality Law and the BIT are as follows:

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Egyptian Nationality Law No. 26 of 1975 (“the Nationality Law”)2

Article 1

Egyptian citizens fall under the following categories:

[...]

Second

Those who were Egyptian citizens as of 22 February 1958 under the provisions of Law No. 391 of 1956 concerned with Egyptian Nationality.

[...]

Article 6

If a foreign husband gains Egyptian nationality, this does not also necessarily entitle his wife to gain Egyptian nationality unless she notifies the Minister of Interior of such wish, provided the marriage does not end before the lapse of two years from the date of such notification unless the husband dies. Nevertheless, before the lapse of a two- year period, the Minister of Interior may decline to grant the wife Egyptian nationality by virtue of a justified decree.

[...]

Article 7

Any foreign woman who marries an Egyptian may not acquire Egyptian nationality unless she notifies the Minister of Interior of such wish and provided the marriage does not end before the lapse of a two-year period from the date of such notification, unless the husband dies. Notwithstanding, before the lapse of such two-year period, the Minister of Interior may decline to grant the wife Egyptian nationality by virtue of a justified decree.

Article 8

If a foreign woman acquires the Egyptian nationality under the provisions of the two previous articles, she will not forfeit it with the termination of marriage, unless she has restored her foreign nationality, or gets married to a foreigner and acquires his nationality by virtue of the law governing that nationality.

[...]

Article 10

An Egyptian may not gain a foreign nationality except after being permitted by virtue of a decree from the Minister of Interior; otherwise such person shall still be considered an Egyptian in every respect and under all circumstances, unless the Cabinet decides to withdraw his nationality under the provision of Article 16 of this Law.

 

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In the event an Egyptian is permitted to gain a foreign nationality, then this shall lead to the withdrawal of the Egyptian nationality.

However, permission to acquire a foreign nationality may allow the person for whom such permission is given, his wife and minor children to retain the Egyptian nationality, provided he notifies his wish to take advantage of such benefit within a period not exceeding one year from the date of gaining the foreign nationality, and in such case they may retain the Egyptian nationality despite having gained a foreign nationality.3

[...]

Article 16

Egyptian nationality may be withdrawn from anybody by virtue of a justified decree by the Minister of Defense in any of the following cases:

(i) Gaining foreign nationality in breach of Article 10. [...]

Article 20

Declarations, notifications, documents and applications stipulated under this Law shall be addressed to the Minister of Interior or whomever he delegates in this regard, and issued on the forms determined by virtue of a decree from the Minister of Interior.

The BIT

Article 1(1)

The term “investment” shall comprise every kind of asset invested before or after the entry into force of this Agreement by a natural or juridical person including the Government of a Contracting State, in the territory and maritime zones of the other Contracting State, in accordance with the laws and the regulations of that State. Without restricting the generality of the foregoing, the term “investment” shall include:

(b) movable and immovable property as well as any other property rights in rem such as mortgages, liens, pledges, usufruct and similar rights;

(c) shares, stocks and debentures of companies, or other rights or interests in such companies, and government issued securities;

(d) claims to money, or to any performance having economic value associated with an investment;

(e) copyrights,trademarks,patents,industrialdesigns,andotherindustrial property rights, know-how, trade juridical rights and goodwill;

any right conferred by law or contract, and any licenses and permits pursuant to law, including the right to search for, extract and exploit natural resources.”

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Article 1(3)

The term “natural person” shall mean, with respect to either Contracting State, a natural person holding the nationality of that State in accordance with its laws.

[...]

Article 9

  1. (1)  All kinds of disputes or differences, including disputes over the amount of compensation for expropriation, nationalizations or similar measures, between one Contracting State and an investor of the other Contracting State concerning an investment of that investor in the territory and maritime zones of the former Contracting State shall, if possible, be settled amicably.

  2. (2)  If such dispute or difference cannot be settled according to the provisions of paragraph (1) of this Article within six months from the date of request for settlement, the investor concerned may:

    1. submit the dispute to the competent court of the Contracting State for decision;

    2. initiate proceedings for conciliation or arbitration, in accordance with the provisions of the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington on 18th March, 1965 and the Additional Facility Rules thereof. In the event of neither of these procedures being applicable, the arbitration shall take place in accordance with the United Nations Commission on International Trade Law Arbitration Rules of 1976 (UNCITRAL).

  3. (3)  Neither Contracting State shall pursue through diplomatic channels any matter referred to arbitration until the proceedings have terminated and a Contracting State has failed to abide by, or to comply with, the award rendered by the Arbitral Tribunal.

 

III. THESUBMISSIONSOFTHEPARTIESONJURISDICTION

 

23. The Claimants argued in the Request that the Respondent had consented to ICSID arbitration of disputes such as their investment in Siag Touristic by virtue of signing and ratifying the BIT which contains an ICSID arbitration clause (Article 9).

A. The Respondent’s Memorial on Jurisdiction

 

24. On 12 June 2006, the Respondent filed a Memorial on Jurisdiction. Its principal arguments are summarized in paragraphs 25 to 42 hereafter.

25. The Respondent asserted that the Claimants have failed to satisfy the ratione personae and ratione materiae requirements under Article 25(1) and (2) of the ICSID Convention. As to Mr Siag, he was born as an Egyptian national on 12

11

March 1962. When Mr Siag’s father died in 1987 the Claimants and the rest of the Siag family took over the family businesses. One of these businesses was Siag Touristic. In 1993 Siag Touristic entered into a Conditional Sale Contract with the Touristic Development Authority to develop a large plot of land in the southern area of Taba. The purpose was to develop a touristic resort. In 1993 another company was formed, Siag Taba.

  1. Pursuant to Article 25 of the ICSID Convention it was indisputable that the investor in ICSID proceedings is subject to a positive and negative nationality requirement. It was further submitted that the determination of whether an investor was a national of an ICSID Contracting State and not a national of the host State should be made by reference to the domestic law of the State whose nationality was at issue.

    Mr Siag

  2. With respect to Mr Siag, it was noted that he based his claim that he lost Egyptian nationality on his subsequent acquisition of Lebanese nationality. The evidence of Lebanese nationality, in the form of copies of relevant parts of his Lebanese passport submitted to the Egyptian Minister of Interior on 19 December 1989 in an application for permission to acquire Lebanese nationality, was inconclusive and did not establish the date of acquisition of such nationality.

  3. The Respondent asserted that Mr Siag’s interpretation of the Nationality Law was incorrect. Under Article 10, a person who desired to acquire foreign nationality must obtain prior permission to this effect from the Egyptian Minister of Interior. When permission is granted the Minister may also give an applicant the option to maintain his/her Egyptian nationality, by means of a declaration made to this effect within a one-year period following the acquisition of foreign nationality. The Respondent relied on an interpretation of Article 10 which would require no further expression within the one-year period once permission was granted and the foreign nationality was acquired. It was stated that this interpretation was supported by mainstream Egyptian jurisprudence.

  4. The Respondent also submitted that from the time of acquiring Lebanese nationality in 1990, Mr Siag was aware of his Egyptian nationality up to the time he revealed his Italian nationality in the context of asserting Egypt’s violations of the BIT in October 2004. He was issued with numerous Egyptian nationality

certificates from 1991-1997. Mr Siag had also made a number of declarations concerning his nationality status as an Egyptian for the purposes of the Siag Touristic and Siag Taba companies and the development in Taba. The Respondent referred to the Champion Trading case where the ICSID Tribunal stated:

The mere fact that this investment in Egypt by the three individual Claimants was done by using, for whatever reason and purpose, exclusively their Egyptian nationality clearly qualifies them as dual nationals within the meaning of the Convention and thereby based on Article 25(2) (a) excludes them from invoking the Convention.4

  1. It could be inferred from the application for permission that Mr Siag submitted on 19 December 1989 that he acquired Lebanese nationality through an application of the jus sanguinis. This being the case the application for permission could be characterized as an application for recognition and the decree of the Egyptian Minister of Interior more in the nature of an official recognition of Lebanese nationality.

  2. Article 10 deals with instances of the acquisition of a foreign nationality only after permission is granted from the Egyptian Minister of Interior. In those circumstances there were two alternatives: (1) permission granted while maintaining Egyptian nationality and (2) permission granted without the right to maintain Egyptian nationality, in which case the person may express his/her desire to maintain Egyptian nationality within the one-year period.

  3. The Respondent concluded that since the third paragraph of Article 10 did not apply to Mr Siag, pursuant to the first part of Article 10 of the Nationality Law he was to be treated as Egyptian in all respects and under all circumstances. He could only lose his Egyptian nationality through a decree from the Egyptian Cabinet under Article 16 of the Nationality Law.

    Ms Vecchi

  4. Ms Vecchi was married to Mr Siag’s father, Mr Elie Siag. She applied for Egyptian nationality on 20 April 1955 pursuant to Egyptian Nationality Law 160 of 1950 and on the expiration of two years acquired Egyptian nationality under the

Nationality Law No. 391 of 1956 on 19 April 1957. She lost her Italian nationality at this time.

  1. Relying on Article 8 of the Nationality Law the Claimants asserted that Ms Vecchi reacquired her Italian nationality in 1993. Even after this date several documents, such as her passport and nationality certificates, evidenced Ms Vecchi’s continued Egyptian nationality.

  2. The Respondent asserted that the Claimants interpretation of Article 8 was flawed. The scope of Article 8 was limited to foreign women who acquired Egyptian nationality “pursuant to the provisions of the two previous articles.” It was submitted that Ms Vecchi was not a “foreign woman” pursuant to Article 7 of the Nationality Law since she came within the definition of an Egyptian national under Article 1 (Second) of the Nationality Law. Since she was an Egyptian national the only way Ms Vecchi could lose her Egyptian nationality was by virtue of a decree of Cabinet pursuant to Article 16.

  3. It may be noted that the Respondent based its ratione personae objections to jurisdiction solely on its assertions as to the true construction of the Nationality Law.

    Existence of an “Investment”

  4. With respect to the requirement of an investment under Article 25(1) of the ICSID Convention, the Respondent submitted that there must be expenditure and that such expenditure must have a foreign origin. As to expenditure, the Respondent asserted that the Claimants had not demonstrated that they made personal expenditure. The expenditure cited by the Claimants in their Memorial was in fact corporate expenditure by the companies, Siag Touristic and Siag Taba.

  5. As to the foreign element, the Respondent relied on the Preamble to the ICSID Convention which states that the Contracting States should “[consider] the need for international cooperation for economic development, and the role of private international investment therein.” Taking into account the object and purpose of the ICSID Convention the Respondent concluded that the origin of capital was

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relevant, decisive and crucial. The Respondent pointed to two ICSID decisions said to identify an injection of funds principle.5

  1. Turning to the specific terms of the BIT the Respondent referred to the preamble, which states:

    The Government of the Republic of Italy and [Egypt]

    [...]

    Recogniz[e] that the encouragement and reciprocal protection under international agreement of such investment will be conducive to the stimulation of business initiative and will increase prosperity in both Contracting States [...].

  2. Based on this passage the Respondent submitted that the origin of capital requirement was further narrowed down so as to require an Italian origin. This was said to be further supported by Article 6 of the BIT which speaks of “repatriation.” The Italian origin of investment had not been established.

  3. In the event the Claimants were able to satisfy the nationality requirement of the ICSID Convention the Respondent asserted that they should be estopped from bringing their claim due to the concealment of their Italian nationalities. Such concealment had resulted in the possibility that the Claimants would become unexpected beneficiaries of the protections afforded in the BIT.

  4. For all the reasons set forth in its Memorial on Jurisdiction, the Respondent requested a declaration that this dispute did not fall within the jurisdiction of the Centre and that the Claimants’ claims were inadmissible. The Respondent also requested the Tribunal to order the Claimants to compensate it for all the costs and expenses of this proceeding including legal fees.

 

B. The Claimants’ Counter-Memorial on Jurisdiction

 

43. The Claimants filed a Counter-Memorial on Jurisdiction on 12 July 2006, which contended that the Claimants had satisfied the jurisdictional requirements of Article 25 of the ICSID Convention and Article 9 of the BIT. The Claimants’ principal arguments are summarized in paragraphs 44 to 68 below.

15

  1. The Claimants submitted that, based on the Respondent’s Memorial, some aspects of jurisdiction were agreed. These were the Italian nationality of the Claimants, Mr Siag’s Lebanese nationality, the existence of a “legal dispute” and the parties’ consent to ICSID jurisdiction.

  2. As to the negative nationality requirement under Article 25(2) of the ICSID Convention the Claimants asserted that on the date the parties consented to arbitration and the date the Request was registered they were not Egyptian nationals. By operation of the Nationality Law, Mr Siag lost Egyptian nationality on 14 June 1990 and Ms Vecchi lost Egyptian nationality on 14 September 1993.

  3. Claimants agreed with the Respondent that the determination of a person’s nationality was controlled by the laws of the State whose nationality was in question. Reference was made to Article 1 of the 1930 Hague Convention, which provides:

    It is for each State to determine under its own law who are its nationals.

  4. Article 2 provides:

    Any question as to whether a person possesses the nationality of a particular State shall be determined in accordance with the law of that State.

  5. As to the practice of ICSID Tribunals, the Claimants noted that this principle had also been observed by ICSID Tribunals.6 On the question of the various documents of the Claimants evidencing Egyptian nationality which had been referred to by the Respondent, the Claimants submitted that such documents were prima facie evidence of nationality only and could not supersede the application of the relevant nationality law. Analysis of the applicable nationality law should be made by the international tribunal. The Tribunal should not just blithely apply the conclusions reached by the authorities in the State in question when issuing documents evidencing nationality.

  6. The Respondent’s reference to the Champion Trading case was said to have been taken out of context and did not support the conclusion that in this case the Claimants held Egyptian nationality at the relevant times for the purposes of the ICSID Convention. In the Champion Trading case the Tribunal applied the Egyptian nationality law and based on that application found that the three

brothers held Egyptian nationality and so did not satisfy the negative nationality requirement. It was irrelevant how the children were characterized when making the investment. That case emphasized the primacy of an application of the domestic law of the State in question to determine nationality. The Claimants noted that the Champion Trading Tribunal had held that there was no room in an application of Article 25 of the ICSID Convention for a “dominant” or “effective” nationality analysis. Under Egyptian law the provisions of the nationality laws are the exclusive determinant of Egyptian nationality. If a person failed to satisfy those provisions, Egyptian nationality was lost ipso jure.

  1. Any instruments or acts in contravention of the nationality laws could have no effect. The Claimants referred to the expert opinion of Professor F Riad, a member of the Law Faculty at Cairo University. Professor Riad stated:

    It should be emphasized that all provisions relating to the Laws of Nationality are per se a matter of public order, since they relate to one of the fundamental Laws of the State. The Egyptian Constitution of 1971 specifies in its article (6) that “The Egyptian nationality is regulated by the law.” Hence, any decision or regulation or instrument inferior to legislation should not be taken into consideration with regard to nationality except as provided by the said Law. Any such inferior instrument or act is null and void and has no legal weight or value if it contradicts the provisions of the Nationality Law.7

  2. This conclusion was said to be supported by the decisions of Egypt’s courts. One decision of the Administrative Court stated that “[w]hereas the establishment of the nationality of a person is determined exclusively by the provisions of the legislation regulating the nationality, all data in documents, even official, have no legal value in proving the Egyptian nationality.”8 More recently the Supreme Administrative Court, in a case involving the application of Article 10 of the Nationality Law,9 held that three separate confirmations of Egyptian nationality were irrelevant because they violated the terms of the Nationality Law. Similarly, the Egyptian courts had held that the acquisition or use of an Egyptian passport is only prima facie evidence of Egyptian nationality, which can only be determined by operation of the law.10 

    17

    Mr Siag

  3. It was contended that Mr Siag had lost his Egyptian nationality by operation of the Nationality Law. Pursuant to Article 10, Mr Siag was granted permission to acquire Lebanese nationality by decree of the Egyptian Minister of Interior on 5 March 1990. For the purposes of Article 10 he acquired Lebanese nationality on 14 June 1990 and lost Egyptian nationality on the same date. Mr Siag could have sought to retain his Egyptian nationality by making a declaration to that effect within one year. However, he did not do so.

  4. The Claimants rejected the Respondent’s assertion that mainstream Egyptian jurisprudence and the opinion of legal scholars does not favour a literal reading of the declaration requirement in the third paragraph of Article 10. Indeed, the opinion of Professor Riad was that such an interpretation would render the third paragraph of Article 10 meaningless.

  5. The Claimants also referred to the case of Mr Saleh in the Supreme Administrative Court. Mr Saleh’s candidacy for parliament was contested on the basis that he was a dual-national of Germany and Egypt. The Supreme Administrative Court held:

    Further, the Egyptian nationality automatically terminates when an Egyptian obtains a foreign nationality with the requisite permission. However, the permission to obtain a foreign nationality may also grant an Egyptian national and his wife and children the option to maintain their Egyptian nationality, if he declares his desire to benefit from this exception within a period not to exceed one year from the date of acquiring foreign nationality. In the latter case, the husband and wife and children continue to be Egyptian nationals even though they obtained a foreign nationality.

    It is understood from the previous passage that the legislator has resolved that an Egyptian national who is permitted to obtain a foreign nationality and who does so loses his Egyptian citizenship. However, the legislator also resolved that the person has the right to request that he maintain his Egyptian citizenship, if the right is exercised within the specified period immediately after obtaining the foreign nationality. That period may not exceed one year from the date on which the foreign nationality is acquired. A newly naturalized person that successfully declares this intention will remain an Egyptian national. However, the legislator placed a key condition on the newly naturalized person’s ability to successfully retain Egyptian nationality. In order to possess the right to remain an Egyptian national, the Minister of Interior’s decree authorizing the foreign citizenship must also expressly authorize maintaining the Egyptian nationality. In addition, section 2 of article 18 states, “an Egyptian nationality that is lost by foreign naturalization may be reacquired by a decree from the Minister of Interior to that effect.” Accordingly, a person that loses the Egyptian nationality by acquiring another (with permission) does not automatically regain his right to maintain his Egyptian nationality by simply submitting an application to that effect. To the contrary, the person can only regain that right by a decree to that effect issued by the Minister of Interior, which is the entity entrusted by the legislature to reinstate the Egyptian nationality when the Egyptian nationality is either: lost because the granted permission approving the acquisition of the foreign

 

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nationality did not also approve retaining the Egyptian nationality; or lost because the granted permission did in fact expressly approve retaining the Egyptian nationality but that right was not exercised within the requisite period set by the law.11

  1. As to opinions of legal scholars, the Claimants submitted that the requirement for a declaration within one year under the third paragraph of Article 10 was recognized by Professor Riad and also by Professor A Algedaoui.12 In the Claimants view, the opinion of Professor A Salama, referred to by the Respondent’s experts, Dr M El-Dakkak,13 and Prof Dr O Abdel Aal,14 to support the view that the declaration requirement is ignored, had been misquoted. In fact, Professor Salama acknowledged the declaration requirement but supported a change to this requirement. The Respondent’s experts, Drs Abdel Aal and El Haddad, had also recently released a book15 where they had acknowledged that an explicit expression of the wish to retain Egyptian nationality must be made within a one-year period or the right to retain Egyptian nationality would be lost.

  2. As to the Respondent’s contention that Article 10 of the Nationality Law did not apply to Mr Siag because he acquired Lebanese nationality prior to submitting his application for permission to the Egyptian Minister of Interior the Respondent was attempting to utilize part of Article 10 while denying the application of the rest of the article.

  3. The Claimants submitted that the time when Mr Siag acquired Lebanese nationality as a matter of Lebanese law was irrelevant to the questions of Egyptian nationality raised in this arbitration. Egyptian law was competent only to establish the acquisition or loss of Egyptian nationality and the circumstances in which Egypt will recognize a foreign nationality. The reference in the Nationality Law to the acquisition of a foreign nationality meant acquisition in the eyes of Egyptian law. As explained by Professor Riad:

    If Article 10 were to be understood as inapplicable to any Egyptian who acquires a foreign nationality under foreign law prior to requesting Egypt’s permission, no Egyptian who acquired a foreign nationality prior to 1975 (when Article 10 was enacted) would ever be able to have that nationality recognized by Egypt, even if such a person subsequently went through the procedure of Article 10. It would also seem that no Egyptian born with a second nationality could ever benefit from the

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options provided by Article 10. Article 10 was not intended to discriminate among Egyptians, with random timing creating one group that could have another nationality recognized and another group that would never be able to do so. Such a situation would clearly constitute a violation of one of the main principles of the Egyptian Constitution, according to which all Egyptians are equal under the law.16

  1. Article 10 of the Nationality Law required a person to seek permission from the Egyptian Minister of Interior before a foreign nationality could be acquired in the eyes of Egyptian law. Once permission was granted, the date of acquisition was the first date on which there was a “formal expression” of Lebanese nationality after the issuance of the Egyptian Minister of Interior’s authorization. This date was 14 June 1990 when Mr Siag was issued a Lebanese passport.

  2. Even if the date of acquisition of foreign nationality referred to the date upon which Mr Siag acquired Lebanese nationality in the eyes of Lebanese law, pursuant to Article 10 the Egyptian Minister of Interior had considered Mr Siag’s application and granted Mr Siag permission. Once that occurred Mr Siag was entitled to go through the Article 10 procedure. The opinion of Dr Abdel Aad and Dr El Haddad,17 in their 2006 book was that a person who acquires a foreign nationality was entitled to subsequently seek the permission of the Egyptian Minister of Interior’s under Article 10. Their conclusion was that the date of acquisition in this case was the date on which permission had been granted by the Egyptian Minister of Interior.18 The only difference between the opinions of the experts therefore was the date of loss of nationality. The Respondent’s experts maintained that it was lost on 5 March 1990 the date permission was granted by the Egyptian Minister of Interior. Irrespective of the date chosen, Mr Siag had not made the required declaration within the one year period.

    Ms Vecchi

  3. In the case of Ms Vecchi the Claimants contended that she ipso jure lost her Egyptian nationality on 14 September 1993 pursuant to Article 8 of the Nationality Law. Article 8 of the Nationality Law referred to the factual situations described in Articles 6 and 7 notwithstanding that, as in the case of Ms Vecchi, Egyptian nationality was acquired under a previous nationality law. This reading

20

of Article 8 was reinforced by the fact that the wording in Article 7 was identical to the provisions in previous nationality laws.

  1. As to the argument that Ms Vecchi was not a “foreign woman” due to Article 1 of the Nationality Law, the Claimants replied that Article 1 had nothing to do with the situation of Ms Vecchi. As explained by Professor Riad, Article 1 established who were “original” Egyptians prior to the brief union of Egypt and Syria as the United Arab Republic between 1958 and 1961:

    Marriage to an Egyptian national was the sole cause of Ms Vecchi’s acquisition of Egyptian nationality. That fact is not altered in any way by the provisions of Article 1 of the Law No. 26 of 1975. As this law was the first nationality law to be enacted after the separation of Egypt and Syria from their brief union as the United Arab Republic, Article 1 endeavored to draw a global distinction between those who were Egyptian before that union and those who were not. In other words, this article has nothing to do with the grounds on which the nationality of each Egyptian is established. Hence, it has no relevance to the way Ms Vecchi acquired her Egyptian nationality and does not mean that she falls outside of Article 8 of Law No. 26, dealing with foreign women who acquired the Egyptian nationality by marriage to an Egyptian.19

    Existence of an “Investment”

  2. The Claimants contended that they had established jurisdiction ratione materiae. The Respondent’s contentions that the Claimants had not proven personal expenditure and that there was an origin of capital requirement were groundless.

  3. The Claimants contested the Respondent’s assertion that they did not make investments in their personal capacities. In any event, it was submitted that it was irrelevant that the Claimants may have invested through the corporate vehicles, Siag Touristic and Siag Taba.

  4. The definition of “investment” under the BIT covered “every kind of asset invested [...] by a natural or juridical person [...] in the territory or maritime zones of the other Contracting State.” The BIT included a non-exhaustive list of examples of “investments.” The Claimants submitted that they had made “investments” for the purposes of the BIT by acquiring shares in Siag Touristic and Siag Taba and by acquiring “claims to money” from Siag Touristic and Siag Taba related to the land purchased in Taba and the development of the touristic resort. Through their shareholdings in these companies the Claimants invested in “movable and immovable property” and acquired other “property rights in rem” and “rights conferred by law or contract.”

  1. The Claimants submitted that the Respondent’s contention that the ICSID Convention and the BIT contained and express or implied “origin of capital” requirement found no support in the ICSID Convention, the BIT or the object purpose of these two instruments. Article 25 of the ICSID Convention intentionally did not limit the term “investment.” It was to be given “broad reach.”20 In the BIT “investment” was given a broad definition and the types of investment given as examples were also defined broadly. The Claimants also contended that the Respondent’s reliance on repatriation of returns was misplaced and did not support an “Italian capital” requirement. On the issue of the object and purpose of the ICSID Convention the Claimants asserted that imposing an origin of capital requirement would have a chilling effect and discourage foreign investment.

  2. Other ICSID Tribunals had categorically rejected the “origin of capital” argument. The Claimants referred to the case of Tokios Tokeles v. Ukraine.21 The Tribunal in Tokios Tokeles rejected the argument that an origin of capital requirement ought to be implied into the BIT and the ICSID Convention.

  3. With respect to the Respondent’s estoppel argument, the Claimants submitted that this was not a jurisdictional issue under Article 25 of the ICSID Convention or Article 9 of the BIT but was related to the merits. In any event the suggestion that the Claimants had “concealed” their Italian nationality was rejected. The Claimants also submitted that being held to the standards of investment protection in the BIT was not “detriment” for the purposes of an estoppel claim.

  4. In their request for relief the Claimants asked the Tribunal to make a decision which would:

    1. (i)  Dismiss Egypt’s objections to jurisdiction in their entirety.

    2. (ii)  Award the Claimants all costs of the jurisdictional phase of the proceedings plus interest.

    3. (iii)  Order the continuance of the merits phase of the proceeding.

 

C. The Respondent’s Reply on Jurisdiction

 

  1. On 24 July 2006 the Respondent filed a Reply on Jurisdiction. Its principal arguments are summarized below in paragraphs 70 to 88.

  2. After making some preliminary observations the Respondent stated that it did not intend to deviate from the objections it had initially raised and presented in its Memorial on Jurisdiction. It said:

    In sum, Egypt’s objections on jurisdiction rests on the following:

    1. (i)  lack of jurisdiction rationae personae due to the Egyptian nationality of claimants [...] and

    2. (ii)  lack of jurisdiction rationae materiae due to the lack of investment in the specific meaning of the Convention and the BIT [...].22

  3. In addition the Respondent further argued that the present dispute should not be admissible before the Centre and Claimants should, without hesitation, be estopped from seeking relief through the Centre.

  4. The Respondents also commented upon the observations raised in Professor Reisman’s opinion23 as to the bona fide Italian nationality of Claimants. Professor Reisman’s view was that both the Claimants had lost their Egyptian nationality by operation of Egyptian law and acquired Italian nationality. Therefore, any historic and continuing links they had to Egypt were irrelevant. Likewise, since they were not dual nationals a search for dominant or effective nationality was inapposite. Additionally, there was no suggestion that the Claimants’ Italian nationality had been acquired fraudulently or as a mere expedient to bring these claims before ICSID.

  5. In response, the Respondent stated that it did not deal with the Italian nationality of the Claimants because of their established Egyptian nationality and links to Egypt. The Respondent noted its view that neither Mr Siag nor Ms Vecchi had the type of connections with Italy that would permit a finding of effective nationality under international law. Egypt was not required under international

23

law to arbitrate an investment with persons who had non-existent, spurious or insubstantial links to the State of which they might formally be nationals.

  1. Dealing first with lack of jurisdiction rationae personae, resulting from the Egyptian nationality of the Claimants, the Respondent first observed that the Claimants’ alleged loss of Egyptian nationality had been used as a deus ex machina to transform the domestic claims which Claimants had been pursuing into international claims. Formality over equity was the reality and substance of what the Claimants were now presenting to the Tribunal.

  2. The Respondent suggested that the Claimants had opened their Counter Memorial with the statement that “[the Nationality Law] means exactly what it says and may be applied in [a] straightforward fashion to the facts of this case.” However, this approach was inconsistent with their contention that the timing of the acquisition of Lebanese nationality prior to submitting the application for permission was immaterial.

    Mr Siag

  3. The Respondent analyzed Mr Siag’s nationality based on the assumption that Mr Siag acquired his Lebanese nationality at birth. It was noted that when he applied to the Egyptian Minister of Interior, Mr Siag submitted a nationality certificate issued by the Lebanese Minister of Interior stating that “[Mr Siag] has been a Lebanese national for over 10 years.” The Respondent disagreed with the Claimants’ interpretation of Article 10 of the Nationality Law whereby it was said to apply only to recognition of nationality in the eyes of Egyptian law. Such an interpretation would mean that the one-year declaration period under the third paragraph was triggered either on the existence of a “formal expression” of Lebanese nationality or, alternatively, on the date the Egyptian Minister of Interior granted permission under Article 10.

  4. The Respondent emphasized that Article 10 dealt solely with those instances where a foreign nationality was acquired through naturalization following the grant of permission by the Egyptian Minister of Interior. As a Lebanese national by birth, the only part of Article 10 relevant to Mr Siag was the first paragraph of Article 10. Under this part of Article 10, Mr Siag must be considered as Egyptian in every respect and under all circumstances. The Respondent submitted that the writing of Dr Salama supported this view:

The provisions of Article 10 [...] stipulate that the renouncement of Egyptian nationality is conditional upon two requirements:

First Condition: an individual must obtain a prior permission from the administrative authority. This condition is explicitly stipulated under the provision of Article 10, which provides that an Egyptian may not become naturalized “except after obtaining a permission to do so from the Minister of Interior” as stipulated in paragraph 2 of this Article that renouncement of the Egyptian nationality shall not occur “so long as such person is permitted [...]” to become naturalized and provided he has actually done so.

[...]

The provision of Article 10 [...] stipulates that such permission must be obtained before naturalization and not after. Therefore, if such permission is issued thereafter, it would merely serve to confirm the reality, together with protecting the individual from being penalized by being divested of his Egyptian nationality as stipulated under Article 16(1).24

  1. The Claimant also asserted that Professor Riad’s opinion was contradicted by one of his scholarly books where he made a distinction between acquisition of nationality by naturalization and by other means.

    Ms Vecchi

  2. As to Ms Vecchi, she acquired Egyptian nationality as described in the 1956 nationality law not in Article 7 of the Nationality Law. The Respondent referred to the articles in previous nationality laws prior to Article 8 of the Nationality Law. Article 14 of the 1958 nationality law provided the following:

    This provision shall apply to a foreign woman who acquired Egyptian nationality pursuant to Articles 8 and 9 of the Presidential Decree issuing [the 1956 Law].

  3. Such a sentence did not appear in Article 8. If the legislators had wished to cover the same “factual situation” as Article 7 they could have preserved this sentence.

  4. In addition, the Respondent emphasized that under Article 1 of the Nationality Law, Ms Vecchi was an Egyptian and not a “foreign woman” for the purposes of Article 7. The Claimants’ argument would result in classifying two groups; those women who had acquired Egyptian nationality on the basis of marriage under the 1958 nationality law and those women who had acquired Egyptian nationality under the 1956 nationality law. Only those who come under the 1956 nationality law could lose their Egyptian nationality. If a person did not come under Articles

25

6 and 7 of the Nationality Law they could utilize Article 10. Contrary to the opinion of Professor Riad such persons were, therefore, able to reacquire their former nationality.

82. The Respondent noted its agreement that a person’s nationality should initially be determined by the laws of the State whose nationality is in question. However, it disagreed with what it described as the Claimants’ attempts to divest nationality certificates of all value. The Respondent referred to a statement of Professor Schreuer that:

A certificate of nationality will be treated as part of the ‘documents or other evidence’ to be examined by the Tribunal in accordance with Art. 43. Such a certificate will be given its appropriate weight but does not preclude a decision at variance with its contents.25

83. The amount of weight that should be given to nationality certificates depended on the prevailing circumstances and conditions under which the certificates were issued or obtained. The Respondent submitted that the factual situation in the Soufraki case differed from this case in that in Soufraki no Italian official undertook an inquiry to determine whether Mr Soufraki had lost his Italian nationality. Egypt’s administrative practice was and is to undertake an investigation of the applicant’s record. The relative weight of nationality certificates should be assessed based on the following twofold test:

  1. With respect to the investor the question relates to the circumstances under which he/she has obtained nationality certificates. Albeit in the absence of fraud on the part of the investor, the pertinent question becomes: has the latter obtain [sic] such certificate for the sole purpose of seeking recourse to ICSID?

  2. With respect to the concerned State, two questions are pertinent:

    1. (a)  What are the circumstances under which the State issued its nationality certificates to the investor? In particular, is there evidence, even circumstantial, that the State was in fact attempting to be subject to ICSID by issuing nationality certificates to foreign investors?

    2. (b)  What are the procedures followed by the State in issuing nationality certificates?26

84. The overwhelming number of declarations and official documents issued to the Claimants evidencing their Egyptian nationality should be taken seriously.

  1. The Respondent contested the Claimants’ analysis of the Champion Trading decision as based on an assessment of Egypt’s nationality laws and reaffirmed its contention that the decision “has established an incontestable linkage between the personal behavior of the claimants (determined through the factual background and circumstances), on the one hand, and deciding the issue of nationality, on the other”27 (emphasis in original). The Claimants’ behaviour in setting up the Siag Touristic and Siag Taba companies and traveling extensively on Egyptian passports was relevant to the Tribunal’s enquiry as to the nationality of the Claimants.

    Existence of an “Investment”

  2. On the subject of its objections to jurisdiction ratione materiae the Respondent submitted that although the term investment has a broad definition it is not without limitations and should be determined on a case by case basis. Foreign investment requires a placement of foreign capital in the host state under the complete or incomplete control of foreign investors. The purpose of the ICSID Convention is to afford a higher level of protection to foreign investors. The Respondent emphasized that the purpose of the ICSID Convention was the settlement of international disputes. That is, investments by foreign investors involving the flow of foreign private funds to the host State. It was submitted that ICSID cases involve at least one foreign element and differ from municipal economic activities. At the date Egypt and Italy concluded the BIT on 2 March 1989, and at the date of entering into the sale contract on 4 January 1989 the Claimants were Egyptian nationals. The two companies, Siag Touristic and Siag Taba were established under Egyptian laws. From their inception, the economic activities of the Claimants were devoid of any foreign element. By contrast, both the Fedax case and the Tokios Tokeles case referred to by the Claimants had involved a foreign element from the beginning.

  3. The Respondent continued to assert that, in any event, the Claimants should be estopped from bringing their claim before this Tribunal due to their attempting to “have it both ways” when it came to their assertions and denials of Egyptian nationality. It was a settled principle of international law that a person may not take advantage of a change of nationality to bring a claim where the investment in question was made using a former nationality. The Claimants obtained the

benefits of Egyptian nationality in making their investments and so should be estopped from bringing a claim based on their Italian nationality. The enquiry should be at the time of the investment not the time of the injury when assessing whether a claimant was seeking to take advantage of inconsistent rights afforded by multiple nationalities.

88. Finally, the Respondent set forth its request for relief in identical terms to those in its Memorial on Jurisdiction.

 

D. The Claimants’ Rejoinder on Jurisdiction

 

  1. The Claimants filed a Rejoinder on Jurisdiction dated 4 August 2006. The principal arguments made in the Rejoinder are summarized below in paragraphs 90 to 102 below.

  2. In their Rejoinder the Claimants reiterated that the case law of the Egyptian courts was clear that documentary evidence of nationality is prima facie evidence only. The most recent decision of the Supreme Administrative Court on 25 June 2005 held that it was “well settled jurisprudence that the Egyptian nationality is a legal status determined pursuant to the dictates of the applicable Egyptian nationality laws.”28 The Claimants submitted that the Respondent had chosen to ignore this well-settled jurisprudence and had not even commented on the six decisions of the Supreme Administrative Court which Claimants had referred to in their Counter-Memorial. In terms of ICSID practice, both the Soufraki and Champion Trading cases reinforced the established principle that nationality was determined by application of the terms of the relevant nationality law and documents evidencing nationality were prima facie evidence only.

    Mr Siag

  3. As to Article 10 of the Nationality Law, its purpose was to provide the legal framework by which an Egyptian may seek to have his/her foreign nationality recognized and to determine the impact of that event upon the person’s Egyptian nationality. With respect to the Respondent’s contention that it was important whether Mr Siag acquired his Lebanese nationality “voluntarily” or “involuntarily” this was in fact irrelevant. In any event, Egypt chose to invoke Article 10 when it

28

received Mr Siag’s application in December 1989 and could not now credibly argue that it was inapplicable. When it invoked Article 10 it did so in the belief that Mr Siag had acquired his Lebanese nationality at birth i.e. “involuntarily.”

  1. On the question of the satisfaction of the third paragraph of Article 10 by an “implied declaration,” it was submitted that the passage from the Supreme Administrative Court’s decision of 10 December 2000 provided no support for Dr El Haddad’s contention that the declaration requirement may be satisfied by an “implied” or an “assumed” declaration. The Claimants recited Article 20 of the Nationality Law which provides that “[d]eclarations, notifications, documents and applications stipulated under this Law shall be addressed to the Minister of Interior or whomever he delegates in this regard, and issued on the forms determined by virtue of a decree from the Minister of Interior.” The Claimants concluded that the declaration under Article 10 must be a formal declaration.

  2. As a matter of law Article 10 applied both to nationalities acquired voluntarily through naturalization and involuntarily such as at birth. It was contended that the Respondent’s argument would discriminate between Egyptians, which is impermissible under the Egyptian Constitution. Furthermore, there was nothing in the text of Article 10 to suggest that a person who acquires a foreign nationality involuntarily cannot apply under Article 10. This was reflected in the form from the Egyptian Ministry of Interior filled out by Mr Siag. It had a notation “date acquired” and Mr Siag wrote “from birth.” This did not prevent the Ministry from processing Mr Siag’s application. The passages from scholars relied upon by the Respondent, including Professor Riad, did not support its argument. All that they stood for was the unremarkable proposition that “an Egyptian who ‘involuntarily’ possesses a foreign nationality and does not seek to have such foreign nationality recognized under the provisions of Article 10 should not be stripped of his Egyptian nationality based solely on his failure to seek permission to acquire such foreign nationality under Article 10.”29

  3. The date of and the manner of Mr Siag’s acquisition of Lebanese nationality continued to be an area of contention between the parties. The Claimants summarized Mr Siag’s acquisition of Lebanese nationality and the documents submitted in evidence as follows. Mr Siag acquired Lebanese nationality by naturalization in December 1989. There was no evidence from the Lebanese

Embassy in Cairo to suggest that Mr Siag acquired Lebanese nationality at birth. Mr Siag was born of Lebanese origin because his ancestors on his father’s side of the family had been Lebanese. It was submitted that the documents relied upon by Egypt to demonstrate that Mr Siag acquired his Lebanese nationality at birth were inconclusive. Mr Siag wrote the words “at birth” on his application for permission, dated 19 December 1989, for the reference to the date he “acquired” Lebanese nationality. He understood this to be a reference to his Lebanese origin. Similarly, the notation on his individual record “more than ten years” showed that he came from an “original” Lebanese family. Finally, the letter to Mr Siag from the Lebanese Embassy in Cairo of 19 December 1989 had been mistranslated by Egypt. It states “was born in Cairo on 12 March 1962, and he is of Lebanese nationality and registered in the records of this mission” not “was born in Cairo on 12 March 1962, of Lebanese nationality and recorded in the registers of this mission.” In addition, the Respondent made a request to the Lebanese Embassy for documents proving Mr Siag acquired Lebanese nationality at birth and evidence of his father’s Lebanese nationality. The Lebanese Embassy responded that it had no such evidence.

Ms Vecchi

  1. As to Ms Vecchi, the Claimants contended that the Respondent’s suggestion that there was a difference between the terms of the 1956 nationality law and the 1958 nationality law was misplaced. The two applicable provisions were identical. Likewise, as stated in the Counter-Memorial and the Expert Opinion of Professor Riad, Article 1 of the Nationality Law was only meant to address who were “original” Egyptians prior to the establishment of the United Arab Republic.

  2. It was submitted that the Nationality Law was a matter of “public order.” Therefore, it was immediately applicable to all Egyptians without discrimination. It was not possible for the Nationality Law to apply only to those women who acquired the Egyptian nationality of their husbands after 1975. Moreover, the prior nationality laws of 1956 and 1958 contained the same provisions as Articles 7 and 8 of the Nationality Law.

  3. In relation to the Respondent’s contention that the legislators could have retained a similar sentence to that found in Article 14 of the 1958 nationality law, the Claimants asserted that this argument was misplaced. The reason for the

sentence being in the 1958 law had been explained by Professor Riad. He stated that it was there because the 1958 law established nationality in the United Arab Republic. This need was not there when the Nationality Law was enacted in 1975.

  1. The Claimants then asserted that the Respondent’s interpretation and application of its nationality law in this case constituted an abuse of rights under international law. The Respondent had inconsistently applied its nationality law for the sole purpose of evading its international obligations.

  2. On the procedural matter of the burden of proof the Claimants submitted that the Respondent bore the burden of proof with respect to each of its jurisdictional objections. Claimants relied upon the opinion of Professor W Michael Reisman30 that stated “Egypt, as the party advancing the objections to jurisdiction following a prima facie showing by the Claimants, bears the burden to prove their elements.”31

    Ratione Materiae Objections

  3. TurningtotherationemateriaeobjectionstheClaimantssubmittedthattheterms of the ICSID Convention and the BIT were relevant. The drafters of the ICSID Convention intentionally left the term “investment” undefined. The BIT in this case contained a very broad definition of “investment.” The Claimants reiterated that the reading in of an origin of capital requirement has been firmly rejected in ICSID practice. It was submitted that the Respondent’s attempt to distinguish the Fedax and Tokios Tokeles cases on the basis that the economic activities in question possessed a foreign element from the very beginning were not of assistance. This difference was immaterial to the propositions expressed in those cases concerning the definition of investment and an origin of capital requirement. The Respondent’s argument that the investments were never controlled by a foreign investor was also challenged. The Claimants submitted that Mr Siag and Ms Vecchi acquired Italian nationality on 3 May 1993 and 14 September 1993 respectively. The vast majority of the money they invested was invested from 1994 onwards.

31

  1. The Claimants repeated their contention that the Respondent’s estoppel argument was not a jurisdictional issue and should be part of the merits stage of these proceedings. In any event, the claim was baseless. The Claimants never attempted to conceal their Italian nationality or deliberately failed to disclose their loss of Egyptian nationality. There was also no evidence that the Claimants wilfully manipulated their nationality. Their acquisition of Italian nationality was unrelated to these proceedings.

  2. The Claimants’ request for relief remained the same as in the Counter-Memorial on Jurisdiction.

 

E. The Hearing on 8-9 August 2006

 

  1. At the hearing on 8–9 August 2006 no witnesses were called for cross- examination. Each side made oral presentation of its respective case and responded to questions from the Tribunal. The presentations closely followed the written submissions discussed above and to avoid undue repetition the following analysis is a brief summary only.

    The Respondent’s Arguments

  2. The Respondent noted that there were two ways to approach the interpretation of the ICSID Convention and the BIT, namely the literal approach and the contextual approach. It was submitted that the contextual approach, taking into account the objectives of these instruments, was the preferred approach. Turning to the Nationality Law the object was to encourage Egyptians to maintain their Egyptian nationality and so their links to Egypt if they acquired another foreign nationality through migration to another country. This was reflected in the first paragraph of Article 10 which stated that if permission was not granted by the Egyptian Minister of Interior to acquire a foreign nationality the person retained their Egyptian nationality.

  3. It was suggested that there was no unanimity of opinion among scholars as to the requirement to make a declaration under the third paragraph of Article 10 within the one year period following the grant of permission. The trend of legal scholarship was towards not requiring a declaration within the one year period once permission had been granted. It was also submitted that the decisions of

32

the Egyptian courts were not unanimous on the one year requirement under Article 10(3). Counsel for the Respondent mentioned four cases that it said supported that trend. (After hearing the submissions of both parties the Respondent was granted permission to produce these four cases and a post- hearing submission.)

  1. There was not a consistent line of court decisions and it was the consistent practice of the Egyptian Ministry of Interior not to require the declaration. However, no evidence to this latter effect was produced. It was also claimed that there was no official form for the declaration.

  2. Where a person applied to the Egyptian Minister of Interior under Article 10 for an already acquired foreign nationality what was actually being sought was recognition of that foreign nationality. If that person was permitted to maintain his Egyptian nationality that was the end of the matter and no further action was required. It was immaterial whether Mr Siag had been born Lebanese or became naturalized as a Lebanese. He did not get prior permission to acquire that Lebanese nationality and so under the first paragraph of Article 10 he remained Egyptian.

  3. With respect to Ms Vecchi, she was not covered by Article 8 of the Nationality Law since pursuant to Article 1 she is not to be considered a “foreign woman.” Moreover, when she reacquired her Italian nationality Ms Vecchi did nothing to inform the Egyptian Ministry of Interior. Article 10 would apply and she has never sought permission under that article.

  4. On the burden of proof it was said that this was covered by Article 24 of the Nationality Law which provided that “the onus of proof of nationality shall be borne by whoever upholds or alleges not carrying Egyptian nationality.“ In short, he or she who asserts must prove.

  5. The Respondent accepted that the definition of “investment” was undefined in the ICSID Convention. However, consistent with its earlier written submissions, it was contended that there must be some foreign element. The Respondent maintained its contention that the purpose and objectives of the ICSID Convention required an origin of capital requirement. It was acknowledged that such a view was the opposite to the view reached by a number of ICSID tribunals. In those cases, though, the economic activity comprised at least one

foreign element from its inception. To include the Claimants’ investment under the protection of the ICSID Convention would expand the scope of international investment protection to include what were municipal economic activities.

  1. The Respondent reiterated that its estoppel claim could be considered at the jurisdictional phase although it was acknowledged that it did not form part of the tests set out in Article 25 of the ICSID Convention. As to the substance of its estoppel claim, the Respondent asserted that the Claimants had derived benefits based on the belief that they were Egyptians and it was inequitable for them to now base claims on the fact such nationality had been lost.

  2. As to the Claimants’ contention that the Respondent has committed an abuse of rights under international law the Respondent submitted that it was entitled to take the position it had taken on interpretation of the Nationality Law and that the opinion of Professor Reisman was unbalanced and biased.

    The Claimants’ Arguments

  3. On the issue of nationality it was contended that the Claimants had provided unrebutted prima facie proof of the positive nationality requirement, Italian nationality, at the time the claim was filed and registered. The Claimants also satisfied the negative nationality requirement.

  4. Mr Siag lost his Egyptian nationality through the operation of Egyptian law when he failed to make a declaration within the one year period stipulated in the third paragraph of Article 10. This view was supported by the premier Egyptian expert on the Nationality Law, Professor Riad and the Egyptian courts. Article 10 concerned the recognition of a foreign nationality by Egypt and the determination of whether Egypt will give such nationality some legal effect in Egypt. It was acknowledged by Respondent’s experts that Article 10 could be utilized irrespective of whether or not the nationality was acquired before or after permission was sought. It also applied irrespective of whether the nationality was acquired voluntarily or involuntarily.

  5. The first paragraph of Article 10 did state that a person who acquired a foreign nationality without obtaining permission retains their Egyptian nationality. However, there is discretion under Article 16 to also strip that person of their Egyptian nationality. Although it was contended that it was not an issue, the

34

Claimants submitted that Mr Siag acquired his Lebanese nationality through naturalization not at birth.

  1. It was the view of Professor Riad that when permission is granted for an already acquired foreign nationality that there should be a formal expression, such as making an application for and receiving a passport, after the permission is granted. The view of the Respondent’s experts Professors El Haddad and Abdel Aal that the one-year period starts when permission is granted was noted. The Claimants submitted that on either calculation there was no declaration made within the one year period. Article 20 of the Nationality Law set out the requirements for declarations and it was clear that these requirements applied to the declaration requirement under Article 10.

  2. It was submitted that extrinsic evidence of nationality was prima facie evidence only. Such was the holding of Egypt’s Supreme Administrative Court and also other ICSID tribunals. However, such evidence is irrelevant if inconsistent with an application of the relevant law.

  3. With respect to Ms Vecchi’s nationality it was contended that she gained her Egyptian nationality exactly in the manner described in Article 7 of the Nationality Law except that it was under the relevant article of the prior nationality law, which was worded identically. It was submitted that the Nationality Law applied to Ms Vecchi but, even if it did not, she lost her Egyptian nationality in any event through the operation of the prior nationality law.

  4. The Claimants summarized their claim that there had been an abuse of rights under international law. It was asserted that the Respondent was not allowed under international law to apply its laws arbitrarily so as to evade jurisdiction under the ICSID Convention.

  5. As to the Respondent’s estoppel claim, the Claimants reiterated their primary argument that this claim should properly be dealt with as part of the determination of the merits of the dispute. In any event, it was denied that the Claimants concealed their Italian nationality from Egypt or in any way had behaved inequitably. The detriment relied upon by Egypt of being held to the stricter standards of investment protection under international law was also questioned.

35

  1. The Claimants maintained that the Respondent’s objections to jurisdiction ratione materiae were without merit. The Claimants had stated that they invested US $ 20 million in the Taba project in their personal capacities. In any event, it made no difference if the Claimants’ funds were channeled through the two companies formed for the purpose of the investment.

  2. There was no origin of capital requirement or any requirement that part of the funds invested should be from Italy. The suggestion to the contrary derived no support from the terms of the ICSID Convention, the BIT or the decisions of ICSID Tribunals. No ICSID tribunal had held that the ICSID Convention requires a foreign origin of capital.

  3. The Claimants disagreed with the argument raised by the Respondent that the Claimants were Egyptian nationals in 1989 when the BIT was entered into and that was the time that mattered. The Claimants investments were made between 1994 and 1996 after they acquired Italian nationality and lost Egyptian nationality. The acts of Egypt that were complained of also occurred after the Claimants acquired Italian nationality.

  4. The Claimants contended that any legitimate expectations that they were Egyptian nationals were not relevant to determining the issue of nationality. This issue was a matter of public order to be determined by the application of Egyptian law. The Champion Trading and Soufraki Tribunals had ruled to this effect.

  5. On the relevance of the abuse of rights argument, it was submitted that this set an outer limit on what the Respondent could argue in this proceeding. It was also relevant to the determination of costs of the jurisdiction phase. In response to a question raised by Professor Vicuña concerning the relevance of continuity of nationality it was submitted that on the facts of this case the Claimants acquired their Italian nationality prior to the time that the vast majority of the investment was made and well before the acts which were the subject of the complaint. Also, for the purposes of jurisdiction the only two dates that mattered were those dates set out in the ICSID Convention.

  6. As to the matters raised concerning the Claimants’ Italian and Lebanese nationality it was argued that the matter of positive nationality was closed. The Claimants had made a prima facie showing of Italian nationality in their Memorial

on the Merits and that had not been rebutted by the Respondent. Nor had Mr Siag’s Lebanese nationality been debated. All that had been raised was whether he acquired such nationality at birth or by naturalization. This was a question of fact under Egyptian law in terms of Article 10.

127. On the matter of interpretation of the international instruments involved in this case it was submitted that the Tribunal should give deference to the negotiated language of the treaty, including how Egypt and Italy chose to define “natural person” and “protected investment.” The Tribunal should not rewrite the BIT to achieve policy ends. If it did so, the Tribunal would be replacing its judgment for that of the Contracting States.

 

F. Post-Hearing Submissions

 

The Respondent’s Post-Hearing Submission

  1. Pursuant to the Tribunal’s ruling at the jurisdictional hearing, the Respondent filed a post-hearing submission dated 29 August 2006.

  2. The Respondent first discussed the alleged date of Mr Siag’s Lebanese nationality. The Respondent argued that the Claimants had retreated from the “at birth” statement on Mr Siag’s application and now contended that he acquired Lebanese nationality in December 1989 through naturalization.

  3. In any case, it was submitted that it was accepted that Mr Siag acquired Lebanese nationality prior to his application for permission. This was decisive to the applicability of Article 10(3) and was supported by the decision of the Egyptian courts in a recent case (the Lakah case referred to below).

  4. It was submitted that the two decisions of the Supreme Administrative Court of 21 December 2002 and 10 December 200032 submitted by the Claimants on the application of Article 10(3) of the Nationality Law did not in fact provide any guidance as to its application. The 2000 decision (the Saleh case) merely stated what the Article said and the 2002 decision related to a different factual situation. The Respondent submitted that the most recent relevant decision of the Supreme Administrative Court was a decision rendered on 27 August 2001.33

This case concerned a Mr Raymond Lakah, a dual-national of Egypt and France. The Respondent submitted that it could be inferred from the Court’s decision that Mr Lakah held French nationality prior to seeking permission under Article 10, that he made no declaration within the one-year period, and that the Court did not investigate any formal expression of French nationality once permission was granted.

  1. The Respondent also provided two further decisions of the Supreme Administrative Court34 which, although not touching on the interpretation of Article 10, were said to illustrate the objective of the Nationality Law.35

    The Claimants’ Post-Hearing Submission

  2. The Claimant filed its Post-Hearing submissionon 11 September 2006.

  3. As to the decision of the Supreme Administrative of 10 December 2000 in the Saleh case, the Claimants said that Mr Saleh lost his Egyptian nationality because the steps required by Article 10 were not followed. Although he made a declaration within the one-year period, he had not in fact been granted the requisite permission by the Egyptian Minister of Interior. The Supreme Administrative Court emphasized and explained the requirement to obtain permission from the Egyptian Minister of Interior and then to make a declaration within one year from the date of acquisition of the foreign nationality. The Claimants submitted that the Respondent’s attempt to distinguish this case was unavailing since Mr Siag’s situation (permission granted but no declaration) was explicitly addressed by the Court. Similarly, the Respondent’s attempt to distinguish the December 2002 Supreme Administrative Court decision as one concerning a minor failed to acknowledge that a minor’s Egyptian nationality is directly linked to the declaration made by the father under Article 10(3).

  4. The Claimants asserted that the three new judgments submitted by the Respondent were unrelated to Article 10(3) and noted that they were unaccompanied by any further expert opinion. The Lakah case raised interesting constitutional questions but shed no light on the interpretation of Article 10(3). The inferences the Respondent sought to draw from a brief passage of the

 

judgment were groundless. There was simply no analysis of Mr Lakah’s Egyptian nationality under Article 10. As to the other two cases submitted by the Respondent, the Respondent had acknowledged that they did not touch upon the declaration requirement under Article 10.36

136. In its post-hearing submission the Claimant also objected to the Respondent’s post-hearing submission on the grounds that it made submissions that went beyond the areas that the Tribunal directed. The Claimants requested the Tribunal to disregard all submissions made by the Respondent in its Post- Hearing Submission that were not in compliance with the directions made by the Tribunal at the jurisdictional hearing. As noted above, the Tribunal does not consider it necessary to rule on this objection.

 

IV. EXAMINATION OF THE PARTIES’ SUBMISSIONS

 

  1. Under Rule 41 of the ICSID Arbitration Rules the Tribunal is required to decide the Respondent’s objection that the present dispute “is not within the jurisdiction of the Centre or, for other reasons, is not within the competence of the Tribunal.” The Claimants contend that the Tribunal’s jurisdiction is established under two instruments referred to at the outset of this Decision: (a) the BIT and (b) the ICSID Convention.

  2. On the burden of proof, the Respondent asserted that despite the fact that it had raised the objections to jurisdiction in this case, the burden of proof lay with the Claimants to prove they were not Egyptian nationals at the relevant times. The Respondent relied upon Article 24 of the Nationality Law which provides “the onus of proof of nationality shall be borne by whoever upholds or alleges not carrying Egyptian nationality.”37 The Tribunal does not agree that this Article extends to the burden of proof for what are jurisdictional objections asserted by the Respondent.

  3. As regards the burden of proof on the Respondent’s jurisdictional objections, the Tribunal adopts the test proffered by Judge Higgins, President of the

39
International Court of Justice, in her separate opinion in the
Oil Platforms Case.38 The principle proposed by Judge Higgins was the following:

The Court should [...] see if, on the facts as alleged by [Claimant], the [Respondent’s] actions complained of might violate the Treaty articles (§ 33) [...] Nothing in this approach puts at risk the obligation of the Court to keep separate the jurisdictional and merits phases [...] and to protect the integrity of the proceedings on the merits [...] what is for the merits, (and which remains pristine and untouched by this approach to the jurisdictional issue) is to determine what exactly the facts are, whether as finally determined they do sustain a violation of [the treaty] and if so, whether there is a defence to that violation [...]. In short it is at the merits that one sees “whether there really has been a breach.”

  1. This principle has been followed by a number of international arbitration tribunals deciding jurisdictional objections by a respondent state against a claimant investor. The Tribunal in the case of Plama Consortium Limited v Republic of Bulgaria39 stated that it did not understand that Judge Higgins’ approach was in any sense controversial. In the Salini v Jordan 40case, referred to in Plama Consortium, the Tribunal stated:

    In considering issues of jurisdiction, courts and tribunals do not go into the merits of the case without sufficient prior debate. In conformity with this jurisprudence, the Tribunal will accordingly seek to determine whether the facts alleged by the Claimant in this case, if established, are capable of coming within those provisions of the BIT which have been invoked.

  2. The Tribunal agrees with this approach and applies it to the jurisdictional issues considered below.

A. Alleged Lack of Jurisdiction Ratione Personae

142. It is common ground between the parties that under Article 25(2)(a) of the ICSID Convention there is a positive and negative nationality requirement. It is important to stress that the Claimants assertion that they held Italian nationality at the relevant times so as to satisfy the positive nationality under Article 25 of the Convention has not been contested by the Respondent.41 Rather, the

40

Respondent’s ratione personae objections to jurisdiction focus on the negative requirement. That is, were the Claimants, at the relevant times under Article 25, nationals of the Host State, Egypt, and so barred from bringing their claim before ICSID under the ICSID Convention?

  1. It is well established that the domestic laws of each Contracting State determine nationality. This has been accepted in ICSID practice.42 Both parties accepted and followed this general principle of international law in their submissions and at the hearing.43 Thus, Egypt’s Memorial on Jurisdiction at paragraph 21 describes it as “indisputable.” Claimants’ Counter Memorial refers to Articles 1 and 2 of the 1930 Hague Convention (“the Hague Convention”) and the 1997 European Convention on Nationality, Article 3(1) as examples of international conventions reflecting the international law principles. Although it never became effective, the Hague Convention is often referred to as reflecting the current international law principles on nationality of individuals. Article 1 states:

    It is for each State to determine under its laws who are its nationals. This law shall be recognised by other States in so far as it is consistent with international conventions, international custom, and the principles of law generally recognized with regard to nationality.

  2. Article 1 identifies that international law sets limits on the power of a state to confer nationality.44 The relevance of international law to the state’s determination of nationality under its municipal law as recognised in Article 1 of the Hague Convention is described in Oppenheim’s International Law as follows:

    This permits of some control of exorbitant attributions by states of their nationality, by depriving them of much of their international effect. Such control is needed since, although the grant of nationality is for each state to decide for itself in accordance with its own laws, the consequences as against other states of this unilateral act occur on the international plane and are to be determined by international law.45

  3. In the context of the settlement of investment disputes under the terms of the ICSID Convention, Professor Schreuer comments:

    Whether a person is a nation of a particular State is determined, in the first place, by the law of the State whose nationality is claimed [...]. But an international tribunal is not bound by the national law in question under all circumstances. Situations where nationality provisions of national law may be disregarded include cases of ineffective

41

nationality lacking a genuine link between the State and the individual. Other instances where national rules need not be followed are certain situations of involuntary acquisition of nationality in violation of international law or cases of withdrawal of nationality that are contrary to international law.46

  1. The international law rule that the municipal law of the state determines nationality is also reflected in the BIT. Article 1(3) of the BIT provides: “The term ‘natural person’ shall mean, with respect to either Contracting State, a natural person holding the nationality of that State in accordance with its laws” (underlining added).

  2. The Parties in their written and oral submissions both placed primary emphasis on the interpretation of the Egyptian nationality law to determine whether the Claimants were Egyptian nationals at the relevant time and so did not satisfy the negative nationality test. However, in its Reply the Respondent made reference to the question of effective nationality47 but this was in response to the opinion of Professor Reisman that since the Claimants were not dual-nationals by operation of the Nationality Law, questions of effectiveness of nationality did not arise. The Claimants acknowledged that there was scope for the Tribunal to take into account international law on nationality.48 The applicability of the concept of effective or dominant nationality is discussed further below.

    Documents of Egyptian Nationality Prima Facie Evidence Only

  3. In its written and oral submissions the Respondent referred to several official documents from the Egyptian Interior Ministry as reflecting that Mr Siag had in fact retained his Egyptian nationality after 1990 and through to the present date. These documents included letters from the Ministry, as well as passport, and company documents relating to the investment in Taba.

  4. Claimants asserted that as a matter of Egyptian law the determination of Egyptian nationality was a matter of public order. Article 6 of the Egyptian Constitution of 1971 states that “the Egyptian nationality is regulated by the

law.”49 As such, it could only be determined by application of the Nationality Law. Such an approach has also been confirmed by Egypt’s Administrative Court of 28 December 1965 where in a decision cited by the Claimants it was stated that “whereas the establishment of the nationality of a person is determined exclusively by the provisions of the legislation regulating the nationality, all data in documents even official have no legal value in proving the Egyptian nationality.”50

  1. This has also been the practice of other ICSID Tribunals. In the Soufraki case the Tribunal was urged to accept the finding of the Italian Government that Mr Soufraki had Italian nationality. The Tribunal ruled as follows:

    It is accepted within international law that nationality is within the domestic jurisdiction of the State, which settles, by its own legislation, the rules relating to the acquisition (and loss) of its nationality. Article 1(3) of the BIT reflects this rule. But it is no less accepted that when, in international arbitral or judicial proceedings, the nationality of a person is challenged, the international tribunal is competent to pass upon that challenge. It will accord great weight to the nationality law of the State in question and to the interpretation and application of that law by its authorities. But it will in the end decide for itself whether, on the facts and the law before it, the person whose nationality is at issue was or was not a national of the State in question and when, and what follows from that finding. Where, as in the instant case, the jurisdiction of an international tribunal turns on an issue of nationality, the international tribunal is empowered, indeed bound, to decide that issue.51

  2. As to the evidential weight to be accorded to certificates of nationality and other official documents the Soufraki Tribunal found that these were prima facie evidence of nationality only and said:

    The Tribunal will, of course, accept Claimant’s Certificates of Nationality as “prima facie” evidence. We agree with Professor Schreuer that:

    A certificate of nationality will be treated as part of the “documents or other evidence” to be examined by the Tribunal in accordance with Art. 43 [of the Convention]. Such a certificate will be given its appropriate weight but does not preclude a decision at variance with its contents.52

  1. In this case, the Respondent urged the Tribunal to take into account the cumulative effect of the number of documents evidencing the Egyptian nationality of the Claimants that were in existence throughout the 1990s and up until the Request for Arbitration was filed in 2005. However, the Respondent did not present any arguments to counter the expert opinion of Professor Riad and the decisions of Egyptian courts that under Egyptian law such documents were prima facie evidence of nationality only and should be disregarded if they were inconsistent with the applicable law.

  2. The Tribunal must determine the nationality of the Claimants.53 Application of international law principles requires an application of the Egyptian nationality laws with reference to international law as may be appropriate in the circumstances. Both Egyptian law and the practice of international tribunals is that the documents referred to by the Respondent evidencing the nationality of the Claimants are prima facie evidence only. While such documents are relevant they do not alleviate the requirement on the Tribunal to apply the Egyptian nationality law, which is the only means of determining Egyptian nationality.

    Mr Waguih Elie George Siag – Background

  3. Mr Siag was born in Egypt on 12 March 1962 to Egyptian parents. He was, therefore, an Egyptian national from birth. On 19 December 1989, Mr Siag submitted an application for permission to acquire Lebanese nationality under Article 10 of the Nationality Law. Prior to submitting his application Mr Siag received a nationality certificate from the Lebanese Ministry of Interior on 15 December 1989 and a letter from the Lebanese Consulate in Cairo that he was “of Lebanese nationality and recorded in the registers of this mission.” On 5 March 1990, the Egyptian Minister of Interior issued his Decree No. 1353 of 1990 acknowledging Mr Siag’s prior acquisition of Lebanese nationality and granting him permission to maintain his Egyptian nationality. On 8 March 1990 the Nationality Authority issued a letter to the Military Conscription Department to exempt Mr Siag from performing compulsory military service on the basis of his having dual-nationality. Mr Siag obtained a Lebanese passport on 14 June 1990. Mr Siag acquired Italian nationality on 3 May 1993 by decree of the Italian Minister of Interior. This was obtained on the basis of his marriage to an Italian

citizen and the provisions of Article 5 of the Italian nationality law Number 91 of 1992. Mr Siag received an Italian passport on 12 July 1995, and remains a citizen of Italy at the present time.

  1. In his application for permission to acquire Lebanese nationality Mr Siag sought permission to maintain his Egyptian nationality pursuant to the third paragraph of Article 10 of the Nationality Law. The third paragraph of Article 10 contains a requirement, once permission to maintain Egyptian nationality is granted, to further notify the Egyptian Interior Ministry within the period of one year of the desire to retain Egyptian nationality.

    Egyptian Nationality Law

    Applicability of Article 10 of the Nationality Law – Voluntary/Involuntary Acquisition of Foreign Nationality – Acquisition Prior to Seeking Permission

  2. The Respondent contended that since Mr Siag acquired his Lebanese nationality prior to seeking permission under Article 10 of the Nationality Law, Article 10 was, in fact, not applicable to Mr Siag.54 In this respect Respondent made detailed submissions devoted to the issue of the accuracy of the documentation that Mr Siag submitted to the Egyptian Interior Ministry and to the categorization of Mr Siag’s Lebanese nationality as either voluntary in the sense that it was acquired through naturalization or involuntarily in that it was acquired at birth through application of jus sanguinis.

  3. The Tribunal finds that it is unnecessary for the purpose of this ruling on jurisdiction to determine whether Mr Siag acquired his Lebanese nationality voluntarily or involuntarily. The Tribunal accepts the evidence of Professor Riad that the Nationality Law does not differentiate between involuntary and voluntary acquisition of a foreign nationality in the application of Article 10.55 Professor Riad served on the commission of legal experts who drafted the Nationality Law for the Egyptian Parliament. He also served on the commission that drafted Egypt’s previous nationality law of 1956 for the Egyptian Parliament. The Tribunal concurs with the Claimants that Professor Riad is in a unique position to

45

be able to comment on the application of Egypt’s nationality laws and is properly regarded as the leading Egyptian authority on the Nationality Law.

  1. At the time Mr Siag applied for permission to acquire Lebanese nationality in December 1989 he already possessed Lebanese nationality. The Respondent asserted that Article 10 of the Nationality Law only applied to situations where the foreign nationality had not yet been acquired. Therefore, pursuant to the first paragraph of Article 10 Mr Siag was considered to be an Egyptian in every respect and under all circumstances.

  2. The Tribunal adopts the opinions of Professor Riad that Article 10 addresses the recognition of foreign nationality in the “eyes of Egypt.” The view of Professor Riad was that the prior acquisition of a foreign nationality under the law of a foreign state made no difference to the permission sought under Article 10.56 Article 10 was “blind”57 to the operation of the foreign law. Under international law, as noted above, the conferral of a foreign nationality is a matter for the domestic law of the foreign state. The Tribunal upholds the Claimants’ assertion that the Nationality Law was concerned with the recognition of that foreign nationality as a matter of Egyptian law and so Article 10 applies in the case of a person seeking permission under Article 10 for a foreign nationality that they already possess.58

  3. This view of the interpretation of Article 10 is also reinforced by the application form of the Egyptian Ministry of the Interior. This form includes a section that asks applicants to indicate that date on which foreign nationality “was acquired.”59 Mr Siag’s application form under this section was noted “at birth.” Despite this notation which clearly indicated Mr Siag had already acquired his Lebanese nationality, the Egyptian Ministry of Interior proceeded to grant Mr Siag permission under Article 10.

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  1. The Tribunal holds that Article 10 may be used to seek permission for an already acquired foreign nationality. In that case, though, the determining date for the commencement of the one year period under the third paragraph of Article 10 would not be the date of the acquisition of the foreign nationality. As Professor Riad stated:

    In terms of applying Article 10, the date that should be considered for purposes of the third paragraph of Article 10 is the first date on which there was a formal expression of Mr Siag’s foreign nationality after the issuance of the Minister’s authorization to acquire the foreign nationality, for it is only at that point in time that Egyptian law acknowledged Mr Siag’s acquisition of the foreign nationality.60

  2. There was some difference of opinion between the experts as to whether the operative date for the commencement of the one-year period was the date when permission was granted by the Egyptian Minister of Interior or when a “formal expression” of the foreign nationality was made. The Tribunal does not find it necessary to determine this latter point. It makes no difference to the finding of the Tribunal as to the declaration by Mr Siag since no formal declaration was made within a one year period commencing from either March 1990 when permission was granted or June 1990 when a formal expression was made through Mr Siag obtaining a Lebanese passport.

    Article 10(3) – The One-Year Period

  3. Under Article 10(3), an applicant seeking permission to obtain a foreign nationality may at the same time seek permission to retain his or her Egyptian nationality. If permission to retain Egyptian nationality is granted, Article 10(3) states the applicant may retain his or her Egyptian nationality “provided he notifies his wish to take advantage of such benefit within a period not exceeding one year from the date of acquiring the foreign nationality.”

  4. The Tribunal accepts the opinion of Professor Riad that the purpose for the one- year period was

    to give the applicant enough time after acquiring the Minister’s permission and the foreign nationality to consider the appropriateness of retaining the Egyptian nationality before the ultimate decision is taken.61

  1. The Tribunal also agrees with the view of Professor Riad that:

    The existence of this two-step requirement has never been challenged in Egyptian legal doctrine. Egyptian scholars are unanimous in considering that the Minister’s authorization alone merely constitutes a permission to acquire the foreign nationality and a license for the applicant to formally declare his wish to retain the Egyptian nationality. Indeed, the two-step requirement contained in article 10 has been deemed by certain authors as rather excessive.62

  2. In its Memorial on Jurisdiction the Respondent argued that a literal interpretation of Article 10(3) requiring a formal declaration within the one year period was not favoured by “current mainstream jurisprudence.”63 However, the Tribunal notes that, in the face of the authorities submitted by the Claimants, in particular those from Egypt’s Supreme Administrative Court,64 and evidence that in a recent book authored by the Respondent’s experts Drs Abdel Aal and El Haddad they had stated that there was such a requirement,65 the Respondent backtracked somewhat on its initial claim.66 For example, at the hearing, counsel for the Respondent asserted that the unanimity of opinion expressed by Claimants created a false impression and in fact Professor Riad had not mentioned those scholars who held a contrary opinion.67

  3. The Respondent also continued to maintain at the hearing that there was a lack of consensus in Egyptian judicial authority as to the application of Article 10(3).68 Leave was granted to it to submit after the hearing four additional cases which its Counsel had referred to at the jurisdictional hearing as demonstrating an alternative view.

  4. The three additional cases supplied with the Respondent’s post-hearing submission do not support its position.

48

  1. The Respondent placed its reliance on the Lakah case. The decision of the Higher Administrative Court was given on 27 August 2001.69 The Tribunal agrees with the contention of the Claimants in their post-hearing submission that this case did not involve any detailed analysis of Article 10(3). From the discussion of Mr Lakah’s dual French/Egyptian nationality it is not possible to infer anything about the Court’s view of the application of Article 10(3) and the need for a declaration within a one year period of acquisition of the foreign nationality or, in the case of an already acquired foreign nationality, the date permission is granted by the Egyptian Ministry of Interior or a “formal expression” made. The remaining two cases, as acknowledged by Respondent,70 do not touch on the application of Article 10(3) at all. They merely provide some background to the motivation and concerns of the drafters of the Nationality Law. The Tribunal does not find these decisions in any way demonstrate a contrary judicial opinion on the application of the two-step requirement under Article 10(3).

  2. In her supplemental opinion Professor El Haddad, an expert retained by the Respondent, suggested that a declaration of intent to retain Egyptian nationality could be implied or assumed. At paragraph 35 of her supplemental opinion Professor El Haddad appeared to attempt to rewrite the terms of Article 10(3) and place a positive obligation on a person to renounce that person’s Egyptian nationality. The Tribunal finds that such a reading of Article 10(3) is unsupported by the language of Article 10(3).

  3. Professor Riad in his reply expert opinion confirmed that in his view an official declaration would be required. The Tribunal agrees such a requirement is strongly supported by the language of Article 20. Respondent made reference to the fact that there is no official form for the declaration in satisfaction of the two- step requirement. Like the official documents evidencing nationality the Tribunal finds that the practice of the Egyptian Interior Ministry is prima facie evidence only. The plain language of Article 20 makes it clear that what is required, at the very least, is an official declaration to the Egyptian Minister of Interior of the applicant’s wish to retain Egyptian nationality. In the view of the Tribunal this provision leaves no room for such a declaration to be implied or assumed. The reason that Article 20 sets out formal requirements for a declaration is to provide

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