Assignment Of Claim

Arbitral practice shows that transferring an investment is not necessarily the same as assigning an investment treaty claim.

When the assignor is a national of a non-ICSID Contracting State or a person or entity that is not otherwise covered under an investment treaty, yet the assignee is a national of an ICSID Contracting State or a national who would satisfy an investment treaty’s nationality requirements, several tribunals have considered that this is not sufficient to establish jurisdiction.In practice, many of the economic benefits sought to be achieved via assignment can be achieved in other ways that do not require assignment or a change in the nationality of the claimant entity.Consider, for example, possibilities of changes in ownership at a level above the claimant entity or a carefully constructed funding arrangement.The tribunal therefore held that the assignor could not put the assignee in any better position without Sri Lanka’s consent.In the words of the tribunal: whatever rights Mihaly (Canada) had or did not have against Sri Lanka could not have been improved by the process of assignment, with or without, and especially without, the express consent of Sri Lanka, on the ground that nemo dat quod non habet or nemo potiorem potest transfere quam ipse habet.Further, when a claim is brought under the ICSID Convention, an assignment to a third person who does not have the nationality of a Contracting State will not suffice to establish jurisdiction over the assignee.However, such contract-based cases as do not necessarily address all the issues that arise in the context of assignment of investment treaty claims.Indeed, tribunals have not taken issue with assignments that are limited to the proceeds of any resulting award, as opposed to the assignment of the claim itself.Award creditors also have the option to assign any resulting award, but, at that stage, the formalities and effect of such assignments would most likely rest entirely within the purview of domestic, as opposed to international, law.However, right before its reorganisation Loewen Group, Inc.assigned its treaty (NAFTA) claim to a newly-established Canadian corporation, Nafcanco.

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