Author: Utkarsh Trivedi*
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This article examines a recurring challenge in investment arbitration, namely the conditions under which a natural person may invoke treaty protection against a State to which that person is also bound by nationality or economic allegiance. The award of the Permanent Court of Arbitration (“PCA”) in Santiago Romero Barst and María Auxiliadora Rodríguez v. The Republic of Ecuador (PCA Case No. 2023-23, Award on Jurisdiction, 3 December 2025) (“Barst v. Ecuador” or “Barst”) furnishes an instructive vehicle for that inquiry. The majority held that dual nationals whose dominant and effective nationality coincides with that of the host State do not qualify as protected “investors” and consequently fall outside the tribunal’s jurisdiction. A contemporaneous development, in June 2026 of a fresh ICSID claim by two casino businessmen and their investments in Ecuador, whose holding company had earlier been excluded under a denial-of-benefits clause, supplies a complementary doctrinal example. The central argument here is that contemporary jurisprudence converges upon a substance-oriented conception of the “jurisdictional threshold”, expressed through two distinct yet functionally cognate filters: the genuineness of nationality, and the genuineness of corporate and economic connection.
The Factual and Treaty Matrix
The Claimants, a family of casino operators, commenced proceedings under the Italy-Ecuador Bilateral Investment Treaty of 25 October 2001 (the “Treaty”) following Ecuador’s abolition of gaming after a 2011 referendum. Each Claimant possessed Ecuadorian nationality from birth, and each subsequently acquired Italian nationality, Ms. Rodríguez by descent in 2003 and Mr. Romero by marriage in 2007. Of particular evidential significance, both had registered their holdings with the Ecuadorian authorities as national investments and had represented themselves as Ecuadorian nationals. By the close of the hearing, the parties had reached agreement upon a dispositive premise: the Claimants were dual nationals whose dominant and effective nationality was Ecuadorian.
Treaty Silence and the Recourse to General International Law
The Claimants advanced an essentially textual argument. Since the Treaty contained no express exclusion of home-host dual nationals, the protection extended to them, and any effective-nationality requirement would constitute an impermissible judicial emendation of the instrument. The majority bench declined to accept this proposition and characterised the Treaty as silent rather than permissive. The decisive weight attached to Article 5(b) of the Protocol, which obliged the tribunal, where an investor elects arbitration under the UNCITRAL Rules, to apply not merely the Treaty but also “the principles of international law recognised by the two Contracting Parties”. They construed that provision as sufficiently capacious to govern questions of jurisdiction, and not solely the merits. The conduit thereby established admitted the principle of dominant and effective nationality into the jurisdictional analysis.
That principle possesses a venerable pedigree. The Italy-United States Conciliation Commission in Mergé (1955) discussed the orthodox method, under which the rule that ordinarily precludes protection in cases of dual nationality “must yield before the principle of effective nationality whenever such nationality is that of the claiming State”, a proposition subsequently codified by the International Law Commission in its 2006 Draft Articles on Diplomatic Protection. Upon application of the relevant criteria, the majority found the Claimants’ connection to Ecuador to be preeminent. Their birth, upbringing, marriage, and professional careers were located in Ecuador, and Mr. Romero had occupied public office there, whereas no genuine link to Italy subsisted beyond the formal incident of a passport. The conclusion was that a dominant Ecuadorian nationality operated to bar the claim.
The majority articulated a second and independent ground founded upon the prohibition of abuse of rights. The Claimants had represented themselves to the Ecuadorian authorities as nationals undertaking domestic investments, and they could not subsequently assume a contrary posture, a result proscribed by the maxims allegans contraria non est audiendus and venire contra factum proprium. It merits emphasis that the tribunal characterised the conduct as an excess of procedural entitlement rather than as bad faith, and it consequently declined to award costs against the Claimants.
That mitigation is more modest than it first appears. The established abuse-of-rights jurisprudence, from Phoenix Actionto Mobil v. Venezuela, has confined the doctrine to restructuring undertaken in contemplation of a foreseeable dispute or accompanied by some indicium of fraudulent intent, precisely because a standing bar of this kind extinguishes the claim rather than merely qualifying its outcome. The Barst majority’s holding dispenses with both requirements, resting instead on the bare inconsistency between the Claimants’ domestic self-representation and their subsequent invocation of treaty protection. A test framed in those terms is, in principle, capable of reaching investors who make entirely routine registrations long before any dispute is conceivable, and who could not have known that an otherwise unremarkable filing would later be read as an estoppel against treaty protection. The refusal to award costs does not answer this concern: it addresses the Claimants’ exposure to the Respondent’s fees, not the more consequential deprivation, which is the loss of any forum in which to litigate the merits at all.
The State of the Authorities
Intellectual discussion requires acknowledgement that this jurisprudence remains divided, a point the majority itself conceded and which a dissenting arbitrator pressed. One line of authority assimilates the principle of effective nationality into the interpretation of silent treaties. The tribunal in Fernando Fraiz Trapote v. Venezuela proceeded through Article 31(3)(c) of the Vienna Convention and declined jurisdiction upon a finding of dominant Venezuelan nationality, while the tribunal in Antonio del Valle v. Spain invoked the rules of diplomatic protection to supply the treaty lacuna yet affirmed jurisdiction because the predominant nationality of the claimants was Mexican. However, the tribunal in Bahgat v. Egyptreasoned that “any developments in international law must yield to the lex specialis of the investment treaty”, and the French courts, in their capacity as the courts of the seat in Barst, have consistently refused to import an effective-nationality condition into silent instruments in Dangelas, García Armas and Aboukhalil. The majority distinguished each of these precedents upon two grounds, namely the singular presence of the Article 5(b) applicable-law clause in the Italy-Ecuador BIT and the paucity of genuine connection between the Claimants and Italy. The position under the ICSID Convention stands apart, since Article 25(2)(a) imposes an express bar upon dual-national claims and thereby renders the effective-nationality inquiry otiose.
This distinction is defensible, but only within narrow limits. An applicable-law clause of the kind found in Article 5(b) is conventionally understood to govern the law by which a tribunal resolves the substance of a dispute once jurisdiction has been established, not the anterior question of who qualifies as a protected investor, a question ordinarily governed by the treaty’s own jurisdictional text as construed under Articles 31 to 32 of the Vienna Convention. To treat a merits-stage applicable-law clause as a vehicle for importing a customary standing requirement into the jurisdictional threshold risks precisely the collapse between jurisdiction and merits that the lex specialis reasoning in Bahgat was designed to avert. What redeems the majority’s approach in Barst is not the general availability of such a move, but the particular drafting of Article 5(b) itself: its reference to “the principles of international law recognised by the two Contracting Parties” is markedly broader than an applicable-law clause confined to “the law applicable to the dispute” or to the merits, and supplies a textual warrant that was absent from the instrument at issue in Bahgat. The better reading of Barst is accordingly not as authority for effective-nationality gap-filling wherever a treaty falls silent, but as a narrower holding confined to instruments whose applicable-law clause is itself drafted with sufficient breadth to reach jurisdictional questions. A tribunal invoking Barst outside that specific drafting context would be extending it beyond what its own reasoning can bear.
The Cognate Threshold: Denial of Benefits
The nationality filter does not exhaust the jurisdictional armoury available to a respondent State. In June 2026, Roberto Cuadrado and Luis Fuentealba Meier, have instituted a fresh ICSID claim against Ecuador. The proceeding followed the dismissal of an earlier treaty claim, advanced by their holding company in respect of the same 2011 prohibition, upon a denial-of-benefits clause. That predecessor was a US$214 million claim under the UNCITRAL Rules, brought by a United States company that alleged the destruction of its casino business, and Ecuador defeated it in October 2025. The proceeding is to be distinguished from Barst, which concerned a claim of approximately US$152 million under the Italy-Ecuador BIT.
The two individuals have invoked the Chile-Ecuador BIT of 1993 and the Ecuador-Spain BIT of 1996, which corresponds to their respective home-State nationalities and that permits the prosecution of the claim in their personal capacities rather than through the impugned corporate vehicle. The denial-of-benefits clause discharges a function analytically cognate to the dominant-nationality inquiry in Barst, since both instruments operate to exclude claimants who lack a genuine economic nexus to the State whose treaty they invoke, typically where an enterprise is controlled by host-State or non-party interests and conducts “no substantial business activities” in its ostensible home State.
The Chile-Ecuador BIT constitutes a problematic instrument for an operator resident in Ecuador. The Barst award records that the treaty incorporates a domicile-based denial-of-benefits provision, under which Ecuador may withhold protection from a national of the other party who, at the date of investment, had been domiciled in Ecuador for more than two years, save upon proof that the investment was admitted from abroad. The Barst majority expressly classified the Chilean, Venezuelan, Argentine, Salvadoran and Nicaraguan treaties as instruments predicated upon such a residency criterion. Should the connection of Mr. Fuentealba replicate that of the Barst claimants, in respect of residence, business situs, and the domestic provenance of capital, the domicile clause presents an obstacle. The Spain-Ecuador BIT, identified in Barstamong the instruments keyed to nationality without an equivalent two-year carve-out, may prove the more resilient vehicle, although the origin of Mr. Cuadrado’s capital remains material. As to procedure, tribunals have held that the denial-of-benefits right must be actively exercised, yet a State may invoke it once the dispute has crystallised, as the tribunals in Ulysseas v. Ecuador and EMELEC v. Ecuador confirmed when they accepted the objection as timely upon its assertion together with the jurisdictional objections. The eventual fate of the individual claimants will therefore depend upon the very substance-over-form inquiry that proved dispositive in Barst.
Implications for the Indian Treaty Programme
Indian practice corroborates the analytical convergence described above. In the aftermath of the award in White Industries Australia Limited v. The Republic of India in 2011, the first known adverse award against the State under a BIT, India terminated the greater part of its legacy treaties, with approximately sixty-six instruments terminated between 2016 and 2019. The Union Cabinet concurrently approved a revised Model BIT in December 2015, published in 2016, which adopts an enterprise-based definition of investment that excludes portfolio holdings, omits the most-favoured-nation and fair-and-equitable-treatment standards, and predicates ISDS upon a five-year exhaustion of local remedies. The Model BIT has not been abrogated and remains the negotiating template, although it is presently the subject of an announced review. Practice has in any event diverged from the template, since the India-UAE BIT in force from 31 August 2024 readmits portfolio investments and reduces the local-remedies period to three years.
Both Ecuadorian filters bear upon the Indian context, subject to an important qualification. As a matter of settled constitutional law, India does not countenance dual citizenship, since Article 9 of the Indian Constitution divests of Indian nationality any citizen who voluntarily acquires a foreign nationality, and the status of Overseas Citizen of India does not constitute citizenship. The pure dual-passport configuration at issue in Barst is, accordingly, infrequent among investors of Indian origin, and the contrast circumscribes any direct transposition. The structural logic nevertheless persists. The 2016 Model BIT and subsequent practice embody a corporate-substance filter analogous to denial of benefits, and the India-UAE BIT requires “substantial business activity”, a criterion assessed by reference to physical presence, central administration, and the employment of personnel. An investor of Indian origin who has naturalised abroad and who channels investment through a conduit entity is thus exposed to the identical substance-over-form scrutiny that excluded the holding company in the Ecuadorian casino litigation.
This configuration inverts, rather than replicates, the logic of Barst. The nationality filter has no purchase here: Article 9 forecloses the dual-nationality predicate on which Barst’s effective-nationality analysis depends, and an OCI cardholder is, as a matter of Indian constitutional law, simply not an Indian national capable of being excluded on that ground. What arises instead is a question closer in kind to the denial-of-benefits inquiry examined above in relation to Mr. Cuadrado and Mr. Fuentealba, though it operates in the opposite direction. There, the substance inquiry served to exclude claimants whose economic connection to the host State was found to exceed their connection to the nominal home State. Here, it is deployed defensively by India as host State, asking not whether the individual investor is too Indian to qualify, but whether the corporate vehicle through which the investment is routed possesses a genuine link, in the form of physical presence, central administration, and employment of personnel, to the State whose treaty is invoked. An OCI’s abiding familial, reputational, and economic ties to India are, on this analysis, largely beside the point: the relevant enquiry is directed at the enterprise’s connection to its state of incorporation, not at the individual’s connection to India. The Barstlogic is accordingly exportable to the Indian treaty programme only in this reoriented form, as a filter addressed to the genuineness of the corporate vehicle rather than to the nationality of the natural person behind it.
Further concerns include consistency of position, a theme that animated the abuse-of-rights holding in Barst, which rested upon the Claimants’ own characterisation of their investment as domestic. An investor who accepts resident or domestic treatment, with its advantages, may find such representations to operate by way of estoppel against any subsequent assertion of foreign-investor status, irrespective of the absence of bad faith.
Conclusion
The award in Barst v. Ecuador will not resolve the controversy concerning home-host dual nationals, for the divergence among the treaty-silent awards, the express prohibition of the ICSID Convention, and the textualist jurisprudence of the French courts ensures the continued vitality of the question. The conjoint significance of the award and the newly instituted casino claim resides, rather, in their demonstration that respondent States increasingly defend the jurisdictional threshold by recourse to two complementary filters, namely the authenticity of an investor’s nationality and the substantiality of that investor’s corporate and economic connection. For India, possessed of a substantial diaspora, a constitutional prohibition upon dual citizenship, and a defensive Model BIT that increasingly incorporates substantial-business-activity requirements, the principle is clear. Access to ISDS is adjudged by reference to substance rather than to formal documentation, and the coherence between an investor’s domestic and international self-characterisation now constitutes an integral element of the jurisdictional calculus.
*Utkarsh Trivedi is an Indian lawyer pursuing an LL.M. in International Arbitration and Dispute Resolution at the National University of Singapore. Prior to NUS, he was a Senior Associate at S&R Associates, where he represented multinational corporations, financial institutions and high net worth individuals in commercial disputes, arbitrations and cross border enforcement proceedings before Indian courts and arbitral tribunals. His practice has covered high value disputes across the energy, pharmaceuticals, aviation, banking and technology sectors. He has published widely on arbitration and commercial law and has served as a speaker, moderator and judge at leading dispute resolution conferences and moot competitions. His interests lie in international arbitration, cross border disputes and commercial law