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Good Faith and International Economic Law$
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Andrew D. Mitchell, M Sornarajah, and Tania Voon

Print publication date: 2015

Print ISBN-13: 9780198739791

Published to Oxford Scholarship Online: June 2015

DOI: 10.1093/acprof:oso/9780198739791.001.0001

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Good Faith, Corporate Nationality, and Denial of Benefits

Good Faith, Corporate Nationality, and Denial of Benefits

Chapter:
(p.117) 6 Good Faith, Corporate Nationality, and Denial of Benefits
Source:
Good Faith and International Economic Law
Author(s):

M Sornarajah

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198739791.003.0006

This chapter builds on Chapter 5 to focus on the ‘denial of benefits’ provisions introduced in treaties as a direct consequence of investors attempting to invoke the protection of investment treaties through the device of incorporation of companies. The object of the treaty being promotion of investment flows between the two states and economic cooperation, the object could not be facilitated by ‘post-box’ companies. Newer treaties began to insert denial of benefits provisions, giving the host state the power to deny protection to companies it thought did not qualify for protection. Yet arbitral tribunals have shown reluctance to ‘lift the veil’ in order to find the true purpose of the incorporation. Good faith principles may provide an answer that effectively accommodates the interests of investors as well as those of host states, in determining whether incorporation is used in a manner that satisfies the purposes behind the treaty.

Keywords:   good faith, denial of benefits, companies, tribunals, investment

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