© José-Miguel Bello y Villarino, 2020.

The definitive, peer reviewed and

edited version of this article is published in Cambridge International Law Journal, Vol.
9 No. 1, pp. 76–95 http://dx.doi.org/10.4337/cilj.2020.01.04

If Mr Nottebohm had a golden passport: a study of the obligations

for third countries under international law regarding citizenships-for-
sale

José-Miguel Bello y Villarino*

PhD Candidate, University of Sydney, Australia (Diplomatic Career, Ministry of Foreign Affairs,
European Union and Cooperation, Spain – on leave)

<ab>When discussing ‘golden passports’, modern-day academics and practitioners frequently and
erroneously cite Nottebohm to claim that international law demands a ‘genuine link’ to grant
nationality. Despite Nottebohm’s central status in international law, such a view misrepresents the
ruling of the majority of the International Court of Justice in the 1955 case. Nottebohm does indeed
open very effective avenues to address some of the legal issues derived from citizenship-for-sale
schemes, but not as often assumed. This article reflects instead on Nottebohm’s insightful distinction
between the competence to grant a nationality, and the effects due under international law norms to
that new nationality by third States. On that basis, the article proposes a number of options working
within the bounds of international and EU law to protect those third States from some of the undesired
trans-boundary effects of golden passports.</ab>

<kw>Keywords: Nottebohm, ICJ, golden passport, genuine link, nationality, ius pecuniae, citizenship-
for-sale

<a>1<em>INTRODUCTION

One can imagine the late Mr Nottebohm scratching his head about ‘golden passports’.1 Mr Nottebohm,
a very familiar name for international law scholars and practitioners, was a German national living in
Guatemala. In 1939, he visited Liechtenstein where his brother lived at the time. During that visit, which
lasted just a couple of months, he became a national of the only double-landlocked country at the time,
an unusually speedy naturalisation process.2 Shortly after that trip, he went back to Guatemala where
he had lived since 1905. Although he had no previous connection to the Principality, from that date, he
behaved exclusively as a Liechtensteiner.

* The views and opinions expressed in this article are exclusively those of the author and cannot be construed to reflect any
official policy or position of any entity with which he is or has been affiliated. The author would like to thank the editorial
team, the double-blind reviewers and Dr Ramona Vijeyarasa for her comments on earlier versions.
1
The term has now received some degree of official endorsement in a report from early 2019 on this topic: Commission,
‘Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and
the Committee of the Regions on Investor Citizenship and Residence Schemes in the European Union’ COM (2019) 12 final,
1, <https://ec.europa.eu/info/sites/info/files/com_2019_12_final_report.pdf> accessed 18 February 2020 (European
Commission Report).
2
Ironically, Liechtenstein has one of the ‘most grueling naturalization timelines on earth’ today. Andrew Henderson, ‘The
Best Citizenship by Investment Programs for 2019’ (Nomad Capitalist, November 2018)
<https://nomadcapitalist.com/2016/06/20/best-citizenship-by-investment-programs/> accessed 4 June 2019.

Electronic copy available at: https://ssrn.com/abstract=4212421

 Things took a bad turn for Mr Nottebohm when he was arrested and deported to the United
States, as Guatemala sided with the allies against Germany in World War II.3 Although he no longer
had a legal connection to Germany (he had lost this nationality when he became a subject of Franz
Joseph II of Liechtenstein), US or Guatemalan authorities acted on the basis of his previous link to that
country. In 1946, after he was released from a two-year detention, he headed back to Guatemala, to find
his entry refused. Homeless and stranded, within weeks he moved to Vaduz, where he set up his
effective and permanent domicile. From that date, he was a Liechtensteiner by passport, residence, tax
obligations and centre of interest.
Yet in 1955, the International Court of Justice (ICJ) told him that he was not a real
Liechtensteiner for the purpose of diplomatic protection against Guatemala. Despite having lived in
Liechtenstein for almost a decade, his citizenship did not qualify as ‘a legal bond having as its basis a
social fact of attachment, a genuine connection of existence, interests and sentiments, together with the
existence of reciprocal rights and duties’.4 The consequences of the judgment are also well known to
the readers of this journal. His properties in Guatemala, confiscated under Guatemalan law in 1949,
stayed in the hands of the State and he was left with no country to protect him.
Fast-forward 65 years and Mr Nottebohm’s ghost may be thinking about how many choices he
would have today. Malta and Cyprus did not even exist in 1938, but he could buy both nationalities
today, as well as a number of nationalities in the Caribbean basin.5 He might even think that if one of
those countries wanted to exercise diplomatic protection on his behalf, he would not need to prove a
genuine connection of existence, interests and sentiments, as nationality-buying is an accepted (or at
least tolerated) practice today.
Would he be right? Does a golden passport deploy all its effects from the moment it is acquired?
Is, then, the reasoning of the majority in Nottebohm out of touch with our new world of high-profile
migrants? Is it time to retire Nottebohm, as some have suggested?6
This article argues just the opposite: the case is as relevant as ever as a starting point for a
serious discussion about golden passports. Yet, despite its central status in international law courses,
Nottebohm is widely misunderstood or misrepresented.7 For the case to help us understand what could
be done about golden passports, it is necessary to re-examine it directly from the source and the notes
of commentators at the time. This, however seemingly cumbersome, is paramount to ensure that readers
do not blindly accept authoritative, but distorted, claims about the ruling.8

3
A good background on the Latin American Detention Program with some insights into the story of Mr Nottebohm can be
found in Cindy G Buys, ‘Nottebohm’s Nightmare: Have We Exercised the Ghosts of WWII Detention Programs or Do They
Still Haunt Guantanamo’ (2011) 11 Chicago-Kent Journal of International and Comparative Law 1, 15.
4
Nottebohm Case (Liechtenstein v Guatemala) (Merits) [1955] ICJ Rep 4, 23. For the purpose of this article, citizenship and
nationality are used indistinctly despite their minor differences, with the exception of references to European citizenship.
5
See eg Manuela Boatcă, ‘Commodification of Citizenship: Global Inequalities and the Modern Transmission of Property’ in
Immanuel Wallerstein, Christopher Chase-Dunn and Christian Suter (eds), Overcoming Global Inequalities (Routledge, City
2015) 3, 3–18.
6
Audrey Macklin, ‘Is It Time to Retire Nottebohm?’ (2017) 111 American Journal of International Law (AJIL) Unbound 492.
7
An example of these misrepresentations can be found in one of the most revered international law books, James Crawford,
Brownlie’s Principles of Public International Law (9th edn, OUP, Oxford 2019) 442: ‘[Lotus] general emphasis on plenary
State discretion is contradicted by the approach taken in Anglo-Norwegian Fisheries and Nottebohm, which concerned
comparable competences of states, respectively, to delimit the territorial sea and to confer nationality on individuals’. As we
will see below, Nottebohm does precisely the opposite: it stresses this ‘plenary state discretion’ for granting nationality. Modern
writers with great insights on the issue on citizenship-for-sale schemes have also made similar misleading statements. See eg
the opening paragraph in Alina Tryfonidou, ‘Citizenship-for-Sale Schemes and EU Law: Can Third-Country Nationals Buy
Their Way into Becoming Subjects of EU Law?’ in Samo Bardutzky and Elaine Fahey (eds), Framing the Subjects and Objects
of Contemporary EU Law (Edward Elgar Publishing, Cheltenham 2017) 145. Some high-level political declarations have gone
beyond the ‘misleading’ and have fallen openly on the wrong side of the law. See eg Viviane Reding, the Commissioner for
Justice, Fundamental Rights and Citizenship, who in 2014 stated in front of the European Parliament that ‘in compliance with
the criterion used under public international law, member states should only award citizenship to persons where there is a
“genuine link” or “genuine connection” to the country in question’: Viviane Reding, ‘Citizenship Must Not Be Up for Sale’
(Plenary Session debate of the European Parliament on ‘EU Citizenship for Sale’, Strasbourg, 15 January 2014)
<https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_14_18> accessed 30 January 2020.
8
See eg an extract from the recent report of the Commission on the issue of golden visas and passports: ‘The Nottebohm case
of the International Court of Justice establishes that, for nationality acquired through naturalisation to be recognised in the
international arena, it should be granted on the basis of a genuine connection between the individual and the State in question’:
European Commission Report (n 1) 5. This document is particularly important in this context, as it can be considered to be the
official position of the Commission to date.

Electronic copy available at: https://ssrn.com/abstract=4212421

 From this perspective, the article then defends the present-day value of Nottebohm in three
steps. In Section 2 it describes the legal elements of a citizenship-for-sale system. Secondly, it clarifies
how Nottebohm offered a double angle for analysis: on the one hand, the granting of nationality, an
exclusive right of the country granting it; and on the other hand, the effects due under international law
to that nationality by third countries. Thirdly, it proposes a different approach to how we understand
golden passports based on that distinction, allowing third countries to put forward international
agreements or unilateral declarations that set the principles about how they will react to those golden
passports.
In its final section, the article also explores how these ‘limitation mechanisms’ would operate
under European Union (EU) law, primarily distinguishing two situations. Firstly, it clarifies the different
legal effects from acquisitions of nationalities accompanied by renunciations of previous ones and
naturalisation involving dual (or more) nationalities. Secondly, it briefly discusses the different formal
requirements for those declarations under general international law and EU law.
The main effect of the establishment of these ‘limitation mechanisms’ to the trans-boundary
effects of golden passports would be enhancing predictability. However, the implementation of these
mechanisms may also alter the balance between countries selling nationalities and those suffering the
consequences, paving the way for a more concerted approach about golden passports at a global or
regional level.

<a>2<em>THE LEGAL ELEMENTS OF A CITIZENSHIP-FOR-SALE SYSTEM

Let us be clear from the outset: Mr Nottebohm, like around 6,000 people in Cyprus and Malta in recent
years,9 legally bought his nationality papers. The main normative difference between his transaction
and the golden passport schemes discussed here is that his was an ad hoc naturalisation procedure.
Golden passports are (to a significant extent) a regulated system open to all foreigners and not a case-
by-case discretionary power of the State.10
Although the transactional nature of the naturalisation is not a point expressly made by the ICJ,
the recueil expressly records the financial commitments he made to the Principality in exchange for that
right. First, he had to prove he was able to afford a certain living standard at his own expense. For this
purpose, ‘he submitted a statement of the Crédit Suisse in Zurich concerning his assets’.11 As an initial
payment, he ‘undertook to pay 25,000 Swiss francs to the Commune of Mauren [and] 12,500 Swiss
francs to the State’,12 an amount which could conservatively be converted to around €125,000 in 2019.13
These payments were on top of the ‘normal’ administrative fees for a naturalisation procedure. 14 He
further committed to a yearly payment to the Revenue Authorities of the Government of Liechtenstein,
regardless of residence. This was materialised in a ‘formal agreement to the effect that he will pay an
annual tax of naturalization amounting to Swiss francs 1,000’.15 Finally, Mr Nottebohm had to be in the
country in order to apply for (buy) its citizenship.

9
Transparency International and Global Witness, ‘European Getaway: Inside the Murky World of Golden Visas’ (2018) 62,
64 <https://www.transparency.org/whatwedo/publication/golden_visas> accessed 18 January 2020.
10
‘Discretionary naturalisation procedures can be used in individual cases to grant citizenship in exchange for investment.
Such discretionary naturalisation procedures are highly individualised and used on a limited basis’: European Commission
Report (n 1) 3.
11
Nottebohm (n 4) 15.
12
Ibid.
13
Using the datasets available in ‘Measuring Worth – Relative Worth Comparators and Data Sets’ (Measuring Worth)
<https://www.measuringworth.com/index.php> accessed 3 June 2019.
14
Nottebohm (n 4) 15.
15
Ibid.

Electronic copy available at: https://ssrn.com/abstract=4212421

 These four elements: (1) initial proof of financial capacity;16 (2) initial payment;17 (3) recurrent
payments in some form of special taxation;18 and (4) physical presence at some stage,19 are all required
in the extant citizenship-for-sale schemes in the EU, namely those of Bulgaria, Cyprus and Malta. As
was the case for Mr Nottebohm, ‘regular’ processing fees are also due.20 The only noticeable innovation
of the ‘golden passport schemes’ when compared to Nottebohm is the requirement of some type of
health insurance and/or proof of good health. 21 Joachim Stern insightfully called this system of
naturalisation ius pecuniae,22 in opposition to the more common systems of ius sanguini or ius soli.23
In the European Commission’s view, ‘these schemes are a new form of naturalisation as they
systematically grant citizenship of the Member State concerned, provided the required investment is
made and certain criteria fulfilled’.24 By contrast, this article argues that the only new thing about them
is their ‘systematic’ character, which restricts the discretion of the national authorities, 25 removing
arbitrariness from the process. In that sense, golden passport systems are a way to bring ius pecuniae
into the rule of law, as ‘[a]rbitrariness is not so much something opposed to a rule of law, as something
opposed to the rule of law’.26 Otherwise they are just a Nottebohm 2.0.
Ius pecuniae systems are legal mechanisms established in domestic administrative law which
provide a person (often an investor in loose terms) with a public document in exchange for a
contribution to the State, to its economy or directly to the treasury, or both. In essence, it is a licensing
system, regulated by administrative law.
A licence ‘confers a right which the person … did not previously possess’.27 Public licences
require an administrative process in which the licensor assesses whether the potential licensee meets
the legal requirements, so it can grant legal permission (often confused with a mere authorisation28) to

16
Often an initial deposit and a statement about the source of wealth. See eg Maltese Citizenship Act, Cap. 188, Citizenship
(Amendment) Regulations, 2014, Section B8 of form N
<http://justiceservices.gov.mt/DownloadDocument.aspx?app=lp&itemid=25885&l=1> accessed 18 February 2020.
17
‘In Bulgaria, an overall investment of EUR 1 million is requested under its fast-track14 investor citizenship scheme. In
Cyprus, a minimum investment of EUR 2 million is necessary, together with ownership of property in Cyprus. In Malta, a
contribution of EUR 650,000 must be paid into a national investment fund, together with an investment of EUR 150,000 and
a requirement to own or rent property in Malta. In Cyprus and Malta, additional investments for family members are required’:
European Commission Report (n 1) 3.
18
Generally through privileged tax schemes for foreign income – see eg Monte Reel, ‘Why the EU is Furious with Malta’,
Bloomberg Businessweek (11 September 2018) <https://www.bloomberg.com/news/features/2018-09-11/why-the-eu-is-
furious-with-malta> accessed 5 June 2019. Although sometimes a minimum taxation is required – see eg Ministry of Interior
of Cyprus, ‘Scheme for Naturalisation of Investors by Exception’ 1
<http://www.moi.gov.cy/moi/moi.nsf/all/A0CAA99287BD0E9DC225806C002988D0/$file/SCHEME%20FOR%20INVES
TORS%20NATURALISATION%2013.9.2016.pdf?openelement> accessed 19 June 2019.
19
‘In Malta, the applicant must be physically present twice (once to provide biometric data for the eResidence Card and once
to take the oath of allegiance). In Bulgaria and Cyprus, their presence is required only once (for the submission of the
application for citizenship in the case of Bulgaria, and for the collection of the residence permit in Cyprus)’. See European
Commission Report (n 1) 4; Jelena Džankić and others, ‘Factual Analysis of Member States Investors’ Schemes Granting
Citizenship or Residence to Third-Country Nationals Investing in the Said Member State ’ (2018) 7, 12
< https://ec.europa.eu/info/sites/info/files/deliverable_d_final_30.10.18.pdf > accessed 7 March 2020 (references omitted).
20
‘Bulgaria charges a total of EUR 650 per application; Cyprus charges EUR 7,000 for the main applicant and EUR 7,000 for
the spouse; Malta charges a total of EUR 8,200 for the main applicant and EUR 5,500 for the spouse’: European Commission
Report (n 1) 4.
21
Džankić et al (n 19) 69.
22
Jelena Džankić, ‘The Pros and Cons of Ius Pecuniae: Investor Citizenship in Comparative Perspective’ (2012) Working
Paper No 14, 1 <http://cadmus.eui.eu//handle/1814/21476> accessed 3 June 2019.
23
Other authors prefer the term ‘ius doni’, a term coined by Christian H Kälin, Ius Doni in International Law and EU Law
(Brill Nijhoff, Leiden 2019). Personally, I believe the idea of ‘pecunia’ to be more representative of the idea of the aim of the
programmes, ie to attract wealthy investors, instead of placing the stress on the donation of money in exchange for the
citizenship. In any case, this approach would be better described as a sale and not a donation.
24
European Commission Report (n 1) 3 (emphasis added).
25
Austria and Montenegro have had such systems in the past, although in a less regulated manner – see Džankić (n 22) 2.
26
Elettronica Sicula S.p.A. (ELSI) (United States of America v Italy) [1989] ICJ Rep 15, 76.
27
‘OECD Glossary of Statistical Terms – Licensing Definition’ (Organisation for Economic Co-operation and Development,
Paris 2002) <https://stats.oecd.org/glossary/detail.asp?ID=3245> accessed 6 June 2019 (OECD Glossary of Statistical Terms).
28
See, in this respect, the reference to an ‘authorisation scheme’ in the ‘Bolkenstein’ Directive, which covers procedures to
reach a decision to restrict access to a service activity or the exercise thereof, without creating a right ex novo as a licensing
system does. Directive 2006/123/EC of the European Parliament and Council of 12 December 2006 on services in the internal
market [2006] OJ L376/36, art 4(6).

Electronic copy available at: https://ssrn.com/abstract=4212421

do something.29 Although some ‘licenses are granted free of charge, … most require payment’.30 The
granting process may require a competitive procedure among a given number of parties applying for
the licence if the total number of licences available is limited.31 Once granted, it acts as a barrier to entry
to other interested parties and is subject to certain restrictions regarding how it is employed at the risk
of revocation if those restrictions are violated.32
The problem of describing naturalisation through ius pecuniae ‘simply’ as a licensing system
is that it does not envisage the effects that this licence may have outside of the granting jurisdiction.
Nationalities are a very special type of licences as they provide their holders with rights that go beyond
those granted by the issuing authority. A simple analogy with driving licences adequately illustrates
this problem, as follows.
Within the European Union, any driver who has been granted a driver’s licence in one Member
State is entitled to have that licence recognised by the authorities of all the other Member States.33 Many
EU and non-EU countries have also entered into international agreements allowing for the mutual
recognition of drivers’ licences with third countries, on a temporary basis or through an ‘exchange
procedure’ which avoids retesting the skills already proven by the driver.34
A driver’s licence is a competence that remains under international (and EU) law exclusively
under the competence of the State; its normal effects are deployed within the jurisdiction of the State
granting it. However, it is possible that it may have some legal effects (through the action of European
or international law) outside of the granting jurisdiction. The granting system and the conditions
imposed on the licensee to acquire it may matter a lot in the decision of whether or not to grant those
effects. It is doubtful that a sovereign State would, for example, sign a mutual recognition agreement
for licences to drive buses or very large lorries if it knows that the other country has a system of selling
those licences. The question, then, is whether the standard for granting effectiveness to nationality is
lower than the one for licences to drive buses.

<a>3<em>CITIZENSHIP-FOR-SALE WITHIN THE NOTTEBOHM PRINCIPLES

29
‘Licencias Administrativas’ (Guias Jurídicas Wolters Kluwer, Madrid 2019)
<https://guiasjuridicas.wolterskluwer.es/Content/Documento.aspx?params=H4sIAAAAAAAEAMtMSbF1jTAAAUNjI0ML
tbLUouLM_DxbIwMDCwNzA7BAZlqlS35ySGVBqm1aYk5xKgAY1PefNQAAAA==WKE> accessed 6 June 2019.
30
OECD Glossary of Statistical Terms (n 27).
31
For example, ‘the Cypriot Government, as of 2018, decided to limit such citizenships to 700 per year. In Malta, the number
of successful main applicants (thus excluding dependants) is capped at 1,800. However, the Maltese authorities are in the
process of updating the law and, following a public consultation, increasing the cap for main applicants by another 1,800’:
Commission, ‘Commission Staff Working Document Accompanying the Document Report from the Commission to the
European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Investor
Citizenship and Residence Schemes in the European Union’ COM (2019) 12 (European Commission Working Document).
32
Centre for Co-operation with European Economies in Transition, Glossary of Industrial Organisation Economics and
Competition Law (Organisation for Economic Co-operation and Development, Paris 1993) 52.
33
Directive 2006/126/EC of the European Parliament and Council of 20 December 2006 on driving licences (Recast) [2006]
OJ L403/18, art 2.
34
See eg Canje de Notas constitutivo de Acuerdo entre el Reino de España y La República de Nicaragua sobre el
reconocimiento recíproco y el canje de los permisos de conducción nacionales, hecho en Madrid el 19 de febrero de 2010,
Boletín Oficial Del Estado, núm 274, 14 November 2011, 117131–117138.

Electronic copy available at: https://ssrn.com/abstract=4212421

Modern commentators of Nottebohm tend to ignore (or forget) its procedural history,35 which was an
essential element of the discussions at the time. 36 All those well-known quotes on nationality
requirements from Nottebohm were about the admissibility of the case, not about the merits. The ICJ
never decided on the legality of Guatemala’s actions. Instead, it denied Liechtenstein the right to bring
a claim in relation to Mr Nottebohm against Guatemala.
Of the three pleas that Guatemala raised on inadmissibility, only the second one, related to the
acquisition of Mr Nottebohm’s nationality, is relevant here. Guatemala argued three possible reasons
why that acquisition would not be legal:
<quotation>
(i) Because the Principality of Liechtenstein has failed to prove that M. Nottebohm … properly
acquired Liechtenstein nationality in accordance with the law of the Principality;
(ii) because, even if such proof were provided, the legal provisions which would have been applied
cannot be regarded as in conformity with international law;
(iii) and because M. Nottebohm appears in any event not to have lost, or not validly to have lost, his
German nationality.37
</quotation>
Liechtenstein rejected Guatemala’s pleas in bar and asked the ICJ to declare that the naturalisation of
Mr Nottebohm was not contrary to international law as it was granted in accordance with its law. On
this point, it seemed that Liechtenstein had the facts on its side, as the nationality was granted respecting
Liechtenstein’s law. From the record and the commentators’ observations, it appears that the residence
requirement was exempted according to the dispositions established by the law itself.38
All these arguments were wasted paper and time. Despite its centrality to the case, the
majority’s decision succinctly evaded this question altogether, making it an issue of domestic law.
Specifically, they ruled on the existing principle that ‘international law leaves it to each State to lay
down the rules governing the grant of its own nationality’.39 This principle is the first foundational
argument of this article in relation to golden passports: States have a wide margin of discretion regarding
to whom and how they grant their nationalities. This was (and still is) the right decision in law.
For at least the last 70 years, nationality has been a ‘reserved domain’ in public international
law. This was already well established after World War II under conventions and practice.40 The ICJ
just formalised the logical legal consequence of this general principle: a nationality legally granted by
one State automatically meets the requirements of nationality under international law. In the words of

35
Sloane perfectly summarised this point when he referred to a ‘doctrinal mantra’ of the genuine link, writing that ‘despite the
oft-quoted rhetoric of the Nottebohm majority, which ostensibly supports the genuine link theory, scrutiny of the opinion as a
whole reveals that the ICJ’s actual concern in Nottebohm had little to do with genuine links’: Robert D Sloane, ‘Breaking the
Genuine Link: The Contemporary International Legal Regulation of Nationality’ (2009) 50 Harvard International Law Journal
1, 3. When they do discuss the procedural story, authors sometimes project towards the ICJ ideas which are not in the
judgment. Clerici, for example, refers to a ‘prevailing opinion’ according to which ‘in the Nottebohm judgment the Court was
influenced by the factual context of the situation, given that Liechtenstein granted its nationality mala fide’: see Roberta
Clerici, ‘Freedom of States to Regulate Nationality: European Versus International Court of Justice?’ in Nerina Boschiero and
others (eds), International Courts and the Development of International Law: Essays in Honour of Tullio Treves (TMC Asser
Press, The Hague 2013) 840. However, a factual reading of the judgment shows that the Court carefully avoided going down
that road and only discussed in dicta the circumstances in which the nationality was granted as a justification for Guatemala
not to recognise the international effects of the granting act – see Nottebohm (n 4) 25–26.
36
Jack H Glazer, ‘Affaire Nottebohm (Liechtenstein v. Guatemala) – A Critique’ (1955–1956) 44 Georgetown Law Journal
313; Madeleine Grawitz, ‘Arrêts Nottebohm du 18 novembre 1953 (compétence) et du 6 avril 1955 (fond)’ (1955) 1 Annuaire
Français de Droit International 262; A N Makarov, ‘Consideraciones Sobre El Derecho de La Protección Diplomática’ (1955)
8 Revista Española de Derecho Internacional 519; Paul De Visscher, ‘L’Affaire Nottebohm’ (1956) 60 Revue Générale de
Droit International Public 238; Josef L Kunz, ‘The Nottebohm Judgment’ (1960) 54 American Journal of International Law
536.
37
Nottebohm (n 4) 9.
38
J Mervyn Jones, ‘The Nottebohm Case’ (1956) 5 International and Comparative Law Quarterly 230, 232; Nottebohm (n 4)
8.
39
Nottebohm (n 4) 23. This idea can be traced back, at least, to a statement of the Permanent Court of International Justice in
1923 which said that ‘in the present state of international law questions of nationality are, in the opinion of the Court, in
principle within this reserved domain [of States]’: Case of the Tunisian and Moroccan Nationality Decrees (Advisory Opinion)
PCIJ Rep Series B No 4, 24. This principle was later codified in the Convention on Certain Questions Relating to the Conflict
of Nationality Laws (adopted 13 April 1930, entered into force 1 July 1937) 179 LNTS 89.
40
‘This is positive international law, recognized by the Hague Codification Conference of 1930, by the Harvard Research in
International Law, by international courts and tribunals [and] by the literature’: Kunz (n 36) 545 (notes omitted).

Electronic copy available at: https://ssrn.com/abstract=4212421

the Court: ‘[i]t is not necessary to determine whether international law imposes any limitations on its
freedom of decision in this domain’.41 A search for those limitations would create ad hoc rules, which
were not (and continue not to be) supported by treaties, customs or global jurisprudence, which do not
impose any relevant constraints.42
In counterpoint to the restraint (and deference to domestic law) exercised in its approach to the
‘granting of nationality’, the ICJ undertook a more consequentialist (and aggressive) approach
regarding the effects of granting a nationality under international law. Interestingly, this part of the
judgment was a ‘decision that was neither invoked nor discussed by the parties’,43 but the majority had
the insight to state something obvious: by its nature, nationality affects international relations and is
susceptible to have certain ‘effects’ at the international level. 44 In other words, an essentially domestic
legal creation can have an effect in international relations. In the view of this author, this is remarkably
prescient for a time when the disciplines of international law and international relations seemed to be
following separate paths.45
The combination of the domestic-looking reserved domain of granting of nationality and the
external-facing effects on international relations of nationality introduces an element of tension between
what a State can do and what others will make of it. This is, in international legal practice, an issue of
predictability: how can the State (or the individual) know how other international actors will react to
the legal ties (the nationality link) created between one State and one individual?
The ICJ answered this question in Nottebohm, clarifying that these effects can be regulated by
public international law. For instance, nationality affects who can exercise diplomatic protection
towards a third party.46 As diplomatic protection is a creation of public international law, it seems
reasonable that the same international law can establish its limits. If a State is bound to accept the
exercise by another State of diplomatic protection in relation to a person the latter claims to be its
national, this should be subjected to rules. This is the second tenet of this article: even if the granting of
nationality is a reserved domain, the external effects of nationality on third parties are limited by public
international law.
This approach moved the pivotal issue of the case. The ICJ assumed that Mr Nottebohm’s
nationality was legal and meeting all standards under Liechtenstein’s law. There was no point in
discussing this, as the majority said, as it would be an issue for a domestic court. The ruling focused
instead on its effects to third States and, concretely, Guatemala. Paraphrasing the reasoning of the Court,
was Guatemala bound to recognise Liechtenstein’s decision for diplomatic protection purposes?
The ICJ created then a distinction between ‘granting’ and ‘effects for third States’ of
nationalisations.47 This distinction, which was duly noted at the time for the majority of commentators,48
seems to have been lost in recent literature.49 For example, in an article in the online edition of the
American Journal of International Law, Macklin argues that Nottebohm ‘introduces the “genuine link”
test as a supplementary and mandatory prerequisite to recognition of nationality at international law’.50

41
Nottebohm (n 4) 20.
42
See in that sense Case C-135/08 Janko Rottmann v Freistaat Bayern [2010] ECR I-1449, Opinion of AG Poiares Maduro,
paras 18–19 (AG Maduro’s Opinion).
43
Kunz (n 36) 540–541.
44
Nottebohm (n 4) 22–23.
45
Jeffrey L Dunoff and Mark A Pollack, Interdisciplinary Perspectives on International Law and International Relations: The
State of the Art (CUP, Cambridge 2013) 3.
46
Jacques Maury, ‘L’arrêt Nottebohm et La Condition de Nationalité Effective’ (1958) 23 Zeitschrift für ausländisches und
internationales Privatrecht 515, 517.
47
Anne Peters (‘Passportisation: Risks for International Law and Stability – Part II’ (European Journal of International Law:
Talk! 9 May 2019) <https://www.ejiltalk.org/passportisation-risks-for-international-law-and-stability-part-two/> accessed 30
May 2019) makes a similar case regarding passportisation of foreign nationals by Russia. Regretfully, her approach fails to
adequately represent what ‘effectiveness’ actually means for the majority in Nottebohm. She argues that ‘the gist of the idea
of effectiveness is that law should faithfully translate social reality’, whereas the ICJ actually meant ‘s’il existe une situation
opposable par un Etat aux autres’ (see Maury (n 46) 517). In that sense, there is nothing in Nottebohm requiring that nationality
‘conceived of as a legal and political relationship between a state and a person, must not be merely virtual, but must be
effective’. This condition can only be relevant in terms of its effects for third States.
48
Grawitz (n 36) 266; Jones (n 38) 240–241; Maury (n 46) 518.
49
See eg Ayelet Shachar, ‘Dangerous Liaisons: Money and Citizenship’ in Rainer Bauböck (ed), Debating Transformations
of National Citizenship (Springer International Publishing, New York 2018) 8 (arguing that in the ‘Nottebohm decision “real
and effective ties” between the individual and the state are expected to undergird the grant of citizenship’).
50
Macklin (n 6) 493.

Electronic copy available at: https://ssrn.com/abstract=4212421

Although the explanation for this statement could be a particular meaning for the word ‘recognition’
(as in ‘mutual recognition of judgments’ in Brussels I,51 ie a recognition to display its effects in another
jurisdiction), it seems to be something else.
Authors and organisations sharing this view 52 want to see in Nottebohm a principle in
international law that establishes certain limits on the legitimacy of changes of nationality. This line of
argument is not particularly new. It can be traced back to a different interpretation of Nottebohm that
assumed that an ‘acquisition’ of nationality ‘may be attacked and its international effect vitiated by the
ex parte declarations of an attacking State – a stranger to the naturalization – without examination at
the lex fori, as to fraud or abuse of power attending the naturalization’. 53 The current view of the
European Commission on naturalisations seems to align with this understanding. For example, the
Commission Staff Working Document on the issue of investor citizenship schemes states that ‘a
“genuine link” between person and the State is generally required’.54
From an ethical and political point of view, this demand of a genuine link is justified. The idea
behind this approach is that nationality represents the membership of a particular polity. Rainer
Bauböck perfectly illustrated this point when discussing the moral arbitrariness of how citizenship is
obtained. 55 In his view, one should distinguish the ‘global justice perspective’ and the ‘internal
democratic perspective’. Ius pecuniae may be a way to redress arbitrariness in the acquisition of
nationality (where you are born, where your parents are from) from a global justice perspective. Yet
delinking nationality from residence altogether is wrong from an internal democratic perspective.
Residence is ‘what makes immigrants’ relation to the political community equal to that of native … and
is therefore not at all an arbitrary criterion for access to citizenship’.56
From a legal point of view, however, this debate is completely misplaced. In the current state
of international law (not that different in this respect from the one analysed by the ICJ in 1955), the
competence to grant (or not) nationality is in the domain of exclusive competence of individual States.
The decision to grant its nationality according to its own law is what makes the link acceptable under
international law.57 It must be acknowledged that this ‘specific link theory’ (as opposed to the ‘genuine
link theory’ espoused by Professor Henri Rolin, agent for Guatemala 58) creates a certain circularity in
international law. A naturalisation conforms to international law if there is a legally valid decision of a
State to grant that nationality. This national competence is a prescriptive jurisdiction granted by
international law.59 Because the granting of nationality is then a competence for a State granted by
international law, other States have to accept it.
In theory, this does not exclude that a nationalisation that conforms with domestic law could
still be attacked under international law. Some argued at the time that the reasoning of the Court was
opening a (theoretical) door to such an attack.60 However, in normal legal practice, the validity of an
acquisition can only be assessed according to domestic law as this is the basis of its legality under
international law. Only its effects on other States can be attacked.
Nevertheless, one should not read from there that the Nottebohm majority blindly accepted that
there is no limit within international law for any naturalisation. For instance, a unilateral naturalisation
of all the inhabitants of one territory in foreign soil, without any intervention of those naturalised could
be considered against international law as it affects the peaceful relations between the States and
undermines one of its elements: the population of the other State. Equally, international law may play

51
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the
recognition and enforcement of judgments in civil and commercial matters [2012] OJ L351/1.
52
See the references in note 7.
53
Glazer (n 36) 314.
54
European Commission Working Document (n 31) 2.
55
Rainer Bauböck, ‘What Money Can’t Buy: Face-to-Face Cooperation and Local Democratic Life’ in Ayelet Shachar and
Rainer Bauböck, ‘Should Citizenship be for Sale?’ (2014) European University Institute Robert Schuman Centre for Advanced
Studies, EUI Working Paper RSCAS 2014/01 19–21
<https://cadmus.eui.eu/bitstream/handle/1814/29318/RSCAS_2014_01.pdf?sequence=1&isAllowed=y> accessed 5 March
2020.
56
Ibid 21.
57
Jones (n 38) 235.
58
Kunz (n 36) 551.
59
Ibid 545.
60
Glazer (n 36) 314.

Electronic copy available at: https://ssrn.com/abstract=4212421

a role in the domestic power of one State to grant or revoke nationality. A State may have relinquished
some of its legislative discretion in this area through international agreements, such as not to deprive
someone of nationality and leave them Stateless.61 Yet, in practice, such a case would likely be decided
in domestic courts and according to the State’s parochial law, as shaped by their international
commitments.
What Nottebohm meant as a principle of law in relation to naturalisation procedures is that the
‘reason’ for a naturalisation escapes the control of international law, insofar as the reason itself is not
contrary to another norm of international law. Whether it is as a connection for ancestors,62 as reparation
for previous wrongs63 or as a selling of citizenship, they are all equally valid in international law.64
Kunz, in the aftermath of World War II, called this connection a ‘qualified point of contact’. He duly
noted as well that it is for States to qualify that qualification.
Yet, as noted several times above, international law can (and does) regulate the effects of an
acquisition of nationality.65 It may do so in two different ways. In its purest form, the effects are felt
where nationality is an element taken into account for State–State legal relations. In Nottebohm,
nationality was considered by the Court as one of the requirements for one party to exercise diplomatic
protection. Liechtenstein could seek the protection of Mr Nottebohm, but Guatemala (and the ICJ
carefully restricted its ruling to this factual context66) ‘was under no obligation to recognize a nationality
granted in such circumstances’.67 It is important to note here that the Court did not say that Guatemala
‘must not recognise’, but only that it is ‘under no obligation to recognise’, clearly laying out the effects
doctrine. As many have noted before, nor could Germany provide protection, as Mr Nottebohm was not
its national both at the time of the facts and at the time of the legal proceedings,68 leaving no State
entitled to exercise diplomatic protection.69
However, in our contemporary legal reality, the effects of nationality in international law are
more likely to be felt in an indirect manner. These effects are still regulated by public international law,
but are oblique rather than horizontal (among States).70 They regulate relations between third States and
foreign individuals, which are granted certain rights (or must endure certain obligations) as holders of
a particular nationality. In Nottebohm, for example, the majority, although indirectly and not explicitly,
legitimised under Guatemalan law the confiscation of Mr Nottebohm’s assets in Guatemala on the basis
of his prior German nationality, which, it must be noted again, he lost when he acquired Liechtenstein’s.
It did so when it denied the diplomatic protection to Liechtenstein as it accepted that for the purpose of
that confiscation this new link between Mr Nottebohm and Liechtenstein could not deploy its effects
vis-à-vis Guatemala. Hence, the decision of Guatemalan authorities to proceed with the confiscation on
the basis of other nationality (or the lack of one nationality altogether for that particular purpose),
ignoring Mr Nottebohm’s recently acquired nationality, was not per se contrary to international law. It
should be noted here, though, that by taking that approach the ICJ avoided the thornier question of the
validity of seizing the assets of a (former) national of a country with whom the State was at war.71

61
Convention on Reduction of Statelessness (adopted 30 August 1961, entered into force 13 December 1975) 989 UNTS 175.
62
Law 379/2000, Rules for the recognition of Italian Citizenship to persons born and residing in territories that were part of
the Astro-Hungarian Empire and their descendants, Gazzetta Ufficiale No 295, 19 December 2000.
63
Law 12/2015 in The Field of Granting of Nationality Spanish Sephardic Jews Originating in Spain, Boletín Oficial del
Estado No 151, 25 June 2015.
64
On the other hand, a wider naturalisation with the aim of affecting the peace in another country would not meet such a
standard.
65
Even some of the sharpest legal minds, such as AG Poiares Maduro, do not fully comprehend the implications of the
difference, mixing ‘effects of’, ‘recognition of’ and ‘conditions for’ acquisition of a nationality: AG Maduro’s Opinion (n 42)
paras 20–21.
66
Nottebohm (n 4) 23, 24.
67
Ibid 26.
68
Kunz (n 36) 543.
69
Too much ado has been made about this, while in legal terms it is not particularly problematic, as it remains a choice for
States to exercise diplomatic protection (or not), which they exercise on their own behalf and not as an assistance to their
nationals. For all, see Guy I F Leigh, ‘Nationality and Diplomatic Protection’ (1971) 20 International and Comparative Law
Quarterly 453, 455.
70
Borrowing the ideas about obliquity as a solution to our problems – see John Kay, Obliquity: Why Our Goals Are Best
Achieved Indirectly (Profile Books, London 2011).
71
See eg the discussion by an author of the time, Philip C Jessup, ‘Enemy Property’ (1955) 49 American Journal of
International Law 57, 62.

Electronic copy available at: https://ssrn.com/abstract=4212421

 This oblique effect is more obvious today in the context of investment treaties. A good example
is the Philip Morris v Australia case.72 Although the Tribunal discussed the case in terms of the doctrine
of ‘abuse of rights’, the facts and the reasoning closely follow those of Nottebohm. According to the
established facts, the claimant, Philip Morris Asia (PM Asia), acquired all shares of Philip Morris
Australia (PMA) on 23 February 2011, when Australia was about to pass its groundbreaking regulation
on plain packaging for tobacco. PMA was the controlling holding of Philip Morris Limited (PML),
which manufactures, imports, markets and distributes tobacco-related products in Australia. Philip
Morris Asia is based in Hong Kong.
The acquisition of PMA by PM Asia allowed the Philip Morris group to bring a claim against
Australia under the 1993 Australia–Hong Kong Bilateral Investment Treaty (BIT).73 This would not
have been possible if PMA had remained under the control of another company of the Philip Morris
international group based in Switzerland, as Switzerland and Australia did not have a similar agreement
for the protection of investments. Although PM Asia sustained that the restructuring was part of a wider
reorganisation, the Tribunal focused its inquiry on one of Australia’s objections, ie establishing whether
‘the restructuring [was] motivated wholly or partly by a desire to gain access to treaty protection in
order to bring a claim in respect of a specific dispute’.74 It found it was motivated by that desire, so it
rejected the claim75 and finally imposed most of the legal costs on PM Asia.76
Although a seemingly odd analogy at first sight, the mechanism and the issue put forward to
the Tribunal had strong similarities with Nottebohm. Whereas the acts of Philip Morris did not
encompass a change of nationality for any of the corporations involved, this would have been possible
through a change of statutory seat or a reincorporation of the company. Instead, Philip Morris opted to
access protection through an international acquisition. As in Nottebohm (in relation to the change of
nationality), the Tribunal did not discuss the legality or validity of the acquisition of PMA and the
consequently different nationality of its owner. If this were ever to be discussed, it could only have been
under the domestic law of Hong Kong, and if valid under domestic law, it would then be automatically
accepted under international law. Instead, it focused on its effects for Australia for the purpose of
gaining Treaty protection. As in Nottebohm again, the Tribunal considered ‘the claims raised in this
arbitration … inadmissible [barring its] jurisdiction over this dispute’.77 In parallel terms to Nottebohm,
the Tribunal sided with the respondent, understanding that its rights should not be affected by a decision
by the complainant to gain access to a jurisdiction.
The legal analogy is particularly relevant as international investment law is part of general
public international law and should be interpreted with this general framework in mind.78 Investors’
rights and obligations are created through international law instruments such as treaties and are subject
to interpretation according to public international law principles, customs and jurisprudence. BITs are
signed among States, but treaty protection manifests in an obliquus manner. This becomes apparent
when treaties refer to individual persons as their addressees.
The Australia–Hong Kong BIT, for example (the basis for the Philip Morris litigation),
establishes treaty protection for ‘physical persons possessing Australian citizenship’.79 If the same case
arose with an individual investor who becomes an Australian national for the purpose of bringing a
claim, no arbitration tribunal could reasonably dismiss the case on the basis that a change of nationality
is an abuse of rights. Nationality is considered to be too important and restricted to open itself to abuse.80

72
Philip Morris Asia Limited v The Commonwealth of Australia (Award on Jurisdiction and Admissibility) (Philip Morris)
UNCITRAL, PCA Case No 2012-12, 17 December 2015 <https://pcacases.com/web/sendAttach/1711> accessed 6 February
2019.
73
Agreement for the Promotion and Protection of Investments (Australia–Hong Kong) (signed 15 September 1993, entered
into force 15 October 1993) 1993 ATS 30 (Australia–Hong Kong BIT).
74
Philip Morris (n 72) para 536.
75
Ibid 588.
76
Philip Morris Asia Limited v The Commonwealth of Australia (Final Award Regarding Costs) UNCITRAL, PCA Case No
2012-12, 8 July 2017 <https://pcacases.com/web/sendAttach/2190> accessed 5 February 2020.
77
Philip Morris (n 72) para 588.
78
Campbell McLachlan, Laurence Shore and Matthew Weiniger, International Investment Arbitration: Substantive Principles
(2nd edn, OUP, Oxford 2017) 17–18.
79
Australia–Hong Kong BIT (n 73) art 1(f)(2)(a).
80
Maybe the case is too artificial, as Australia does not grant nationality ius pecuniae. Yet Australia does have an investor
visa that could be bought (through investment): ‘Business Talent (Permanent) Visa (Subclass 132) Significant Business History

Electronic copy available at: https://ssrn.com/abstract=4212421

The only legally sound solution for all these cases is using the Nottebohm effects doctrine as a guiding
principle. The next section explains how this would work in practice.
Finally, it could be argued that this difference, which is very clear in theory, may amount to
little in practice. One can wonder about the practical consequences of a rule establishing that nationality-
granting is a domain reserved to the State and fully respectful with its sovereignty if that power to grant
nationality has no external effects towards other international actors when it has not been exercised
according to certain international law principles. In other words, does the distinction between the
different regulatory regimes for granting a nationality and regulating its effects make sense if a
nationality granted without a ‘genuine link’ can be deprived of its effects in the international sphere,
where it really matters for international law? This line of reasoning, although appealing, would not
reach very far. Obviously, the primary consequence of the distinction is that international law does not
prohibit a State from giving domestic effect to such a grant, but this is unlikely to involve international
obligations or a differendum between countries. However, the domestic effect could easily have
implications within a purely international law regime. For example, a classical rule in extradition
treaties has been to relieve a State from the duty to extradite its own nationals.81 A nationality granted
in accordance with domestic law to an individual would make that person non-extraditable, giving a
legal effect at the international level to a domestic decision. Similar situations can be envisaged in the
areas of international taxation (for example as a limit in information-sharing agreements) and many
other areas where the State granting the nationality has different international obligations with regard
to its own nationals and foreigners under its jurisdiction, ie when something is required under
international law from the country that granted the nationality. Conversely, the effects doctrine displays
its full force when something is required from a country that may not want to recognise the nationality
granted by a different country.

<a>4<em>ENHANCING PREDICTABILITY FOR GOLDEN PASSPORT HOLDERS: THE

‘EFFECTS DECLARATIONS’

As a licence granting more rights than those under the jurisdiction of the granting authority, golden
passports create tensions in the relations between countries. One possible way to approach this issue
would be to work with the norms of international law that limit the marge de manoeuvre of a country
regarding how and to whom it can grant its nationality, ie to focus on the granting legislation. This is,
for example, the approach of the European Convention on Nationality,82 based on Article 1 of the 1930
Hague Convention.83
After recalling the competence of countries to establish their own nationality laws, Article 3(2)
of this Convention establishes that these laws ‘shall be accepted by other States in so far as it is
consistent with applicable international conventions, customary international law and the principles of
law generally recognised with regard to nationality’. 84 Although it may seem as if the Convention
establishes a fair-sounding guiding principle for recognition, in reality it sets a very low threshold. As
noted in the previous section, the limits imposed by international law are particularly lax, creating a
very wide reserved domain for States.
This article approaches instead the issue of golden passports from a more practical point of
view. It assumes that States will not accept any significant changes to existing international law that
may significantly restrict their discretion. Thus, it accepts that in very broad terms countries are free to
grant their own nationality to whoever they consider appropriate. From that initially levelled playing
field (all countries can equally grant nationality) it also acknowledges the existence of an incentive for
one country to create a set of ius pecuniae rules that can reap most of the benefits of that process at the

Stream’ (Australian Government Department of Home Affairs, 31 May 2019) <https://immi.homeaffairs.gov.au/visas/getting-

a-visa/visa-listing/business-talent-permanent-132/significant-business-history-stream#Overview> accessed 18 June 2019. In
any case, the Australia–Hong Kong BIT also grants protection to Australian permanent residents – see (n 73) art 1(f)(2)(a).
81
Ivan A Shearer, ‘Non-Extradition of Nationals: A Review and Proposal’ (1963) 2 Adelaide Law Review 273.
82
European Convention on Nationality (adopted 6 November 1997, entered into force 1 March 2000) ETS 166.
83
Convention on Certain Questions Relating to the Conflict of Nationality Laws (adopted 13 April 1930, entered into force 1
July 1937) 179 LNTS 89.
84
European Convention on Nationality (n 82) art 3(2).

Electronic copy available at: https://ssrn.com/abstract=4212421

lowest cost for itself. For example, for the naturalisation a State may require a payment to its treasury
(or an investment in its territory or its sovereign bonds) and impose on the prospective Mr Nottebohms
the purchase of private medical and income-protection insurance for the rest of their lives. These
requirements would guarantee that the State would receive most of the benefits of that naturalisation
while avoiding the main costs of having a new national. On the other side of the coin, this naturalisation
free-rides on other countries, imposing on them the out-of-jurisdiction effects of granting that
nationality, such as visa-free travel. This is the problem that the European Parliament denounced back
in 2014 in relation to the citizenship-for-sale scheme of Malta.85
Džankić insightfully identified in 2012 the analogies of selling citizenship with Buchanan’s
club theory,86 but fell short of exploring the practical problems derived from it. The issue is not the
process of election for membership in terms of the contribution they will make to the production of
‘club goods’ – no one would doubt that these new members will contribute to the club more than what
they will take from existing members. The real issue for third countries in general, and particularly for
other members of the EU regarding the Cyprus, Malta and Bulgaria schemes, is how they can protect
themselves from those members who charge for letting someone in the club, and while not sharing the
proceedings, still want the other members to suffer certain legal consequences.
As noted before, in the current state of international law (and for that matter of EU law as
recalled in several instances by the European Court of Justice, with the addition of ‘with due regard to
EU law’87), third States are powerless bystanders to those schemes granting nationalities ius pecuniae.
This does not mean, however, that they must swallow the unpleasant pill of all its trans-border effects.
This section asserts which obligations are necessarily derived for other countries under
international law while suggesting how they can ex ante limit the effects on them of citizenship-for-sale
schemes. In other words, this section explores the options, based on Nottebohm, to level the playing
field again, distinguishing two situations: the applicable regime under general international law and the
particularities of dealing with the effects of ius pecuniae under EU law.

<b>4.1<em>Possible solutions within public international law

The idea of acting within the boundaries of public international law to limit the effects of the decision
of third States to grant a nationality according to certain mechanisms is not new at all. Maury, back in
1958, was already pointing in this direction. He argued that the exercise of a domestic competence to
grant a title could not be sufficient by itself to impose on others (who do have the obligation to recognise
the granting of the title) to suffer its effects.88 He even stated presciently that only international law
could impose such an obligation and ‘on ne peut affirmer a priori qu’en reconnaissant la compétence
étatique sur un ensemble de questions données le droit international s’en remette aux Etats de régler ces
questions avec effet dans le domaine international’.89
This point is better illustrated if we think of particular cases. To be clear, this article does not
deal with the more media-prone scenario of the corrupt businessperson or politician applying for
citizenship in Malta or Cyprus without relinquishing their previous nationalities to shelter their illegal
profits.90 These are (or at least ‘should be’) adequately addressed by their domestic laws, once that
situation is discovered (or proven). This article focuses instead on those cases where the systems (with
more or less margin of discretion for the authorities) are used for the exact purpose for which they have
been designed, offering nationality in exchange for some type of contribution to the country. Who are
these modern Mr Nottebohms? Think about Facebook co-founder Eduardo Saverin.

85
European Parliament Resolution 2013/2995 of 16 January 2014 on EU citizenship for sale [2016] OJ C482/16.
86
Džankić (n 22) 2.
87
Case C-369/90 Mario Vicente Micheletti and Others v Delegación del Gobierno en Cantabria [1992] ECR I-4239, para 10;
Case C-200/02 Kunqian Catherine Zhu and Man Lavette Chen v Secretary of State for the Home Department [2004] ECR I-
9925, para 37.
88
Maury (n 46) 517.
89
Ibid 517–518.
90
Sara Farolfi, David Pegg and Stelios Orphanides, ‘The Billionaires Investing in Cyprus in Exchange for EU Passports’, The
Guardian (London, 17 September 2017) <https://www.theguardian.com/world/2017/sep/17/the-billionaires-investing-in-
cyprus-in-exchange-for-eu-passports> accessed 25 June 2019.

Electronic copy available at: https://ssrn.com/abstract=4212421

 Mr Saverin, originally a Brazilian citizen, acquired US nationality while living there as a child.
Shortly before becoming a billionaire through the Facebook IPO, Mr Saverin renounced his US
citizenship and became a national of Singapore.91 Regardless of other reasons, that change significantly
reduced his tax bill.92 As far as we know, Mr Saverin is today a national only of Singapore, having cut
ties with Brazil and the United States. It may be pointless to discuss whether Singapore could exercise
diplomatic protection on his behalf vis-à-vis, for example, France, 93 but it may be much more relevant
to know whether China must accept a claim regarding Facebook based on the China–Singapore Bilateral
Investment Treaty.94
The proposal to address these issues is simple. Countries opposing those schemes should
publicly state that they will not grant the effects otherwise accorded to these nationality links. Two
approaches are possible. One, determined by subject matter, would establish that different rules would
apply in cases of changes of nationality under certain circumstances for recognising particular rights
within the international law regime. The other approach would involve the establishment of a general
rule restricting the effects of nationality changes based on the method, ie through ius pecuniae schemes.
However, following Nottebohm, only the former would align with the reasoning of the ICJ which
specifically restricted its reasoning to the concrete subject matter, in that case diplomatic protection vis-
à-vis Guatemala.
Regarding the procedure, it is possible to envisage two different mechanisms as well. One would
consist of a unilateral declaration. This would mainly serve as a ‘reverse estoppel mechanism’95 so both
the naturalised individuals and granting States could not demand from the country issuing the
declaration to endure the effects of this new nationality. The other option would be through an
international agreement between several countries establishing a set of rules equivalent for all the
signatories regarding those naturalisations ius pecuniae. This second option seems preferable for cases
such as mutual recognition of specific individual rights, particularly those granted in investment-
protection contexts as it would enhance predictability and create coordinated responses.

<b>4.2<em>Dealing with the effects of ius pecuniae naturalisations under EU law

The issue becomes thornier if we consider derivative structures, such as European citizenship,96 or
selling of citizenships in supranational legal regimes built on the idea of trust and sincere (loyal)
cooperation. As noted by one author, the ‘actions of those member states that take the liberty to put
their national citizenship “on sale” indirectly affects the supranational political membership good that
is shared by other countries, which may resist such commodification’.97

91
‘Countries with restrictive dual citizenship regimes, such as Austria and Singapore, require the investor to relinquish his or
her citizenship of origin in order to be naturalised. The main rationale of such policies is to ensure that the applicant is
indisputably related to the country in which he or she invests’: Džankić (n 22) 6.
92
Liz Neisloss, ‘Why is Facebook Co-Founder Now in Singapore?’ (CNN, 18 May 2012)
<https://www.cnn.com/2012/05/16/business/singapore-saverin-facebook/index.html> accessed 19 June 2019.
93
Rishi Iyengar, ‘Eduardo Saverin Confirms June Wedding in Facebook Post’ Time (27 July 2015)
<https://time.com/3972692/eduardo-saverin-wedding-facebook-post-elaine-andriejanssen/> accessed 19 June 2019.
94
China and Singapore Agreement on the Promotion and Protection of Investments (adopted 21 November 1985, entered into
force 7 February 1986) 1443 UNTS 293.
95
This type of effect from the declaration would avoid many of the problems identified by Rubin in the ICJ judgment on the
Nuclear Tests cases: Alfred P Rubin, ‘The International Legal Effects of Unilateral Declarations’ (1977) 71 American Journal
of International Law 1.
96
Even an introduction to the topic of European citizenship would exceed the aims of this article. However, it is interesting to
note here how some authors have identified a trend in the European courts to limit the (until recently) ever-expanding rights
attached to the enjoyment of European citizenship. In this context, the Court of Justice may be today more receptive to the
proposals included here than when its only aim seemed to be promoting equal rights for all EU citizens irrespective of the
circumstances. See eg Urška Šadl and Mikael Rask Madsen, ‘Did the Financial Crisis Change European Citizenship Law? An
Analysis of Citizenship Rights Adjudication Before and After the Financial Crisis’ (2016) 22 European Law Journal 40;
Michael Blauberger and others, ‘ECJ Judges Read the Morning Papers: Explaining the Turnaround of European Citizenship
Jurisprudence’ (2018) 25 Journal of European Public Policy 1422.
97
Shachar (n 49) 14.

Electronic copy available at: https://ssrn.com/abstract=4212421

 From a political point of view, this creates an ethical and social problem for the EU, discussed
to a notable extent in academia.98 In more chrematistic legal terms, the question is much more tangible:
are the other 26 EU Member States obliged to suffer the consequences of granting the (very beneficial
compared to citizens of third countries) rights enjoyed by nationals of other Member States without
sharing the spoils of the price paid for that nationality?
Within those supranational regimes, namely the EU, the actions of States willing to reduce the
effects of nationalities granted by other members have to be developed within the legal framework of
the organisation. Concretely, for Member States of the European Union, in order to avoid an intersection
of legal regimes, the international agreements proposed in the previous section could be formalised
through regulations passed by a qualified majority in each of the relevant domains. However, the
establishment of legal shields against undesired effects of nationalities acquired ius pecuniae for other
Member States face two additional hurdles in EU law.
Firstly, the case law seems consistent99 in stating that the situations involving the exercise of
the fundamental freedoms fall necessarily within the scope ratione materiae of Community law
irrespective of the nationality. 100 Regarding those fundamental freedoms, Member States cannot
‘restrict the effects of the grant of the nationality of another Member State by imposing an additional
condition for recognition of that nationality’.101 However, for all other rights not derived directly from
the treaties, including the Schengen arrangements, it would be possible to impose restrictions on the
effects of these ius pecuniae naturalisations through EU normative acts.
Secondly, in cases of dual nationals, where the acquisition of the second nationality has been
through ius pecuniae, a State or group of States could limit the effects by establishing a domestic
conflict of laws norm that considers as the relevant nationality the pre-existent nationality or the one
not acquired through ius pecuniae. This approach seems adequate for general public international law.
However, in the context of EU law this author has sustained that there is a principle of primacy of EU
effect in the context of dual nationalities that override general (public and private) international law
rules for dual nationality.102 In principle, the easiest solution for Member States would be to treat those
cases of naturalisation ius pecuniae as cases in which there should be a search for the ‘relevant’
nationality, for example on the basis of domicile or the one with the closest connection to the
situation.103 However, this solution would violate EU law if it deprived the EU citizen of a right they
would enjoy if the other nationality were the chosen one. 104 In practice, the rule established by the
European courts is that for dual nationals, when an EU nationality might be relevant in order to grant a
right to an EU citizen, that nationality should be considered to be the one with the closest connection.105
A normative act imposing a different rule may be considered illegal by the Court of Justice. Hence, any
normative solution should be restricted to the effects of the change of nationality, accepting the new EU
nationality. In other words, when compared to the situation in general public international law, EU
Member States could not rely on a private or public international law rules solution which leads the
conflict of laws process to establish as the relevant nationality the one not granting the relevant right.

<a>5<em>CONCLUSION

98
For a good overview of the socio-political implications, see all the contributions in the first section (‘Should Citizenship Be
for Sale?’) in Rainer Bauböck (ed), Debating Transformations of National Citizenship (Springer International Publishing,
2018) 3–70. Parisi’s efforts to go beyond the obvious and delve into the implications of nationalities for sale for the ‘ideal’
concept of citizenship is notable: Nicoletta Parisi, ‘Immigration, Citoyenneté Européenne et Citoyenneté de Résidence Dans
l’Union Européenne’ (2017) International Law and the Protection of Humanity 165, 174.
99
An analysis of the bases for the decisions of the courts can be found in Šadl and Madsen (n 96) 44.
100
This case law can be traced back at least to Case C-148/02, Carlos Garcia Avello v Belgian State [2003] ECR I-11613,
paras 23–24.
101
Chen (n 87) para 39.
102
José-Miguel Bello y Villarino, ‘From Micheletti to García Avello: Does the ECJ Take the Hague Convention on Nationality
Seriously?’ (College of Europe 2004) 44–45
<http://library.coleurope.eu/pdf/thesis/thesis_2004_LAW_BELLOVILLARINO.pdf> accessed 4 February 2020.
103
Convention on Certain Questions Relating to the Conflict of Nationality Laws (n 83) art 5.
104
Bello y Villarino (n 102).
105
Ibid 16.

Electronic copy available at: https://ssrn.com/abstract=4212421

Many modern-day international lawyers and practitioners often want to interpret Nottebohm as
establishing a principle in international law that demands a ‘genuine link’ to grant nationality. This
point of view, perfectly justifiable from an ethical and political point of view, does not adequately
represent the view of the majority of the ICJ in the 1955 case. Instead, they should pay more attention
to the distinction it established between granting a nationality and the effects derived from that new
nationality in relation to third States.
This distinction is particularly useful to deal with undesired effects for third States of
nationality-for-sale schemes. Countries unwilling to suffer certain consequences from golden passports
affecting them enjoy the protection of international law as it stands today. However, in order to enhance
the predictability of the international order regarding golden passports, those States should use the
mechanisms of international law sources to publicly declare those views.
This approach may not suffice for Member States of the European Union as the Court of Justice
in the absence of an EU norm may not accept those restrictions. However, they have the option, at the
initiative of the Commission, to approve as many domain-specific regulations by qualified majority
voting as necessary. The previous position of the European Parliament on the issue seems to grant the
necessary political support to this approach.
Two particular situations were discussed. Firstly, the rights for golden passport holders are
derived directly from the treaties. In this author’s view, limitations of these rights through sector-driven
secondary legislation can be considered illegal by the courts. Hence, treaty-originated effects of ius
pecuniae naturalisations cannot be limited without a modification of the treaties or through legislation
that could expand existing limitations of those rights already in the treaties. Secondly, the cases of dual
nationals if one of the nationalities is that of a Member State. Here, the problem is the potentially
different treatment under international law and EU law. For these cases, a possible solution would be
for Member States to use the ordinary legislative procedure on the basis of Article 18 of the Treaty on
the Functioning of the European Union,106 to establish that certain limitations on the effects of golden
passports on cases of dual nationals would not be considered discriminatory.
Finally, a reference should be made to those who irrevocably forgo their previous nationality
when acquiring the new one, such as Mr Nottebohm. It could be imagined that some of these people
may have very legitimate reasons for their nationality change. For example, Mr Nottebohm’s decision
may have been driven by the spiralling events in Nazi Germany and his willingness to separate himself
ethically and politically from the course of action of the Hitler government or, more likely, as a way to
separate himself from a country at war.107 In this regard, the mechanisms proposed in this article for the
limitation of effects on third parties of ius pecuniae naturalisations may severely undermine their
legitimate options.
For them, one can only hope that the implementation of these mechanisms may alter the balance
between countries selling nationalities and those suffering the consequences, which could pave the way
for a more concerted approach about golden passports. This concerted action (ie international
agreements on the topic) would hopefully generate new rules that adequately distinguish passport
shopping from legitimate changes. Until then, these legitimate acquirers of nationalities risk being left
unprotected, just like Mr Nottebohm.

106
Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ
C115/47.
107
Buys (n 3) 6, 12–13.

Electronic copy available at: https://ssrn.com/abstract=4212421