Development, Investment, and Financial Law

There exists a number of seemingly inconsistent decisions and judgments issued by courts and sports tribunals on the topic of erroneous bank transfers as a result of hacked invoices for football transfer fees delivered through hacked email addresses. The buyer is presumed to have the burden of making correct payment and consequently is found to be in breach of its obligation to the selling club for failure to pay to the seller’s bank account. The argument presented here, which is consistent with the spirit of relevant statutes, institutional rules, and the limited case law, is that there is a clear due diligence standard demanded from seller and buyer in player transfer agreements. Both must ensure, on the basis of a best-efforts approach, that their IT systems are not susceptible to external interference, and if they have any suspicion that they have indeed been interfered with, they must alert the other party immediately. The buyer, in particular, must use alternative (personal) channels of communication with the seller where the latter alters its banking details as those are registered in FIFA’s Transfer Matching System (TMS). Where the buyer takes all appropriate due diligence measures and the seller fails to respond on time or is otherwise negligent in its IT controls, the buyer’s liability for erroneous payments is partial, if at all, since the seller is deemed to have contributed to the buyer’s breach of contract.

How can you tell where someone is “from”? Historically, an individual’s national identity was singular, starting with formal nationality. One’s national center of gravity was readily determinable. Not so today. Determining one’s primary national identification is no longer an easy thing in many cases. This is consequentially enabled by the growing acceptance of dual citizenship. One can openly identify as a formal member of more than one country in a way that was disfavored in the past.

International investment law, however, has not caught up to this reality. In an increasing number of international arbitrations, tribunals are shutting the doors on dual national claimants under the doctrine of “dominant and effective nationality.” The test, which requires arbitrators to determine to which of two nationalities a claimant is more strongly attached, works from antiquated conceptions of nationality as essentially singular. Contemporary sociological conditions now allow for fluid and non-zero-sum national associations. Moreover, application of the dominant nationality test will have unintended consequences. It may revive an imperial era practice in which investors from the Global North carefully nurture their homeland citizenship even while they establish themselves permanently as non-citizens, alongside their investments, in states of the Global South.

For better or worse, citizenship’s place in the world has been transformed. International investment law has been generally slow to absorb change, siloed from scholarship outside the perimeter of specialized arbitration journals. The nature of international arbitration, moreover, systemically inclines it to putative doctrinal regularity. Here as in other areas tribunals should come to incorporate elements of global social meanings into their decision-making presumptions. This Article brings citizenship theory to bear on a field that is systemically insulated from exogenous bodies of scholarship.

Thousands of international investment and trade agreements contain provisions protecting investments made by parties from the signatory states. One such provision is Investor-State Dispute Settlement (ISDS), a mechanism allowing foreign investors to sue host states in arbitration for treaty violations. Fossil fuel investors are increasingly utilizing ISDS successfully to hold states liable for climate action; arbitral tribunals are awarding large compensations to these investors when states deny them permits for upstream activities or enact phase-out policies attempting to ban fossil fuel consumption. These awards impose heavy burdens on states while simultaneously deterring climate action by creating fears of liability. This Comment proposes that states could invoke the security exception, a common clause in these international agreements that allows a state to violate its treaty obligations to protect its essential security interests, to defend action targeting fossil fuel assets for the purpose of mitigating climate change. Historically, tribunals have accepted a broad slate of interests, from economic to environmental, as within the purview of the security exception, and they have afforded wide discretion to invoking states in defining their security interests for themselves. Climate change poses a significant security threat to the socioeconomic and political stability of countries. Invoking the security exception to defend climate action would be a novel and potentially effective defense that could help states win such disputes, advancing global efforts to achieve the Paris Agreement climate goals.

I. Introduction

I. Introduction