Procedural requirements of denial-of-benefits clauses in investment treaties: a review of arbitral decisions

gastrell, lindsay; paul-jean le cannu;

Denial-of-benefits clauses in investment treaties are generally designed to exclude from treaty protections nationals of third States which, through mailbox or shell companies, seek to benefit from provisions that the State parties to the treaty did not intend to grant them. A review of recent investment cases reveals that tribunals have reached significantly diverging decisions as to when, how and with what effect these clauses can and should be invoked. Given the importance of their functioning both to investors and host States, this article examines how the procedural requirements of denial-of-benefits clauses have been interpreted by investment tribunals and what might explain the differences in analysis and outcomes.