Marko Mihaljevic v. Republic of Croatia
ICSID · Investment (ICSID and treaty) · Croatia · 19 May 2023
Why it matters
This case clarifies the strict application of Article 25(2)(a) of the ICSID Convention, which excludes dual nationals from ICSID jurisdiction in claims against their home state. The Tribunal emphasized that the critical date for determining nationality is the date of registration of the request for arbitration, not the date of filing. It also rejected arguments that a state's delay in processing a citizenship discharge application could create jurisdiction, reinforcing that tribunals cannot override clear jurisdictional requirements.
Summary
Marko Mihaljević, a dual German-Croatian national, initiated ICSID arbitration against Croatia under the Germany-Croatia BIT, claiming expropriation of a property inherited from his father. Croatia objected to jurisdiction under Article 25(2)(a) of the ICSID Convention, which excludes claims by nationals of the respondent state. The Tribunal bifurcated proceedings to address this jurisdictional issue. The central question was whether Mr. Mihaljević had effectively renounced his Croatian citizenship before the critical date of 31 December 2019 (when ICSID registered the request for arbitration). The Claimant had applied for discharge from Croatian citizenship in 2017, but the process was still pending. The Tribunal applied Croatian law and the objective manifestation test, finding that the Claimant had not objectively manifested a clear and unequivocal will to renounce his citizenship. The Tribunal rejected the Claimant's argument that Croatia's alleged bad-faith delay in processing his application should allow jurisdiction. It held that the relevant date for determining nationality is the date of registration, not the date of filing. The Tribunal also found no abuse of process. Consequently, it declined jurisdiction and ordered the Claimant to pay all costs, including legal fees and arbitration expenses, totaling US$1,974,516.27, plus interest at SOFR + 2% if unpaid after 30 days.
The detail
Parties: Marko Mihaljevic v. Republic of Croatia
Case number: ICSID Case No. ARB/19/35
Outcome: The Tribunal declined jurisdiction because the Claimant remained a Croatian national on the date of registration, precluding ICSID jurisdiction under Article 25(2)(a) of the ICSID Convention. The Claimant was ordered to pay the Respondent's costs of US$1,974,516.27 plus interest.
Quantum: US$1,974,516.27 (costs)
Applicable law: ICSID Convention Article 25(2)(a); Germany-Croatia BIT (1997); Croatian Citizenship Act
Issues in play: The key legal issue was whether the Claimant had effectively renounced his Croatian citizenship before the critical date (registration of the request for arbitration). The Tribunal applied the objective manifestation test for renunciation under Croatian law and found that the Claimant's actions (applying for discharge from citizenship) did not result in loss of citizenship before the relevant date.
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