Renouncing Your Way Out of Treaty Protection

Can a claimant voluntarily renounce the treaty nationality that grounds his standing as a protected investor, mid-proceedings, and continue to pursue his claims? That question has been brought into sharp relief by events in a pending investment arbitration against Armenia. On 18 April 2026, Samvel Karapetyan, one of five claimants in Karapetyan and others v. Armenia at the SCC, renounced his Cypriot and Russian citizenship to meet Armenian constitutional requirements for Prime Ministerial eligibility ahead of the June 2026 elections. Its consequences for the arbitration are the subject of this piece.

The proceedings were initiated under the Cyprus-Armenia BIT (1995). On 22 July 2025, the Emergency Arbitrator issued interim measures ordering Armenia to refrain from further steps allegedly aimed at expropriating the Electric Networks of Armenia (ENA). By a procedural decision of 24 December 2025, the full tribunal deferred all substantive matters, including jurisdiction, to later stages.

At the time of filing, Karapetyan held Cypriot nationality and was covered by the BIT as a natural person investor. No decision on jurisdiction has yet been issued by the full tribunal, meaning the renunciation occurs before the tribunal has fixed its jurisdiction. The remaining claimants, anchored by Liormand Holdings Limited, a Cyprus-incorporated entity whose treaty nationality is independent of Karapetyan’s personal citizenship, continue unaffected. The question is whether Karapetyan’s voluntary mid-proceedings loss of the qualifying nationality extinguishes his personal standing as a protected investor under the BIT.

The Continuous Nationality Rule

The Permanent Court of International Justice affirmed in Panevezys-Saldutiskis Railway (at 16) that a claim must retain its national character from the date of the injury through to the date of its resolution. The International Law Commission’s 2006 Draft Articles on Diplomatic Protection codified the rule at Article 5, requiring continuous nationality from the date of injury to the date of official presentation of the claim, while acknowledging that the dies ad quem remains contested in state practice.

The application of the rule in investment arbitration was most fully addressed in Loewen v. United States. In Loewen, the first claimant held Canadian nationality at the time of filing. Following bankruptcy reorganisation during the proceedings, its claims were assigned to a Canadian corporation owned and controlled by the respondent state’s national. The tribunal stated that “there must be continuous national identity from the date of the events giving rise to the claim, which date is known as the dies a quo, through the date of the resolution of the claim, which date is known as the dies ad quem.” (para. 225) The tribunal confronted NAFTA’s silence on post-filing continuity, holding that “it is that silence in the Treaty that requires the application of customary international law to resolve the question of the need for continuous national identity.” (para. 226) The tribunal then reinforced that conclusion by reference to Article 1131(1)’s direction to decide in accordance with “applicable rules of international law,” and dismissed the claims on that basis (paras 228-220). Importantly for the present case, the tribunal confirmed that voluntariness was immaterial: “Whatever the reasons for TLGI’s decision to follow the bankruptcy route it chose, the consequences broke the chain of nationality that the Treaty requires.” (para. 234)

The question Karapetyan’s case poses is whether that reasoning carries over to an arbitration conducted under a BIT that contains no equivalent to NAFTA Article 1131(1). It does. The Loewen tribunal treated Article 1131(1) as the mechanism through which custom entered the arbitration. The operative holding is that treaty silence on post-filing continuity requires the application of customary international law to fill the gap. That pathway operates on two levels. Article 1(3) of the BIT, which defines protected investors by reference to nationality but is silent on the temporal scope of that requirement, must be read in its international law context: under Article 31(3)(c) of the Vienna Convention on the Law of Treaties, any relevant rules of international law applicable between the parties are to be taken into account, and the continuous nationality rule is precisely such a rule. As a matter of applicable law, Article 9 of the BIT contains no applicable law provision, and Article 27(1) of the 2023 SCC Arbitration Rules therefore directs the tribunal to apply the rules of law it considers most appropriate, which, for a claim arising under a BIT, means the treaty read together with customary international law. Article 8(5) of the BIT, governing state-to-state disputes, confirms that this is how the contracting parties understood the applicable framework: disputes are to be decided, inter alia, based on “rules and principles of international law.”

A respondent state might argue that the investor-state and state-to-state provisions operate in separate contexts, and that the applicable law framework of Article 8(5) cannot be transposed into Article 9 by inference. Nevertheless, the BIT is a single instrument, and the contracting parties’ shared understanding of the legal framework governing disputes under it does not fracture depending on which provision is invoked.

Jurisdiction

The claimant’s argument from this silence would be straightforward: jurisdiction is assessed as of the date of filing; Karapetyan was a Cypriot national at that point; and his subsequent loss of that nationality is legally irrelevant. In Loewen, the jurisdictional objection based on nationality loss was raised only after the oral hearing on the merits, and after a preliminary Decision on Jurisdiction had been issued in January 2001. The tribunal nonetheless accepted the objection as capable of defeating jurisdiction in the final award (para. 2). In Karapetyan’s case, no jurisdictional decision has been issued. The functus officio and res judicata concerns that might otherwise insulate a prior jurisdictional ruling from reconsideration have not been engaged. If Loewen’s reasoning reached backwards through a completed merits hearing to defeat jurisdiction, it reaches forward through an early procedural phase with greater ease.

The abuse of process doctrine, developed primarily to police nationality planning by claimants seeking to acquire treaty protection, does not map onto this scenario: Karapetyan is shedding a nationality he genuinely held, for reasons entirely unconnected to the arbitration. Loewen’s holding that voluntariness is immaterial (para. 234) was directed at a different kind of voluntariness, a business decision to restructure, taken with full awareness of its jurisdictional consequences. Whether the same rule applies with equal force to voluntary loss for extraneous motives is a question the case law has not confronted directly.

The Likely Outcome

Three factors weigh in favour of dismissing Karapetya’s personal claims for lack of jurisdiction. First, Loewen’s reasoning carries over cleanly to the Armenia-Cyprus BIT: the treaty’s silence on post-filing continuity triggers the application of customary international law, and the continuous nationality rule is what that body of law supplies. The absence of a literal Article 1131(1) equivalent is immaterial, and the BIT’s own structure, through Article 8(5), confirms that customary international law is the framework in which its obligations operate. Second, the voluntariness of the renunciation cuts against Karapetyan. This is distinct from the abuse of process doctrine, which targets nationality planning aimed at acquiring treaty protection: Karapetyan is not gaming the system by acquiring a nationality, but by deliberately shedding one. Good faith principles operate differently here; a claimant cannot invoke treaty protection rooted in a nationality he has chosen to abandon, and the case law has not treated voluntariness as a defence to the continuous nationality rule. Third, dismissing Karapetyan’s personal claims does not deprive the claimant side of its substantive case: the dispute continues through Liormand Holdings, the remedies available remain substantially intact, and the tribunal reaches the same doctrinal outcome without having to rule that a claimant can voluntarily renounce the qualifying nationality mid-proceedings without consequence.