Key Legal Issues
- Sovereignty in Citizenship Matters: The principle that nationality is within the jurisdiction of the state that confers it.
- Genuine Link Requirement: The necessity for a meaningful connection between the individual and the state granting citizenship.
- Effective Nationality: The concept that nationality should reflect a genuine and effective link, as highlighted in the Nottebohm case.
- International Recognition: The obligation of other states to recognise the nationality granted, provided it conforms to international standards.
- Due Diligence: The importance of thorough due diligence processes to ensure the genuineness of the connection between the applicant and the state.
- Impact on Citizenship by Investment Programs: The implications of the Nottebohm case for modern citizenship by investment schemes, such as Malta's.
Nottebohm Case: The Facts
The ICJ Decision of 1955 in Liechtenstein vs Guatemala (the Nottebohm Case), decided by the International Court of Justice at the Hague, revolved around a refusal by the government of Guatemala to recognise the acquisition of citizenship by an individual who obtained citizenship by naturalisation in Liechtenstein. Friedrich Nottebohm was born in Germany and had moved and settled in Guatemala where he opened up a business. In October 1939, after the beginning of WWII while on a visit to Europe he applied for citizenship in Liechtenstein and was approved. A year later he travelled back to Guatemala with his Liechtenstein passport where he continued his business activities. As a result of war measures, Guatemala arrested Nottebohm and confiscated all his property as they deemed him to be German. Following his release, Nottebohm travelled back to Liechtenstein where he continued living. In 1951, the government of Liechtenstein acting on behalf of Nottebohm instituted proceedings against Guatemala in the ICJ.
The Nottebohm Judgement
In the course of proceedings, Guatemala argued that Nottebohm did not acquire the citizenship of Liechtenstein as per International law. It made reference to the principle that it is the bond between the state and the individual which confers upon the state the right to diplomatic protection. The Court proceeded to consider whether the granting of nationality by Liechtenstein directly entailed an obligation on the part of Guatemala to recognise its effect. The ICJ held that it is a well known principle that nationality is within the jurisdiction of the State which confers it, however a state cannot claim that the rules it has laid down are entitled to be recognised by another state, unless it has acted in conformity with the general aim of making the nationality granted in accordance with an effective link between the state and the individual.
The Court pointed out that Nottebohm retained his family and business connections with Germany and there was nothing to indicate that the application for citizenship in Liechtenstein was motivated by a desire to disconnect himself from Germany. In addition, he had settled in Guatemala for over 30 years and it had become the centre of his interest and business activities. Thus, there is an absence of any bond of attachment with Liechtenstein and naturalisation was not based on any connection with the country. The acquisition of citizenship was lacking in genuineness and granted without regard to the concept of nationality adopted in international relations.
The ICJ upheld the principle of effective nationality where the individual must prove a meaningful connection to the state in question. For these reasons, the court held that Liechtenstein's claim is inadmissible and the judgment was given in favour of Guatemala by eleven votes to three.
The Malta Citizenship by Investment Programme and the Genuine Link
The announcement of the Malta citizenship programme in 2013 led to controversy since, in its proposed version, investors were able to acquire Maltese citizenship solely by giving a donation to the country without establishing any link with Malta.
Although citizenship was within the exclusive jurisdiction of each member state, the EU Commission argued that member states should award citizenship in a spirit of sincere cooperation. Commissioner Viviane Reding said that in compliance with the criterion used under public international law, Member states should only award citizenship to those individuals where there is a genuine link to the country in question.
Malta, on the other hand continued to insist that citizenship should be solely within the jurisdiction of each member state and relied on the position of the Greek Presidency of the EU which stated that EU citizenship is additional to and does not replace national citizenship.
On the 29th of January 2014, representatives of the European Commission and of the Government of Malta met on the issue of the Individual Investor Programme of the Republic of Malta. The Maltese representatives presented their intentions regarding further amendments to the regulations issued under the Maltese Citizenship Act (L.N.450 of 2013). The amendments included the introduction of a genuine link requirement with Malta through the introduction of an effective residence status in Malta prior to the possibility to acquire Maltese naturalisation. The programme was amended so that no certificate of naturalisation would be issued unless the applicant provided proof that he/she has resided in Malta for a period of at least 12 months immediately preceding the day of issuing of the certificate of naturalisation. The government also included other changes such as a requirement to invest in government bonds as well as a requirement to buy or rent property in Malta. In addition, the government also introduced a cap of 1,800 applicants.
The Commission's services welcomed the announced amendments concerning the residence requirement – done in good faith and in a spirit of sincere cooperation and both parties express satisfaction about the understanding reached on this issue.
Physical Presence Genuine Link in Maltese Citizenship
The residence criteria can be seen as an objective factor of a relationship between the individual and the state, however is it necessary for residence to be effective & physical in order to be considered as a link?
If one takes a look at both Maltese and foreign law, it is evident that physical presence is not a necessary requirement for one to obtain citizenship. This is evident if one looks at the thousands of Argentinian nationals obtaining Italian citizenship by descent without setting foot in Italy or else if one considers the law passed by Hungary, whereby over half a million individuals whose ancestors lived in the Austro Hungarian Empire obtained a Hungarian (EU) Passport. This situation occurs even when looking at Maltese law regulation the acquisition of citizenship by descent. In fact British nationals applying for Maltese citizenship have doubled since the Brexit referendum as one can apply for citizenship where it is proved that an applicant had two consecutive generations of ascendants in the direct line which were born in Malta. This increased interest in the Maltese passport is undoubtedly connected with the UK's decision to leave the EU, and the fact that Malta is a member state of the EU. Thus thousands of Maltese descendants living in the UK, Canada and Australia in particular are acquiring Maltese citizenship without the need to spend any days in Malta and without the need to sit for any Maltese cultural or language test.
Nottebohm Principle of Effective Nationality reinforced in 2024 EC vs Malta Citizenship Case
The Advocate General's opinion in the Malta Citizenship Case EC vs Malta case supports Malta's sovereignty in determining its citizenship rules, rejecting the EU's imposition of a "genuine link" requirement. This means Malta can continue its investor citizenship program without EU interference, as long as it adheres to its national laws. The opinion reinforces the idea that citizenship matters fall under national jurisdiction, which could influence other EU countries with similar programs. However:
The Nottebohm case emphasises the need for a genuine connection between the individual and the state to ensure the recognition of Maltese Citizenship acquired by Investment by other countries on a worldwide basis. Malta addresses this by ensuring that applicants for its investor citizenship program establish meaningful ties through residence, investment, or other substantial connections. This approach aligns with the principle of effective nationality, strengthening the legitimacy of Malta's citizenship program in the eyes of other countries.
Our Maltese Citizenship by Investment Services
We offer the following services in relationship to Malta Citizenship by Investment:
- advising you on your eligibility and your chances of success before filing your application;
- providing you with pre-immigration legal and tax advice;
- guiding you with the preparation and forwarding of the necessary documentation;
- vetting and preparing all supporting documentation for submission;
- assisting you with the purchase / rental of property in Malta including applications for AIP permits (foreigners need AIP permit to purchase property in Malta), reviews of your contract, liaising with the notary.
Applications for Maltese Citizenship by Investment are to be made to and processed wholly by Agenzija Komunita Malta. Dr Priscilla Mifsud Parker is a Licensed Agent, holding licence AKM-ACCA.
