The rights of Citizenship by Investment beneficiaries as Community Nationals: What Implications for CARICOM Member States?
Citizenship by Investment (CbI) programmes are utilised as a development strategy by five out of the fifteen countries comprising the Caribbean Community. This article explores the rights which CbI beneficiaries are entitled to as nationals of the Community under the Revised Treaty of Chaguaramas and considers the implications these rights have for CARICOM member states. Particularly, it explores the tension between the right of CbI operating member states to determine their own citizenship policy versus the right of non-CbI member states to control the entry of perceived “undesirable persons” to their borders, particularly in light of the Caribbean Court of Justice’s ruling in Shanique Myrie v Barbados.
Citizenship by Investment (CbI)
CbI programmes offer qualifying investors (as well as their spouse and dependents once they meet certain criteria) citizenship in exchange for an investment in a qualifying activity, for instance, in real estate, a special fund or government bonds. The programmes are aimed at high net worth individuals (HNWIs) with the expectation that they would lead to targeted foreign direct investment inflows to sectors considered to be of national importance (e.g: hospitality and luxury real estate), job creation and the sharing of expertise and skills. In a previous article I discussed the specifics of the programmes in each territory and the pros and cons of CbI programmes.
Although CbI programmes have existed in the Caribbean since the 1980s, CARICOM countries differ on the desirability of their usage as legitimate development strategies. At present only five of the fifteen CARICOM states currently offer CbI programmes: St. Kitts & Nevis, Grenada, Dominica, Antigua & Barbuda and most recently, St. Lucia. The Bahamas has been discussing the prospect of a CbI programme for some time. Belize scrapped its programme a few years ago, while Grenada had suspended its programme at one point and now operates its programme by invitation only. The current policy positions of the Governments of Barbados and St. Vincent and the Grenadines is that they will not be offering CbI programmes.
While it is the right of each member state to determine its own citizenship laws, the issue of granting citizenship on a purely economic basis becomes a regional one considering that CbI beneficiaries (the term I use to refer to persons who have successfully obtained citizenship under a member state’s CbI programme) would be considered ‘Community Nationals’ for the purposes of the Revised Treaty of Chaguaramas and would be entitled to all the rights and benefits such nationals enjoy under the Revised Treaty, including the right to travel to, live and work in another member state, subject to exceptions.
The CbI beneficiary as a ‘Community National’
In regards to a natural person, Article 32(5) of the Revised Treaty of Chaguaramas defines a Community “national” as:
(a) a person shall be regarded as a national of a Member State if such person –
(i) is a citizen of that State;
(ii) has a connection with that State of a kind which entitles him to be regarded as belonging to or, if it be so expressed, as being a native or resident of the State for the purposes of the laws thereof relating to immigration; or
A literal interpretation of this clause provides that any natural person, including one who attains citizenship of a CARICOM member state pursuant to its CbI legislation and regulations, is a national of that State and henceforth considered a Community “national” for the purposes of Article 32(5) of the Revised Treaty of Chaguaramas.
Rights enjoyed by Community nationals
These rights are fundamentally economic in nature and can be divided between what I term general (non-discrimination and Most Favoured Nation) and specific rights (right of establishment, free movement of persons, services and capital). These rights are not absolute and are thus subject to exceptions.
- Non-Discrimination and MFN: Article 7 of the Revised Treaty of Chaguaramas prohibits member states from discriminating based only on the grounds of nationality within the scope of the application of the Revised Treaty except where provided for in the Treaty (Article 7). The Most Favoured Nation clause (Article 8) prohibits Member States from according to other Member States treatment less favourable treatment than they accord to a third Member State or third States. It should be noted that in Shanique Myrie v Barbados, the Caribbean Court of Justice noted that the right to MFN treatment “is a right that enures to Member States and, so far as applicable, to their nationals”.
- Rights of establishment and to work – The right of establishment includes the right to engage in “non-wage earning activities” which are defined by Article 32(2) of the Revisted Treaty as “activities undertaken by self-employed persons”, as well as the right to create and manage economic enterprises as defined under the Revised Treaty. The following categories of Community nationals have the right to seek employment in the jurisdiction of another member state (a) University graduates; (b) media workers; (c) sportspersons; (d) artistes; and (e) musicians, recognised as such by the competent authorities of the receiving Member States. The Certificate of Recognition of CARICOM Skills Qualification assists in this.
- Capital – Member states are prohibited from introducing any new restrictions on the movement of capital by businesses and individuals. However, as many CARICOM states currently operate currency controls, this still very much remains highly restrictive.
- Freedom of services – Member States are prohibited from introducing any new restrictions on the provision of services by nationals in the Community through the four modes of services supply: cross-border, consumption abroad, commercial presence and via temporary presence of a natural party in the territory of a Member State.
- Rights accruing under treaties with third states – This is not covered in the Revised Treaty. However, as Community nationals, CbI beneficiaries have the right to make use of any double taxation agreements, bilateral investment treaties and any other treaties of which their member State is a party, as well as any such agreements of which CARICOM is a party, including the EC-CARIFORUM Economic Partnership Agreement.
Freedom of movement is a cornerstone of the Caribbean Community and is one of the areas in which Member States have made the least progress in their implementation of reforms and commitments. It entails the right of entry, as well as the right to live and work in another member state. It should be noted that the Bahamas has not signed on to this aspect.
Right of Entry
Community nationals enjoy the right of entry to any member state and to stay therein for a period of up to six months, subject to exceptions. This stems from a decision taken by the Heads of Government at the Twenty-Eighth Heads of Government Meeting in Barbados in July 2007 where they agreed that
-: “all Community nationals should receive a definite entry of six months upon arrival in a Member State in order to enhance their sense that they belong to, and can move in the Caribbean Community, subject to the rights of Member States to refuse undesirable persons’ entry and to prevent persons from becoming a charge on public funds.”
A key issue arises in regards to the right of CbI states to determine their own citizenship laws versus the right of other Member States to limit their risk exposure by denying entry to any such persons whom they perceive as “undesirable persons”, particularly persons from “high-risk” countries. This balancing of rights is of greater currency in light of the escalation of global terrorism threats, rising crime and concerns about money laundering.
Critics of CbI programmes argue that the non-CbI Member states are at the mercy of the robustness of the due diligence checks and vetting process of CbI states to ensure that “undesirable persons” are not granted citizenship. They also argue that the free movement of persons and capital within the Community provides fertile ground for money launderers, terrorists and organised crime participants to carry out such threatening activities across the Region, with concomitant security and reputational implications for the Community as a whole vis-a-vis third States e.g: in regards to visa waivers.
While these concerns have legitimacy and it is imperative on CbI countries to manage their programmes to the highest possible standard, security concerns apply not just under citizenship granted under a CbI programme but also to citizenship obtained under regular naturalisation laws. It also should be noted that those Community nationals believed to be fighting with ISIS are natural born Community nationals.
However, the fear of “undesirable persons” obtaining citizenship under its CbI programme and the reputational threats to its own programme are likely the motivation behind St. Kitts & Nevis’ suspension of the eligibility of Syrian nationals to benefit under its programme.
Under Community Law, to what extent can a CARICOM State deny the right of entry to a Community national based solely on his or her previous or original country of origin?
The ‘Myrie Effect’
Community law and the limits it imposes on the Member States must take precedence over national legislation, in any event at the Community level. It follows from the above that a refusal on the basis of “undesirability” may be based on national law and on Community law, with the proviso that where national law does not conform with the parameters laid down by Community law, it will be the latter that ultimately must prevail.
(paragraph 69 of the CCJ Judgment in Myrie v Barbados)
The tension between CbI programmes and the rights of States to deny entry to persons perceived to be threats is heightened in light of the CCJ’s ruling in Shanique Myrie v Barbados which interprets several points of laws relating to the right of entry and the denial of the right and which some critics have unfortunately viewed as curtailing a member state’s public policy right to deny entry to “undesirables”.
The CCJ in its original jurisdiction applies and interprets the Revised Treaty of Chaguaramas.In brief, the landmark Myrie case involved a claim brought by a young Jamaican woman, Miss Shanique Myrie, against Barbados after she claimed she was discriminated against by being denied entry, and being allegedly subjected to bad treatment by Barbadian immigration authorities. For all the controversy which surrounded it, it is a pivotal case in Community Law.
Firstly, the case established a precedent wherein a natural person (Miss Myrie) was granted leave to bring a claim against a member state before the CCJ’s original jurisdiction. Therefore, it is possible that a CbI beneficiary can be granted leave to bring a claim against a member state if he/she feels her rights under Community Law were violated.
Secondly, the Court gave a definitive statement on the law relating to the right of entry and under what circumstances a State may successfully invoke any of the exceptions under Articles 225 and 226. At paragraph 65 of its judgement, the Court found that by virtue of the Heads of Government decision previously referenced all Community nationals have the right to be granted definite entry for a period of six months upon arrival in a member state “without harassment or the imposition of impediments”.
Thirdly, the Court clarified the law on Articles 225 and 226 of the Revised Treaty which provide exceptions to any of the fundamental rights. The Court noted that as exceptions to a fundamental right any exception must be narrowly and strictly interpreted and the burden of proof rests on the member state that seeks to invoke the ground for refusing entry. As the Court stated at paragraph at 83 of the judgment, “Given the above characteristics of the right of entry it would only be in exceptional situations that entry into Member States will be denied to Community nationals.”
Fourthly, the Court at paragraph 70 defined “Undesirable persons” within the meaning of the 2007 Conference Decision as “those Community nationals who actually pose or can reasonably be expected to pose such a threat”. For the purposes of the case, the Court was not called on to determine or define what would constitute “a threat affecting one of the fundamental interests of society”. However, it held obiter that:
in the area of public morals, national security and safety, a reasonable test for assessing such a threat is that, as a starting point, it must be shown that the visitor poses a threat to do something prohibited by national law. In practice that threshold will of course be much higher as it also requires that the threat be genuine, present and sufficiently serious.
Fifthly, the Court held at paragraph 83 that a State which is refusing entry must give the reasons for refusal promptly and in writing and must inform the person denied that he or she has a right to challenge the decision and must allow the refused national the opportunity to consult an attorney or a consular official of their country or a family member. Member States are also required at the national level to provide “an effective and accessible appeal or review procedure with adequate safeguards to protect the rights of the person denied entry”.
This does not mean, however, that a State’s immigration authorities’ hands are completely tied and that if there is clear evidence or suspicion that a national is a clear threat, entry cannot denied. It however prohibits the arbitrary denial of entry to Community nationals, including on the basis of their original citizenship.
While there are fears about CbI programmes and whether they will attract “undesirable persons”, it should be noted that there has to date not been any known case of any individual who has been granted citizenship under a Caribbean CbI programme who has been involved in a major organised crime or other illicit activity.
Because of the lack of publicised data on the operation of the CbI programmes in the region, it is difficult to know for sure how the programmes are operating and which nationalities have been the most active. However, recently released data for Antigua shows that Chinese nationals, followed distantly by Syria, Libya and Italy have been the main beneficiaries. This highlights the fact that the majority of the persons who apply under these CbI programmes are HNWIs who come from countries with restricted passports and are seeking hassle-free travel for business or leisure, or are seeking to escape conflict-ridden countries. Due to confidentiality, it is unknown whether persons who have been denied approval into one member country’s programme have subsequently had their applications approved in others.
According to the data provided by the Prime Minister, many of the applicants who have been successful under the Antigua CbI programme are also from metropolitan countries like the US, Italy and Germany. CbI programmes can be complementary to regional integration by fostering intra-regional investment and tourism. It is not unusual for foreign nationals who have established a business in one member state to eventually conduct business, either directly or indirectly, in others. Additionally, HNWIs tend to be highly mobile, travelling for business and with their families for leisure, and therefore could be a target market for high end tourism and yachting.
The EU Experience and Malta
A similar tension between the right of a State to control its citizenship laws versus the Community interest played out in the European Union in relation to Malta’s introduction of its Individual Investor Programme by amending its Citizenship Act in 2013. Malta is a small island state of the EU with a population of under half a million and not dissimilar in geographic size to many of the small islands of CARICOM.
Maltese citizenship not only entitles successful CbI applicants to all the rights of natural-born Maltese but also EU rights, such as the right to reside and work in other EU states and the right to visa-free travel within the Schengen area. The EU raised opposition to Malta’s programme, including by adopting a resolution in January 2014 which argued that Malta’s programme put EU citizenship for sale. After engaging in negotiations with the EU Commission, Malta added a residency condition which provided that any applicant is required to prove that they had been residing in Malta for at least twelve months immediately preceding the issuing of the certificate of naturalisation.
CbI programmes have co-existed in the Caribbean Community since the 1980s. What is clear is that as community nationals, CbI nationals are entitled to the same rights as all other Community nationals, including the right of entry into other member states.
There are however potentials for conflict if there is lack of confidence by member states in the due diligence processes of CbI member states. It would appear from the Community law examined that no member state may arbitrarily deny entry to the national of another member state, including based on his or her previous or dual citizenship, and where entry is denied, must follow the procedure laid out by the Revised Treaty for denial of entry and the denied national is entitled to appeal.
Member states must be assured of the robustness of the screening and due diligence process of CbI states. In light of increasing threats in regards to crime, terrorism and money laundering and the security and reputational risks which any lapse may cause for non-CbI states in the context of free movement of labour, CbI states have an increased duty to ensure their programmes are highly managed and regulated. In this regard, it would be useful if CbI countries would use the framework for information sharing as mentioned in the Community Stategic Plan to share data on the operation of their programmes for transparency purposes, including their approval and disapproval rates.
There are also options such as the addition of a residency requirement in order to establish a “genuine” link between the CbI beneficiary and the member state/Community and the exemption from eligibility of nationals from certain “risky” countries. Without doubt, the constant monitoring and review of due diligence and screening procedures is essential.
Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.