Nationality is important in the context of State Responsibility.
A State Responsibility. A State may only espouse a claim against another State on behalf of one of its nationals. International law lays down no definition of nationality, as the granting of nationality is exclusively a matter of domestic law. A State is free to determine for itself who are to be deemed its nationals. In spite of this prima-facie unfettered discretion, a State may have its grant of nationality challenged when it attempts to rise a claim against another State. A State’s right to afford diplomatic protection may be challenged on the grounds that the link between it and its alleged national is only tenuous and not genuine. In the absence of such a link, a claimant State will be prohibited from proceeding with an International claim. The need for there to be obvious genuine link between the claimant State and the individual concerned.
In Nottebohm case, Nottebohm was a German national since birth in 1881. In 1905 he had taken residence in Guatemala and engaged in substantial business dealing there. In 1939, Nottebohm applied for naturalization in Liechtenstein. He obtained a Liechtenstein passport, and returned to Guatemala to resume his business activities. At his request, Guatemalan authorities made appropriate change regarding Nottebohm’s in Register of aliens and in his identity document.
On 17 july 1941, USA blacklisted nottebohm and froze his assets in the USA. War broke out between USA and Germany, between Guatemala and authorities in 1943 and deported to the USA where he was interned until 1946 as an enemy alien. On his release, he applied for his readmission to Gautemalan but his application was refused. Nottebohm then took up residence in Liechtenstein, in Guatemala had in meantime taken legislative measures to confiscate his properties in that country.
This case prefer to ICJ Concluded that Guatemala is under no obligation to recognize a nationality granted to extend its protection to Nottebohm vis-à-vis Gautemala and its claim must, for this reason, be held to be inadmissible.