In 1939, Nottebohm again visited Liechtenstein, and on October 9, 1939, shortly after World War II began, he applied for citizenship.

As part of the deportation of Germans from Latin America during World War II, in which the US co-operated with various Latin American countries to intern in the US over 4,000 persons of German ancestry or citizenship, Nottebohm was arrested by the Guatemalan government as an enemy alien in 1943, handed over to a US military base, and transferred to the US, where he was interned until 1946.

In 1951, the Liechtenstein government, acting on behalf of Nottebohm, brought suit against Guatemala in the International Court of Justice for what it argued was unjust treatment of him and the illegal confiscation of his property.

However, the government of Guatemala argued that Nottebohm did not gain Liechtenstein citizenship for the purposes of international law.

The Court held that Liechtenstein was not entitled to take up his case and put forward an international claim on his behalf against Guatemala:[4][5] Naturalization was asked for not so much for the purpose of obtaining a legal recognition of Nottebohm's membership in fact in the population of Liechtenstein, as it was to enable him to substitute for his status as a national of a belligerent State that of a national of a neutral State, with the sole aim of thus coming within the protection of Liechtenstein but not of becoming wedded to its traditions, its interests, its way of life or of assuming the obligations-other than fiscal obligations-and exercising the rights pertaining to the status thus acquired.

Liechtenstein consequently is not entitled to extend its protection to Nottebohm vis-à-vis Guatemala and its claim must, for this reason, be held to be inadmissible.The ruling came under scrutiny due to the implication that a person could be left without any effective nationality.