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A single and simple all-encompassing ruling like that doesn't exist. The relevant statutes here - articles 15 to 18 - are quoted on the previous page.
Those born in the north (and, presumably, persons born to an Irish parent anywhere, as those born of an Irish national are automatically conferred with Irish citizenship from birth) qualify to play for us under article 15. Article 17, however, comes into play in circumstances where a player not entitled to Irish citizenship by birth (or, I assume, by descent via parentage), but rather, by applying through descent via grand-parentage, acquires a new nationality.
Whilst article 17 refers to the territory of the FAI, eligibility under article 15 has nothing to do with territory or jurisdiction, but rather strictly nationality, and seeing as Ireland offers citizenship extra-territorially as a birthright to those born in the north (save for the exceptions introduced by the twenty-seventh constitutional amendment in 2004), this enables those born in Northern Ireland represent us under article 15 despite not being born within the jurisdiction of the FAI.
For a player who acquires new citizenship through grand-parentage and is deemed an Irish citizen from the date of acquisition, the criteria in article 17 stipulate that these grandparents must have been born in the territory of of FAI.
For that reason, I don't believe that a player like Carl Magnay, who was born in England and whose link to Ireland is via grandparents born in Northern Ireland, is eligible to play for us despite being perfectly entitled to apply for Irish citizenship (assuming his grandparents were also Irish citizens), unless FIFA would interpret Northern Ireland as constituting the territory of the FAI due to the fact that Irish citizenship can be conferred to those born there, but I don't find that likely seeing as the IFA already claim jurisdiction over that territory. The discrepancy arises in the statutes because Irish citizenship is granted extra-territorially to those born in Northern Ireland. For Magnay to qualify to play for us, I imagine article 17 would have to allow for his grandparents merely to have held Irish citizenship as opposed to demanding the stricter condition that they had been born in the territory of the FAI. The legal rules governing the extension of Irish citizenship don't require that those entitled to it be born within the territory of the Irish state. That's the fundamental difference.
Hope that clears it up. Just my thinking on it, certainly, but it's based on a fairly literal interpretation of the statutes and I'm not sure how you could read article 17 in any other way. Maybe FIFA enforce a looser, "common sense" application in relation to Ireland to keep it in line with our extra-territorial nationality law. I don't know. It would be interesting to know. Geysir mentions Alex Bruce, of course, whose circumstances were identical to Magnay's - Bruce's grandmother was from Bangor - yet Bruce has already represented us at full international level. To be honest, I can't really understand how, but can only assume, as geysir does, that FIFA apply their rules using common sense here.