The Meaning of ‘Investment’ as a Requirement for Jurisdiction Ratione Materiae of the ICSID Centre

Abstract

It follows from Article 25 of the ICSID Convention that the ICSID Centre has jurisdiction only if the dispute arises from an 'investment'. Despite the importance of this term, there is a fundamental lack of consensus on its meaning. Although the general view appears to be that the term 'investment' under Article 25 of the ICSID Convention has some objective meaning that is not at the disposition of the parties, not every tribunal has explicitly accepted the existence of these outer limits to the Centre's jurisdiction. The tribunals that do accept these outer limits are divided on the relevant characteristics that can be used to identify the term 'investment' and the nature and meaning of these characteristics. A divide has been recognized by tribunals and legal commentators between the 'jurisdictional' and a 'typical characteristics' approaches when considering abstract criteria relevant for 'defining' or 'identifying' the existence of an investment under Article 25 of the Convention. After considering recent case law, this article proposes that a hybrid between these two approaches can be identified. On the one hand, the concept of using abstract criteria as mandatory requirements to test the existence of an investment is consistently rejected. On the other hand, exception has been made by several tribunals which have required that the claimed investment should at a minimum be suitable to contribute to the economic development of the host State. The author of this article considers this to be a reasonable approach and in line with the purpose of the ICSID Convention.