The Meaning of 'Investment' in ICSID Arbitrations

Abstract

The term ‘investment’ in Article 25(1) of the ICSID Convention has eluded definition ever since the entry into force of the ICSID Convention in 1966. The Salvors Award on Jurisdiction of 2007 and the Salvors Annulment Decision of 2009 encapsulate two divergent interpretive approaches which, when applied to the same set of facts, can lead to opposite findings on the presence of an ‘investment’. The tribunal in the Salvors Award favoured an objective meaning of ‘investment’ that was ascertainable independently of how ‘investment’ was defined in the United Kingdom–Malaysia BIT and found that there was no ‘investment’ within the meaning of the ICSID Convention. In contrast, the majority of the ad hoc Committee in the Salvors Annulment Decision relied on the BIT as the sole interpretive source of the meaning of ‘investment’ and found that an ‘investment’ did exist. Subsequent tribunals tasked with determining the existence of an ‘investment’ when disputing parties invoke the jurisdiction of ICSID have continued to apply one of the two prevailing approaches. This author is persuaded that the interpretive approach adopted by the majority of the ad hoc Committee in the Salvors Annulment Decision is to be preferred.