The Tribunal in Malaysian Historical Salvors v. Malaysia Adopts a Restrictive Interpretation of the Term “Investment”

Abstract

The absence of a definition of “investment” in the ICSID Convention has led several arbitral tribunals to develop a narrow reading of this term. The most recent notable example of such conservative interpretation is a decision of the ICSID tribunal in Malaysian Historical Salvors (MHS) v. Malaysia. In that case, the tribunal decided that MHS’s contract with Malaysia to undertake complex salvage operations did not rise to the level of an investment because, among other things, the contract did not significantly contribute to Malaysia’s economic development. MHS’s four years of work also failed to reach the necessary level of risk and duration. This decision signifies a worrying trend in international jurisprudence to interpret the notion of investment restrictively.It remains to be seen whether an ad hoc annulment committee, which was constituted at the claimant’s request on October 30, 2007, will support the tribunal’s interpretation.