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Jan 01, 2009

Identify or define? Reflections on the evolution of the concept of investment in ICSID practice


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“Identify or define? Reflections on the evolution of the concept of investment in ICSID practice,” in International Investment Law for the 21st Century. Essays in Honour of Christoph Schreuer, (OUP, 2009, Christina Binder, Ursula Kriebaum, August Reinisch, and Stephan Wittich, eds.), P.403

At the time of the adoption of the Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID Convention) it could hardly have been foreseen that, more than forty years later, the notion of investment would become one of the most controversial issues as regards the determination of ICSID arbitral tribunals' jurisdiction.

Under Article 25 of the Convention, such jurisdiction extends to disputes between contracting States and investors of other contracting States arising directly out of an 'investment'. 'Investment', however, is not defined. It has become commonplace in arbitral case law to refer to the World Bank Executive Directors' observation that "no attempt was made to define the term 'investment' given the essential requirement of consent by the parties, and the mechanism through which Contracting States can make known in advance, if they so desire, the classes of dispute which they would or would not consider submitting to the Centre".

When the jurisdiction of an arbitral tribunal is based on an investment protection treaty, as is most often the case today, it is the treaty that defines what the host State and the investor's State intended to include in the concept of investment. In such cases, except for the claimant's satisfaction of the investment requisite as defined by the treaty on which the claim is based, the concept of investment within the meaning of the ICSID Convention should not give rise to particular difficulty. The recent case law, however, shows that the Executive Directors' observation on the intentional absence of a definition of 'investment' is, with a few exceptions, as often overlooked as it is referred to.

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Authors and Contributors

Emmanuel Gaillard


International Arbitration

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