Originally from  Jurisdiction in Investment Treaty Arbitration - IAI Series No. 8

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The question of what is the legal definition of “investment” immediately stirs up the debate, with which we are all familiar, surrounding the concept of investment under Article 25 of the ICSID Convention.  This paper will only focus briefly on that debate – and at that, only as a prelude to the author’s main objective of shifting the conversation away from Article 25 and toward the State parties’ own definitions of “investment” in international investment agreements (“IIAs”), which is a much more useful context for understanding how tribunals define investment.  On this issue, this paper will raise more questions than it will be able to answer.

The debate concerning Article 25 is comprised of two views that describe the different ways tribunals define investment under the ICSID Convention.  On the one hand, there is the subjective view that tribunals should defer to the definition established by the parties in the relevant IIA or the relevant contract.  On the other hand, there is the objective view that tribunals should offer a definition, or at least apply certain criteria, of an investment under the ICSID Convention before determining whether there is an investment for the purpose of both the IIA or contract and the ICSID Convention.

Two points can be made regarding the debate on Article 25.  First, there is not that much of a contradiction between the so-called objective and subjective views because, in a way, it is all a matter of degree.  No tribunal has ignored the ICSID Convention when ruling on whether an investment exists for the purposes of jurisdiction.  At the same time, tribunals do not ignore the definition of an investment established by the parties.  So it is a matter of degree of deference to the parties’ definition of investment, and not two extreme positions that are in conflict with each other.