When Pre-Investment or Development Costs May or May Not Be Regarded as Part of "Investment" under Article 25(1) of the ICSID Convention

The Mihaly Case

in The Journal of World Investment & Trade
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When Pre-Investment or Development Costs May or May Not Be Regarded as Part of "Investment" under Article 25(1) of the ICSID Convention

The Mihaly Case

in The Journal of World Investment & Trade

References

1 This Convention came into force on 14 October 1966. 2 Case No. ARB/00/02, Final Award rendered 15 March 2002, Sompong Sucharitkul, President, Andrew Rogers and David Suratgar, Arbitrators, as reproduced in 41 International Legal Materials 867, 2002. The Award is also available at 17 ICSID Rcv.-F.LL.J. 142, 2002, 14 World Trade and Arbitration Materials 21, 2002, and «http://www.worldbank.org/icsid/cases/mihaly-award.pdf».

3 Available at: «http://199.88.185. ] 0()/tcc/data/comn]erce_httnl/TCC_2/Sntanka!nvcstmcntTrcaty.htni[". This BIT came into force on 1 May 1993. 4 The Tribunal's Award does not refer to thc actual amount expended by the Clairnant as prc-investment expenditure. The amount of 2 to 4 percent of thc total cost, as usual expenditure during the devclopment phase, was indicated by an expert appointed by the Claimant.

5Mihaly Award, supra, footnote 2, at 869.

1 Ibid., at p. 877.

7 The Award of the Tribunal was reproduced in 37 International Legal Materials 1391, 1998.

8 H. Lauterpacht, The Fllllctitm o(1-nu� in the International COI1H1lllllity, Anchor Books, Hamden, 1966, at 144. v See IcsiD, Doarments concerning the Origirt and the Fonndation ofthe Convention, 1968, Vol. u, at 54 and 203. "' Ibid., at 54; see also the Opinion ofMr Licftrick, Rcprcsentative ofthe Netherlands, in his oral submission to the Legal Committee; see also C. Chattcrjec, Investment-Related Promissory Notes Are Investments under the ICSID COl1vmlio,,-Fedax NV v. The Republic q( Vfllezllela, 3 J.W.1. 1, February 2002, pp. 147-159.

" ICSID, ibid., at 204. 12 Ibid., Vol. i, at 116. 13 See the Fedax Award, supra, footnote 7. 14 See further, Chattcrjce, supra, footnote 10, at p. 149. 'S See the Caee concerning East Timor, Icj Reports, 1995, at 89 and 99. 16 C.F. Amerasinghe, 77" Jurisdictioll of the International Centrefor the Settlement ofhivestment Disputes, 19 Indian Journal of International Law, 1979, at 166. 17 ICSID, supra, footnote 9, Vol. I, Part 1, at 411. IX Ibid., Vol. ti, Part 2, at 826. ''' See further, 1 ICSID Reports 18, 1980.

211 See further, the arbitration berween American Manufacturing & Trading Inc. and the Republic of Zaire; the text ofthat Award has been reproduced in 36 International Legal Materials 1531, 1997; see also C. Chatterjee, The Arbitration between American Mal1lifactllrillg & '1'rnding lllc. and the Republic of Zaire: When Challfllges to the Jurisdiction of an IcsiD Tribunal Are Not Valid, 16 Journal of International Arbitration 37, 1999.

21 ICSID, mpra, footnote 9, Vol �, at 116. 22 Ibid., Vol II, at 652. 23 Id. 21 Ibid., Vol. 11, at 844.

15 Ibid., Vol. u, at 707. 26 Ibid., Vol. 11, at 703. 27 Ibid., Vol. u, at 706. 21 Ibid., Vol. n, at 702. 2» Ibid., Vol. 11, at 826.

30 Mihaly Award, supm, footnote 2, at 873. 31 Id. 32 Id. 33 Ibid., at 874. 34 Id. 35 Id.

3(, Id. 3� Ibid., at 875 (para. 48). 3H Id. 30 Sec Article vi(1)(a) of the BIT. 411 Mihaly Award, supra, footnote 2, at 876 (para. 52).

41 lbid., at 879 (para. 6).

42 led. 43 Ibid., at 880 (para. 9).

44 The abovc rule is without prejudice to Article 46, which is concerned with invalidity of treatic�s.

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