Beyond Hallmarks and Formal Requirements: a "Jurisprudence Constante" on the Notion of Investment in the ICSID Convention

In: The Journal of World Investment & Trade
Author: Paolo VARGIU1
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  • 1 Paolo Vargiu, J.D. (Cagliari), LL.M. (Nottingham) is a Ph.D. Candidate at the University of Nottingham, UK. The author thanks Prof. Mary E. Footer and Dr. Annamaria La Chimia for their valuable comments on an earlier draft of this paper. All mistakes remain the author's own. The author can be contacted at Uxpv5@nottingham.ac.uk.

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  • I Convention on the Settlement of Investment Disputes between) States and Nationals of Other States, March 18, 1965, 17 UST 1270, 575 UNTS 159 (hereinafter ICSID Convention). 2 SCHREUER C, The IcsiD Convention: a Commentary, Cambridge, 2001, at 122. 3 IBRD, The Convention on the Settlement of Investment Disputes, Documents Concerning the Origin and the Formulation of the Convention (Icsm History), Vol. I, at 116. 4 Schreuer C, supra note 2 at 122. 5 Ittnn, TIle Convention on the Settlement of Investment Disputes, Documents Concerning the Origin and the Fomittlation of the Convention (ICSID History), Vol. 11/2, at 710. 6 Sornarajah M., The International Law on Foreign Investments, Cambridge, 2004, at 204.

  • I International investment scholars still debate on the role played by BITS in international investment law and, in particular, on the possibility that BITS have given birth to customary international law principles related to foreign investments. That is the position of e.g. DENZA E., BRooKS S., Investment Protection Treaties: United Kingdom Experience, 36 ICQL 913 (1987), which is objected to by those scholars who maintain that the very existence ofBtTs is proof of the lack of customary law regarding international investment and the need for a conventional regime to fill this gap (see SORNAIL1JAH M., supra note 6, at 215, 226-227, 233, 276). 8 Malaysian Historical Salvors Sdn Bhd (Mns) v Malaysia, Award on jurisdiction, ICSID Case No ARB/05/10, lie 289 (2007). See infra, section 3. 10 See infra, sections 4, 5 and 6. 11 See infra, section 7. 12 "Portfolio investments" are investments aimed to achieve revenues as well as capital growth (e.g. the acquisition of shareholdings in a company located in a foreign country with no control on the management or the activities of the company). See Mnuao M., Gli accordi internazionali sulla promozione e la protezione degli investimenti, Turin, 2003, at 41, and DASGUPTA P., Creation of a Global Capital Market: Evolution of International Commercial Law in Cross-border Portfolio Investments, 73 Nordic Journal of International Law 161 (2004).

  • 13 See JUrLLARD P., Notion d'investi5sement, in CARREAU D., FLORY T., JUILLARD P., Chranique de droit international économique, 20 Annuaire francis de droit international 744 (1984) at 773. 1; DoLZER R., ScHREUER C., Principles of International Investment Law, Oxford, 2007, at 61. IS See for example CSOB. v Slovakia, ICSID Case No. Arb/97/4, Decision on Objections to Jurisdiction, 24 May 1999, 14 ICSID Rev - FiLj 251 (1999), para. 68: 'A two-fold test must therefore be applied in determining whether this Tribunal has the competence to consider the merits of the claim: whether the dispute arises out of an investment within the meaning of the Convention and, ifso, whether the dispute relates to an investment as defined in the Parties' consent to ICSID arbitration, in their reference to the BIT and the pertinent definitions contained in Article 1 of the BIT.' 16 Schreuer C., supra note 2 at 140. MHS v Malaysia, supra note 8 at para. 72. 18 See infra, section 3. 19 See infra, section 4.

  • 20 MHS v Malaysia, supra note 8 at para. 72. m Fedax N.V v Republic of Venezuela, 1(7sii) Case No. AM/96/3, Decision on Objections to Jurisdiction of 11 July 1997, 37 ILM 1378 (1998). zz Report of the Executive Directors on the Icsid Convention, 1 Icsid Rep. 28 (1993). 23 BROCHEs A., 77ic Conventinn on T7i(, Settlement of Investment Disputes: Some Observations on Jurisdiction, 5 Colum. J. Transnat'l L. 263 (1966) at 268; AMERASIN<�HF C.F., Tliejiirisdictioii of the International Centre for the Settlement of Investment Disputes, 19 Indian Journal of International Law 166 (1979) at 181; DELAUME G., ICSID and the Transnational Financial Community, 1 ICSID Rev - FW 237 (1986) at 239-240; SHIHATA L, Towards n Greater Depoliticization of Investment Disputes: 71ze Roles of ICSID and Miga, 1 Icsji) Rev - Filj 1 (1986) at 4; LAMM C, SMUTNY A., The implementation rif ICSID Arbitration, Agreements, 11 ICSm Rev - FIIJ 64 (199fi) at 80. z4 Fedax v Venezuela, supra note 21 at para. 22. 25 Id., para. 43, referring to SCHREUER C., Commentary on the ICSID Convention, 11 1 Iesil) Rcv - FILJ 316 (1996) at 372. See supra, section 2. 2(, See also GAFi('IA-B(>LIIVAIt 0., Foreign Investment Disputes under IcsID: a revierv of its Decisions onJurisdiction, 5 Journal of World Investment & Trade 187 (2004) at 192. z� Fedax v Venezuela, supra note 21 at para. 42. ze Ceskoslovenska obchodni banka, a.s. (CsoB) v Slovak Republic, ICSID Case No. A"/97/4, Decision on Objections to Jurisdiction, 24 May 1999, 14 ICSID Rev - Fm) 251 (1999).

  • 29Id., para. 79. 3D Id., para. 88. 31 Id., para. 90. 32 Salini Costruttori S.p.A. and Italstrade S.p.A. v Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001, 129JD) 196 (2002), 42 Il 609 (2003). 33 See YAtn F., The Notion of "Investment" in IcsiD Case Law: A DrifiingJurisdictional Requirement? Some "Un- Conventional" Thoughts on Salini, Scs and Mihaly, 22 J. Int. Arb 105 (2005), at 110. 3° Salini v Marocco, supra note 32 at para. 52. Reference is made to GAILLARD E., Centre internatioreal pour le reglement des différends relatifs aux investissements (Crxnt): chronique des sentences arbitrales, 126 jDi 292 (1999). 35 See infra, section 7. 36 Salini v Marocco, supra note 32 at para. 52. See also SEATZU F., La nozione di "investimento internazionale" nella Convenzione di Washington del 1965 sulla soluzione delle controversie tra Stati e nazionali di altri Stati alla luce di una recentegiurisprndenza arbitrale, in Studi in Onore di Carmine Punzi, Milano (2008), p. 1400.

  • 3� Joy Mining Machinery Limited v The Arab Republic of Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004, 19 Icsm Rev - FiLj 486 (2004). 38 Id., para. 50. 39 Id., para. 53. ao See supra, section 3. 41 Joy Mining v Egypt, supra note 37 at para. 56. 42 Ibid. '3 See supra, section 3.

  • 44 Joy Mining v Egypt, supra note 37 at para. 57. ^5 See GAILLARD E., Identify or Define? Reflections on the Evolution of the Concept of Investment in ICSID Practice, in BINDER C., KtttESAUM U., PEINISCH A., Wrr'rn:H S. (eds.), International Investments Law for the 21st Century - Essays in Honour of Christoph Schreuer, Oxford, 2009, p.403, at 412. 11 Patrick Mitchell v The Democratic Republic of Congo, ICSID Case No. Arb/99/7, Decision on the Application for Annulment of the Award, 1 November 2006, lie 172 (2006). Id., para. 39. 48 Id., para. 27.

  • ^`�Id., para. 32. so Id., para. 30. 51 Consortium Groupement LESi-Dipenta v People's Democratic Republic of Algeria, ICSID Case No. ARB/03/8, Award, 10 January 2005, 19 ICSID Review - F)L) 426 (2004), and LESI S.p.A. and ASTALDI S.p.A. v People's Democratic Republic ofAlgeria, ICSID Case No. AR.B/05/3, Decision on Jurisdiction, 12July 2006, lie 150 (2006). sz LESI-Dipenta v Algeria, supra note 51 at Section 2.2, para. 13(iv). 53 LESI and As'rAi.W v Algeria, supra note 51 at para 72. S4 Ibid. and LESi-Dipenta v Algeria, supra note 51 at Section 2.2, para. 13(iv). 55 Bayindir Insaat Turizm Ticaret Ve Sanayi A. S. v Islamic Republic of Pakistan, ICSID Case No. ARB/03129, Decision on Jurisdiction, 14 November 2005, IIC 27 (2005). sb Id., para. 130. s� Id., para. 137. 58 Jan de Nul NV and Dredging International NV v Arab Republic of Egypt, ICSID Case No. ARB/04/13, Decision on Jurisdiction, 16June 2006, lie 144 (2006). s9 Saipem SpA v People's Republic of Bangladesh, ICSID Case No. AM/05/07, Decision on Jurisdiction and Recommendation on Provisional Measures, 21 March 2007, Ilc 280 (2007), para 99. so loannis Kardassopoulos v Georgia, ICSID Case No. ARB/05/1S, Decision on Jurisdiction, 6 July 2007, LC 294 (2007), para 116. 61 Jan de Nul v Egypt, supra note 58 at para. 91. 62 Victor Pey Casado and President Allcnde Foundation v Republic of Chile, ICSID Case No. AttH/98/2, Award, 8 May 2008, He 324 (2008).

  • 63Id., para. 232. 64 Ibid. 65 Helnan International Hotels A/S v Arab Republic of Egypt, ICSID Case No. AM/05/19. Decision, Objection to Jurisdiction, 17 October 2006, lie 130 (2006). �fi Id, para. 77. 67 Malaysian Historical Salvors Sdn Bhd (MHS) v Malaysia, Award on jurisdiction, ICSID Case No ARB/OS/lO, lie 289 (2007). sa Id., para. 108.

  • <■» Id., para. 109. 70 Id., para. 110. 71 Id., para. 111. 72 Id., para. 112. 73 Id., para. 130. 74 Id., para. 143. 7S Id., para. 131. Reference was made to the awards in CSOB (supra, section 3), Jan de Nul and Bayindir.

  • 'h See infia, section 6. 77 See supra, section 2. 78 See supra, section 3. �9 Mci Power Group, LC and New Turbine, Inc v Ecuador, ICSID Case No. ARB/03/6, Award, 31 July 2007, lic 296 (2007). 80 Id., para. 165. 81 Cms Gas Transmission Company v Argentina, Decision on application for annulment, ICSID Case No APB/Ot/8, 25 September 2007, lie 303 (2007). 82 Id., para. 71. 1. s3 Biwater Gauff (Tanzania) Ltd v Tanzania, IcsID Case No Afts/OS/22, Award, 24 July 2008, lie 330 (2008).

  • 84 Id., para. 312. 85 Id., para. 313. 86 Id., para. 314. 87 Id., para. 316. 8' MHS v Malaysia, ICSID Case No Aas/OS/10, Decision on the Application for Annulment, 16 April 2009, lie 372 (2009). 89 Id., para. 73. 90 Id., para. 78. 91 MEIS v Malaysia, Decision on the Application for Annulment, 16 April 2009, Dissenting Opinion of Judge Mohamed Shahabuddeen, Ilc 372 (2009) at 387.

  • 92Id., paras. 7-13. 93 Mr�s v Malaysia, Award, supra note 67 at para. 105. 94 See supra, section 6. MHS v Malaysia, Decision on the Application for Annulment, supra note 88 at para. 71. 1 . Id., para. 72.

  • 97 See supra, section 1. 98 See supra, section 5 with reference to the two LESI cases.

  • 9y B]oaK�uNn A., Investment Treaty Arbitral Decisions asJurisprudence Constante, in PICKER C, BUNN L, ARNER D. (eds.), International economic law: the state and future of the discipline, Oxford, 2008, at 265. �°° ALGERo M., The Sources of Law and the Value of Precedent: a Comparative and Empirical Study of a Civil Law State in a Common Law Nation, 65 La. L. Rev 775 (2005), at 783. t°t B]olUU.UI�1D A., supra note 99.

  • 102 See Mtis v Malaysia, Decision on the Application for Annulment, supra note 88 at para. 80.

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