State-Owned Enterprises as Claimants in International Investment Arbitration

Reflecting the significant amount of foreign investment by State-owned enterprises (SOEs), a number of claims against States by SOEs have been submitted to investor-State arbitration. Such claims raise the issue of whether, for purposes of determining standing as ‘investors' in investment arbitration, tribunals should apply the same analysis to State-owned and privately owned corporations.Existing bilateral investment treaties and investment chapters of free trade agreements, with only a few isolated exceptions, are available to SOEs as claimants, at least when acting in a commercial capacity. The more challenging questions concern, first, whether those agreements also are available to SOEs as claimants when acting in a governmental capacity and, second, if not, how to distinguish commercial from governmental conduct by SOEs. With respect to those two issues, this article recommends that decision-makers, first, look primarily to the applicable definition of ‘investor' when determining whether treaty protections extend to sovereign conduct and, second, rely on well-developed customary international law attribution principles — which have been applied in a variety of settings when there is a need to determine the boundaries of sovereign conduct — to distinguish commercial from governmental conduct.With respect to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) — which does not extend to State-to-State disputes, even in a subrogation context — this article recommends that decision-makers again look to customary international law attribution principles to distinguish between claims brought by SOEs in a commercial capacity (which can be submitted against States under the ICSID Convention) and a governmental capacity (which cannot be submitted against States under the ICSID Convention). Consistent with customary international law attribution principles, tribunals should consider not only the nature, but also the purpose, of an SOE's activities when determining the boundaries of sovereign conduct