Subject Matter Jurisdiction : The Notion of Investment

As is well known, the ICSID Convention does not define what “investments” are. Article 25 ICSID Convention, the only provision on the subject matter jurisdiction of ICSID tribunals, merely refers to “investment”. Investment tribunals and the literature have adopted divergent approaches with respect to two specific features of the term “investment”. These two features are: (i) whether “investment” in Article 25 ICSID Convention has an objective meaning, in addition to the definition of investment in the instrument of consent/the investment treaty (the controversy over the objective versus subjective meaning of investment); and (ii) if “investment” has an objective meaning, which elements ought to be used to objectively determine investments (the controversy about objective, or characteristic elements of investments). Specifically, there has been some controversy as to whether an objective element is that the transaction contributes to the host country’s economic development. This study explores both features. It focuses on the second feature because the objective elements that may characterize investments have considerable practical relevance for the jurisdictional determinations of ICSID tribunals. Section II analyses whether “investment” in Article 25 ICSID Convention has an objective meaning, and whether the term “investment” has evolved over time. Section III examines possible objective elements of investments. Section IV considers two special cases whose investment status is unclear considering these two controversies: first, whether financial instruments qualify as investments and, second, whether commercial arbitration awards, investment awards or judgments by national courts in the host country qualify as investments