IV Investment

Abstract

This chapter differentiates between direct and indirect investments. In practice, two conceptual approaches have been developed to give legal meaning to the term ‘investment’. The first approach is to offer specific elaborate definitions in bilateral and multilateral treaties, usually at the beginning of the operative part. The second approach, adopted for example in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), does not provide for a definition of ‘investment’ but leaves the interpretation and application of this term to the practice of States and tribunals. Cases involving ICSID arbitration typically require two separate examinations of the existence of an ‘investment’: one under the instrument providing for consent to arbitration (BIT, national law, contract), the other under Article 25 of the ICSID Convention. This is often referred to as the double keyhole approach or double-barrelled test. The chapter then outlines the types of investments, including tangible assets, contract rights, shareholding, financial instruments, intellectual property rights, and arbitral awards. It also considers the concept of the unity of the investment. Only foreign investments are protected by international investment law. In some cases, investment tribunals denied protection because the investment or the claimant's conduct in making it was illegal either under domestic law or under international legal rules or principles.