The Uneasy Role of Precedent in Defining Investment

Abstract

The recent Decision on Jurisdiction in Quiborax v. Bolivia represents the latest effort by international investment tribunals to find middle ground on the definition of “investment." This Comment criticizes Quiborax on two interrelated grounds. The first criticism is methodological: the Tribunal failed to account for historical evidence from the drafting of the ICSID Convention, as required by Article 31(4) of the Vienna Convention on the Law of Treaties (“VCLT”). Second, because of this methodological error, the Tribunal adopted the wrong substantive definition of “investment” under Article 25 of the ICSID Convention. Article 25 should properly be understood to reach any plausibly economic activity or asset, but Quiborax adopted a much narrower test that allows tribunals to set aside state decisions about the scope of investment protections. Quiborax reached the right result in allowing the case to proceed. But it exemplifies a troubling tendency for an insufficiently reflective reliance on precedent to swamp the principles of treaty interpretation.