Journal of lnsratna Arbitaton 222}: 105-126, 2015, {© 205 Klar La Iron, Ped The Nerds The Notion of “Investment” in ICSID Case Law: A Drifting Jurisdictional Requirement? Some “Un-Conventional” Thoughts on Salini, SGS and Mihaly Farouk Yata* I. Inrropuction Despite the fact that the term “investment” appears at the heart both of the name of the International Centre for the Settlement of Investment Disputes (ICSID) as well as in the ttle of the Convention on the Settiement of Investment Disputes between States and Nationals of other States' (“the Washington Convention” or “the Convention”), no definition of this term is provided in the text of the treaty. Article 25(1) of the Convention simply provides that: ‘The jurisdiction of the Centre shal extend to any legal dispute arising directly out ofan invest- sment, between a Contracting State... and a national of another Contracting State. In their Report, the Executive Directors of the World Bank in charge of carrying on negotiations between states on 2 final version of the Convention in 1965 tried to justify this lacuna by declaring that: no atempe was made to define che term “investment” given the exten requtement of consent by the partes, and the mechanism through which Contacting States can make known in advance, if they so desir, the clases of disputes which they would or would not consider submiting tothe Cenete(Aricle 25(4)? ‘As already demonstrated by one author, this explanation from the World Bank report is not only misleading but, moreover, does not correspond to the reality of the history of the treaty’s negotiations.” Indeed, several state delegates who were present in Washington in 1965 submitted proposals for a definition of the term “investment.” Some delegates even displayed a strong interest in this issue, which was considered to be of “capital * DEA Universty Pahon- Aust Pari I CAPA Paris Lectarer athe French Petroleum Insitute: Thi ale fe baxed on paper tha he author presented atthe conference Nara opments Sane ets ia a ‘natn elf ietisoent rnin, held in Pars on May 3, 2004, under the uspics ofthe Ista des Hates ‘ney ternational Univers of Pnthon-Ases Par I in claborauon with OGEMID and OGE), *IMarc 8, 1965, LA'S 60, 575 UN. TS 159 [hereinafter "the Wahington Convention”) 2 Rpt of the Eee Dass the Canton the Seement of nese’ Dip Breen Stes ond [Natal Oe Sats, March 18, 1963, in ICSID Convention, RECULATIONS aN Ruts, Doe. ICSID/15/Res. 10927 44 Ganuary 2003. 7 5 ‘Sesion Marcia Invesnements Granger et arbitrage ene Eas et revortisanes autres Bas: 28 années (ited Decerber 1,200) ‘Mihi International Carp Democntic Soctae Repub of Lanka, March 15, 02, 1CSHD Case No, ‘ARA/00/2, 17 ICID Rese 142 (No.1, 200041 LEM 867 (2002, "a Sais Conruton SpA & Iabade SpA. Kizgtlom of Morocco July 23, 2001, 42 LLM. 606 2003) 129 5 Deo tert (coun) 20822}; 12 Rasa DEL Aaragzo 381 200) Ics‘A DRIFTING JURISDICTIONAL REQUIREMENT? 107 arising out of the performance of a contract for the consteuction of a highway there, The two Italian claimants alleged before the tribunal’ that Morocco’ filure to pay certain invoices allegedly due under the contract amounted to a violation of the Morocco-Italy bilateral investment treaty (BIT)"* concluded in 1990, including its provisions on fair and equitable treatment and protection against indirect expropriation. The Kingdom of ‘Morocco raised several objections to the tribunal’ jurisdiction and alleged, inter alia, that the dispute was not in elation to an “investment” under Article 25(1) of the Washington Convention and Article 1 of the BIT. For the first time, an ICSID tribunal was explicitly required to determine whether a construction contract can be considered to be an investment for purposes of ICSID jurisdiction. Several ICSID tribunals have in the past had to deal with cases involving construc- tion contracts. In these cases, however, the construction contracts were part of an overall project that included other contractual arrangements concluded between the foreign investors and the host states. These included general understanding agreements, profit~ sharing agreements, establishment conventions, joint-venture contracts for the operation ‘of the industrial plant or infrastructure, management contracts, technical asistance agree- ments, ec. All of these contracts were part of an “investment puzzle," and contributed to qualifying the binomial “investor—host state” a a partnership rather than as an ephem= «eral “vendor-client” relationship. Moreover, from a legal perspective, Prof. Juillard has already demonstrated that, in these cases, the disputes did not arse solely from the con~ struction contracts or, as French law qualifies them, “contas de louage d’ouonages," but from the entire contractual relation put into place by the parties for the implementation of their project. Consequently, these disputes were considered by arbitrators as arising from an “investment” because the overall project displayed the characteristics of an interna- tional investment. In Satin, the parties had concluded a single construction contract. The tribunal was faced with a dispute arising ftom a stand-alone civil engineering contract with no other contractual arrangements concluded by the partes for the operation or maintenance of the purported highway. In a preliminary decision rendered on July 23, 2001, the eribunal unanimously rejected Morocco’ objection to jurisdiction. It held that che contract for the construction of the highway was an investment both under Article 25 of the Washington Convention and the Morocco-Italy BIT. From a methodological perspective this © rine Preiden), Creside and Fadl + Trent Promesion sd Prsecton Tray July 18, 990, 1a-Moroeco ® Sieg ley lone SA ad tbs Mone, ICSID Case NAR 72/; Armco Ain Corp. ad oes x: Repu of Indoneta ICSID Case No ARB/SI/1 24 LL.M 1029 (985) Adiano Gant SpA Coc Urvore,ICSID Case No-ARB/?4/1, 1 ICSID Rep 285 (1993) KicknerIndseie-Anlagen GubH tad othe © ted Republi of Cameroon and Sociét Camerounsne ds Engras 1CSID Cae No ABBY, 1 Isr Aa 145 (984) 114 LR. 157 (1999) Sore Ouew Afticne des Boos ni» Seep 1CSID Cat No. ARDY 12/1, 17¥33. Cow. Amn. 42 (1992): Asopita Concesonada de Venere, -A-x Boltaran Kepubic of Venere TCS) ise No ARH/O0/5, 6 1CSID Ra. fo No 3 200) M tsene Kl Le element de igs et Ea ct peso pie range: approche cq de Comgaton de Wangan 125 (051) (np eas, Unies Europe, ofc wi aon patrick Jlrs Choe de a neal 30 ANNUAIRE RANGA DU DROW ITETION, 77, 7B (0589,