Investment Treaty

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Document information Chapter 5: Material Scope of Application: Definition of

Investment with Reference to Cases Involving Central
Publication Asian States
International Investment Berk Demirkol
Law and Investor-State
Disputes in Central Asia: Existence of an ‘investment’ is one of the fundamental requirements to have
Emerging Issues access to investment arbitration, without which the jurisdiction of investment
tribunals would not be established. Despite the critical role it plays, there is not
a uniform understanding of the term ‘investment’. This is because ‘investment’
Topics has been conceptualised differently by tribunals, as well as by scholars.
Investment Arbitration This chapter proceeds in three parts to explain the material jurisdiction of
investment tribunals and the notion of ‘investment’. The first main point of
discussion is how to determine the applicable test for what an investment is. The
second point of discussion is which assets and rights could be considered an
Key words ‘investment’, and particularly whether nominal value investments done by shell
investment companies would satisfy the test for ‘investment’. The final point is the legality
jurisdiction of the investment.
assets
nominal value One may observe that cases involving Central Asian States as the respondent
shell company party provide significant contribution to various discussions concerning the
legality notion of ‘investment’ in the context of investment arbitration. The approaches
ICSID Convention and conclusions adopted in Central Asia-related investment claims are not
investor specific to the region or to investment treaties concluded by Central Asian
States. These approaches and conclusions reflect various opinions spelt globally
in the scholarly writing and in the investment arbitration case law.
Bibliographic P 102
reference
Berk Demirkol, 'Chapter 5: 5.01 INTRODUCTION
Material Scope of The particular mechanism commonly referred to as ‘investment arbitration’ or ‘investor-
Application: Definition of State dispute settlement’ is an international mechanism for the settlement of disputes
Investment with Reference arising out of ‘investment’ between a host state and a qualified investor.
to Cases Involving Central
Asian States', in Kiran N. International investment treaties, which usually contain an arbitration clause for the
Gore , Elijah Putilin , et al. settlement of disputes, provide substantive and procedural protection for the
(eds), International ‘investment’. Under these investment treaties, those are only disputes arising out of an
Investment Law and investment that can be submitted to arbitration. The Convention on the Settlement of
Investor-State Disputes in Investment Disputes between States and Nationals of Other States (ICSID Convention), (1)
Central Asia: Emerging in its Article 25(1), similarly provides jurisdiction for the International Centre for
Issues, (© Kluwer Law Settlement of Investment Disputes (ICSID) only if the dispute arises out of an investment.
International; Kluwer Law Accordingly, the existence of an ‘investment’ is one of the fundamental requirements to
International 2022) pp. 101 have access to investment arbitration. Without ‘investment’, an investment tribunal
- 122 would not have jurisdiction to hear a claim, as the dispute would not fall within the
material scope of the dispute settlement clause of the applicable investment treaty or
that of Article 25(1) of the ICSID Convention.
Despite its critical role in establishing the jurisdiction of investment tribunals, there is
not a uniform understanding of the term ‘investment’; the notion of ‘investment’ could
often be an important element of the controversy between the parties. Indeed, several
tribunals and commentators have adopted different approaches as to what constitutes
an ‘investment’ for the purposes of establishing the jurisdiction of an investment tribunal.
It is because of a combination of factors that ‘investment’ has been conceptualised
differently by tribunals, scholars, or parties. First and foremost, the ICSID Convention
does not provide a definition for the term ‘investment’. (2) Second, most bilateral and
multilateral investment treaties do not usually define the term ‘investment’ either. (3)
Although these treaties list various types of rights and assets that ‘investment’ could
include, the mere existence of one of these listed assets in the underlying operation
would not suffice to satisfy the jurisdiction of the investment tribunal. In order to satisfy
the jurisdictional requirement, these assets need to be ‘the result of the act of investing’
and ‘presuppose an investment in the sense of a commitment of resources’, without
which the asset in question cannot constitute an investment. (4)
This chapter thus covers one of the most classic subjects of international investment law.
P 103 Although this subject has been widely covered and debated in scholarly writing so far,
it involves many discussions that have not yet been settled. Investment tribunals,
including the ones constituted rather recently, have adopted different approaches to
these active debates.
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This chapter proceeds in three parts to explain the material jurisdiction of investment
tribunals and the notion of ‘investment’. The first main point of discussion is how to
determine the applicable test for what an investment is (section 5.02). In the context of
investment treaty cases submitted to the ICSID, this issue further requires the analysis of
the relationship or interaction between the understanding of ‘investment’ under the
ICSID Convention and the understanding of the term under the applicable investment
treaty. The second point of discussion is which assets and rights could be considered an
‘investment’ (section 5.03). The analysis in this section will include a discussion on the
question of whether the jurisdiction of a tribunal could be established in case of an
indirect investment or an investment structuring where the claimant does not have close
proximity to the investment. Finally, the third point is the legality of the investment
(section 5.04). This issue requires the tribunals to address the questions of when, how and
under which circumstances their jurisdiction would be affected by an allegedly illegal
investment.
This chapter does not exhaustively treat investment tribunals’ material jurisdiction, the
notion of ‘investment’, or the three discussion points referred to in the previous
paragraph. Instead of treating the subject once again from a general perspective, this
chapter rather focuses on the awards rendered by tribunals in investment claims
initiated against Central Asian States. As a preliminary remark, cases involving Central
Asian States as the respondent party provide significant contribution to various
discussions concerning the notion of ‘investment’ in the context of investment
arbitration. The approaches and conclusions adopted in Central Asia-related investment
claims are not specific to the region or to investment treaties concluded by Central Asian
States. These approaches and conclusions reflect various opinions spelt globally in the
scholarly writing and in the investment arbitration case law. This said, some Central Asian
investment cases are considered to be the pioneer of some views and approaches in
investment arbitration on discussions concerning the material jurisdiction of tribunals
and the understanding of ‘investment’ which makes focusing on the Central Asian
experience a worthy endeavour.
5.02 METHODOLOGY FOR THE ASSESSMENT OF WHAT QUALIFIES AS AN

‘INVESTMENT’
As stated in the introduction, the term ‘investment’ is not defined in the ICSID
Convention, and the ‘definition’ clause in investment treaties usually lists the assets that
can form an investment rather than actually defining the term.
To start with, the ICSID Convention does not provide any definition, description,
explanation, or clarification as to the term ‘investment’. Due to this lack of definition,
ICSID tribunals are required to provide their definition of ‘investment’ and, by extension,
an applicable test for this jurisdictional requirement. The test for the existence of
P 104 investment, which an ICSID tribunal would apply, very much depends on how this
tribunal conceptualises the investment and elaborates the relationship between the
‘investment’ requirement under the ICSID Convention and the parallel requirement under
the applicable investment treaty.
Differently from the ICSID Convention, the investment treaties do provide clarifications
on the term ‘investment’. Most of the investment treaties, however, instead of defining
‘investment’ and providing the essential elements for the fulfilment of the existence of
investment condition, simply list the rights and assets that could be allocated for the
investment. Some investment tribunals have thus discussed whether it would be
sufficient for the dispute to arise out of the rights listed in the applicable investment
treaty so that the claimant could attract the protection of this treaty or if it would still be
necessary for the claimant to demonstrate other elements of the investment, such as
duration and risk. The outcome of this discussion is of significance, especially if the
investment claim based on the investment treaty is brought in an arbitration mechanism
other than the ICSID.
In deciding on the jurisdictional objections concerning the ratione materiae jurisdiction of
the tribunal (whether or not the dispute has arisen out of an investment), the first task of
investment tribunals is thus to determine how the requirement for ‘investment’ should be
conceptualised. The immediate next task of ICSID tribunals hearing an investment treaty
case is to consider the interaction and the relationship between the ‘investment’
requirement under the ICSID Convention and the requirement under the investment
treaty. The third step is to determine the constituent elements of an investment and to
propose a test for the satisfaction of the conditions concerning material jurisdiction of
the tribunal.
[A] Conceptualisation of ‘Investment’

In his article ‘Identify or Define? Reflections on the Evolution of the Concept of
Investment in ICSID Practice’, Gaillard identifies two main methods for the assessment of
the existence of an investment in the context of ICSID arbitration – the intuitive method
and the deductive method. (5)
The intuitive method, the approach introduced by Schreuer, identifies certain features of
investments that are typical to most operations. (6) Schreuer explicitly sees it unrealistic
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to attempt to propose another definition of ‘investment’ on the basis of ICSID’s
experience. The commentator does not treat these features as jurisdictional
requirements but merely as typical characteristics of investments. (7) Accordingly, if the
operations before the tribunal include some of these features – without the need to cover
all of them – it would be considered an investment. This approach could be criticised for
not being analytical, failing to establish a proper test concerning the ‘investment’
P 105 requirement for the purposes of ICSID jurisdiction and creating obscurity rather than
clarity. Indeed, it is not precise how many of these features a transaction should bear and
whether a transaction could still be considered an investment even if it does not meet
some basic features, such as duration and risk.
The deductive method attempts to propose a true and objective definition for the term
‘investment’. (8) Under this method, the autonomous and objective definition of
‘investment’ is formed by the synthesis of several constitutive elements. This is different
from identifying typical features of the investment and requiring that some of them be
met in ICSID claims. The existence of investment entails the presence of each of the
constructive elements; absence of any of them would result in the lack of jurisdiction of
an investment tribunal. This approach seems more reasonable. Even if the ICSID
Convention has not defined the term ‘investment’, it refers to a term that has an intrinsic
meaning. This meaning determines the scope of the jurisdiction of ICSID tribunals.
The Salini test adopted by the investment tribunal in Salini v. Morocco (9) may be
considered a milestone for the recognition of this method. The tribunal, in this case,
defined the term ‘investment’ for the purposes of establishing ICSID jurisdiction and
proposed the constitutive elements of the investment. This approach has been since
widely accepted: a significant majority of subsequent tribunals adopted either this
approach or a variant of this approach, adding new constituent elements to the Salini
test or removing one of them. Notwithstanding that, some tribunals still apply the
intuitive method for establishing the tribunal’s ratione materiae jurisdiction.
An interesting approach was adopted by the tribunal in the Stans Energy v. Kyrgyzstan I
case in relation to the definition of ‘investment’. The tribunal, in a non-ICSID treaty claim,
explained that ‘[i]nvestments are financial and tangible assets invested by investor into
different objects of activity as well as the transferred rights to material and intellectual
property with a view of gaining profit (income) or achieving a social effect [...]’. (10) Then,
the tribunal explained that the funds of the investors were invested into the acquisition
of shares, licences, property and company activity (such as salaries). (11) The tribunal
accepted that the claimant satisfied the ‘investment’ requirement after it observed that
‘there were investments in monetary form as well as investments which changed their
form and were transformed into the assets in a tangible form or in a form of the license,
which does not change their legal characteristics as investments’. (12) The tribunal seems
to follow the deductive method instead of adopting an intuitive approach; it provides a
rather objective definition of ‘investment’, although the elements of the definition are
not as clear as the Salini test.
P 106
[B] Relationship Between the ICSID Convention and the Investment Treaty in Terms
of the Understanding of the Term ‘Investment’
The term ‘investment’ is referred to as a condition of the application of the relevant
instrument both in the ICSID Convention and in international investment treaties. Since
the existence of ‘investment’ thus becomes a jurisdictional requirement under two
instruments, ICSID tribunals constituted under an investment treaty have adopted
different views, as outlined in the following subsections, concerning the relationship and
interaction of these two instruments on the determination of existence of ‘investment’.
[1] Consensual Method
The first method is the consensual method. (13) Proponents of this method suggest that an
ICSID tribunal should refer to the definition of ‘investment’ in the applicable investment
treaty. This is mostly because the investment treaty being the instrument incorporating
consent to ICSID arbitration would be defining a critical term for the tribunal’s
jurisdiction. The position as to the term ‘investment’ in the investment treaty becomes a
definition agreed upon by both parties once an investor accepts the host state’s offer
within the dispute settlement clause of the treaty to arbitrate the investment dispute. As
an agreed understanding by both parties, the mutual understanding of the parties on the
term ‘investment’ should also apply for the purposes of the ‘investment’ requirement
under the ICSID Convention. Accordingly, if the transaction made by the claimant satisfies
the test and requirements of the term ‘investment’ as defined in the investment treaty, it
would also satisfy the material jurisdiction requirement under the ICSID Convention.
The proponents of this method consider that this method provides a flexible and
pragmatic approach; (14) it would be the parties’ agreement on the definition of
‘investment’ which would fill the gap in the ICSID Convention. As underscored by the CMS
Annulment Committee, ‘Article 25 of the ICSID Convention did not attempt to define
‘investment’. Instead, this task was left largely to the terms of bilateral investment
treaties or other instruments on which jurisdiction is based’. (15)
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The consensual method could be criticised by the argument that allowing the parties to
determine what ‘investment’ means could remove the requirement that the dispute
should arise out of an investment, which is a self-standing jurisdictional requirement
P 107 under Article 25(1) of the ICSID Convention. Indeed, if the parties were to determine
what investment is in the instrument incorporating consent, the requirement for
existence of investment would be overtaken by the parties’ agreement. (16) As also
suggested by the tribunal in Joy Mining v. Egypt, there is a limit to the freedom of parties
to submit disputes in ICSID arbitration. The tribunal continued, ‘[t]he parties to a dispute
cannot by contract or treaty define as investment, for the purpose of ICSID jurisdiction,
something which does not satisfy the objective requirements of Article 25 of the
Convention. Otherwise Article 25 and its reliance on the concept of investment, even if
not specifically defined, would be turned into a meaningless provision’. (17) The tribunal
in Salini v. Morocco noted as well that the requirement for an investment dispute under
the ICSID Convention could not be diluted by the parties’ agreement. (18)
An example of this approach among cases initiated against Central Asian States could be
found in the Garanti Koza v. Turkmenistan award, where the tribunal first noted that the
ICSID Convention chose not to include a definition for the term ‘investment’ and agreed
with earlier decisions which stated that the ICSID Convention provided a broad
framework for that purpose. (19) Then, the tribunal showed sympathy for the intuitive
method, which lists basic features of an investment without requiring all these features to
be present in every case. (20) The tribunal also openly rejected adopting the Salini test or
the deductive method. Even if the term ‘investment’ as used in the ICSID Convention
should have some meaning, the tribunal considered that the Convention does not call for
any strict definition and leaves the task of filling a meaning into the term ‘investment’ to
the parties to investment treaties or other expressions of consent. (21) The tribunal thus
adopted the consensual approach and took the view that the term ‘investment’ under the
ICSID Convention should be understood as this term was defined in the applicable
investment treaty. Saying that, the tribunal further observed that neither the nature of
the claimant’s investment nor the definition of ‘investment’ in the investment treaty
exceeded what was permissible under the ICSID Convention. (22) Accordingly, the term
‘investment’ under the ICSID Convention still imposes a minimum level of scrutiny: what
would be recognisable as an investment should be permissible under the ICSID
Convention and should not be absurd or patently incompatible with the object and
purpose of the Convention. (23) The tribunal did not, however, determine what would not
be permissible as ‘investment’ under the ICSID Convention.
Another example which seems to support this approach is the Caratube v. Kazakhstan
award. The tribunal held that ‘where there is an agreement between the parties regarding
P 108 the existence of an investment, they are generally precluded from later challenging
ICSID’s jurisdiction based on the alleged absence of an investment’. (24) Whereas the
tribunal did not propose to directly apply the ‘investment’ definition provided in the
investment treaty to the ‘investment’ requirement for the purposes of the ICSID
Convention, it observed that parties agreed in their underlying contract to treat the
transaction at hand as an investment. (25) The tribunal concluded that against such
explicit agreement, the respondent State was precluded from opening the debate on
whether there was an investment. (26)
[2] Double-Barrelled/Twofold Test
The second method is the application of a two-stage test, which is commonly known as a
double-barrelled test but is also referred to as a double keyhole test or twofold test.
Tribunals applying this method examine the jurisdictional requirements under the ICSID
Convention and the applicable investment treaty separately. Consequently, the
existence of investment is first tested against the tribunal’s understanding of the term
‘investment’ under the ICSID Convention (if the tribunal adopts the Salini test, for
example, the tribunal examines whether the requirements of this test have been met)
and then against the definition of ‘investment’ provided under the investment treaty (the
tribunal checks whether the transaction made by the claimant falls within the scope of
the definition of ‘investment’ of the treaty). According to this approach, the fact that the
claimant accepts the host state’s offer to arbitrate under the investment treaty and thus
accepts the application of this treaty would not affect the scope of application of the
ICSID Convention. In other words, the fact that the parties have agreed on a certain
definition of ‘investment’ would not lower the minimum level of prerequisites for the
application of the ICSID Convention.
An example of a tribunal constituted under a Central Asian investment treaty, which
adopted this approach, is the Kim v. Uzbekistan tribunal. The tribunal stated, ‘[f]or
jurisdiction to be established, the claim must pass both through the institutional
jurisdictional keyhole set forth in Article 25 as well as the specific jurisdictional keyhole
defined in the BIT’. (27)
[3] Ordinary/Intrinsic Meaning Approach
It seems that a third method has emerged rather recently, which could be referred to as
the ordinary or intrinsic meaning or autonomous definition approach. The theoretical
underpinnings of this method are similar to the two-stage test. Yet, applying the
deductive method rigorously, this approach suggests that the term ‘investment’ has an
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intrinsic and universal meaning regardless of the instrument in which this term is used.
P 109
The deductive method already suggests that an ICSID tribunal should apply such an
objective definition. The intrinsic meaning approach goes further and suggests that the
term ‘investment’ should be interpreted likewise also for the purposes of the application
of the investment treaty. In other words, irrespective of the definition that the investment
treaty provides as to the term ‘investment’, this notion should be given the same
objective, universal and self-standing meaning under both the ICSID Convention and the
investment treaty. Differently from the consensual approach, however, this time, it is not
the meaning in the investment treaty that applies to ICSID jurisdiction but the objective
meaning given to the term, such as the definition adopted in the Salini test, that applies
to the understanding of investment under the investment treaty.
Obviously, any limitations or reservations in the treaty as to the term ‘investment’ may
determine the scope of application of the treaty. Indeed, for example, if the treaty
considers shareholding of no less than 10% as an investment, an investment involving a
5% shareholding in a company would not be covered and protected by the treaty. This is
not however because a 5% shareholding does not objectively constitute an investment
but because the treaty provides a limitation on its scope of application.
One of the main supports for this approach is the award in KT Asia Investment v. Republic
of Kazakhstan. The tribunal first noted that the absence of a definition of ‘investment’
within the ICSID Convention implies that the ordinary meaning of the term should be
given to the term ‘investment’ under Article 31(1) of the Vienna Convention on the Law of
Treaties rather than a special meaning under Article 31(4). (28) The tribunal explained
that this ordinary meaning is an objective one and is inherent to the term ‘investment’
both under the ICSID Convention (29) and under the investment treaty. (30) Accordingly,
the meaning of the term ‘investment’ should be the same and uniform under the ICSID
Convention and the investment treaties; investment treaties do not modify the inherent
meaning of the term ‘investment’.
The award rendered by the Romak v. Uzbekistan tribunal is probably among the most
seminal awards with respect to the notion of ‘investment’ in investment treaty arbitration
case law. The claim was brought in non-ICSID arbitration under UNCITRAL Arbitration
Rules and based on the Switzerland-Uzbekistan BIT. The respondent State objected to
the tribunal’s jurisdiction, arguing that the claimant did not own an investment. (31) Since
the claimant relied on the respondent State’s consent in the BIT, the tribunal had to
ascertain whether the underlying transaction satisfied the requirement of having an
‘investment’ under the BIT. In order to do so, the tribunal had to interpret the term
‘investment’ as found in Article 1(2) of the BIT. The tribunal indicated that it would resort
P 110 to the ordinary meaning of the term. (32) Referring to the Black’s Law Dictionary, the
tribunal indicated that the ordinary meaning of ‘investment’ is ‘the commitment of funds
or other assets with the purpose to receive a profit, or ‘return’, from that commitment of
capital’. (33)
The reason why the Romak v. Uzbekistan award is considered a seminal award is because,
despite being a non-ICSID arbitration, it required the claimant to demonstrate a
transaction that would be objectively qualified as an ‘investment’. The tribunal was not
satisfied with the claimant’s argument that the dispute concerned assets that fell within
one or more of the categories listed in the definition of ‘investment’ in Article 1(2) of the
investment treaty. (34) The tribunal asserted that claimant’s approach would deprive the
term ‘investment’ of any inherent meaning. For the tribunal, the term ‘investment’ has a
meaning in itself, an intrinsic meaning that cannot be ignored while applying the
definition provided by the investment treaty. (35) In other words, there should not be a
mechanical and literal application of the categories listed in the investment treaty’s
provision defining ‘investment’. (36) The tribunal explained, for instance, that although
some ‘claims to money’ could constitute an ‘investment’, not all such assets would do, as
those are simply illustrations of assets that could be invested. (37) The tribunal
concluded that the claimant did not own an investment; the transaction underlying the
dispute was a sale contract, a one-off commercial transaction that could not be
considered an ‘investment’. (38)
A completely opposite approach may be found in Stati v. Kazakhstan. The claim was
brought under the ECT before a non-ICSID tribunal. The tribunal observed that the ECT
includes an ‘extremely broad definition’ in contrast to the ICSID Convention, which does
not contain any definition. (39) The tribunal rejected applying the guidelines and tests
developed in the ICSID jurisprudence, including the Salini test, in relation to the term
‘investment’ to the interpretation of the same term used in the ECT. (40) The tribunal’s
finding that ‘investment’ has different meanings under the ICSID Convention and under
investment treaties may be found controversial.
[C] Constituent Elements of the ‘Investment’

The Salini test mentioned above is the leading example of the conceptualisation of the
‘investment’ through the deductive method. As explained above, this method proposes a
definition of ‘investment’. This definition includes cumulative constitutive elements,
each of which is considered a separate requirement for the tribunal to establish its
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jurisdiction.
P 111
The Salini Tribunal enumerated the constitutive elements of the investment as follows: (1)
contributions, (2) a certain duration of performance of the contract, (3) participation in
the risks of the transaction, (4) contribution to the economic development of the host
state. (41) Although this test has been followed by many tribunals, an important number
of tribunals added new constitutive elements into the definition of ‘investment’ or
removed some elements, most specifically questioned whether an investment
necessarily involves the fourth element, i.e., contribution to the economic development
of the host state.
Although some tribunals added new constituent elements to the Salini test, such new
tests developed by these tribunals have not always found much support from subsequent
investment tribunals. An example is that a few tribunals imposed a higher threshold for
the satisfaction of the fourth element of the ‘investment’; they required that the
contribution to the economic development of the host state should be significant. For
instance, the annulment committee in Patrick Mitchell v. Democratic Republic of Congo
held that a legal consulting service might be considered an investment only if it
contributes to the interests of the host state, e.g., in case it provides legal services for
new incoming foreign investors. (42) Accordingly, a similar legal consulting business
would not, under this approach, satisfy the jurisdictional requirements of an ICSID
tribunal if the legal service does not concern transactions having a positive impact on the
national economy. That is to say, a family or probate law practice would not qualify as an
investment. It is rather controversial to draw such distinction between the same services
based on the content of the consultancy service rather than on the act of investing into
this practice. Underpinning its theoretical grounds on the Preamble of the ICSID
Convention, (43) this approach considers that the substantial contribution of the
investment to the economy of the host state is a strict independent element and an
essential characteristic of the investment. (44) Yet, neither the ICSID Convention nor the
investment treaties generally impose such a threshold.
Another test which introduces additional elements into the definition of ‘investment’ is
the Phoenix test. This approach adds two additional elements to the four-prong Salini
test. Accordingly, an investment needs to be legal (not in violation of the laws of the host
state), and it has to be made in good faith. (45) As a consequence, the Phoenix tribunal
adopted a test composed of six elements (four elements of the Salini test + investment in
accordance with the laws of the host state + bona fide investment). (46) The main idea
P 112 behind the Phoenix test is to exclude investments that the international investment
regime does not protect. (47) Rather than establishing the existence of an investment,
this test aims to determine whether the investor has made a ‘protected investment’.
In contradistinction with the above approaches, some tribunals adopted an approach
based on the ordinary or economic meaning of ‘investment’, which removes an element
from the four-prong Salini test. While seeking to find the ordinary meaning of the term
‘investment’, this approach considers that this term is not originally a legal term of art
but rather belongs to another discipline, namely, economics. Referring to the first three
criteria of investment under the Salini test, i.e., (1) contribution, (2) a certain duration,
and (3) an element of risk, (48) the tribunal in Saba Fakes v. Turkey explained that these
criteria would be necessary and sufficient to define an investment. Considering the
ordinary meaning of the term, the tribunal further explained both in the context of a
complex international transaction and of the education of one’s child, ‘one is required to
contribute a certain amount of funds or know-how, one cannot harvest the benefits of
such contribution instantaneously, and one runs the risk that no benefits would be
reaped at all, as a project might never be completed or a child might not be up to his
parents’ hopes or expectations’. (49) Accordingly, one may define ‘investment’ as
dedication of some assets (element of contribution) according to a plan (element of
duration) in order to achieve some benefits (element of risk). (50)
A support for the ordinary meaning approach in the context of investment claims
involving Central Asian States is the award in the KT Asia Investment v. Kazakhstan case.
The tribunal required that the investment comprises the following elements: a
contribution of money or assets (a commitment of resources), duration and risk. (51) The
tribunal noted that the element of ‘expectation of a commercial return’ should be
treated as part of the risk element. (52) In relation to the ‘contribution to the host State’s
development’, the tribunal was of the opinion that this was not a separate component of
the ‘investment’, but such a contribution would be rather a consequence of a successful
investment. (53) Therefore, this element should not be included within the test and
definition of the ‘investment’; it is not expected from the investor to demonstrate that
the transaction in question contributes to the economy of the host State.
Another case involving Central Asian States which supports the approach that
P 113 contribution to the host State’s development should not be considered a constituent
element of the definition of the ‘investment’ is the İçkale v. Turkmenistan award. (54) The
tribunal explained that the fact that the Preamble of the ICSID Convention specifically
mentions international cooperation for economic development does not infer that such
contribution is expected from every single investment; it is rather the role of foreign
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private investment ‘as a whole’ or ‘in aggregate’ to contribute to the development of the
economy. (55)
Among the cases brought against Central Asian States, a different approach to the
understanding of ‘investment’ may be found in Petrobart v. Kyrgyzstan I. In a non-ICSID
arbitration based on Kyrgyz Foreign Investment Law, the tribunal in Petrobart v.
Kyrgyzstan I considered that ‘foreign investment’ is usually defined as ‘a transfer of
tangible or intangible property from one country to another for the purpose of use in that
country with a view to generating profit, or at least wealth, under the control of the owner
of the property’. (56) This definition combines the features of a version of the ordinary
meaning of the ‘investment’ with the requirement that foreign investment should involve
a transfer of tangible or intangible property from one country to another. Although this
determination of the tribunal could be questionable, the tribunal still distinguished the
transaction involved in a foreign investment from ‘export transactions where goods are
sold by manufacturers, or owners, in one state to traders or users in another state’. (57)
The tribunal underscored the nature of the investment involving ‘a more permanent
relationship between the foreign investor and the host state’ than a regular international
sale transaction. (58)
5.03 ASSETS AND RIGHTS CONSTITUTING AN ‘INVESTMENT’

In theory, any right or asset could constitute an ‘investment’. In parallel to this
understanding, the vast majority of international investment treaties list various rights
and assets as an investment without aiming to provide a closed number list; the list is not
exhaustive and is to provide examples of investment. (59) Similarly to this understanding
under international investment treaties, a tribunal constituted under the Kyrgyz
Investment Law observed that the concept of ‘investment’ was extensive under the
applicable instrument: it stated that the relevant provision provided ‘a particularly wide
definition of “investment”’ and included ‘contributions of all kinds of assets, owned or
controlled directly or indirectly by an investor’. (60)
There have been, so far, some investment treaty arbitration cases where the tribunal had
P 114 to discuss whether the particular asset held by the investors could be considered an
investment under the ICSID Convention and/or the applicable investment treaty.
Investment claims concerning sovereign debt instruments held by investors usually lead
to such discussions. (61)
[A] Contractual Rights as Investment

Investment tribunals constituted in cases initiated against Central Asian States adopted
different (and sometimes rather controversial) approaches when they considered
whether a contractual right could form an investment.
The first claim initiated by Petrobart was brought on the basis of the Kyrgyz Foreign
Investment Law. Petrobart contractually undertook delivery of gas condensate. The
Foreign Investment Law qualified ‘foreign investments’ as ‘investments appearing as
contributions of foreign investors into objects of economic activity in the territory of the
Kyrgyz Republic’. (62) After having carefully examined the meaning of the terms used in
this definition under Kyrgyz law, the tribunal noted that the term ‘contribution’ has a
legal-technical meaning in Kyrgyz law and means the provision of capital to a company,
or partnership, in exchange for stock or shares in the company or partnership in question.
(63) In the absence of a contribution by Petrobart, as the term is understood under Kyrgyz
law, the tribunal concluded that the claimant did not make an investment within the
meaning of the Foreign Investment Law and rejected its jurisdiction. (64)
The second claim initiated by Petrobart was brought on the basis of the Energy Charter
Treaty (ECT). (65) The claimant argued that the contract, its claim for money and the
Kyrgyz domestic court judgment, which was in favour of Petrobart, constituted an
investment under the ECT. (66) The contract was for the delivery of gas condensate. This
was a sales contract, and the transaction did not involve any transfer of money or
property as capital in a business in the Kyrgyz Republic. (67) The tribunal noted that
whereas the tribunal in Petrobart I did not find that there was a foreign investment under
the Foreign Investment Law, the task of the tribunal in Petrobart II was to determine
whether there was an investment under the definition in the ECT. (68) In the tribunal’s
view, the rights provided for in the sales contract and confirmed in the domestic court
judgment constituted investment within the meaning given to this term under the ECT. To
be more specific, these rights were considered claims to money and claims to
P 115 performance. (69) The tribunal underscored that claims to money would be assessed as
investment even in cases where they were not part of a long-term business engagement
in another country. (70) Consequently, the tribunal held that a right conferred by contract
to undertake an economic activity concerning the sale of gas condensate was an
investment under the definition of ‘investment’ of the ECT; it also accepted that the right
to be paid for such a sale was within the definition of investment. (71)
The tribunal’s conclusion is very controversial; it accepted a sale contract and the right to
payment under this contract to be an investment despite almost a uniform approach
which suggests that a sale would almost never constitute an investment. The tribunal was
satisfied that the claimant made an investment by the simple fact that the claimant had
7
a contractual right without analysing that this asset was dedicated to an investment. The
tribunal ignored the fact that the investment treaty lists some assets but does not
actually define the term ‘investment’, and these assets listed in the ECT could not in and
of themselves constitute an investment without being committed to an actual
investment.
Another investment dispute under the ECT arising out of an investment made through
contracts is Al-Bahloul v. Tajikistan. Differently, however, from the scenario in Petrobart v.
Kazakhstan, where the claimant was a party to a sale agreement, the claimant in Al-
Bahloul v. Tajikistan concluded six oil and gas exploration agreements, according to
which the claimant had to finance, at his own risk, the exploration works. (72) The tribunal
considered these agreements as ‘claims to performance pursuant to contract having an
economic value and associated with an Investment’ under Article 1(6)(c) of the ECT and
accepted that they constituted ‘investment’ within the meaning of the ECT. (73)
The investment underlying the Stati v. Kazakhstan case is similar. This ECT claim also
arose out of licences and contracts for the exploration and production of hydrocarbons,
and claimants funded the initial stages of the operations. (74) The tribunal considered
these rights, as well as the reinvestment of the profits, as investments under Article 1(6) of
the ECT. (75)
In Adem Dogan v. Turkmenistan, the tribunal held that contractual interests in a future
stream of income from a company constituted an investment as defined under the
applicable investment treaty. The annulment committee considered that this right, in the
absence of a category generally including ‘contractual interests’, could fall within the
limb ‘shares and other kinds of company interests’ of the investment definition of the
investment treaty. Although these rights would not qualify as ‘shares’, the annulment
P 116 committee found that the words ‘other kinds of company interests’ are wide enough to
cover any interest in a company, including a contractual arrangement over the company’s
future income. (76)
[B] Nominal Value Investments/Shell Companies

The case law developed under investment claims based on investment treaties
concluded with Central Asian States or domestic investment laws of these States in
relation to nominal value investments is relatively rich and surprisingly interesting.
In the ICSID claim initiated by KT Asia Investment, the tribunal, after having determined
that it would follow the ordinary meaning approach as to the definition of the
‘investment’, had to examine whether the claimant’s investment met this objective test.
The tribunal in KT Asia Investment v. Kazakhstan noted that the ultimate beneficial owner
of the claimant was a private businessman and Kazakh national and that the claimant KT
Asia Investment had to follow this Kazakh national’s instructions at all times. (77) The
tribunal observed that the claimant was a shell company set up to temporarily hold this
businessman’s shares in a Kazakh bank. (78) It acquired these shares from other
companies owned and controlled by the same businessman. (79) The tribunal also found
that the claimant never had funds of any significance in its bank account, (80) and it did
not have any activity other than holding the shares, with the exception of initiating the
investment claim. (81) The price determined for the purchase of these shares was also
significantly (about eight times) less than the market value of these shares, (82) and this
price was not even actually paid because the claimant bought these shares on credit
through loans given by the seller companies of the Kazakh businessman. (83) The loans
were granted without any security, and the claimant never repaid them. (84) Based on
these facts and in relation to the first element of the applicable test for ‘investment’, the
element of contribution, the tribunal addressed the question of whether the claimant
made any injection of capital or any other original or subsequent contribution during or
after the acquisition of the shares in question. (85) The claimant did not dispute that it
did not make any injection of fresh capital but attempted to rely on the contribution
made by the Kazakh businessman. (86) The tribunal observed that there might be nothing
unlawful with the Kazakh businessman’s shifting assets from one to the other, but it would
not be possible then to claim that these companies formed a conventional commercial
P 117 group for the purposes of benefitting from investment treaty protection. (87)
Furthermore, the tribunal considered that the claimant’s reliance on the original
contribution made by the Kazakh businessman actually contradicted its claim that the
claimant is a separate legal entity for purposes of nationality. (88) The tribunal thus
concluded that the claimant did not make any contribution and decided that it did not
have jurisdiction to hear the dispute. (89) Besides, the tribunal noted that the claimant
company’s intention was to hold the shares temporarily, and the investment was
supposed to last a very short period of time. (90) This would demonstrate that the
claimant was simply a vehicle for the realisation of the plans of the beneficial owner. The
tribunal observed that the claimant did not have any intention to hold the assets for any
material time; the shares were transferred to this company for their ultimate sale to a
third party. The tribunal concluded that such a short-term project would not meet the
duration element of the ‘investment’. (91) In the absence of any contribution, the tribunal
also came to the conclusion that the transaction in question did not involve any risk
element for the claimant. (92)
Another interesting case concerning nominal value investment is Caratube v. Kazakhstan
8
I. The claim is based on the bilateral investment treaty concluded between Kazakhstan
and the USA. The claimant argued that it is a Kazakh company under the control of a US-
national investor and should be treated as a US national under Article 25(2)(b). (93) In his
witness statement, however, the US national, whose nationality was invoked for the
purposes of establishing the jurisdiction of the tribunal, admitted that he did not
participate in a day to day running of the Kazakh company. (94) As a result of this
acknowledgement, the tribunal found that there was not sufficient evidence of exercise of
actual control over the claimant Kazakh company by the US national. (95) The tribunal
noted, however, that the applicable investment treaty required the US national to own or
control his investment. Accordingly, although the US national did not control the
claimant company incorporated in the host State, the claimant company could be
deemed as a US national for the purposes of jurisdictional considerations in case a US
national owned the Kazakh company. (96) The tribunal thus questioned whether the
Kazakh company was an investment of the US national. The tribunal found that the
person who acquired the shares either paid a nominal price for these shares or, as the
claimant could not provide evidence of any payment, did not even pay such price. (97)
P 118 Following an analysis of earlier investment treaty cases, the tribunal considered that
the lack of almost any contribution by the person who paid only a nominal price for the
shares would indicate that the investment was not an economic arrangement. (98) In the
tribunal’s view, such an arrangement would not be covered by the term ‘investment’ of
the investment treaty, and the tribunal would not have jurisdiction to hear disputes
arising out of such arrangement, which is not protected by the treaty. (99)
The tribunal in Caratube v. Kazakhstan II, however, seems to have adopted an opposite
approach. In relation to control that should be exercised for the purposes of Article 25(2)
(b) of the ICSID Convention, the tribunal asserted that an actual exercise of control over
the company was not required to meet the threshold of the provision. (100) The tribunal
considered that the claimant company was owned by a US national and another
foreigner, and whereas the respondent argued that the ultimate beneficiary was someone
else, there was no challenge toward the company being controlled by a national of
another ICSID Contracting State. (101) The tribunal reached the conclusion that the
claimant company was at all relevant times under foreign control within the meaning of
Article 25(2)(b) of the ICSID Convention, and it should thus be considered a US national.
(102) The tribunal further observed that the respondent State did not question that the
US national owned 92% of the shares of the claimant company but whether he actually
paid an adequate price for the shares. (103) The tribunal was not convinced that the US
national was a mere puppet fronting for the real parties in interest. (104) Despite the
interest-free financing obtained by a Lebanese company that belonged to the US
national’s brother-in-law, the tribunal did not accept that the claimant, a Kazakh
company, was in reality controlled by this Lebanese company rather than the US
national, who was the majority shareholder. (105) The tribunal also observed that
Lebanon became an ICSID Contracting State before the US national’s acquisition of the
shares and many years before the dispute arose. (106) Accordingly, the tribunal held that
the claimant company was under foreign control and it had jurisdiction to hear the
dispute under the ICSID Convention and the dispute settlement clause of the contract
between the parties. (107)
In the Garanti Koza v. Turkmenistan case, the claimant was an English company, and it
brought an ICSID claim under the Turkmenistan-UK BIT. This company entirely belonged
to a Turkish company. Due to this structure, the respondent argued that the claimant,
being an English company, did not actively make the investment (it was rather the
Turkish company that made the investment). The tribunal rejected the argument that the
P 119 claimant was merely a passive investor, as the tribunal rejected the characterisation
that the claimant was a façade for the Turkish company. (108) Although the English
claimant used personnel, experience, and technology provided by the Turkish company,
the tribunal found out that it was the English company who negotiated construction
contracts to build some highway bridges in Turkmenistan and who actually engaged in
the construction of these bridges. (109) Observing that the claimant made an investment
of equipment and material resources for the carrying out of the construction projects, the
tribunal concluded the English company made an investment in Turkmenistan within the
meaning of the investment treaty and, adopting the consensual approach under Article
25 of the ICSID Convention. (110)
5.04 LEGALITY OF THE INVESTMENT

Whether or not the investment has been made legally and in compliance with the host
State’s law is often treated as part of the considerations concerning jurisdiction ratione
materiae. Tribunals often distinguish illegality at the time of the making of the
investment, which they consider a jurisdictional problem, from unlawful acts of the
investor after the investment is made, which they consider as parts of the merits.
As explained above, the legality of the investment is not mostly considered as part of the
definition of the ‘investment’ by most tribunals, with the exception of the six-prong test
adopted by the tribunal in the Phoenix case. The requirement that investment be made
in compliance with the host State law is, however, usually envisaged as a condition of the
application of investment treaties. As a result of such proviso, the legality of the
investment becomes a requirement concerning the material scope of the jurisdiction of
9
investment tribunals, as the consent of the host State depends on the fact that investor
has made its investment in compliance with the host State’s law.
The tribunal in Rumeli Telekom v. Kazakhstan explained this requirement in the following
terms: ‘in order to receive the protection of a bilateral investment treaty, the disputed
investments have to be in conformity with the host State laws and regulations’. (111) The
tribunal did not find that the investment was fraudulent or violated any laws or
regulations of the host State. (112)
In Oxus Gold v. Uzbekistan, the tribunal agreed with the approach adopted by the Phoenix
v. Czech Republic tribunal. It stated that ‘an investment may not qualify for protection
under a BIT, where such investment was made in breach of relevant laws and regulations,
including international treaties but also national law of the host State’. (113) The tribunal
then noted that it is generally accepted that only in case the illegality affects the making
P 120 of the investment, the claimant would lose the protection granted under the
investment treaty; if the illegality occurs during the implementation or operation of the
business, namely after the investment has been made, the illegality will not preclude the
transaction from being qualified as an ‘investment’ under the treaty. (114) It is noteworthy
that the tribunal discussed this issue as a matter concerning the admissibility of the
claimant’s claims and not as a jurisdictional matter. (115)
If there is not such a proviso in the text of the applicable investment treaty, the illegality
of the investment would not be considered part of the discussions concerning the
jurisdiction of the tribunal. (116) The tribunal in the Stati v. Kazakhstan case explained
that the ECT does not contain the requirement that the investment be lawful for the
tribunal established under its dispute settlement clause would have jurisdiction. The
tribunal continued, ‘if the contracting states had intended there to be such a
requirement, they could have written it into the text of the Treaty’. (117) By the same
token, the tribunal in the Stans Energy v. Kyrgyzstan II case observed that the definition
of ‘investment disputes’ in the Kyrgyz Investment Law did not contain any reference,
which would suggest that violations of the host State law should not be within the
tribunal’s jurisdiction. On the contrary, the tribunal observed that reference to ‘any
dispute’ would suggest otherwise, as the term is wide enough to cover any dispute. (118)
The most authoritative statement in this line was probably made by the tribunal in the
Metal-Tech v. Uzbekistan case. The tribunal clearly distinguished its approach from the
one adopted in the Phoenix v Czech Republic case. It held that the jurisdictional
requirement under the ICSID Convention does not impose that the investment be made
in good faith or in accordance with host State law. (119) The tribunal further noted that
the contracting parties to an investment treaty may bring such a limitation by
introducing a specific language which requires that the investment be made in
accordance with the laws and regulations of the host State. (120) The inclusion of such
language in the investment treaty would not however change the fact that the fifth and
sixth elements of the Phoenix test are not part of the objective definition of ‘investment’
under the ICSID Convention. Therefore, the tribunal concluded that the claimant’s
contribution met the objective definition of ‘investment’ under the ICSID Convention
without analysing whether the investment had been made in accordance with host State
law. (121) The tribunal then turned to the question of whether the condition of consent
was satisfied. Within that context, the tribunal noted that for establishing the host State’s
consent to submit the dispute to investment arbitration, the requirements set out in the
investment treaty should be satisfied. (122) One of those requirements was the legality
requirement. The tribunal determined that the legality of investment is required at the
P 121 time when the investment was made. (123) Accordingly, the investment should be legal
when it was initially made. After having examined the facts, the tribunal found that the
making of investment was accompanied by corruption in violation of the host State law,
and thus it was not made in accordance with the host State law. (124) Since the host
State’s consent was restricted to disputes concerning investments made in accordance
with host State law and the investment in the present case was not made in accordance
with host State law due to corruption, the tribunal reached the conclusion that the
dispute did not fall within the scope of the host State’s consent in the investment treaty.
(125)
A similar analysis was made by the tribunal in the Kim v. Uzbekistan case. The applicable
investment treaty included the legality requirement for the investment. The tribunal
discussed the legality of the investment in the context of this specific requirement in the
treaty. (126) It stated that it did not need to discuss a parallel legality requirement under
international law. (127) In any case, the tribunal did not discuss whether the legality of
the investment is an element of the term ‘investment’ that a claimant needs to satisfy in
order to establish the jurisdiction of an ICSID tribunal. In relation to the temporal
dimension of the legality requirement, similar to the Metal-Tech v. Uzbekistan tribunal,
this tribunal also held that the legality of investment is a requirement at the time when
the investment was made. (128)
The tribunal in Liman v. Kazakhstan distinguished an invalid or void transaction from a
voidable transaction in the making of the investment. The tribunal explained that since
the transfer of a licence was not invalid but only voidable, the investment did not fall
outside the scope of the host State’s consent and, thus, the tribunal’s jurisdiction. (129)
Elsewhere, the tribunal also noted that it would not have jurisdiction over investments
10
made by fraud and bribery, which would be violating international public policy. (130)
5.05 CONCLUSION
This chapter analyses how to conceptualise the term ‘investment’ and what an
‘investment’ consists of. This chapter focuses on the awards rendered by tribunals in
investment claims brought against Central Asian States.
An analysis of these cases would show that the case law is far from being considered
uniform when it comes to the understanding of the term ‘investment’. Even tribunals
hearing disputes with a similar or the same background often adopted contradictory
P 122 views. This spectrum of approaches adopted by these tribunals is not, however,
specific to the region or to investment treaties concluded by Central Asian States. These
approaches and conclusions reflect various opinions spelt globally in the scholarly
writing and in the investment arbitration case law. This said, some Central Asian
investment cases are considered to be the pioneer of some views and approaches in
investment arbitration on discussions concerning the material jurisdiction of tribunals
and the understanding of ‘investment’ which makes focusing on the Central Asian
experience a worthy endeavour.
P 122
References
1) Concluded on 18 March 1965, entered into force on 14 October 1966, 575 UNTS 159.
2) Report of the Executive Directors on the Convention on the Settlement of
Investment Disputes Between States and Nationals of Other States, para. 27.
3) Romak S.A. v. The Republic of Uzbekistan, PCA Case No. AA280, Award, 26 November
2009, para. 180. See also Abaclat and Others v. The Argentine Republic, ICSID Case No.
ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011, para. 347.
4) KT Asia Investment Group B.V. v. Republic of Kazakhstan, ICSID Case No. ARB/09/8,
Award, 17 October 2013, para. 166.
5) E Gaillard, ‘Identify or Define? Reflections on the Evolution of the Concept of
Investment in ICSID Practice’ in Ch Binder, et al. (eds), International Investment Law
for the 21st Century: Essays in Honour of Christoph Schreuer (OUP, 2009) 403, 407-411.
6) CH Schreuer, et al., The ICSID Convention: A Commentary (CUP, 2nd edn, 2009), 128.
7) Schreuer (supra n. 6), 128.
8) Gaillard (supra n. 5), 410.
9) Salini Costruttori S.p.A and Italstrade S.p.A. v. Kingdom of Morocco, ICSID Case No.
ARB/00/4, Decision on Jurisdiction, 23 July 2001, para. 52.
10) Stans Energy Corp and Kutisay Mining LLC v. Kyrgyz Republic, Moscow Chamber of
Commerce and Industry Arbitration No. A-2013/29, Award, 30 June 2014 (Stans Energy
v. Kyrgyzstan I), p. 86.
11) Stans Energy v. Kyrgyzstan I (supra n. 10), p. 87.
12) Stans Energy v. Kyrgyzstan I (supra n. 10), p. 87.
13) For this denomination, see M Dekastros, ‘Portfolio Investment: Reconceptualising the
Notion of Investment under the ICSID Convention’ (2013) 14 JWIT 286, 294.
14) Biwater Gauff (Tanzania) Ltd. V. United Republic of Tanzania, ICSID Case No.
ARB/05/22, Award, 24 July 2008, paras 316-317.
15) CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8,
Decision on the Application for Annulment, 25 September 2007, para. 71. See also
Malaysian Historical Salvors (MHS) v. The Government of Malaysia, ICSID Case No.
ARB/05/10, Decision on the Application for Annulment, 16 April 2009, paras 72-74.
16) For this criticism, see Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20,
Award, 14 July 2010, para. 108.
17) Joy Mining Machinery Limited v. The Arab Republic of Egypt, ICSID Case No. ARB/03/11,
Award on Jurisdiction, 06 August 2004, paras 49-50.
18) Salini v. Morocco (supra n. 9), para. 52.
19) Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award, 19 December
2016, para. 236.
20) Garanti Koza v. Turkmenistan (supra n. 19), para. 237.
23) See Garanti Koza v. Turkmenistan (supra n. 19), para. 241.
24) Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of
Kazakhstan, ICSID Case No. ARB/13/13, Award, 27 September 2017 (Caratube v.
Kazakhstan II), para. 635.
25) Caratube v. Kazakhstan II (supra n. 24), para. 637.
27) Vladislav Kim and Others v. Republic of Uzbekistan, ICSID Case No. ARB/13/6, Decision
on Jurisdiction, 8 March 2017, para. 242.
28) KT Asia Investment v. Kazakhstan (supra n. 4), para. 165.
11
31) Romak v. Uzbekistan (supra n. 3), para. 163.
34) Romak v. Uzbekistan (supra n. 3), paras 178-179.
39) Anatolie Stati, Gabriel Stati, Ascom Group S.A. and Terra Raf Trans Traiding Ltd. v. The
Republic of Kazakhstan, SCC Arbitration V (116/2010), Award, 19 December 2013, para.
806.
40) Stati v. Kazakhstan (supra n. 39), para. 806.
41) Salini v. Morocco (supra n. 9), para. 52.
42) Patrick Mitchell v. The Democratic Republic of Congo, ICSID Case No. ARB/99/7,
Decision on the Application for Annulment, 1 November 2006, para. 39.
43) The first paragraph of the Preamble reads as: ‘Considering the need for international
cooperation for economic development, and the role of private international
investment therein.’
44) See Patrick Mitchell v. DRC (supra n. 43) paras 29-30 and 33; Malaysian Historical
Salvors (MHS) v. The Government of Malaysia, ICSID Case No. ARB/05/10, Award on
Jurisdiction, 17 May 2007, para. 123.
45) Phoenix Action v. The Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009,
paras 100-113.
46) Phoenix v. Czech Republic (supra n. 45), para. 114.
47) Phoenix v. Czech Republic (supra n. 45), para. 79.
48) These three criteria have been frequently referred to by previous and later
investment tribunals adopting the ordinary meaning approach. See also Consorzio
Groupement LESI-Dipenta v. People’s Democratic Republic of Algeria, ICSID Case No
ARB/03/8, Award, 10 January 2005, para. 13(iv) at p. 19; LESI S.p.A and Astaldi S.p.A v.
People’s Democratic Republic of Algeria, ICSID Case No ARB/05/3, Decision, 12 July
2006, para. 72(iv); Victor Pey Casado and President Allende Foundation v. Republic of
Chile, ICSID Case No ARB/98/2, Award, 8 May 2008, para. 232; Romak v. Uzbekistan
(supra n. 3), para. 207.
49) Fakes v. Turkey (supra n. 16), para. 110.
50) B Demirkol, ‘The Notion of ‘Investment’ in International Investment Law’ (2015) 1(1)
Turkish Commercial Law Review 41, 50.
54) İçkale İnşaat Limited Şirketi v. Turkmenistan, ICSID Case No. ARB/10/24, Award, 8
March 2016, para. 291.
55) İçkale v. Turkmenistan (supra n. 54), para. 291.
56) Petrobart Limited v. The Kyrgyz Republic, Award, 13 February 2003 (Petrobart I), p. 50.
57) Petrobart v. Kyrgyzstan I (supra n. 56), pp. 50-51.
58) Petrobart v. Kyrgyzstan I (supra n. 56), p. 51.
59) See, e.g., İçkale v. Turkmenistan (supra n. 54), para. 290.
60) Stans Energy Corp and Kutisay Mining LLC v. Kyrgyz Republic, PCA Case No. 2015-32,
Award, 20 August 2019 (Stans Energy v. Kyrgyzstan II), para. 418.
61) See, e.g., Abaclat v. Argentina (supra n. 3); Postova Banka, A.S. and Istrokapital SE v.
The Hellenic Republic, ICSID Case No. ARB/13/8, Award, 9 April 2015.
62) See, Petrobart v. Kyrgyzstan I (supra n. 56), p. 46.
65) Petrobart Limited v. The Kyrgyz Republic, SCC Case No. 126/2003, Arbitral Award, 29
March 2005 (Petrobart II).
66) Petrobart v. Kyrgyzstan II (supra n. 65), p. 68.
70) Petrobart v. Kyrgyzstan II (supra n. 65), pp. 71 and 72.
72) Mohammad Ammar Al-Bahloul v. Republic of Tajikistan, SCC Case No. V (064/2008),
Partial Award on Jurisdiction and Liability, 2 September 2009, paras 136-138.
73) Al-Bahloul v. Tajikistan (supra n. 72), paras 139-140.
74) Stati v. Kazakhstan (supra n. 39), paras 808-809.
76) Adem Dogan v. Turkmenistan, ICSID Case No. ARB/09/9, Decision on Annulment, 15
January 2016, paras 117-119.
83) KT Asia Investment v. Kazakhstan (supra n. 4), paras 183-184.
12
93) Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No.
ARB/08/12, Award, 5 June 2012 (Caratube v. Kazakhstan I), paras 316-321.
94) Caratube v. Kazakhstan I (supra n. 93), para. 406.
97) Caratube v. Kazakhstan I (supra n. 93), paras 436-437. The US national acquired 92%
of the shares of the claimant for USD 6,500 whereas the claimant had investment
around USD 10 million to a contract and later brought this investment claim where it
claimed over USD 1 billion.
100) Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of
Kazakhstan, ICSID Case No. ARB/13/13, Award, 27 September 2017 (Caratube v.
Kazakhstan II), para. 619.
102) Caratube v. Kazakhstan II (supra n. 100), paras 623-624.
107) Caratube v. Kazakhstan II (supra n. 100), paras 649-650.
109) Garanti Koza v. Turkmenistan (supra n. 19), paras 232-233.
110) Garanti Koza v. Turkmenistan (supra n. 19), paras 234 and 241-242.
111) Rumeli Telekom A.S. and Telsim Mobil Telekomünikasyon Hizmetleri A.S. v. Republic of
Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008, para. 319.
112) Rumeli v. Kazakhstan (supra n. 111), para. 320.
113) Oxus Gold v. The Republic of Uzbekistan, UNCITRAL (1976), Final Award, 17 December
2015, para. 706.
114) Oxus Gold v. Uzbekistan (supra n. 113), para. 707.
115) See, e.g., Oxus Gold v. Uzbekistan (supra n. 113), para. 710.
118) Stans Energy v. Kyrgyzstan II (supra n. 60), para. 542.
119) Metal-Tech Ltd v. The Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, 4
October 2013, paras 126-127.
120) Metal-Tech v. Uzbekistan (supra n. 119), para. 127.
126) Kim v. Uzbekistan (supra n. 27), paras 363-369.
127) Kim v. Uzbekistan (supra n. 27), para. 370.
128) Kim v. Uzbekistan (supra n. 27), para. 374.
129) Liman Caspian Oil BV v. Republic of Kazakhstan, ICSID Case No. ARB/07/14, Award, 22
June 2010, para. 187.
130) Liman v. Kazakhstan (supra n. 129), para. 194.
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Investment Treaty

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Investment Treaty

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Document information Chapter 5: Material Scope of Application: Definition of

5.02 METHODOLOGY FOR THE ASSESSMENT OF WHAT QUALIFIES AS AN

[A] Conceptualisation of ‘Investment’

[C] Constituent Elements of the ‘Investment’

5.03 ASSETS AND RIGHTS CONSTITUTING AN ‘INVESTMENT’

[A] Contractual Rights as Investment

[B] Nominal Value Investments/Shell Companies

5.04 LEGALITY OF THE INVESTMENT

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