To determine its jurisdiction, an arbitral tribunal must have recourse to the applicable rules on its jurisdiction ratione materiae, ratione personae and ratione temporis.
As a result, the arbitral tribunal will have to look at the existence of an investment pursuant to the applicable definition of "investment" as well as the existence of a "dispute" in connection with the investment. In bifurcated proceedings, the prima facie test2 has often been applied to determine the jurisdiction ratione materiae of arbitral tribunals.3
Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, 16 September 2003, para. 8.10; Swissbourgh Diamond Mines (Pty) Limited, Josias Van Zyl, The Josias Van Zyl Family Trust and others v. The Kingdom of Lesotho, PCA Case No. 2013-29, Judgment of the High Court of Singapore on the Set Aside Application [2017] SGHC 195, 14 August 2017, para. 104.
Sheppard, A., Chapter 23 The Jurisdictional Threshold of a Prima-Facie Case, in Muchlinski, P.T., Ortino, F. and Schreuer, C. (eds.), The Oxford Handbook of International Investment Law, Oxford University Press, 2008.
Cervin Investissements S.A. and Rhone Investissements S.A. v. Republic of Costa Rica, ICSID Case No. ARB/13/2, Decision on Jurisdiction, 15 December 2014, paras. 320; Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005, para. 197; Impregilo S.p.A. v. Islamic Republic of Pakistan (II), ICSID Case No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, para. 254; Ethyl Corporation v. The Government of Canada, Award on Jurisdiction, 24 June 1998, para. 61.
For arbitral tribunals to assume jurisdiction ratione materiae, there must be an investment.4 Many respondent States have contested the jurisdiction ratione materiae of an arbitral tribunal.4 It is now generally accepted that there is no uniform definition of the term "investment" as suggested by the Salini test.5 Rather, the applicable definition depends on the provisions of the underlying investment agreement. For examples of investment treaty practice defining "investment," see Definition of investment.
Article 26(1) of the Energy Charter Treaty illustrates the above. Pursuant to said provision, ECT tribunals have jurisdiction ratione materiae to hear “[d]isputes (…) relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation (…)”. Hence, all disputes brought before an ECT tribunal must "relate to an investment" of a national of an ECT contracting State in the territory of another ECT contracting State. The term "investment" is defined in Article 1(6) of the Energy Charter Treaty.
In a similar vein, Article 25(1) of the ICSID Convention provides that “[t]he jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment”. In ICSID arbitrations, arbitral tribunals frequently address proprio motu both the definition of an investment in the underlying agreement as well as the definition contained in the ICSID Convention.6 See Double barrelled / Two-fold test.
Bay View Group LLC and The Spalena Company LLC v. Republic of Rwanda, ICSID Case No. ARB/18/21, Respondent’s Request for Bifurcation, 24 May 2019, para. 25; Lion Mexico Consolidated L.P. v. United Mexican States, ICSID Case No. ARB(AF)/15/2, Decision on Bifurcation, 29 May 2017, para. 3; RENERGY S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/14/18, Award, 6 May 2022, para. 511-518; Energoalians LLC v. Republic of Moldova, Judgment of the Paris Court of Appeal, 10 January 2023, para. 43; Komaksavia Airport Invest Ltd. v. Republic of Moldova, SCC Case No. 2020/074, Final Award, 3 August 2022, para. 180.
Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18, Decision on Jurisdiction, 6 July 2007, para. 113; Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan, ICSID Case No. ARB/12/6, Award, 4 May 2021, para. 665; (DS)2, S.A., Peter de Sutter and Kristof De Sutter v. Republic of Madagascar (II), ICSID Case No. ARB/17/18, Award, 17 April 2020, paras. 231-232.
Robert Aleksandrowicz and Tomasz Częścik v. Cyprus, SCC Case No. V 2014/169, Award, 11 February 2017, para. 196; Theodoros Adamakopoulos, Ilektra Adamantidou, Vasileios Adamopoulos and others v. Republic of Cyprus, ICSID Case No. ARB/15/49, Decision on Jurisdiction, 7 February 2020, para. 294; Standard Chartered Bank (Hong Kong) Limited v. United Republic of Tanzania, ICSID Case No. ARB/15/41, Award, 11 October 2019, para. 200; B3 Croatian Courier Coöperatief U.A. v. Republic of Croatia, ICSID Case No. ARB/15/5, Award (Excerpts), 5 April 2019, paras. 593-594, 603.
When the treaty is silent, a Claimant voluntarily disposing of an investment prior to initiating proceedings can still be considered as having an existing investment. See:
The existence of a dispute is a crucial aspect for an arbitral tribunal to assume jurisdiction. Generally, a dispute can be defined as “a disagreement on a point of law or fact, a conflict of legal views or of interests between two persons."7 According to the ICJ’s established caselaw, the existence of a dispute must be subject to objective determination.8 Similar definitions have been expressed by arbitral tribunals in investment disputes.9 For further discussion on the crystallisation of the dispute and its legal nature, see Dispute existence, Sections III and IV.
The Mavrommatis Palestine Concessions, PCIJ Series A. No 2, Judgment (Objection to the Jurisdiction of the Court), 30 August 1924, p. 11; Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004, para. 106; Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/8, Decision on Jurisdiction, 3 August 2004, paras. 159-160; El Paso Energy International Company v. Argentine Republic, ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006, para. 61; Magyar Farming Company Ltd, Kintyre Kft and Inicia Zrt v. Hungary, ICSID Case No. ARB/17/27, Award, 13 November 2019, para. 277.
Nuclear Tests (New Zealand v. France), Judgment, 20 December 1974, para 58; Alleged Violations of Sovereign Rights and Maritime Spaces in the Caribbean Sea (Nicaragua v. Colombia), Judgment - Preliminary objections, 17 March 2016, para. 50; Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v. Russian Federation), Judgment - Preliminary objections, 1 April 2011, para. 30; Obligations concerning Negotiations relating to Cessation of the Nuclear Arms Race and to Nuclear Disarmament (Marshall Islands v. India), Judgment - Jurisdiction of the Court and admissibility of the application, 5 October 2016, para. 36; Obligations concerning Negotiations relating to Cessation of the Nuclear Arms Race and to Nuclear Disarmament (Marshall Islands v. Pakistan), Judgment - Jurisdiction of the Court and admissibility of the application, 5 October 2016, para. 36; Obligations concerning Negotiations relating to Cessation of the Nuclear Arms Race and to Nuclear Disarmament (Marshall Islands v. United Kingdom), Judgment - Preliminary objections, 5 October 2016, para. 39; Application of the Convention on the Prevention and Punishment of the Crime of Genocide (The Gambia v. Myanmar), Order, 23 January 2020, para. 26.
Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on Objections to Jurisdiction, 25 January 2000, para. 94; Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004, paras. 106-107; Industria Nacional de Alimentos, S.A. and Indalsa Perú, S.A. (formerly Empresas Lucchetti, S.A. and Lucchetti Perú, S.A.) v. Republic of Peru, ICSID Case No. ARB/03/4, Award, 7 February 2005, para. 48; Impregilo S.p.A. v. Islamic Republic of Pakistan (II), ICSID Case No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, paras. 302-303; AES Corporation v. Argentine Republic, ICSID Case No. ARB/02/17, Decision on Jurisdiction, 26 April 2005, para. 43; El Paso Energy International Company v. Argentine Republic, ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006, para. 61; Suez, Sociedad General de Aguas de Barcelona, S.A. and Interagua Servicios Integrales de Agua, S.A. v. Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction, 16 May 2006, para. 29; M.C.I. Power Group, L.C. and New Turbine, Inc. v. Republic of Ecuador, ICSID Case No. ARB/03/6 , Award, 31 July 2007, para. 63.
Furthermore, arbitral tribunals must assess whether there is a link between the dispute and the investment.10 Treaties, including the ICSID Convention, have expressed this concept through formulations such as "arising (directly) out of"11 an investment or "relating to" an investment.12 For further discussion on tribunals' interpretation of directness, see Dispute existence, Section V.
Furthermore, investment tribunals may exercise jurisdiction ratione materiae for contractual claims if these claims fall within the scope of the applicable investment treaty.13 See further Treaty claim / Contract claim.
Abaclat and others (formerly Giovanna a Beccara and others) v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011, para. 256; National Grid PLC v. The Argentine Republic, Decision on Jurisdiction, 20 June 2006, paras. 138-140; European Media Ventures SA v. The Czech Republic, Award on Jurisdiction, 15 May 2007, para. 53; Inmaris Perestroika Sailing Maritime Services GmbH and others v. Ukraine, ICSID Case No. ARB/08/8, Decision on Jurisdiction, 8 March 2010, para. 86; Raymond Charles Eyre and Montrose Developments (Private) Limited v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/16/25, Award, 5 March 2020, para. 239; (DS)2, S.A., Peter de Sutter and Kristof De Sutter v. Republic of Madagascar (II), ICSID Case No. ARB/17/18, Award, 17 April 2020, paras. 236-237.
Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. (formerly Compañía de Aguas del Aconquija, S.A. and Compagnie Générale des Eaux) v. Argentine Republic (I), ICSID Case No. ARB/97/3, Decision on Annulment, 3 July 2002, paras. 95-111; 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, paras. 59-61; SGS Société Générale de Surveillance S.A. v. Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction, 29 January 2004, paras. 131, 135; Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) and Abal Hermanos S.A. (Uruguay) v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Decision on Jurisdiction, 2 July 2013, paras. 108-113; AES Corporation and Tau Power B.V. v. Republic of Kazakhstan, ICSID Case No. ARB/10/16, Award, 1 November 2013, para. 192; Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award, 19 December 2016, para. 244; Iberdrola Energía, S.A. v. The Republic of Guatemala, PCA Case No. 2017-41, Final Award, 24 August 2020, paras. 293-294.
Many arbitral tribunals have denied jurisdiction ratione materiae due to the unlawfulness of the underlying investment, often due to the requirement in the underlying investment agreement that the investment be made in accordance with law. In this regard, a crucial aspect of the lawfulness analysis is the wording of the relevant BIT provision.
In Fraport v. Philippines, the tribunal decided that “[b]ecause there is no "investment in accordance with law", the Tribunal lacks jurisdiction ratione materiae”.14 In the same vein, the tribunal in Inceysa Vallisoletana S.L. v. Republic of El Salvador,15 denied jurisdiction as the investment was made in a fraudulent manner, which was clearly unlawful under the laws of El Salvador.16 Similarly, the tribunal in Ioannis Kardassopoulos v. The Republic of Georgia addressed the lawfulness of the investment to analyse its jurisdiction ratione materiae.17
Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010, para. 114; Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Decision on Jurisdiction, 27 September 2012, para. 226; Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. v. Republic of Peru, ICSID Case No. ARB/10/2, Final Award, 21 May 2013, paras. 392-394; Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, 4 October 2013, para. 127; Ascom Group S.A., Anatolie Stati, Gabriel Stati and Terra Raf Trans Traiding Ltd. v. Republic of Kazakhstan, SCC Case No. 116/2010, Award, 19 December 2013, para. 812; Cairn Energy PLC and Cairn UK Holdings Limited v. The Republic of India, PCA Case No. 2016-07, Final Award, 21 December 2020, paras. 713-714.
Some investment agreements exclude specific areas from their jurisdiction ratione materiae.19 This is possible under the States’ freedom of contract. For example, Article 21 of the Energy Charter Treaty excludes “taxation measures” from the scope of the ECT. Pursuant to Article 21(1) ECT, “nothing in this treaty shall create rights or impose obligations with respect to [t]axation [m]easures.” See further Taxation exclusions, Taxes and Treaty exclusions in general.
Moreover, some agreements emphasise the need for the dispute to be of a “legal” nature. Specifically in ICSID arbitration, if a claim is brought before an ICSID tribunal, it must respect the requirement of Article 25(1) of the ICSID Convention and relate to a “legal” dispute.20 Generally, most disputes can be construed and “formulated […] in terms of a legal right or obligation”.21 There have already been cases in which the investor has withdrawn its request for arbitration after ICSID questioned the lack of a legal basis of the dispute.22 For further discussions on the crystallisation of the dispute and its legal nature, see Dispute existence, Sections III and IV.
ICSID, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes, para. 26; Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Decision on Jurisdiction, 8 December 2003, para. 58; Fedax N.V. and The Republic of Venezuela, ICSID Case No. ARB/96/3, Decision of the Tribunal on Objections to Jurisdiction, 11 July 1997, para. 15; Noble Energy Inc. and MachalaPower Cía. Ltd. v. Republic of Ecuador and Consejo Nacional de Electricidad, ICSID Case No. ARB/05/12, Decision on Jurisdiction, 5 March 2008, para. 123; ESPF Beteiligungs GmbH, ESPF Nr. 2 Austria Beteiligungs GmbH, and InfraClass Energie 5 GmbH & Co. KG v. Italian Republic, ICSID Case No. ARB/16/5, Award, 14 September 2020, para. 219; Grenada Private Power Limited and WRB Enterprises, Inc. v. Grenada, ICSID Case No. ARB/17/13, Award, 19 March 2020, para. 110.
A reference to an unpublished instance is available at:
Limitations can also exist in the domestic law that is a basis for respondent State's consent, and when it is the case, the arbitral tribunal applies them. See Penwell v. Kyrgyzstan.
Another specificity of the ICSID framework as to jurisdiction ratione materiae can be found in Article 46 of the ICSID Convention.
Article 46 of the ICSID Convention allows an ICSID tribunal to hear other claims that arise directly out of the investment. These claims must of course also be within the tribunal’s jurisdiction under both the ICSID Convention and the underlying investment agreement. Article 46 does not constitute an extension of the jurisdictional scope but rather the possibility to avoid the institution of separate proceedings.23 “[T]he point of this Article was to obviate separate proceedings for incidental claims and to make it unnecessary for parties who have additional claims or counterclaims to start new procedures.”24 Such ancillary claims can concern third party contracts, interests claimed or procedural costs.25 See further Counterclaims.
Grenada Private Power Limited and WRB Enterprises, Inc. v. Grenada, ICSID Case No. ARB/17/13, Award, 19 March 2020, para. 359; Urbaser S.A. and Consorcio de Aguas Bilbao Biskaia, Bilbao Biskaia Ur Partzuergoa v. Argentine Republic, ICSID Case No. ARB/07/26, Award, 8 December 2016, para. 1151; David R. Aven, Samuel D. Aven, Carolyn J. Park, Eric A. Park, Jeffrey S. Shioleno, Giacomo A. Buscemi, David A. Janney and Roger Raguso v. The Republic of Costa Rica, ICSID Case No. UNCT/15/3, Final Award, 18 September 2018, para. 696.
Schreuer, C., Article 46, para. 4, in The ICSID Convention: A Commentary: A Commentary on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 2nd ed., Cambridge University Press, 2009.
Schreuer, C., Article 46, para. 34, in The ICSID Convention: A Commentary: A Commentary on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 2nd ed., Cambridge University Press, 2009.
Amado, J.D., and Others, Jurisdiction Ratione Materiae: The Substantive Rights, in Arbitrating the Conduct of International Investors, 2018.
Baumgartner, J., Jurisdiction Ratione Materiae, in Treaty Shopping in International Investment Law, 2016.
Reed, L., and Others, Protected Investment, in Ruiz-Fabri, H. (ed.), EiPro Max Planck Encyclopaedia of International Procedural Law, 2019.
Yannaca-Small, K., and Katsikis, D., The Meaning of “Investment” in Investment Treaty Arbitration, in Yannaca-Small, K. (ed.), Arbitration under International Investment Agreements – A Guide to the Key Issues, 2018, pp. 266-301.
Bischoff, J.A., and Happ, R., Ratione Materiae, in Bungenberg, M., and Others (eds.), International Investment Law, A Handbook, 2015, pp. 1-149.
Matringe, J., La notion d’investissement, in Charles Leben (ed.), Droit international des investissements et de l’arbitrage transnational, 2015, pp. 135-160.
Schreuer, C., Investments, International Protection, in Wolfrum, R. (ed.), Max Planck Encyclopaedia of Public International Law, 2013.
Schreuer, C. and Others, The ICSID Convention: A Commentary, 2009.
Douglas, Z., The International Law of Investment Claims, 2009.
Schreuer, C., What Is a Legal Dispute?, in Buffard, I., and Others (eds.). International Law between Universalism and Fragmentation, 2008.
Schreuer, C., Malintoppi, L., Reinisch, A. and Sinclair, A., Ancillary Claims, The ICSID Convention: A Commentary, Cambridge University Press, 2009, pp. 731-756.
Rubins, N., The Notion of “Investment” in International Investment Arbitration, in Horn, N. (ed.), Arbitrating Foreign Investment Disputes, 2004, pp. 283-324.
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