The “double-barreled test”, also referred to as “double keyhole test” or “twofold test”, is the test followed by an arbitral tribunal to ascertain both its general and special jurisdiction under both Article 25(1) of the ICSID Convention (the objective test) and the relevant provision in the instrument embodying its consent to ICSID, typically a BIT, but which can also be the national legislation1 or a contract2 (the subjective test). In order to establish its ratione materiae jurisdiction, an arbitral tribunal must therefore respectively assess that an alleged investment qualifies as an “investment” under each prong of this dual test.
Malaysian Historical Salvors Sdn, Bhd v. Malaysia, ICSID Case No. ARB/05/10, Award, 17 May 2007, para. 55; Liberian Eastern Timber Corporation v. Republic of Liberia, ICSID Case No. ARB/83/2, Award, 31 mars 1986, para. 16.2; Kaiser Bauxite Company v. Jamaica, ICSID Case No. ARB/74/3, Decision on Jurisdiction and Competence, 21 June 1974, p. 17.
The ICSID Convention or other ICSID instruments do not define the term “investment”. Article 25(1) only provides that “(t)he jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment”.3 On the contrary, investment protection treaties4 or national legislation5 usually provide a definition. This has sometimes sparked uncertainty about the relevant approach to assess the meaning of the term “investment”.
In some cases, it has been construed as reflecting the intent of the Convention’s drafters to leave to parties the broadest discretion to define what disputes they are willing to submit to ICSID. It thereby leaves tribunals the task to assess what constitutes an “investment” only under the BIT, national legislation or contract, and not also under the Convention.6
Most arbitral tribunals, however, have followed the double-barreled test, holding that the term “investment” in Article 25(1)7 sets the objective outer limits within which parties may establish their subjective definition of “investment” without depriving the term of any effect or circumventing its meaning.8
RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, 6 June 2016, para. 157; Lanco International Inc. v. Argentine Republic, ICSID Case No. ARB/97/6, Jurisdiction of the Arbitral Tribunal, 8 December 1998, para. 48; 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. 159-160.
; CMC Africa Austral, LDA, CMC Muratori Cementisti CMC Di Ravenna SOC. Coop., and CMC Muratori Cementisti CMC Di Ravenna SOC. Coop. A.R.L. Maputo Branch and CMC Africa v. Republic of Mozambique, ICSID Case No. ARB/17/23, Award, 24 October 2019, para. 191; Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Award, 2 July 2018, para. 243; Koch Minerals Sàrl and Koch Nitrogen International Sàrl v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/11/19, Award, 30 October 2017, para. 6.50; Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen, ICSID Case No. ARB/14/30, Decision on Jurisdiction, 31 May 2017, para. 126; Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award, 19 December 2016, para. 227; İçkale İnşaat Limited Şirketi v. Turkmenistan, ICSID Case No. ARB/10/24, Award, 8 March 2016, para. 289; Poštová banka, a.s. and Istrokapital SE v. Hellenic Republic, ICSID Case No. ARB/13/8, Award, 9 April 2015, para. 359; Giovanni Alemanni and others v. Argentine Republic, ICSID Case No. ARB/07/8, Decision on Jurisdiction and Admissibility, 17 November 2014, para. 188; Ambiente Ufficio S.p.A. and others (formerly Giordano Alpi and others) v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility, 8 February 2013, para. 435; Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/09/2, Award, 31 October 2012, para. 293; 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. 344; Malicorp Limited v. Arab Republic of Egypt, ICSID Case No. ARB/08/18, Award, 7 February 2011, para. 107; Víctor Pey Casado et Fondation Président Allende c. La République du Chili, Affaire CIRDI No. ARB/98/2, Sentence, 8 May 2008, para. 232; Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009, para. 74; Noble Energy, Inc. and Machalapower Cia. Ltda. v. The Republic of Ecuador and Consejo Nacional de Electricidad, ICSID Case No. ARB/05/12, Award on jurisdiction, 5 March 2008, para 135-141; Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18, Decision on Jurisdiction, 6 July 2007, para. 113; Malaysian Historical Salvors, SDN, BHD v. Malaysia, ICSID Case No. ARB/05/10, Award on Jurisdiction, 17 May 2007, para. 55; Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Decision on Jurisdiction, 16 June 2006, para. 90; Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID Case No. ARB/05/19, Decision of the Tribunal on Objection to Jurisdiction, 17 October 2006, para. 80; Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, 1 November 2006, para. 31; Aguas del Tunari S.A. v. Republic of Bolivia, ICSID Case No. ARB/02/3, Decision on Respondent's Objections to Jurisdiction, 21 October 2005, para. 278; Joy Mining Machinery Limited v. Arab Republic of Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004, para. 50; SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Jurisdiction, 6 August 2003, para. 140; 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. 44; Consortium R.F.C.C. v. Royaume du Maroc, ICSID Case No. ARB/00/6, Decision on Jurisdiction, 16 July 2001, para. 51; Ceskoslovenska Obchodni Banka, a.s. v. The Slovak Republic, ICSID Case No. ARB/97/4, Decision of the Tribunal on Objections to Jurisdiction, 24 May 1999, para. 68; FEDAX N.V. v. The Republic of Venezuela, ICSID Case No. ARB/96/3, Decision on Objections to Jurisdiction, 11 July 1997, para. 20.;
III. First prong - An objective definition under the ICSID Convention
A first approach to ascertain that an alleged investment falls under the definition of the term “investment” in Article 25(1) is referred to as the “Salini test”,10 which requires that the alleged investment cumulatively satisfies the following criteria,11 by encompassing: (1) a contribution (2) of a certain duration, (3) a risk and (4) a contribution to the economic development of the host State, though this last criteria remains debated.12 A minority of tribunals has adopted a more liberal approach, under which these criteria do not need to be considered cumulatively.13
Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Award, 2 July 2018, para. 237; Quiborax S.A., Non-Metallic Minerals S.A. v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Decision on Jurisdiction, 27 September 2012, para. 220; Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010, para. 111; Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009, para. 85; Víctor Pey Casado et Fondation Président Allende c. La République du Chili, ICSID Case No. ARB/98/2, Award, 8 May 2008, para. 232; L.E.S.I. S.p.A. et ASTALDI S.p.A. c. Republique algerienne democratique et populaire, ICSID Case No. ARB/05/3, Award on jurisdiction, 12 July 2006, para. 72.
IV. Second prong - A subjective definition
Almost all BITs and national legislation offer a definition of the investment and do so by following different approaches. In most situations, the definition is an asset-based definition and is typically expressed as encompassing: (i) any kind of asset; (ii) taking the form of moveable or immoveable property and the rights attached thereto, any kind of interest held in a company, claims under a contract with a financial value, intellectual property rights, rights held under a contract, such as a concession contract, and (iii) followed by a non-exhaustive list of examples.16 Less often, the definition might rather require the asset to be linked to an enterprise,17 or take the form of an exhaustive list,18 or of a general definition combined with a list excluding certain categories of economic operations.19 Recently, there seems to have been a tendency to include the criteria listed in the objective test under the definition of investment in BITs, thereby reducing the uncertainty around the existence and application of the dual test.20
Reciprocal Investment Promotion and Protection Agreement Between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria, adopted on 3 December 2016, Article 1; Agreement between Canada and the Republic of Serbia for the Promotion and Protection of Investments, adopted on 1 September 2014, Art. 1.
Brazil – Morocco BIT, 13 June 2019, Art. 3; Reciprocal Investment Promotion and Protection Agreement Between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria, adopted on 3 December 2016, Art. 1; Canada - Serbia BIT, 1 September 2014, 27 April 2015, Art. 1; Agreement Between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People's Republic of China for the Promotion and Protection of Investments, 10 February 2016, 6 September 2016, Art. 1.
Dolzer, R., The Notion of Investment in Recent Practice, in Charnovitz, S., Steger, D.P. and Van den Bossche, P., (eds.), Law in the Service of Human Dignity: Essays in Honour of Florentino Feliciano, Cambridge University Press, 2005.
Fadlallah, I., La notion d’investissement: vers une restriction à la compétence du CIRDI?, in Aksen, G. and Briner, R. (eds.), Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner, ICC Publishing, 2005.
Gaillard, E., Identify or Define? Reflections on the Evolution of the Concept of Investment in ICSID Practice, in Binder, C. et al. (eds.), International Investment Law for the 21st Century : Essays in Honour of Christoph Schrueur, Oxford, 2009.
Gilles, A., La définition de l’investissement international, Larcier, 2012.
Krishan, D., A Notion of ICSID Investment, in Weiler, T. (ed.), Investment Treaty Arbitration and International Law, Vol. 1, 2008.
Legum, B., Defining Investment and Investor: Who is entitled to Claim?, Arbitration International, Vol. 2, Issue 4, 2006, pp. 521-526.
Matringe, J., La notion d’investissement, in Leben, C. (ed.), Droit international des investissements et de l’arbitrage transnational, Pedone, 2015, pp. 135-160.
Rubins, N., The Notion of “Investment”, in Horn, N. and Kroll, S., (eds.), Arbitrating Foreign Investment Disputes, 2004.
Williams, D. and Foote, S., Recent Developments in the Approach to Identifying an ‘Investment’ pursuant to Article 25 (1) of the ICSID Convention, in Brown, C. and Miles, K. (eds.), Evolution in Investment Treaty Law and Arbitration, Cambridge University Press, 2011.
Yala, F., The Notion of “Investment” in ICSID Case Law: A Drifting Jurisdictional Requirement? Some “Unconventional” Thoughts on Salini, SGS and Mihaly, Journal of International Arbitration, 2005.
Reed, L., Scanlon, Z., and Atanasova, D., Protected Investment, in Ruiz-Fabri, H. (ed.), EiPro Max Planck Encyclopaedia of International Procedural Law, 2019.