The Salini test1 is the leading test employed by arbitral tribunals to define the term “investment” in Article 25(1) of the ICSID Convention.
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”.2 Most ICSID tribunals have held that this provision establishes an independent requirement for their jurisdiction under the ICSID Convention: in particular, the alleged investment must constitute an “investment” under Article 25(1).3 The Convention, however, does not contain a definition of “investment”.
III. Application of the Salini test by arbitral tribunals
ICSID tribunals thus generally apply the Salini test, or a modified version thereof, to determine whether an alleged investment constitutes an “investment” under Article 25(1) of the ICSID Convention.4 See further Section V below.
The Salini test, established by the tribunal in Salini v. Morocco, requires that the alleged investment satisfy four criteria to be considered an “investment” under Article 25(1): (1) a contribution; (2) a certain duration; (3) a risk; and (4) a contribution to the economic development of the host State.7
For example, in Joy Mining v. Egypt, the tribunal modified the criterion of contribution to the economic development of the host State such that the contribution must be “significant”.11 As another example, in Quiborax v. Bolivia, the tribunal removed the criterion that the investment must contribute to the economic development of the host State.12 And as a final example, in Phoenix Action v. Czech Republic, the tribunal added the criteria that the assets must be invested in accordance with the laws of the host State and that the assets must be invested bona fide.13
Castro de Figueiros, R., Chapter 3: The Notion of Investment and Economic Development under the ICSID Convention, in Baltag, C. (ed.), ICSID Convention after 50 years: Unsettled Issues, 2016.
Gaillard, E., Identify or Define? Reflections on the Evolution of the Concept of Investment in ICSID Practice, in Binder, C. and Others (eds.), International Investment Law for the 21st Century, 2009, p. 403.
Gaillard, E., Reconnaître ou définir ? Réflexions sur l’évolution de la notion d'investissement dans la jurisprudence du CIRDI, in Le droit international économique à l'aube du XXIe siècle. En Hommage aux professeurs Dominique Carreau et Patrick Juillard, Textes Réunies par Jean-Marc Sorel 18, Pédone. 2009.
Gaillard, E. and Banifatemi, Y., The Long March towards a Jurisprudence Constance on the Notion of Investment, in Kinnear, M. (ed.), Building International Investment Law, The First 50 Years of ICSID, 2015.
Garcia-Bolivar, O.E. and Others, Evolution in Investment Treaty Law and Arbitration, 2011.
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