Certain duration is one of the four core criteria of the definition of investment in what is popularly referred to as the Salini test. As conceived originally by Christoph Schreuer,1 a certain duration is a necessary characteristic of an investment operation which is expected to constitute long-term relationship.
II. Related Wiki Notes
III. Travaux préparatoires of Article 25 ICSID Convention
Article 25 of the ICSID Convention does not include a definition of investment. However, the drafting history of this provision confirms that the duration criterion was considered relevant to the determination of the existence of an investment.2 A draft definition of investment referred to the contribution of money or assets “for an indefinite period or, if the period be defined, for not less than five years.”3 Finally, no definition of the term investment was included in the Convention, leaving the decision up to State parties.4
IV. State treaty practice
States have included time or certain duration as a component of the definition of investment in their investment treaties.5 Duration framed as a “characteristic” similar to what is seen in the Salini test is also included in treaties.6
V. Certain duration as an element of the definition of investment in case law
Duration has played a role in investment arbitration since before the Salini.7 The first cases in which the definition of investment utilized duration as one of the characteristics described by Schreuer were Fedax v. Venezuela8 followed shortly thereafter by Salini v. Morocco.9 These cases established certain duration as one of the four characteristics of the "Salini test."
The criteria are sometimes expanded upon10 and more often subtracted from,11 (see further Salini test, Section IV) but certain duration consistently remains a core characteristic of what ICSID12 and non-ICSID13 tribunals consider an "investment."
At least one tribunal has however criticized the subjectivity of requiring a certain or sufficient duration,14 similar to what is often said about the debated requirement of contribution to the development of the host State.
VI. What is a “certain duration”?
Substantively, in the absence of specific treaty provisions, tribunals have held that duration is a flexible term that could range from months to years and that the requirement is to be considered holistically.15 Many tribunals have determined to this extent that a period of two to five years meets the requirement of certain duration,16 thus excluding ordinary or one-time commercial transactions.17 This period can include relevant extending factors that fall outside of the activity’s primary execution time.18 Tribunals have further noted that it is the intended or expected duration that should be considered.19
Desierto, D.A., Deciding International Investment Agreement Applicability: The Development Argument in Investment, in Baetebs, F. (ed.), Investment Law within International Law: Integrationist Perspectives, 2013, pp. 240-256.
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: Essays in Honour of Christoph Schreuer, 2009, pp. 203-416.
Nakajima, K., Parallel Universes of Investment Protection? A Divergent Finding on the Definition of Investment in the ICSID Arbitration on Greek Sovereign Debts, Law and Practice of International Courts and Tribunals, 2016, pp. 472-490.
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, 2011, pp. 42-64.
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