The Salini test¹ is the leading test employed by arbitral tribunals to define the term “investment” in Article 25(1) of the ICSID Convention.

See also Definition of investment, Double-barreled test, Contribution of money or assets, Certain duraiton, Risk and Contribution to the economic development of the host State.

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”.

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.

Some non-ICSID tribunals have also applied the Salini test, or a modified version thereof, to determine whether an alleged investment constitutes an “investment” under the applicable investment treaty.⁵

 Other tribunals, however, have rejected the applicability of the Salini test.⁶

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

The Salini tribunal held that these four criteria may be “interdependent” and thus “should be assessed globally”.⁸ 

Other tribunals have held that the four criteria should not be applied as independent requirements, but rather as factors to be taken into account in determining whether the alleged investment is an “investment” under Article 25(1).⁹ See also Definition of investment, Section V.

Although some tribunals apply the Salini test directly,¹⁰ others have applied a modified version of the test, in particular by modifying, removing, and/or adding one or more criteria.

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

Burger, L., The trouble with Salini (Criticism of and Alternatives to the Famous Test), ASA Bulletin, 2013, pp. 145-160.

Bechky, P.S., Salini’s Nature: Arbitrators’ Duty of Jurisdictional Policing, in Ruiz-Fabri, H. (ed.), The Law & Practice of International Courts and Tribunals, 2018.

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.

Dupont, P.E., The Notion of ICSID Investment: Ongoing “Confusion” or “Emerging Synthesis”?, The Journal of World Investment and Trade, 2011, pp. 245-272.

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.

Grabowski, A., The Definition of Investment under the ICSID Convention: A Defense of Salini, Chicago Journal of International Law, 2014.

Manciaux, S., The Notion of Investment: New Controversies, The Journal of World Investment and Trade, 2008.

Martin, A., Definition of 'Investment': Could a Persistent Objector to the Salini Tests Be Found in ICSID Arbitral Practice?, Global Jurist, 2011.