Jurisdictional Objections and Defenses (Ratione Personae, Ratione Materiae, and Ratione Temporis)

Jurisdictional Objections and Defenses
(Ratione Personae, Ratione Materiae, and

Ratione Temporis)
Sungjin Kang
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
An Investor’s Noncompliance with the Host State Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
“Jurisdiction” Versus “Admissibility” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bifurcated Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Discussions on Jurisdiction Rationae Personae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
“Nationality” Under International Investment Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Juridical Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Discussions on Rationae Materiae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Existence of a “Dispute” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Legal Nature of the “Dispute” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
“Directness” of the Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Existence of an “Investment” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Jurisdiction Rationae Temporis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Abstract
The determination of whether a court or an arbitral tribunal has jurisdiction over a
case is a very important stage in the course of such proceedings. Investment
arbitral tribunals have classified the jurisdictional issues as follows: “(1) there
should be jurisdiction over subject-matter of the dispute (jurisdiction rationae
materiae); (2) the claimant must have standing to refer the dispute to the arbitral
tribunal (jurisdiction rationae personae); (3) the parties must establish jurisdiction
under the parties’ consent (Jurisdiction voluntatis); and (4) the dispute must
The views and opinions expressed in this chapter is strictly personal, and nothing in this chapter
reflects any official view of Kim & Chang. All errors are attributed to the author.
S. Kang (*)
Kim & Chang, Seoul, South Korea
e-mail: kangsj1977@gmail.com
© Springer Nature Singapore Pte Ltd. 2020 1

J. Chaisse et al. (eds.), Handbook of International Investment Law and Policy,
https://doi.org/10.1007/978-981-13-5744-2_67-1
2 S. Kang
satisfy the time limits in the treaty as to standing as well as to the arising of the
cause of action (jurisdiction rationae temporis).”
The issues surrounding the jurisdiction ratione personae and jurisdiction
ratione materiae appear again and again. Article 25 of the ICSID Convention
and the related jurisprudence are usually treated as “leading” rules governing the
jurisdictional objections, and principles like Salini criteria are widely accepted as
principles governing the jurisdictional objections. In addition, principles under
general public international law still governs the issue, and thus tribunals often
apply leading ICJ cases and ILC Draft Articles in many cases. Also, the jurisdic-
tional objections usually take similar form of arguments, citing similar rules. As a
result, the value of precedents is regarded higher by arbitral tribunals. However,
the issues are ultimately handled on a case-by-case basis, as each case is distinct
from one another, dealing with different investment treaties.
Keywords
Jurisdiction · Investment · Arbitration · ICSID · Jurisdiction rationae personae ·
Jurisdiction rationae materiae
Introduction
The determination of whether a court or an arbitral tribunal has jurisdiction over a

case is a very important stage in the course of such proceedings. In this regard, many
international courts and arbitral tribunals have adopted procedural rules to help the
courts/arbitral tribunals to determine the personal and subject matter jurisdiction.
For example, the Statute of the International Court of Justice (ICJ Statute) pro-
vides “only states may be parties in cases before the Court.”1 Then, Article 36(1) of
the ICJ Statute provides “the jurisdiction of the Court comprises all cases which the
parties refer to it and all matters specially provided for in the Charter of the United
Nations or in treaties and conventions in force.” In addition, the states may vest the
ICJ over international law disputes by issuing a declaration to be subject to “com-
pulsory jurisdiction” as well.2 In practice, the ICJ provides for “Preliminary objec-
tion” stage to review “any objection by the respondent to the jurisdiction of the Court
or to the admissibility of the application, or other objection the decision upon which
is requested before any further proceedings on the merits.”3 As a result, almost all
judgments by the ICJ have at least two judgments – judgment on preliminary
objection and the judgment on the merits.
In an arbitration, consent of the parties is the essential basis. On the other hand, unlike
a commercial arbitration, a treaty-based arbitration assumes that the state gave consent to
“present and potential investors who satisfy nationality criteria and whose investment is
1
Statute of the International Court of Justice, Article 35(1).
2
Id., Article 36(2)–36(5).
3
Rules of the International Court of Justice, Article 79(1).
Jurisdictional Objections and Defenses (Ratione Personae, Ratione. . . 3
protected by the treaty” before an actual dispute arises.4 Just as any international court,
the jurisdiction of an investment dispute tribunals has been subject to queries by the
disputing parties in almost all cases, especially the ICSID arbitration cases.5
In addition, as the number of claims increased, states have been working hard to
create methods to exclude jurisdiction of the arbitral tribunals, and they have been
successful in good number of cases. As a result, recent treaties provide for proce-
dural requirement to reflect the evolution of jurisprudence.
Investment arbitral tribunals have classified the jurisdictional issues as follows:
“(1) there should be jurisdiction over subject-matter of the dispute ( jurisdiction
rationae materiae); (2) the claimant must have standing to refer the dispute to the
arbitral tribunal ( jurisdiction rationae personae); (3) the parties must establish
jurisdiction under the parties’ consent (Jurisdiction voluntatis); and (4) the dispute
must satisfy the time limits in the treaty as to standing as well as to the arising of the
cause of action ( jurisdiction rationae temporis).”6
In this chapter, we will review the issue of jurisdictional objections and defenses
on rationae materiae and rationae personae. In particular, the some of the questions
include:
• What steps should a tribunal take if an investor does not comply with the
requirements of the host state laws on investment?
• The distinction between jurisdiction and admissibility. How to describe the
difference between jurisdiction and admissibility?
• Why states raise so many jurisdictional objections and seek to bifurcate proceedings
• Whether or when bifurcated proceedings are a good idea
• Criteria governing who should have standing to submit an investment claim
• The “continuous nationality” rule
An Investor’s Noncompliance with the Host State Law
In some investment treaties, they require investors and investment to comply with
domestic laws of the host state,7 and the breach of such obligation in the host state
may result in “civil actions for liability in the judicial process” of the Home State of
the investor.8
4
Sornarajah M (2017) The international law on foreign investment, 4th edn. Cambridge University
Press, p 358
5
Id., p. 358.
6
Id., pp. 359–360.
7
E.g., Article 11, SADC Model Bilateral Investment Treaty Template: Investors and Investments
shall comply with all laws, regulations, administrative guidelines and policies of the Host State
concerning the establishment, acquisition, management, operation and disposition of investments.
8
E.g., Article 17(1), SADC Model Bilateral Investment Treaty Template: Investors and Investments
shall be subject to civil actions for liability in the judicial process of their Home State for the acts,
decisions or omissions made in the Home State in relation to the Investment where such acts,
decisions or omissions lead to significant damage, personal injuries or loss of life in the Host State.
4 S. Kang
However, allegations of investor misconduct may arise in any stage of investment

(preestablishment, establishment, operation of the investment, etc.), and treatment of
such issue may be a problem before an investor-state dispute settlement system.
Above all, it is important to identify whether such investor misconduct issue is a
“jurisdictional” issue or a substantive issue.
There are number of cases which discussed whether the investor misconduct issue
is a jurisdictional issue. For example, in Fraport v. Philippines,9 Philippines chal-
lenged the Tribunal’s jurisdiction on the basis that “the protections afforded by the
BIT at issue do not extend to investments made in violation of Philippine law.”10
Philippines further argued that “the duty to comply with the host State’s law is an
ongoing one which must be respected throughout the period in which the investment
is made.”11
The tribunal in this case found that “(i) the BIT explicitly and reiteratedly required
that an investment, in order to qualify for BIT protection, had to be in accordance
with the host state’s law and (ii) local counsel explicitly warned that a particular
structural arrangement would violate a serious provision of Philippine law.”12 The
tribunal also found that the Board of Directors of the complainant, Fraport, knew that
it could not avoid violation of the Philippine law in order to make the investment
operation profitable, which was accomplished in the Article 2.02 of the
FAGPAIRCARGO-PAGS-PTI Shareholders’ Agreement of 6 July 1999.13 In addi-
tion, it was clear that the complainant refused to submit such key documents to the
tribunal in the written proceedings, and therefore Fraport “knowingly and intention-
ally” circumvented the Anti-Dummy Law of the Philippines through secret Share-
holders’ Agreement, which led to the nonexistence of an investment “in accordance
with law” under the relevant BIT.14 As a result, the tribunal found that it had no
jurisdiction ratione materiae.
After the annulment of the abovementioned case, Fraport resubmitted the dispute
to a new tribunal, which was dismissed for lack of jurisdiction.15 In this case, the
Philippines argued that “since the investment was made in violations of the host
State’s law,” the Tribunal lacked jurisdiction rationae materiae, if such violation is
established. The Tribunal agreed with the Philippines and held that an investment
must comply with the host State’s law, and it was appropriate to consider the legality
of the investment. Then the Tribunal concluded that Fraport’s initial investment was
9
Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, Award, ICSID
Case No. ARB/03/25, Award (16 August 2007). (Hereinafter Fraport I)
10
Id., para 285.
11
Id., para 286.
12
Id., para 398.
13
Id., para 398.
14
Id., paras 400–401. On the issue of shareholders legal standing, see Chaisse J (2016) Shareholder
protection reloaded – redesigning the matrix of shareholder claims for reflective loss. Stanford J Int
Law 52(1):51–94
15
Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No.
ARB/11/12, Award (10 December 2014) (Hereinafter Fraport II)
in violation of the Philippines’ law and therefore it held that the Tribunal lacked
jurisdiction rationae materiae.16
After the two Fraport cases, one may argue that the legality objection is available
“only when the relevant BIT contains an express legality requirement, and the
investor has violated host State law.”17 However, subsequent cases showed that
the reality is not simple.
First, although there is no explicit provision that an investment should be made
“in accordance with” the host State law, there are cases where the Tribunals rejected
the case for lack of jurisdiction.18 In some cases, the tribunals held that the compli-
ance with host State law requirement is “inherent in every BIT.”19 In addition, some
tribunals cited traveaux preparatoires to find the BIT parties’ will to exclude
investment in violation of host State law from the protections under the BIT.20 In
Phoenix Action v. Czech Republic case, the tribunal considered that Article 25 of the
ICSID Convention has such requirement.21
Second, the State must demonstrate that the investment itself is illegal or inten-
tionally wrongful. In order to do so, the State must prove either (a) the investment
itself is illegal under the domestic law of the host State; or (b) the investment is
procured through deceptive or illegal means.22 In case of (a), an ICSID tribunal
declined its jurisdiction over a dispute involving “Ponzi” scheme in Costa Rica,
based on the Canada-Costa Rick BIT defining “investments” as “any kind of asset
owned or controlled . . . by an investor of one Contracting Party in the territory of the
other Contracting Party in accordance with the latter’s laws.”23 The tribunal held that
the entire transaction at issue was illegal in violation of the laws of Costa Rica, and
therefore it lacked jurisdiction under the BIT.24
In addition, regarding the case (b), In Inceysa v. El Salvador, the claimant won a
public bidding concession contract for vehicle inspection services. However, El
Salvador subsequently breached the contracted and expropriated the investment,
16
Id., paras 320–332; 437, 467, 468.
17
Kalicki J, Evseev D, Silberman M (2016) Chapter 9: Legality of investment. In: Kinnear M et al
(eds) Building international investment law: the first 50 years of ICSID. Wolters Kluwer, p 139
18
For example, in World Duty Free v. Kenya, the tribunal refused to move forward to the merits as
the claimant procured bribes to the then-president Kenya, which was “contrary to the international
public policy.” World Duty Free v. Kenya, ICSID Case No. ARB/03/24 (27 August 2008)
19
SAUR International S.A. v. Argentine Republic, ICSID case No. ARB/04/4, Decision on Juris-
diction and Liability (6 June 2012), paras 306–308.
20
Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB 03/26, Award (2
August 2006), paras 194–195.
21
Phoenix Action Ltd. V. Czech Republic, ICSID Case No. ARB/06/5, Award (15 April 2009), paras
113–114.
22
See footnote 22, p. 135.
23
Canada – Costa Rica BIT, Art. I(g); Alasdair Ross Anderson et al. v. Republic of Costa Rica,
ICSID Case No. ARB (AF)/07/3, Award (19 May 2010), paras 55–57.
24
Alasdair Ross Anderson et al. v. Republic of Costa Rica, ICSID Case No. ARB (AF)/07/3, Award
(19 May 2010), para 57.
6 S. Kang
which constituted an alleged violation of El Salvador – Spain BIT. In the ICSID

proceedings, El Salvador argued that the claimant made a misrepresentation of its
industry experience and financial capabilities, which the tribunal found “fraud” by
the claimant. Then the ICSID tribunal declined to exercise its jurisdiction.25 In
another case, an ICSID tribunal also declined jurisdiction when the claimant investor
was found to commit deliberate concealment of key facts which amounted to
fraud.26 The tribunal found that the claimant investor should have informed the
State “by virtue of good faith” when it has material change in its shareholding which
may affect the State’s approval.27 Also, there is a question of how “material” such
illegal or inappropriate investor conduct should be to decline the tribunal’s jurisdic-
tion. While the tribunals take case-by-case approach, some tribunals also required
“causation” between the fraudulent investor conduct and award of the concession to
the investor.28
On the other hand, some tribunals held that “a government is estopped from raising
violations of its own law as a jurisdictional defense when it knowingly overlooked
them and endorsed an investment which did not comply with its own law.”29 In other
words, a State may be estopped from contesting the validity of an investment (1) when
its government official or entity explicitly ratified the investment at issue or (2) when it
failed to raise the issue in a timely manner.30 A more recent ICSID case also held that
“the relevant law for purposes of determining whether the investment was legally
made is the law of the host State,” and as long as the investment was made in
accordance with the host state law and the host state did not contest the legality in a
timely manner, the host state is estopped from contesting the same issue.31
“Jurisdiction” Versus “Admissibility”
First, it is necessary to check the definition of the term “jurisdiction” and “admissi-
bility.” If we start with the “ordinary meaning” of the term under international law,
the term usually refers to “powers of the state under international law to regulate or
otherwise impact upon people, property and circumstances and reflects the basic
principles of state sovereignty, equality of states and noninterference in domestic
25
Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB 03/26, Award (2
August 2006), paras 242–244.
26
Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award (27
August 2008), paras 134–135.
27
Id., paras 134–145.
28
See footnote 25, paras 237, 239.
29
Fraport I, para 346.
30
See footnote 22, p. 139.
31
Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. The Argentine
Republic, ICSID Case No. ARB/09/1, Decision on Jurisdiction (21 December 2012), paras
316–331.
affairs.”32 At the same time, “admissibility” under international law may refer to
“power of a court to decide whether or not to exercise the power to adjudicate a
matter.”33
In case of international investment law, one of the often-cited legal literature on
this issue may be the dissenting opinion by Keith Highet in Waste Management, Inc.
v. United Mexican States. In this case, he argued, “Jurisdiction is the power of the
tribunal to hear the case; admissibility is whether the case itself is defective—
whether it is appropriate for the tribunal to hear it. If there is no title of jurisdiction,
then the tribunal cannot act.”34 Mr. Highet continued that “such would be the case
here if the waiver under Article 1121 had never been given, or were defective.
Moreover, a claim of lack of jurisdiction ought normally be decided without
trenching upon the merits of the case at all; in some instances, however, this will
not be possible.46 Likewise, a tribunal may be able to determine a challenge to the
admissibility of a claim without invading the merits of the case, but it is more likely
that such an examination will have to be postponed and joined to the merits.”35
He then argued that the Award has dealt with “a matter of admissibility,” rather
than a matter of jurisdiction. As a result, he argued that raising a lawsuit on a small
portion of originally claim amount to a local court in Mexico would not prevent the
rest of the claim amount to be handled by the NAFTA Chapter 11 tribunal.36 As a
result, Mr. Highet argued that the tribunal should not have rejected the claimant’s
arguments, and proceed to render an arbitral award, except for the amount litigated
before a Mexican local court.37
In Alemanni v. Argentina case, some 183 claimants with “debt instruments issued by
the Republic of Argentina” defaulted in 2001 and thereafter filed request for arbitration
against Argentina.38 The ICSID tribunal distinguished “jurisdictional” objections and
“admissibility” objections as follows, based on the Respondent’s objections:
• Jurisdictional objections
– The Claimants have not properly authorized these proceedings, and therefore
have not validly consented to arbitration.
– There is no consent to arbitration on the part of the Respondent.
– There is no jurisdiction ratione materiae as the Claimants’ assets do not
constitute “investments” under the terms of the BIT, nor were they “made in
the territory of Argentina”.
32
Shaw M (2017) International law, 8th edn. Cambridge University Press, p 483
33
Shany Y et al (2014) The Oxford handbook of international adjudication. Oxford University
Press, p 787
34
Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/98/2, (8 MAY
2000) Dissenting Opinion, para 58.
35
Id., para 58.
36
Id., para 62.
37
Id., para 63.
38
Giovanni Alemanni and Others v. The Argentine Republic, ICSID Case No. ARB/07/8, (Novem-
ber 17, 2014) Decision on Jurisdiction and Admissibility, para 1.
8 S. Kang
– The Claimants have not established a prima facie breach of the BIT.
– The Claimants have not duly met the preconditions to arbitration laid down in
the BIT.39
• Admissibility objections
– That investment arbitration is an inherently unsuitable and unacceptable way
of dealing with default on sovereign bonded debt.
– That the multiplicity of Claimants and the variations between them will require
procedural innovations that lie beyond the powers of an ICSID tribunal and
will not be able to protect the due process rights of the Respondent.40
The main point distinguishing the “jurisdiction” objections and “admissibility”

objections was “between those objections that raise the issue whether the Parties
have duly consented to the dispute being brought to ICSID arbitration (which fall
more on the ‘jurisdictional’ side of the line) and those objections that raise the
question whether, even if the Parties have duly consented, there nevertheless exist
reasons why the Tribunal should decline to hear the dispute in the form in which the
dispute is brought before it, even though it possesses the formal competence to do so
(which thus fall more on the ‘admissibility’ side of the line).”41
Bifurcated Proceedings
The term “bifurcation” refers to the separation of jurisdictional issues from the merits
and is defined as “a separate jurisdictional phase to consider the jurisdictional and
admissibility objections raised by the Respondent.”42 Article 41(2) of the ICSID
Convention also recognizes that the tribunal may separate jurisdictional objection
and merits proceedings. The ICSID Arbitration Rule provides that any jurisdictional
objection by a party should be as early as possible.43 If a party formally raises such
objections, the tribunal may suspend the merits proceeding and consider the objec-
tions.44 Upon consultation with the parties, the President of the Tribunal fixes the
time-limit to submit the observations to the jurisdictional issues.45 The Tribunal may
decide whether oral proceedings are required.46
In addition, the ICSID Arbitration Rules also provides for possibility for parties to
file objections that a claim has no legal merit. A party may, between 30 days after
39
Id., para 274.
40
Id., para 318.
41
Id., para 260.
42
Itera International Energy LLC and Itera Group NV v. Georgia, (ICSID ARB/08/7), Decision on
admissibility of ancillary claims, 4 December 2009, para 34.
43
ICSID Arbitration Rules, Rule 41(1).
44
ICSID Arbitration Rules, Rule 41(3), first sentence.
45
ICSID Arbitration Rules, Rule 41(3), second sentence.
46
constitution of the tribunal and before the first session of the Tribunal, file such
objections.47 If the Tribunal decides to decide the preliminary objections, it must
issue a decision to that effect.48
The UNCITRAL Rules also permit bifurcation; First, Article 24(4) of the 1976
UNCITRAL Rules states that:
In general, the arbitral tribunal should rule on a plea concerning its jurisdiction as a
preliminary question. However, the arbitral tribunal may proceed with the arbitration and
rule on such a plea in their final award.
Article 23(3) of the 2010 UNCITRAL Rules changed the approach that the
arbitral tribunal must make decision on jurisdiction. It states that:
The arbitral tribunal may rule on a [jurisdictional objection] either as a preliminary question
or in an award on the merits.
Therefore, the 2010 UNCITRAL Rules eliminated the presumption in favor of

bifurcation, and made the rules in line with the ICSID Convention which does not
require presumption of bifurcated proceedings.
There are several strategic considerations for respondents and claimants consid-
ering bifurcation. First, from the respondent’s point of view, if a respondent state has
reasonably sound jurisdictional objections, it should request the tribunal to bifurcate
the proceedings. In addition to this, by bifurcating the proceedings, the respondent
may draw the tribunal’s attention to the facts beneficial to the respondent state. At the
same time, this may be the reason why the claimant opposes bifurcation.49
Second, respondents may use bifurcation to delay any possible adverse conse-
quences of their actions. On the other hand, the claimant investor may seek to avoid
bifurcated proceedings, as claimant’s incentive is to conclude the whole proceedings
and receive a favorable award as quickly as possible.50
In practice, while most investment arbitration cases split the jurisdiction and merit
phase, the way to bifurcate proceedings may vary. For example, in LG&E v.
Argentina case, the proceedings were split into decisions on jurisdiction, liability,
and award.51 In addition, the tribunal in Glencore v. Bolivia ordered to bifurcate the
award and damages.52
47
48
ICSID Arbitration Rules, Rule 41(6).
49
Carlson M, Childres P (2019) Chapter 5: Bifurcation in investment treaty arbitration. In: The
investment treaty arbitration review. Law Business Research, pp 54–55
50
Id., pp. 54–55.
51
LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc.v. Argentine Republic,
ICSID Case No. ARB/02/1, Decision on Jurisdiction (30 April 2004); Decision on Liability (3
October 2006); Award (25 July 2007).
52
Glencore Finance (Bermuda) Limited v. Plurinational State of Bolivia, PCA Case No. 2016-39,
Procedural Order No. 2 Decision on Bifurcation, 31 January 2018, para 56.
10 S. Kang
Discussions on Jurisdiction Rationae Personae
“Nationality” Under International Investment Law
Natural Persons
In an investment dispute, an investor’s nationality is important for several purposes:
• An investor must be a national of a party to the investment treaty or an ICSID

Convention. In particular, it is important to determine the standard of treatment
guaranteed in the treaty.
• The investor must not be a national of a host State.
An important case to review the issue of the nationality of a natural person is

Soufraki v. UAE Award.53 In this case, the Claimant presented himself as an Italian
national and invoked his Italian nationality to invoke Italy-UAE BIT.54 However, the
tribunal held that Soufraki lost his Italian nationality when he voluntarily acquired
Canadian citizenship in 1991.55 The ICSID Tribunal confirmed that the investor’s
nationality should be determined by the law of the investor’s nationality, i.e., Italian
law in this case.56 His application for annulment was also rejected, and the tribunal
explained three principles:
• The nationality of natural persons is governed by the law of the country whose
nationality is at issue. In Soufraki v. UAE Award, it was Italian law. That law is to
be applied in the way to be applied by the domestic courts and other authorities.
• The decision on the existence of a nationality is with the tribunal in pursuance of
its power to determine its jurisdiction (e.g., Art. 41 of the ICSID Convention).
• Documents issued by the country in question, such as passports and certificates of
nationality, are to be given their appropriate weight. However, they are not
conclusive and do not bind the tribunal.57
In subsequent cases, the tribunals basically endorsed the first principle on

governing law on nationality. For example, in Micula v. Romania, the tribunal
53
Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Award (7
July 2004) (Hereinafter Soufraki v. UAE Award)
54
Schreuer C (2016) Chapter 11: Criteria to determine investor nationality (natural persons). In:
Kinnear M et al (eds) Building international investment law: the first 50 years of ICSID. Wolters
Kluwer, p 154
55
Id., para 66–68.
56
Id., para 55.
57
Kluwer, p 157
noted that the decision of the law to determine the nationality of an individual is “the
domestic laws of each Contracting State.”58
Also regarding the second principle, the tribunals also adopted the same approach
as the Soufraki v. UAE Award.59 Then, the tribunals consistently held that the
documents issued by the country in question may have probative value, but they
have no binding effects on the tribunals.60 In particular, in Ambiente Ufficio v.
Argentina,61 the tribunal explained the evidentiary value of certificates of nationality
as follows:
[T]he question of the appropriate way for Claimants to meet the substantiation requirement
for their having Italian nationality must be drawn from the general evidentiary regime of the
ICSID Convention. The Tribunal will therefore have to decide whether an investor meets the
Convention’s nationality requirements in the same manner as with the other objective
requirements for ICSID jurisdiction. A certificate of nationality will therefore be treated as
part of the “documents or other evidence” to be examined by the Tribunal in accordance with
Art. 43 of the ICSID Convention. ICSID arbitration is not governed by formal rules nor by
national laws on evidence. ICSID tribunals have full discretion in assessing the probative
value of any piece of evidence introduced before them. In general, the finding of the
Annulment Committee in Soufraki v. United Arab Emirates that “[i]t is only in exceptional
cases [. . .] that ICSID tribunals have to review nationality documentation issued by state
officials”, may be taken as a guidance in that regard.62
In this regard, the issue of nationality of a natural person appears to follow the
principles established by Soufraki v. UAE Award.
In a recent case of Ballantine v. Dominican Republic,63 the PCA arbitral tribunal
had to deal with the issue of investors with dual nationality. Traditionally, the
principle of “genuine link” between the Claimant’s State and the Claimant has
been governing principle under public international law.64 In international invest-
ment law context, Article 25(2)(a) of the ICSID Convention states that the “National
of another Contracting State” means “any natural person who had the nationality of a
Contracting State other than the State party to the dispute on the date on which the
parties consented to submit such dispute to conciliation or arbitration.” In addition,
Article 9.1 of the CPTPP also provides, “If that investor is a natural person, who is a
permanent resident of a Party and a national of another Party, that natural person may
58
Ioan Micula et al. v. Romania, ICSID Case No. ARB 05/20, Decision on Jurisdiction and
Admissibility (24 September 2008), para 86.
59
Id., para 94.
60
Kluwer, p 160
61
Ambiente Ufficio S.p.A. et al. v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on
Jurisdiction and Admissibility (8 February 2013).
62
Id., para 318.
63
Michael Ballantine and Lisa Ballantine v. The Dominican Republic, PCA Case No. 2016-17.
64
Nottebohm Case [1955] ICJ Reports 4.
12 S. Kang
not submit a claim to arbitration against that latter Party.” Therefore, both provisions
require that the individual investor should not be a national of the host State.65
Several ICSID tribunals also applied Article 25(2)(a) of the ICSID Convention to
deny access of the claimant with the nationality of host State.66 They also continued
that “noneffective” nationality should be disregarded, and required “dominant and
effective nationality” to determine the jurisdiction rationae personae of the
claimant.67
Juridical Persons
Determination of Corporate Nationality

The nationality of juridical persons has been a matter of international law for the
purpose of diplomatic protection. In Barcelona Traction case, the International Court
of Justice (ICJ) held that the nationality of a corporation would follow the state of
incorporation and the place of the registered office.68 This has been a basic approach
to determine nationality of a corporation and/or other juridical persons. Meanwhile,
Article 25(2)(b) of the ICSID Convention69 does not provide any criteria for
determination of nationality of such juridical person. As a result, the ICSID and
other investment arbitral tribunals applied investment treaties or other legal instru-
ments evidencing the consent between the parties, and general principles of inter-
national law.70
In the ICSID case of Tokios Tokeles v. Ukraine,71 the claimant, a Lithuanian
company controlled by Ukrainian nationals, argued that its wholly owned Ukrainian
subsidiary was subject to series of measures in breach of Ukraine’s obligations under
1994 Ukraine-Lithuania BIT. The majority opinion of the case held that as there is no
definition of an investor’s nationality under the ICSID Convention, the tribunal
65
Schreuer C et al (2010) The ICSID convention – a commentary, 2nd edn. Cambridge University
Press, Cambridge, Article 25 – Jurisdiction, para 664.
66
Champion Trading v. Egypt, Decision on Jurisdiction (21 October 2003), p. 11.
67
68
Barcelona Traction, Light and Power Company Limited (Belgium v. Spain), Judgment, 5
February 1970, ICJ Reports 1970, p. 42, para 70.
69
ICSID Convention, Art. 25(2)(b): any juridical person which had the nationality of a Contracting
State other than the State party to the dispute on the date on which the parties consented to submit
such dispute to conciliation or arbitration and any juridical person which had the nationality of the
Contracting State party to the dispute on that date and which, because of foreign control, the parties
have agreed should be treated as a national of another Contracting State for the purposes of this
Convention.
70
ICSID Convention, Art. 42(1): The Tribunal shall decide a dispute in accordance with such rules
of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply
the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and
such rules of international law as may be applicable.
71
Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction (29 April 2004).
would refer to the definition of an “investor” under the 1994 Ukraine-Lithuania

BIT.72 In that BIT, an investor is defined as “any entity established in the territory of
the Republic of Lithuania in conformity with its laws and regulations.”73 The
tribunal found that the claimant was registered in Lithuania in accordance with the
laws of the country, based on the ordinary meaning of the BIT provision at issue.74
The Tribunal also confirmed that the “the state of incorporation” is the key criteria
under the definition of “investors” under that BIT.75 The Tribunal also held that its
reasoning is consistent with other ICSID tribunals.76 Therefore, the Tribunal found
that the claimant was an investor of Lithuania.77
However, the Professor Weil’s Dissenting Opinion argued that the jurisdiction of
the ICSID was limited to “disputes between sovereign states and foreign inves-
tors.”78 He noted that the Article 25 of the ICSID Convention was silent on
definition of the nationality of corporation. However, he argued that this does not
mean that the definition is left for the parties’ discretion.79 He argued that in this
particular case, the question of whether the claimant was the “real investor,”80 but
the Convention itself provides for flexible interpretation.81
As international corporate structures get increasingly complicated, the issue of
defining corporate investor’s nationality increasingly became an issue. Subsequent
ICSID tribunals also noted that Article 25 of the ICSID Convention did not specify
the test for nationality, and the Contracting States are “free to set the parameters of
nationality within the outer limits” of Article 25 of the ICSID Convention.82
In a more recent Mera Investment case,83 the ICSID tribunal also analyzed the
issue of corporate nationality again. In this case, the Cyprus-Serbia BIT84 provided
that an investor should be “(i) incorporated, constituted, or otherwise duly organized
72
Id., paras 25–26.
73
1994 Ukraine – Lithuania BIT, Art. 1(2)(b).
74
See footnote 71, para 29.
75
See footnote 71, paras 30–39.
76
See footnote 71, paras 42–51.
77
See footnote 71, para 39.
78
See footnote 71, Dissenting Opinion of P. Weil, para 21.
79
80
Prof. Weil considered that the claimant could not qualify as an “investor” considering the
corporate structure and ownership. See footnote 71, Dissenting Opinion of P. Weil, para 30.
81
82
KT Asia Investment Group B.V. v. Republic of Kazakhstan, ICSID Case No. ARB/09/08, Award
(17 October 2013), para 121.
83
Mera Investment Fund Limited v. Republic of Serbia, ICSID Case No. ARB/17/2, Decision on
Jurisdiction (30 November 2018)
84
Bilateral investment treaty; specifically, “Agreement between Serbia and Montenegro and the
Republic of Cyprus on Reciprocal Promotion and Protection of Investments” of 21 July 2005
(CL001)
14 S. Kang
according to the laws of the Republic of Cyprus, (ii) having its seat in the territory of
the Republic of Cyprus, and (iii) making investments in the territory of Serbia.”85
The tribunal accepted the certificate of incorporation of the Claimant, and thus the
tribunal found that the first requirement was fulfilled.86 Regarding the second
requirement, the tribunal recalled that “it is well-accepted that Article 25 of the
ICSID Convention leaves it to the contracting parties to determine nationality,
including corporate nationality.” The tribunal noted that there was no further guid-
ance under the BIT and the ICSID Convention regarding the meaning of “seat in the
territory of that Contracting Party.”87 While the Respondent argued that the term
“seat” meant “where the effective management takes place,”88 the tribunal accepted
the term as “reference to an actual location, place, or address” under Section 102 of
the Cypriot Companies Law.89 Regarding the third requirement, the tribunal found
that “the Claimant actively held and managed the investments after it became a
Cyprus entity, thereby ‘making investments’ in Serbia as required by Article 1(3)(b)
of the BIT.”90 As a consequence, the ICSID tribunal found that the Claimant
qualified as an “investor” under the Cyprus-Serbia BIT. The tribunal in Mera
Investment case appeared to have applied the dissenting opinion of Prof. Weil.
“Continuous Nationality”
The continuous nationality rule was developed to limit individual’s ability to choose
a state to demand for diplomatic protection claims.91 Basically, the rule requires “the
bond of nationality” between the claimant private party and the claimant State must
exist at the time of occurrence of violation of international law against the injured
person.92 The ILC Draft Articles on Diplomatic Protection 2006 also provides:
A State is entitled to exercise diplomatic protection in respect of a corporation that was a

national of that State, or its predecessor State, continuously from the date of injury to the date
of the official presentation of the claim. Continuity is presumed if that nationality existed at
both these dates.93
In case of corporations, the basic rule is that a corporation’s nationality depends

on the State of its incorporation. However, “when the corporation is controlled by
nationals of another State or States and has no substantial business activities in the
85
Id., para 62.
86
Id., para 70.
87
Id., para 85.
88
Id., paras 86–88.
89
Id., paras 91–92.
90
Id., para 107.
91
Bernardini P (2016) Chapter 12: Continuous nationality rule in investor-state arbitration. In:
Kluwer, pp 163–164
92
Barcelona Traction, para 61.
93
UN ILC, Draft articles on Diplomatic Protection 2006, Article 10(1).
State of incorporation, and the seat of management and the financial control of the
corporation are both located in another State, that State shall be regarded as the State
of nationality.”94 In addition, the ILC Draft Articles on Diplomatic Protection
explicitly provides that the Draft Articles “do not apply to the extent that they are
inconsistent with special rules of international law, such as treaty provisions for the
protection of investments.”95 As a result, the principle of “continuous nationality”
does not apply to investor-State arbitration.
However, in Loewen v. United States case,96 the ICSID Tribunal applied “con-
tinuous nationality” principle.97 The ICSID tribunal explained that Articles 1116 and
1117 of NAFTA did not deal with whether nationality must continue to exist from
the beginning of the dispute to the end of such dispute, the tribunal applied
customary international law.98 However, subsequent cases did not accept the Loewen
tribunal, and rejected the rationale of the case. Instead, Article 25(2) of the ICSID
Convention provides that the jurisdiction of the ICSID would apply to “any juridical
person which had the nationality of a Contracting State other than the State party to
the dispute on the date on which the parties consented to submit such dispute to
conciliation or arbitration and any juridical person which had the nationality of the
Contracting State party to the dispute on that date,” i.e., the nationality is fixed on the
date of the parties’ consent to bring the dispute to ICSID proceedings. In addition,
this requirement applies to maintain jurisdiction ratione personae, rather than
continuity of nationality issue.99
Discussions on Rationae Materiae
When we discuss the jurisdiction rationae materiae in an investment dispute, the first
reference may be Article 25 of the ICSID Convention, which reads:
The jurisdiction of the Centre shall extend to any legal dispute arising directly out of or in
relation to an investment between a Contracting State (or any constituent subdivision or
agency of a Contracting State designated to the Centre by that State) and a national of
another Contracting State, which the Parties to the dispute consent in writing to submit to the
Centre.
Article 25 of the ICSID Convention requires that there should be “a legal dispute
arising directly out of or in relation to an investment.” There are elements that may
94
UN ILC, Draft articles on Diplomatic Protection 2006, Article 9, second sentence.
95
UN ILC, Draft articles on Diplomatic Protection 2006, Article 17.
96
Loewen Group, Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB
(AF)/98/3.
97
Id., paras 220–237.
98
Id., para 226.
99
El Paso Energy International Company v. Argentine Republic, ICSID Case No. ARB/03/15,
Decision on Jurisdiction (27 April 2006), para 135.
16 S. Kang
raise jurisdictional questions: (1) the existence of a “dispute”; (2) legal nature of the
dispute; (3) directness of the dispute; and (4) existence of an “investment.”100
Existence of a “Dispute”
What is a “dispute” under the ICSID Convention? A legal dictionary defined a

dispute “A conflict or controversy; a conflict of claims or rights; an assertion of
aright, claim, or demand on one side, met by contrary claims or allegations on the
other.”101 The International Court of Justice defined a dispute as “a disagreement on
a point of law or fact, a conflict of legal views or interests between parties.”102 ICJ
further explained that the existence of a dispute means “the claim of one party is
positively opposed by the other.”103
An ICSID Tribunal also defined a “dispute” under US-Ecuador BIT104 as “(i) a
disagreement between the parties on their rights and obligations, an opposition of
interests and views, and (ii) an expression of this disagreement, so that both parties
are aware of the disagreement.”105 In another ICSID case, the Tribunal defined a
dispute as follows:
It begins with the expression of a disagreement and the statement of a difference of views. In
time these events acquire a precise legal meaning through the formulation of legal claims,
their discussion and eventual rejection or lack of response by the other party. The conflict of
legal views and interests will only be present in the latter stage, even though the underlying
acts predate them. It has also rightly commented that the existence of the dispute pre-
supposes a minimum of communication between the parties, one party taking the matter
with the other, with the latter opposing the Claimant’s position directly or indirectly. This
sequence of events has to be taken into account in establishing the critical date for
determining when under the BIT a dispute qualifies as one covered by the consent necessary
to establish ICSID’s jurisdiction.106
The existence of a dispute also presupposes at least a minimum communication

between the parties, and therefore, failure to respond to a specific demand within a
100
Dolzer R, Schreuer C (2012) Principles of international investment law, 2nd edn. Oxford
University Press, p 245
101
The Law Dictionary, https://thelawdictionary.org/dispute/ (Accessed 1 October 2019)
102
Case Concerning East Timor, ICJ Reports (1995) p. 89, para 22. (Judgment of 30 June 1995)
103
Id., para 22.
104
“Treaty between the United States and Ecuador concerning the Encouragement and Reciprocal
Protection of Investments” of 11 May 1997
105
Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on
Jurisdiction (2 June 2010), para 289.
106
Maffezini v. Kingdom of Spain (ICSID Case No. ARB/97/7), Decision on Objections to Juris-
diction, (25 January 2000), 5 ICSID Rep. 387, para 96. (Cited from Railroad Development
Corporation (RDC) v. Republic of Guatemala, ICSID Case No. ARB/07/23, Second Decision on
Jurisdiction (18 May 2010), para 129.)
reasonable time would be sufficient to establish existence of a dispute.107 In addition,

the dispute related to “clearly identified issues between the parties,” i.e., immediate
interest to the parties.108
In Pan American v. Argentina, the ICSID tribunal found that the quantum of
damages would be uncertain to a certain degree. However, the tribunal held it did not
affect its jurisdictions as long as the claimants were able to demonstrate the occur-
rence of some damages.109
Legal Nature of the “Dispute”
Article 36(2) of the ICJ Statute provides that the jurisdiction of the court applies to
“legal disputes.” Article 25(1) of the ICSID Convention also provides that the
jurisdiction of the ICSID would extend to “any legal dispute arising directly out of
an investment.” Then what is the “legal dispute?”
The Report of the Executive Directors to the ICSID Convention explained that
legal disputes exist if they “concern the existence or scope of a legal right or
obligation, or the nature or extent of the reparation to be made for breach of a
legal obligation.”110 The Rule 2(1)(e) of the ICSID Rules of Procedure for the
Institution of Conciliation and Arbitration Proceedings (“Institution Rules”) also
requires that the claimant must demonstrate the legal nature of the dispute.
The ICSID tribunal in Suez v. Argentina case held that the Claimant made legal
claims as the claims were based on “legal rights which they allege have been granted
to them under the bilateral treaties that Argentina has concluded with France and
Spain,” and the tribunal further found that the claimants “consistently presented their
case in legal terms.”111
“Directness” of the Dispute
Article 25(1) of the ICSID Convention also provides that the jurisdiction of the
ICSID would extend to any legal dispute arising “directly” out of an investment. On
the other hand, Article 2(b) of the ICSID Additional Facility Rules authorizes the
107
108
Id., para 44.
109
Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic,
ICSID Case No. ARB/03/13, Decision on Preliminary Objections (27 July 2006), paras 177–180.
110
Dolzer R, Schreuer C (2012) Principles of international investment law, 2nd edn. Oxford
University Press, p 246
111
Suez, Sociedad General de Aguas de Barcelona SA, and InterAguas Servicios Integrales del
Agua SA v. Argentina, Decision on Jurisdiction (16 May 2006), para 34.
18 S. Kang
proceedings to settle disputes which do not directly arise out of investment. At the
same time, the tribunals interpreted that the term “directly arising out of investment”
as direct relationship between the dispute and the investment, not whether the
investment is “direct” or not.112
In CSOB v. Slovakia,113 the claimant granted a loan to a Slovak collection
company, by a guarantee of the Slovak Ministry of Finance. When CSOB requested
for arbitration against Slovakia for default of the Slovak collection company,
Slovakia argued that the claims did not arise “directly” out of an investment within
the meaning of the Article 25(1) of the ICSID Convention.114 The ICSID tribunal
rejected this argument as the investment at issue was a complex operation, and
therefore, even if the transaction at issue, standing alone, would not qualify as an
“investment” under the ICSID Convention, as long as the particular transaction
forms an “integral” part of an overall investment operation.115 Having found that
the Slovak republic’s obligation was closely related to the loan made by the CSOB,
and the loan was part of the overall operation to consolidate CSOB and to develop
the banking activity in the Slovak Republic, the tribunal held that the dispute arose
“directly” out of the investment.116
In a more recent case, the ICSID tribunal held that “directness” requirement was
met, “because Claimants’ claim that the revocation of ENJASA’s license, coupled
with the subsequent transfer of ENJASA’s operation and employees to new opera-
tors, is the cause of the alleged destruction of Claimants’ investment in the gaming
and lottery sector in Salta, that is, its (direct) shareholding in L&E and (its indirect
shareholding) in ENJASA.”117
Existence of an “Investment”
ICSID Convention
The term “investment” has no definition in the ICSID Convention. When the ICSID
Convention was negotiated in 1960, several attempts to define “investment” were
112
Fedax N.V. v. The Republic of Venezuela, ICSID Case No. ARB/96/3, Decision on Jurisdiction
(11 July 1997), para 28; Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8,
Decision on Jurisdiction (3 August 2004), para 150; Tokios Tokeles v. Ukraine, Decision on
Jurisdiction (29 April 2004), para 90.
113
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).
114
Id., para 62.
115
Id., para 72.
116
Id., paras 75–91.
117
Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft v. Argentine
Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction (29 June 2018), para 194.
presented to the drafters.118 For example, the First Draft introduced a definition of
“investment as “any contribution of money or other assets of economic value for an
indefinite period or, if the period be defined, for not less than five years.”119 This
faced a flurry of opposition and Mr. Aron Broches, the rapporteur, continued to insist
against precise delimitation of the jurisdiction of ICSID.120 As a result, the ICSID
Convention did not contain a definition of “investment.”
Jurisprudence Before Salini Case

Article 1139 (a) through (h) of NAFTA provides an example of an “exhaustive list”
approach to the definition of investment.121 However, it complements its approach
with a negative definition by establishing “certain kinds of property that are not to be
considered investments under the treaty.”122 However, the subparagraphs (i) and (j)
of NAFTA Article 1139 excluded (1) claims to money based on (1) commercial
118
ICSID Convention, First Draft, Article 30 contained a general definition of “investment” as “any
contribution of money or other assets of economic value for an indefinite period or. . . not less than
five years.” Id., p. 287
119
Press, Art. 25, para 114.
120
Id., paras 114–115.
121
NAFTA Article 1139: Investment under NAFTA “means”:
(a) an enterprise;
(b) an equity security of an enterprise;
(c) a debt security of an enterprise
(i) where the enterprise is an affiliate of the investor, or
(ii) where the original maturity of the debt security is at least 3 years, but does not include a
debt security, regardless of original maturity, of a state enterprise;
(d) a loan to an enterprise
(i) where the enterprise is an affiliate of the investor, or
(ii) where the original maturity of the loan is at least 3 years, but does not include a loan,
regardless of original maturity, to a state enterprise;
(e) an interest in an enterprise that entitles the owner to share in income or profits of the enterprise;
(f) an interest in an enterprise that entitles the owner to share in the assets of that enterprise on
dissolution, other than a debt security or a loan excluded from subparagraph (c) or (d);
(g) real estate or other property, tangible or intangible, acquired in the expectation or used for the
purpose of economic benefit or other business purposes; and
(h) interests arising from the commitment of capital or other resources in the territory of a Party to
economic activity in such territory, such as under
(i) contracts involving the presence of an investor’s property in the territory of the Party,
including turnkey or construction contracts, or concessions, or
(ii) contracts where remuneration depends substantially on the production, revenues or profits
of an enterprise;
Rubins N (2004) The notion of “investment” in international investment arbitration. In: Horn N,
122
Kroell S (eds) Arbitrating foreign investment disputes. Kluwer Law International, pp 293–294
20 S. Kang
contracts; (2) extension of credit; and (2) “any other claims to money, that do not
involve the kinds of interests set out in subparagraphs (a) through (h).”123
In the Pope & Talbot v. Canada case, the tribunal found that the access to the US
softwood lumber market was a property interest of the claimant. It found that the
interests at stake were the investment’s asset base as the claimant depended heavily
on export business. As a result, the tribunal concluded that Canada’s measure
affected “investment” under Articles 1139 and 1110 of NAFTA.124 In contrast, the
tribunal of Methanex Corp. v. United States case found that although some intangible
property could qualify as “investment” under NAFTA Article 1139, customer base,
market share, and goodwill could not fall into the category of investment under
Article 1139 on a “stand-alone” basis.125
In Fedax NV v Republic of Venezuela case, an ICSID tribunal considered the
definition of “investment” extensively. In this case, Fedax NV was the beneficiary of
debt instruments issued by Venezuela. The ICSID tribunal noted that there was no
definition of “investment” under Article 25 of the ICSID Convention, and noted that
“a broad approach to the interpretation of the term of Article 25 is warranted.” It then
found that considering the broad scope of Article 25(a) of the ICSID Convention and
the ensuing ICSID practice, there was no issue in finding that promissory notes
qualify as an “investment” as they are “evidence of a loan and a rather typical
financial and credit instrument.” The ICSID tribunal also noted that the definition of
“investment” under the Netherlands-Venezuela BIT was broad enough to include the
promissory notes at issue. In addition, it noted that the BIT at issue was not an
exceptional case in the contemporary treaty practice. Therefore, it found that the
promissory notes would qualify as an “investment” both under Article 25 of the
ICSID Convention and the Netherlands-Venezuela BIT.
Turning to the details of the promissory notes, the tribunal noted that the basic
features of an investment would involve “certain duration, a certain regularity of profit
and return, assumption of risk, a substantial commitment and a significance for the host
State’s development.” The tribunal applied these criteria to the investment at issue and
found that the investment at issue met all these criteria. In particular, the tribunal found
123
NAFTA Art. 1139 (i) and (j): but investment does not mean,
(i) claims to money that arise solely from

(i) commercial contracts for the sale of goods or services by a national or enterprise in the
territory of a Party to an enterprise in the territory of another Party, or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing,
other than a loan covered by subparagraph (d); or
(j) any other claims to money, that do not involve the kinds of interests set out in subparagraphs
(a) through (h);
124
Pope & Talbot Inc. (US) v. Canada, Merits Award (26 June 2000), para 98.
125
Methanex Corp. (Canada) v. United States, Final Award on Jurisdiction and Merits (3 August
2005), para 35.
that there was “a significant relationship between the transaction and the development
of Venezuela, as specifically required under the Law for issuing the pertinent financial
instrument.” Therefore, the tribunal held that it had jurisdiction over the case at issue.
Salini Test
Background of the Case

In August 1994, the Societé Nationale des Autoroutes du Maroc (ADM), incorpo-
rated in 1989, issued an invitation for international tender for construction of a
highway between Rabat and Fez, Morocco. Salini Costruttori SpA (“Salini”) and
Italstrade SpA (“Italstrade”) submitted a joint tender for Section 2 (50 km long) of
the highway.126 ADM awarded the contract for Section 2 to the claimants. The works
were completed on 14 October 1998, ADM took over the project provisionally on 31
July 1998, and finally on 26 October 1999. On 26 March 1999, ADM sent a draft of
final account, which the claimants responded to with reservation on 29 April 1999.
On 14 September 1999, the Italian companies sent a memorandum of final accounts
rejecting all claims by ADM.127
On 1 May 2001, the two Italian companies filed a Request for Arbitration against
Morocco with ICSID seeking damages of 132,639,617,409 Italian Lira.128 The
complainants based their claims on Article 8 of the Bilateral Investment Treaty
between Morocco and Italy.129
The ICSID Tribunal’s Findings on Definition of “Investment”

The Moroccan government argued that the existence of the ICSID tribunal’s subject
matter jurisdiction depended on (1) the existence of an “investment” and (2)
existence of the claims of violations of the bilateral treaty.130
With regard to the first criterion, the ICSID tribunal noted that its jurisdiction
depended upon (1) the definition under a BIT/FTA and (2) the definition under the
ICSID Convention. The ICSID tribunal considered that both definitions must be
satisfied to find jurisdiction of an ICSID tribunal.131
126
Salini Costruttori S.p.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on
Jurisdiction (23 July 2001), para 2.
127
Id., paras 4–5
128
Id., para 6.
129
Treaty between the Government of the Kingdom of Morocco and the Government of the
Republic of Italy for the Reciprocal Promotion and Protection of Investments (“Italy-Morocco
BIT”), signed on 18 July 1990, entered into force on 1 January 1992. Id., para 9
130
Id., para 36.
131
Id., para 44.
22 S. Kang
First, the complainants argued that the contract at issue was an investment within
the meaning of Article 1(c) and (e) of the Italy-Morocco BIT.132 The tribunal found
that construction contract would create “contractual benefit having an economic
value” under Article 1(c) of the Italy-Morocco BIT and the contractor would benefit
from “a right of an economic nature conferred by law or by contract” under Article 1
(e) of the same Treaty.133 The tribunal also reviewed whether the contract was
approved by a competent authority under Article 1(g) of the Italy-Morocco BIT.
The tribunal found that the contract in question was an object of an authorization by
a competent authority because (1) the allocation of the contract occurred in accor-
dance with the rules and procedures set out by ADM. In addition, the tribunal found
that the “Ministry of Infrastructure approved the conclusion of the public procure-
ment contracts by ADM in accordance with the mandatory procedure, which was not
alleged to have been violated”; and (2) each stage toward the signature of the
construction contract involved interventions by authorities concerned.134 Therefore,
the tribunal found that the condition of Article 1(g) was also satisfied and the
contract fell within the meaning of “investment” under the Italy-Morocco BIT.
Because there was no definition of “investment” under Article 25 of the ICSID
Convention,135 the tribunal recognized that “ICSID case law and legal authors agree
that the investment requirement must be respected as an objective condition of the
jurisdiction of the Center.”136 It pointed out three factors to indicate the presence of
investment: (1) contributions, (2) a certain duration of the contract, and (3) a
participation in the risks of the transaction.137 The tribunal found that the Italian
companies made contributions in money, in kind, and in industry, e.g., by using their
know-how and provision of necessary equipment and qualified personnel, and
obtaining loans to finance the execution of the deal.138 Also, the Tribunal noted
that the total duration of the contract was originally 32 months, although it took
36 months to complete it. The tribunal noted that this met the “minimal length of
132
Id., para 38. Italy-Morocco BIT Article 1: The term “investment” designates all categories of
assets invested, after the coming into force of the present agreement, by a natural or legal person,
including the Government of a Contracting Party, on the territory of the other Contracting Party, in
accordance with the laws and regulations of the aforementioned party. In particular, in no way
exclusively, the term “investment” includes:
(c) capitalized debts, including reinvested income, as well as rights to any contractual benefit
having an economic value;
(e) any right of an economic nature conferred by law or by contract, and any license or
concession granted in compliance with the laws and regulations in force, including the
right of prospecting, extraction, and exploitation of natural resources
133
Id., para 45.
134
Id., para 48.
135
Id., paras 50–51
136
Id., para 52.
137
Id., paras 52–54; See footnote 2, pp. 307–308.
138
Id., para 53.
time upheld by the doctrine, which is from 2 to 5 years.”139 Then, with regard to the
risks, the tribunal noted that the contract itself contained an exhaustive list of risks
associated with the project.140 The tribunal found that it would not matter whether
the parties freely took these risks.141 Rather, the tribunal noted such construction
contracts would create an “obvious risk” for the investor.142 In the end, the tribunal
also checked the criterion of “contribution of the contract to the economic develop-
ment.” However, the tribunal did not seriously analyze this issue as infrastructure
construction falls within the category of tasks of the State or other public authorities
which serve public interest.143 As a result, the tribunal found that the contracts
between ADM and the Italian companies constituted an investment under both Italy-
Morocco BIT and Article 25 of ICSID Convention.144
Practice After Salini
Treaty Practices
Since the Salini case, many recent investment treaties have also adopted the Salini
test to define “investment.” In particular, the criteria of “certain duration” and
“assumption of risk” in the Salini test appear to have influenced subsequent treaty
practice and investment legislation. In this part, the author will briefly review some
examples of recent treaty laws and national laws to see how the Salini criteria were
implemented.
First, the 2004 and 2012 US Model BIT provides a broad definition of “invest-
ment” and a nonexhaustive list of “forms” of investment. The 2012 US Model BIT’s
definition of “investment” is the following:
“Investment” means every asset that an investor owns or controls, directly or indirectly, that
has the characteristics of an investment, including such characteristics as the commitment of
capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms
that an investment may take include:
(a) An enterprise
(b) Shares, stock, and other forms of equity participation in an enterprise
(c) Bonds, debentures, other debt instruments, and loans
(d) Futures, options, and other derivatives
(e) Turnkey, construction, management, production, concession, revenue-sharing, and other
similar contracts
(f) Intellectual property rights
(g) Licenses, authorizations, permits, and similar rights conferred pursuant to domestic law
139
Id., para 54.
140
Id., para 55.
141
Id., para 56.
142
Id., para 56.
143
Id., para 57.
144
Id., para 58.
24 S. Kang
(h) Other tangible or intangible, movable or immovable property, rights, such as leases,
mortgages, liens, and pledges145
It is interesting to note that this provision recognizes that the characteristics of

investment include “commitment of capital or other resources” and “assumption of
risk.” In particular, the 2012 US Model BIT explains that “Some forms of debt, such
as bonds, debentures, and long-term notes, are more likely to have the characteristics
of an investment, while other forms of debt, such as claims to payment that are
immediately due and result from the sale of goods or services, are less likely to have
such characteristics.”146 Also, it provides that “whether a particular type of license,
authorization, permit, or similar instrument (including a concession, to the extent
that it has the nature of such an instrument) has the characteristics of an investment
depends on such factors as the nature and extent of the rights that the holder has
under the law of the Party.”147 Then it explains that licenses, authorizations, permits,
and similar instruments “that do not create any rights protected under domestic law”
would be deemed not to have the characteristics of an investment.148 In addition,
regarding the issue of whether the term “investment” includes a judicial decision or
administrative order, the 2012 US Model BIT clearly says it does not.149 Against this
background, Chapter XV of the US-Singapore FTA and Chapter 11 of the Korea-US
FTA basically follow the definition of investment contained in the 2004 US Model
BIT. However, at the end of the provision, the KORUS FTA Chapter 11 has the
following provision: “For purposes of this Agreement, a claim to payment that arises
solely from the commercial sale of goods and services is not an investment, unless it
is a loan that has the characteristics of an investment.”150
With respect to the European Union, Articles 206 and 207 of the Treaty on the
Functioning of the European Union (TFEU) give the European Union exclusive
competence on foreign direct investment (FDI). The Communication paper
published by the European Commission on 7 July 2010 outlines its approach to
foreign direct investment issues.151 The European Commission described that “For-
eign direct investment (FDI) is generally considered to include any foreign invest-
ment which serves to establish lasting and direct links with the undertaking to which
capital is made available in order to carry out an economic activity.” (Emphasis
added)152 In particular, the European Commission is of the view that in case of
shareholding, such shareholding involves participation in management or control of
145
2004 US Model BIT, Article 1; 2012 US Model BIT, Article 1.
146
2004 US Model BIT, Article 1, Footnote 1.
147
2012 US Model BIT, Article 1, Footnote 2, First Sentence.
148
2012 US Model BIT, Article 1, Footnote 2, Second Sentence.
149
2012 US Model BIT, Article 1, Footnote 3.
150
Korea-US FTA, Article 11.28.
151
Communication From The Commission To The Council, The European Parliament, The Euro-
pean Economic And Social Committee And The Committee Of The Regions: Towards a compre-
hensive European international investment policy, COM(2010)343 (Final), 7 July 2010
152
Id., p. 1.
the company. Therefore, it expressly states that an investment without influence,

control, or management of an undertaking does not fall into FDI and would consti-
tute “portfolio investment” which would be regulated under the laws of freedom of
movement of capital (Articles 63–66 TFEU).153
Arbitral Awards After Salini

After the Salini case, tribunals generally followed the Salini criteria as a widely
accepted norm, with some adjustment to the circumstances. For example, in the
Noble Energy v. Ecuador case,154 the ICSID tribunal also recognized that the Salini
test was a widely accepted standard. Interestingly, the ICSID tribunal recognized that
“there is no doubt that under the ICSID Convention, shares in a company qualify as
an investment” and Noble Energy’s shareholding of MachalaPower, would qualify
as an “investment” based on the CMS Gas Transmission Company v. Argentina
case.155 In addition, the tribunal found that “the disputes submitted to the Tribunal
relate to and arise directly from the implementation of a project which was clearly
not a mere commercial operation. The Concession was to last 31 years and the
project clearly benefited the State’s development and involved a risk for the inves-
tors.”156 It then found that MachalaPower’s operation also constituted “investment”
under Article 25 of the ICSID Convention.157
In another case, there was a dispute concerning a series of commercial arrange-
ments involving a company and a hotel owned by a Ukrainian State enterprise
regarding reconstruction and renovation of several floors of the hotel referred to as
“joint activity agreements (JAA).”158 The tribunal found that (1) the claimant’s
economic activity in Ukraine lasted for a sufficient duration, from 1994 through
2004 through multiple JAAs and renovation/reconstruction process; (2) claimant’s
investment bore a high commercial risk as it took place in a time of political turmoil
because the collapse of the Soviet Union led to high inflation, high interest rates and
a high risk premium; (3) the claimant made a substantial economic commitment in
renovating the hotel during the relevant period; and (4) the renovated hotel quickly
became a venue of “many important official functions, and the Ukrainian Govern-
ment even bestowed awards on the Hotel and the project during the period of
operation” and significantly contributed to the promotion of Ukrainian tourism
industry, which the Tribunal viewed as evidence of a significant contribution to the
public interest of the host State.159 As a result, the ICSID tribunal found that the
153
Id., pp. 1–2.
154
Noble Energy, Inc. and Machala power CIA. LTDA v. Ecuador and Consejo Nacional de
Electricidad, ICSID Case No. ARB/05/12, Decision on Jurisdiction, (5 March 2008).
155
Id., para 130.
156
Id., para 132.
157
Id., para 133.
158
Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16, Award (8 November
2010), paras, 44–229.
159
Id., paras 317–332.
26 S. Kang
project at issue met the Salini test, and therefore the claimant had made an “invest-
ment” under Article 25 of the ICSID Convention.
In the Bayindir case,160 Pakistan raised an objection to jurisdiction based on the
alleged lack of an investment within the meaning of Article I(2) of the Turkey-
Pakistan BIT and Article 25 of the ICSID Convention.161 Applying the Salini test,
the ICSID tribunal had no problem finding the existence of investment under the
Turkey-Pakistan BIT as Bayindir made contribution both in terms of know-how,
equipment, and personnel and in terms of injection of funds, within the meaning of
the general definition of “investment” set forth in Article I(2) of the BIT.162
The tribunal found that because the completion of the project involved a sub-
stantial amount of resources and time and Pakistan did not challenge jurisdiction in a
similar dispute involving the construction of a dam.163 Then, the tribunal applied the
Salini test. First, the tribunal found that it had already held that there was a significant
contribution of funds, know-how, equipment, and personnel by Bayindir.164 Regard-
ing the duration element, the tribunal noted that Bayindir pointed out that the
Contract had an initial duration of 3 years followed by a defect liability period of
1 year and a maintenance period of 4 years against payment. In addition, the tribunal
found that the project had been underway for 3 years and that Bayindir was granted a
contractual extension of an additional 12 months. As Pakistan also did not contend
that the project was not sufficiently extended in time to qualify as an investment, the
tribunal considered that the duration element was satisfied.165 The tribunal also
recognized an obvious risk for Bayindir because of “a defect liability period of
1 year and of a maintenance period of 4 years against payment creates an obvious
risk for Bayindir.”166 Also, the Tribunal held that the construction of a highway was
clearly important for Pakistan’s infrastructure development. As a result, the tribunal
held that the tribunal had jurisdiction over the case.167
In the Jan de Nul168 case, the ICSID tribunal began by identifying the key
elements of the Salini test: “(i) a contribution, (ii) a certain duration over which
the project is implemented, (iii) a sharing of operational risks; and (iv) a contribution
to the host State’s development.”169 There was no dispute on (i), (iii), and (iv).
However, Egypt raised a question of whether the dredging project met the duration
160
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).
161
Id., para 104.
162
Id., para 121.
163
Id., paras 127–129.
164
Id., para 131.
165
Id., paras 132–133.
166
Id., para 136.
167
Id., para 137–138.
168
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).
169
Id., para 91.
criteria. The tribunal noted that an operation may be characterized as an “invest-

ment” if it lasts at least 2 years.170 The ICSID tribunal agreed with the claimants that
there was an investment meeting the duration criteria.
In the Saipem v. Bangladesh case, the ICSID tribunal explicitly applied the “the
well-known criteria developed by ICSID tribunals in similar cases, which are known
as the Salini test.”171 The ICSID tribunal in Toto Costruzioni v. Lebanon172 also
faced the issue of the existence of an “investment,” applying the Salini test. The
ICSID tribunal found that Toto’s construction project met the requirements under the
Salini test, i.e., a contribution by the investor, a profitability risk, a significant
duration, and a substantial contribution to the State’s economic development,173
and thus found that Toto’s project met the risk element of the Salini test. Regarding
other issues, the tribunal found that Toto made a significant financial and technical
contribution to undertake the project for the duration of well over 5 years, and the
project significantly contributed to the State’s economic development because it
facilitated land transportation between Lebanon and Syria.174
In a very recent case, the Permanent Court of Arbitration (PCA) also applied
Salini criteria in a dispute arising from the France-Mauritius BIT.175 In this case, the
parties and the tribunal agreed to apply the Salini criteria. However, in analyzing the
nature of the alleged activities, the arbitral tribunal found that the Claimants’ transfer
of 300,000 EUR was just “one-off” payment, and they failed to provide evidence of
contribution of their know-how.176 As a result, the arbitral tribunal held that the
alleged activities could not qualify as an “investment” under the France-Mauritius
BIT, as they lacked (1) evidence of contribution to Mauritius economy and (2)
“commitments of discernible duration.”177
In addition, another ICSID tribunal confirmed that Salini criteria are the starting
point of the analysis of the existence of an “investment” under the Article 25(1) of
the ICSID Convention as well.178 In this case, while the tribunal confirmed that the
first three Salini criteria are fulfilled, the fourth criterion, i.e., the contribution of the
activity to the host State’s development, was a controversial issue, as the business
170
Id., para 93.
171
Saipem S.p.A. v. The People’s Republic of Bangladesh, ICSID Case No. ARB/05/07, Decision on
Jurisdiction and Recommendation on Provisional Measures, (21 March 2007), para 99.
172
Toto Costruzioni Generali S.p.A. v. Republic of Lebanon, ICSID Case No. ARB/07/12, Decision
on Jurisdiction (11 September 2009). See e.g. Chaisse J (2015) The issue of treaty shopping in
international law of foreign investment – structuring (and restructuring) of investments to gain
access to investment agreements. Hast Bus Law Rev 11(2):225–306
173
Id., para 86.
174
Id., para 86.
175
Christian Doutremepuich and Antoine Doutremepuich v. Republic of Mauritius, PCA Case No.
2018-37, paras 121–155.
176
Id., paras 125–140.
177
Id., paras 141–144.
178
Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft v. Argentine
Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction (29 June 2018), para 187.
28 S. Kang
involved operation of gaming and lottery activities. However, the tribunal held that
the Claimant’s business through shareholding indirectly contributed to the positive
economic development of the province of Salta, and as a result, Argentina. There-
fore, the tribunal held that all four Salini criteria were fulfilled.179
Jurisdiction Rationae Temporis
There is also an issue of jurisdiction rationae temporis. Generally, the jurisdiction

rationae temporis refers to “the jurisdiction of a court of law over a proposed action
in relation to the passage of time.”180 In many BITs or FTAs, parties limit their
consent to arbitration to disputes arising after the entry into force.181
However, there are cases where an arbitral tribunal may distinguish between “the
events giving rise to the dispute and the dispute itself.”182 The ICSID tribunal in
Maffezini v. Spain case explained that even if the events leading to a dispute occurred
before the entry of force of Argentina-Spain BIT, the dispute itself began with “the
expression of a disagreement and the statement of a difference of views” which
acquired precise legal meaning “through the formulation of legal claims, their
discussion and eventual rejection or lack of response by the other party.”183 There-
fore, the ICSID tribunal held that “the dispute in its technical and legal sense began
to take shape in 1994, particularly in the context of the disinvestment proposals
discussed between the parties,” which was after the entry into force of the Argentine-
Spain BIT. As a result, the ICSID tribunal held that it had jurisdiction over the
dispute.184
In a recent case of Ping An v. Belgium, the claimant relied on 1986 China-
Belgium BIT185 for substance of the case, and 2009 China-Belgium BIT186 to
179
Id., paras 188–193.
180
https://definitions.uslegal.com/j/jurisdiction-ratione-temporis/ (Accessed 9 October 2019)
181
Salini Costruttori S.p.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on
Jurisdiction (23 July 2001), para 170; KORUS FTA, Article 11.1.2: For greater certainty, this
Chapter does not bind either Party in relation to any act or fact that took place or any situation that
ceased to exist before the date of entry into force of this Agreement.
182
Press, Article 25 – Jurisdiction, para 51.
183
Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision on
Jurisdiction (25 January 2000), para 95–96.
184
Id., paras 98–99.
185
Agreement between the Government of the People’s Republic of China and the Belgium-
Luxembourg Economic Union on the Encouragement and Reciprocal Protection of Investments
dated June 4, 1984. (entered into force on 5 October 1986)
186
Agreement between the Government of the People’s Republic of China and the Belgium-
Luxembourg Economic Union on the Reciprocal Promotion and Protection of Investments dated
June 6, 2005. (entered into force on 1 December 2009)
establish jurisdiction.187 The tribunal began by explaining that the principle of

nonretroactivity under Article 28 of the Vienna Convention on the Law of Treaties
(VCLT) applies as “general principle of international law.”188 The tribunal also
recalled that substantive provisions of a BIT have no retrospective effect.189 How-
ever, the tribunal also emphasized, “whether obligations have retroactive effect is a
quite different question from the question whether a BIT applies to investments made
prior to its entry into force.”190 After extensively reviewing Mavrommatis191 case,
the tribunal found that “the temporal application of jurisdictional provisions is a
question separate from the retroactivity of substantive provisions.”192
The tribunal recalled that in some cases, there may be an explicit provision in
BITs and FTAs to limit the parties’ consent to arbitration to disputes arising after the
entry into force.193 However, if there is no such provision, the tribunal explained that
the arbitral tribunals sometimes applied presumption of nonretroactivity.194 How-
ever, the ICSID tribunal in Ping An v. Belgium case distinguished the case from other
precedents, as they viewed it as an issue of interpretation of successive treaties.195
The tribunal first discussed Article 8(1) of the 2009 China-Belgium BIT, but as
the language was inconclusive, the tribunal turned its attention to the intention of the
parties.196 The tribunal found several indicators that “the 2009 BIT does not cover
disputes which arose before it came into force but whose disposition was not
expressly provided for under the 2009 BIT.” The indicators were (1) the plain
meaning of the text of Articles 8(1), 8(2) and 10(2) refers only to the dispute
which arose after the entry into force of the 2009 China-Belgium BIT; (2) the
preamble of the 2009 China-Belgium BIT cannot offer assistance on the question
the Tribunal must answer; (3) the fact that Article 10(2) that the 2009 BIT applies to
all investments, made before or after its entry into force, does not assist in any way
on the question of the effect of a dispute arising before entry into force; (4) one
cannot infer that disputes which were not under judicial or arbitral proceedings, but
notified under the 1986 BIT fall under the scope of the 2009 BIT; (5) the 2009 China-
Belgium BIT was intended to substitute and replace the 1986 BIT, thus such
inference cannot justify such inference; and (6) it would allow the use of the much
wider dispute resolution provisions of the 2009 BIT to bring claims already notified
187
Ping An Life Insurance Company, Limited and Ping An Insurance (Group) Company, Limited v.
The Government of Belgium, ICSID Case No. ARB/12/29, Award (30 April 2015), para 37–50.
188
Id., paras 168–170.
189
Id., para 171.
190
Id., para 173.
191
Permanent Court of International Justice, Mavrommatis Palestine Concessions, Judgment of 30
August 1924 (Series A, No. 2)
192
Id., para 186.
193
Id., paras 187–188.
194
Id., paras 189–191.
195
Id., para 192.
196
Id., paras 212–219.
30 S. Kang
under the 1986 BIT, which is far more limited in substantive scope for the purposes
of dispute-settlement jurisdiction.197 As a result, the ICSID tribunal accepted
Belgium’s objection to the jurisdiction rationae temporis, and therefore the ICSID
tribunal dismissed the case.198
Concluding Remarks
The issues surrounding the jurisdiction ratione personae and jurisdiction ratione
materiae, appear again and again. Article 25 of the ICSID Convention and the
related jurisprudence are usually treated as “leading” rules governing the jurisdic-
tional objections, and principles like Salini criteria are widely accepted as principles
governing the jurisdictional objections. In addition, principles under general public
international law still govern the issue, and thus tribunals often apply leading ICJ
cases and ILC Draft Articles in many cases. Also, the jurisdictional objections
usually take similar form of arguments, citing similar rules. As a result, the value
of precedents is regarded higher by arbitral tribunals. However, the issues are
ultimately handled on case-by-case basis, as each case is distinct from one another,
dealing with different investment treaties.
197
Id., paras 224–229.
198
Id., para 240.

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Jurisdictional Objections and Defenses

(Ratione Personae, Ratione Materiae, and

© Springer Nature Singapore Pte Ltd. 2020 1

The determination of whether a court or an arbitral tribunal has jurisdiction over a

An Investor’s Noncompliance with the Host State Law

However, allegations of investor misconduct may arise in any stage of investment

which constituted an alleged violation of El Salvador – Spain BIT. In the ICSID

“Jurisdiction” Versus “Admissibility”

The main point distinguishing the “jurisdiction” objections and “admissibility”

Therefore, the 2010 UNCITRAL Rules eliminated the presumption in favor of

Discussions on Jurisdiction Rationae Personae

“Nationality” Under International Investment Law

• An investor must be a national of a party to the investment treaty or an ICSID

An important case to review the issue of the nationality of a natural person is

In subsequent cases, the tribunals basically endorsed the ﬁrst principle on

Determination of Corporate Nationality

would refer to the deﬁnition of an “investor” under the 1994 Ukraine-Lithuania

A State is entitled to exercise diplomatic protection in respect of a corporation that was a

In case of corporations, the basic rule is that a corporation’s nationality depends

Discussions on Rationae Materiae

What is a “dispute” under the ICSID Convention? A legal dictionary deﬁned a

The existence of a dispute also presupposes at least a minimum communication

reasonable time would be sufﬁcient to establish existence of a dispute.107 In addition,

Legal Nature of the “Dispute”

“Directness” of the Dispute

Jurisprudence Before Salini Case

(i) claims to money that arise solely from

Background of the Case

The ICSID Tribunal’s Findings on Definition of “Investment”

Practice After Salini

It is interesting to note that this provision recognizes that the characteristics of

the company. Therefore, it expressly states that an investment without inﬂuence,

Arbitral Awards After Salini

criteria. The tribunal noted that an operation may be characterized as an “invest-

Jurisdiction Rationae Temporis

There is also an issue of jurisdiction rationae temporis. Generally, the jurisdiction

establish jurisdiction.187 The tribunal began by explaining that the principle of

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