NEED TO DEVELOP THE DEFINITION OF INVESTMENT UNDER INTERNATIONAL INVESTMENT LAW BEYOND SALINI AND QUIBORAX TESTS TO ACHIEVE EQUITABILITY

Abstract

The globe is not physically fragmented as this phrase is very relevant in the context of global economic relations. Investment is the key contributor to the economic development of any country. In the global context, cross border investments are inevitable and inexorable, particularly for the developing and underdeveloped countries which need such investments greatly for their economic development. However, when a person or institution from one country invests money/capital in another country, the question of protecting such investment certainly reaches the surface. The modern investment law encompasses two important protective principles (1) protecting the rights of investors, and (2) protecting the right to the economic development of host countries. In any dispute between the money/capital contributor and the host country, a fundamental question is whether the claimant’s contribution of money/capital in the host country constitutes an investment. It is an important question, as the rights and duties of the parties depend on the answer to this. The International Centre for Settlement of Investment Disputes (ICSID) which is the main forum for the settlement of the international investment disputes, did not define investment. This made the tribunals under ICSID to determine this question. Two different tests (1) the Salini test and (2) Quiborax test articulated by the tribunals create uncertainty in the investment law. This paper will focus on the merits and demerits of these tests and will discuss how to achieve an equilibrium whereby both parties’ interests are reasonably protected.