Tribunals have sharply curtailed the categories of investment eligible for protection under international investment law’s keystone treaty, the ICSID Convention. This Article urges them to reverse that trend and recognize that ICSID has jurisdiction over any plausibly economic asset or activity.
Tribunals’ sudden constriction of what constitutes “investment” arises in the first instance from a widespread historical misunderstanding. Commentators have commonly acted as though the Convention’s omission of a definition for “investment” amounts to a wholesale delegation of the question to arbitral tribunals for case-by-case lawmaking. That premise is mistaken. The Convention’s travaux demonstrate that the drafters adopted a clear—and extremely broad—meaning of “investment.” It is not that all parties agreed on this broad understanding from the start. Rather, the broad definition was part of a compromise reached after long and contentious negotiations over what that definition should be. The other element of the compromise was a series of opt-out provisions by which states could narrow the Convention’s capacious baseline definition on an individual basis.
The historical arrangement properly reflects the deference that international tribunals owe to state autonomy. This Article suggests three reasons for tribunals to respect a state’s decision to extend ICSID protection to a given category of enterprise. First, the historical approach retains policy flexibility in a pluralist world occupied by diverse state actors with shifting policy preferences. Second, it delegates economic decisions to political entities that generally have a comparative advantage in both expertise and legitimacy. Third, it recognizes that the operative legal term is meant to facilitate state action, not to restrain state autonomy. This Article therefore argues that international tribunals should respect the ICSID framework as it was originally established: an adaptable vehicle with the capacity to satisfy many states’ preferences and the flexibility for individual states to change their investment policies over time.