chapter  4
Determination of foreign investments
Pages 70

Determination of investment is an important element of international investment law because only qualified investments are protected thereunder. Traditionally, definitions of investments have taken either an asset-based or an enterprise-based approach. Briefly, an asset-based definition emphasizes foreign investors’ property interests and rights, whilst an enterprise-based definition focuses on foreign investors’ participation in and control of the entities established in the host state.1 What is common in contemporary bilateral investment treaties (“BITs”) and free trade agreements (“FTAs”) is the combination of asset-based and enterprise-based definitions in which what may constitute an investment is stipulated in an illustrative list. However, no BIT or FTA contains an exhaustive list of qualified investments. As a result, whether a particular transaction is qualified as a protected investment is subject to interpretation.