chapter  9
18 Pages

Treaty definitions of ‘investment’ and the role of economic development: a critical analysis of the Malaysian Historical Salvors cases


The definition of an ‘investment’ is a highly con tentious topic in investment arbit ra tion. A range of indic at ive ‘charac ter istics’ or binding ‘requirements’ – depending on one’s in ter pretation – have been identified: a con tri bu tion of resources, sufficient duration, incurring a certain risk, acquiring a regu lar profit and return, and a con tri bu tion to the eco nomic de velopment of the host state. Remarkably, there is still no consensus in the case law on whether any cri teria should be applied at all, or what cri teria those would be, or how such cri teria should be in ter preted. The charac ter istic that has been in ter­ preted most diversely is prob ably the ‘con tri bu tion to the eco nomic de velopment of the host state’. Some tri bu nals have deemed it a funda mental pillar of investment arbit ra tion; others have not even con sidered it im port­ ant enough to mention it. In this con tri bu tion, two of those divergent de cisions will be con sidered more closely: the Award on Jurisdiction, a case brought based on the United Kingdom-Malaysia Bilateral Investment Treaty (BIT, 1981),1 and the Annulment Decision in Malaysian Historical Salvors, SDN, BHD v. Malaysia.2