UNCTAD Report on Recent Trends in Investment Disputes

The UNCTAD has recently produced the 2010 issue of its annual report on Recent Developments in Investor-State Dispute Settlement. The report evaluates a number of issues relating to Investor-State investment law disputes. On a general note, it shows that despite high costs and an often lengthy duration of proceedings, the number of investment law proceedings is growing and most disputes are administered by the ICSID or governed by the UNCITRAL Arbitration Rules. 

In 2009 there were 357 active known investment disputes, of which 202 were initiated in the last five years (63% ICSID and 25% UNCITRAL). In the same year, 44 decisions were made with 20 awards on the merits of the particular case, 7 decisions on jurisdiction, 4 decisions on the challenge of arbitrators and 3 decisions on annulments. The remaining decisions related to the admissibility of ancillary claims, provisional measures or settlement agreements.

One of the issues expressly commented on in the report is the contested criteria for defining an “investment”. In the Romak v. Uzbekistan case referred to, the Claimant argued that its rights, arising out of a sales contract, would qualify as an investment under the Switzerland-Uzbekistan BIT due to the broad definition covering “every kind of assets and particularly…”. The arbitral tribunal rejected this argument. Various investment criteria have been developed in literature and case law, such as the need to assist the host State’s development by a contribution of money or assets of economic value with a certain duration and involving an element of risk. Authorities in the field have also argued that regularity of profit and return and a substantial commitment are further key factors that define an investment.

Despite the ongoing development around the specific key criteria by arbitral tribunals on a case-by-case basis – or probably even because of this continuous process – an international consensus has still not been reached. It remains to be seen whether, what the UNCTAD report refers to as “uncertainties”, will be further contributed to over the next years or whether pertaining decisions will converge on a particular set of criteria in order to establish some form of common understanding on the basics of the notion of an “investment”.