Protection under international investment agreements is subject to a number of conditions, the key conditions being qualification as a protected “investor” with a protected “investment,” and being within the temporal scope of the treaty’s protection. While questions surrounding the nationality of an individual and corporate investor have been extensively debated in the arbitral case law, the question whether an investment should have a particular “nationality” to meet the requirements of jurisdiction ratione materiae has received relatively little attention. The present contribution will analyse whether a protected investment is subject to any “nationality” requirements by reference to two separate issues: first, whether the funds used to make an investment should originate from a particular source or in a particular jurisdiction, and second, whether an investment should have a specific territorial nexus to the host State.
I. IS THE ORIGIN OF FUNDS RELEVANT TO THE EXISTENCE OF AN INVESTMENT?
To define what is a protected “investment,” most investment treaties adopt a broad definition in the form of a reference to “every kind of asset” followed by a non-exhaustive list of examples. However, treaties are silent on where funds used to make a protected investment should originate. Respondent States have raised two related objections to jurisdiction based on the origin of the capital invested: first, that the investor did not fund its investment using its own resources, and second, that the investment is “domestic,” rather than “foreign,” because the funds used to make the investment originated in the host State. Arbitral tribunals have unanimously rejected these objections, with one recent exception.