There are two main approaches to define investment (ratione materiae). The first is called “enterprise-based” definition of investment, “akin to the traditional concept of a direct investment and which excludes portfolio investment and real estate”. The second approach is the “asset-based” definition of investment, which is generally used in bilateral investment protection treaties including intangible assets such as intellectual property and portfolio investment.
The BIT between Japan and Papua New Guinea use a hybrid approach to define investments. The Energy Charter Treaty (ECT), which frames this particular BIT provides a list of assets to illustrate the term “investment”. Under the treaty, it refers to any investment associated with any economic activity in the energy sector. ECT Article 6(1) contains the same definition of investments as the BIT in Article 1(1).
“The broad definition of investment suggest that non-discrimination, investment protection and national treatment are applicable to all form of investments listed in the BIT. In the case of Servier v Poland it has been granted that the investor sell imported pharmaceutical products. The significance of this case is, it operates as an example of how broadly investment can be defined. Further examples can be found in Petrobart v Kyrgyz Republic and in Eureko v Poland cases. Although, the Salini criteria states that there are certain aspects which need to be met in order to determine an investment.
Those criteria are given by ICSID Article 25 ” The five criteria are commitment of capital, assumption of risk, profit expectations, duration, contribution to development. The decision of the strict application of those criteria has been challenged in few cases on that basis that “they do not appear on the ICSID convention”. On the other hand, the decision in Quiborax v Bolivia has triggered to reach a middle ground that even if the Salini criteria has not been applied it does not mean that there is no investment. It can be said that there is no strictly used definition of investment. It would be illogical in the lights of that there are many treaties in force nowadays which are defining investment on a different way. I tend to think that as long as the definition used by a BIT is equivalent to one appears in a Treaty under international customary law the investment is correctly defined.