Application of the Salini test in determining investments in the practice of the International Center for Settlement of Investment Disputes

Tereshkova Valentina Vladimirovna PhD in Law Associate Professor of the Department of International Law of the Siberian Federal University 660075, Russia, Krasnoyarsk Territory, Krasnoyarsk, Maerchaka str., 6, office 410 tereshkova@list.ru

Gadalov Gleb Andreevich Master's Degree, Department of International Law, King's College London (UK) WC2R 2LS, Great Britain, London, Somerset House East, King's College gleb.gadalov@kcl.ac.uk

 Introduction

One of the most significant achievements in the field of international legal regulation of investment activity was the adoption of the Washington Convention on the Procedure for Resolving Investment Disputes between States and Foreign Persons of 1965 ^[1], the text of which was developed under the auspices of the International Bank for Reconstruction and Development.

The main way to protect the rights of investors guaranteed by the Washington Convention is the dispute resolution mechanism within the framework of the International Center for Settlement of Investment Disputes (ICSID). ICSID, the leading international arbitration institution in the field of investor-state dispute resolution, part of the World Bank Group, provides an opportunity for objective and independent arbitration between the state and the investor.

According to official ICSID data, as of 12.04.2019, 163 States have signed the Washington Convention, 154 of them have ratified it. Despite the fact that the Russian Federation has not ratified the Convention ^[1], for Russia there are more than 20 agreements on the promotion and protection of investments, providing for the transfer of disputes to the ICSID in accordance with the Additional ICSID Rules. For example, the Agreement between the Government of the Russian Federation and the Government of the People's Republic of China on the Promotion and Mutual Protection of Investments provides for the transfer of disputes between a State and a natural or legal person of another Contracting State to the ICSID, subject to the entry into force of the Washington Convention for both States, or in accordance with the Additional Rules of ICSID, if the Washington Convention has not entered into force for any of the Of the Contracting Parties (Part 2 of Article 9). Norms of a similar nature are contained in the agreements of Russia with Azerbaijan, Cambodia, the United Arab Emirates, Romania, Slovakia, Singapore, Uzbekistan, the Czech Republic, etc.

The first stage of any arbitration proceedings is the resolution of the issue of the availability of powers to consider the dispute submitted by the parties. Without resolving this key issue, it is impossible to determine whether a particular dispute is subject to consideration by one or another arbitration institution, the composition of arbitrators, to determine the boundaries of their activities, and, accordingly, proceed to the consideration of the case on the merits.

   According to Article 25 (1) (a) of the Washington Convention, ICSID's jurisdiction extends to any legal dispute arising directly from investments. The practice of applying this rule has caused a lively discussion in the doctrine, which has led to the evolution of the approaches used by arbitrators in determining the availability of investments in resolving issues of ICSID jurisdiction.

However, neither in the doctrine nor in the practice of dispute resolution has a consensus been reached on the substantive aspect of the "investment" category.

The determination of the existence of subject jurisdiction is of particular importance for the entire process of dispute resolution in ICSID, since the decision actually establishes the admissibility of the claim and resolves the issue of its further consideration on the merits.

In the presence of a seemingly sufficiently developed concept of investment, the definition of ICSID jurisdiction causes significant difficulties in practice. Firstly, there is a situation in which the ICSID arbitration panel, which resolves a specific dispute, has broad discretionary powers when assessing the investor's activities and, accordingly, when deciding on jurisdiction. Secondly, the lack of clear criteria for investment activity and the use of fundamentally different approaches and methodologies by different arbitrators negatively affects the formation of uniform arbitration practice. As a result, both foreign investors and recipient States are unable to predict their legal and financial risks in the event of a disagreement. In addition, the conflicts outlined above lead to a violation of the stability and legitimacy of the dispute resolution mechanism itself within the ICSID.

When determining the availability of investments, ICSID refers to the norms of international and national law, to its practice, and is also guided by doctrinal approaches.

MethodologyThe authors use general scientific and special research methods, such as analysis, synthesis and comparative analysis.

The authors analyze in detail the issues of subject jurisdiction in ICSID decisions, starting with the analysis of the Fedex case, where for the first time the need to use objective criteria in determining ICSID jurisdiction without interpreting these criteria was noted, and the Salini case, where the arbitrators disclosed the content of these criteria, as well as subsequent decisions illustrating the different approaches of arbitrators to the interpretation of the Salini test.

The concept of investment: basic approachesIn modern arbitration practice, there are two main approaches to determining the existence of an "investment" and the legal qualification of investment activity: "subjective" and "objective" ^[2] The key difference between them is which of the two international treaties will be given priority: the Washington Convention or the international agreement on the protection and promotion of investments.

The subjective or consensual ^[3] approach is based on the autonomy of the will of the parties and assumes that in the absence of a definition of "investment" in the text of the Washington Convention, the agreed will of the parties (sovereign states between which an agreement has been concluded) is crucial, and the qualification of economic activity in each particular case is carried out by referring to the definition contained in in the relevant investment protection agreement.

Since the parties to the contract themselves determine which transactions to consider as protected investments, disputes about which can be transferred to the ICSID, the subject jurisdiction is already in fact a foregone conclusion. In other words, although the parties submit the dispute for consideration voluntarily on the basis of the relevant international agreement, the ICSID arbitrators are not able to properly resolve issues of jurisdiction by applying the doctrine of "competence-competence", but only state the arbitrability of the dispute, taking into account the definition agreed in advance in the contract (Article 47 of the Washington Convention).

Definitions or lists of activities that fall under the investment criterion in the texts of bilateral and multilateral investment protection treaties can be divided into three main categories:

Free or open definitions ("asset-based definitions") ^[4] recognize any investments as protected, regardless of their nature and other properties.

Closed lists ("closed definitions") contain exhaustive types of transactions subject to protection in accordance with a particular investment protection treaty ^[5] and the Washington Convention.

Broad definitions ("circular definitions"), although they contain a certain list of activities, but for the most part they have a reservation "... but not limited to those" ^[6]. Such definitions, according to some experts (Barton Legum, 2005), make it possible to envisage new forms of investment emerging in the future ^[7].

Open and broad definitions provide arbitrators with a fairly wide freedom in interpreting the terms of the investment promotion agreement. However, it seems that such formulations negate the main advantage of the consensual approach – the autonomy of the will of the parties. The uncertainty of the range of transactions considered as investments leads to the fact that arbitrators, in the absence of a clear list of transactions, are forced to evaluate them at their discretion, based, at the same time, on objective characteristics.  The parties to the contract, although they have the right to clearly specify the categories of investments, deprive themselves of such. The only way to preserve the autonomy of the will of the parties in this case is to use only closed lists of investments that clearly define the types of protected investments, disputes over which will be arbitrable.

It seems that the subjective approach does not allow any differentiation of investments from any other, typical commercial operations. For example, if the parties to the relevant agreement have agreed on "any financial and contractual obligations" as investments, then with the subsequent legal qualification of investment activity, this may mean an unreasonably wide range of ordinary commercial transactions, which will actually lead to the simultaneous development of two more problematic issues – the unjustified expansion of ICSID jurisdiction in view of blurring the boundaries between investment and other economic activity, and, as a consequence, the abuse by investors of the right to appeal to international investment arbitration.

The second, objective approach, on the contrary, assumes the existence of the concept of "investment" as autonomous and establishes certain "external restrictions" on the content of such activities. Considering any economic activity through the prism of this approach, the arbitration interprets the concept of "investment" in accordance with its usual meaning and established practice. When interpreting, arbitrators may also use preparatory materials for the text of the Washington Convention. At the same time, when checking an investment for compliance with the Washington Convention, arbitrators use the so-called "two-key principle", which consists in the fact that the ICSID jurisdiction can be established only if the transaction in question complies with both the definition of investment enshrined in a specific agreement on mutual protection and promotion of investments and the requirements of the Washington Convention ^[8].

For the first time, such a view of the problem under consideration was presented by one of the authoritative researchers of the issue and the ICSID arbitrator, H. Schreer, who presented a list of the most typical signs for investment activity. The initial version had 4 criteria, among which were named significant financial investments; a certain duration of the investor's activity on the territory of a foreign state; regularity of revenue and profit; risks assumed by the investor; as well as contribution to the economic development of the recipient state.

In the practice of ICSID, attempts have been made before to independently interpret the category of "investments", but they were few. The first dispute in which the ICSID arbitrators departed from the usual practice that had existed for years was the case of Fedax v. Venezuela ^[9]. In this case, the company, which has a formal registration on the island of Curacao in the Caribbean Sea, was the holder of six Venezuelan debt receipts.  The respondent State refused to pay them, arguing that such receipts were not investments within the meaning of the Washington Convention. According to the Venezuelan Government, such a transaction could not be considered a direct foreign investment, including a direct, long-term investment of resources or the transfer of capital from one state to another in order to acquire a stake in a local company, since it does not entail any risks for a potential investor. Although this objection of the respondent State was rejected, the arbitration formulated a number of principles that subsequently became key to the development of an objective approach. In particular, it was pointed out that in order to qualify any activity as an investment, it is necessary to have a real contribution to the economic development of the host State, as well as a certain duration.

Finally, the basic "objective test" (the Salini test), which exists in its current form, was formulated as a definite list of signs in the case of Salini v. Morocco ^[10]. This dispute arose over a contract for the construction of a highway in Morocco, as the executor of which two Italian companies were involved, who fulfilled their obligations with a delay of the established deadlines for objective reasons, and therefore their work was not paid. After unsuccessful attempts to appeal against the actions of local authorities in national courts, the companies appealed to ICSID.

The Government of Morocco argued that the concept of investment should be defined in accordance with national legislation, according to which the transaction in question should be characterized as a contract for the provision of services, and not as an investment contract.

The arbitration concluded that the contract concluded between ADM LLC acting on behalf of the State and the Italian companies constitutes an investment in accordance with the provisions of the bilateral agreement concluded between the Kingdom of Morocco and Italy, as well as article 25 of the Washington Convention.

When considering this case, the arbitrators pointed out signs of investment activity, allowing to distinguish it from any other, for the purpose of establishing the subject jurisdiction of ICSID in relation to the dispute. Among the criteria , the arbitrators called: (1) investment of funds or assets (contribution criteria); (2) a certain duration of the project implementation; (3) an element of risk and (4) a contribution to the economic development of the recipient state.

Criteria of the "Salini test"(1) The contribution criterion is indisputable and presupposes the establishment by the arbitrators of the fact of the investor's investment of capital.

Investments can be both financial and consist in the investment of know-how by the investor. In order to qualify an activity as an investment of capital, practice in some cases does not require the presence of real expenses. For example, in the case of Malicorp v. The Arab Republic of Egypt ^[11] arbitrators noted that, despite the fact that the company did not provide many services in accordance with the contract, it was bound by an obligation to make significant investments in the future. Such a commitment is an investment.

In some disputes, the defendants attempted to challenge the existence of a contribution on the basis of the absence of profit-making activities. However, in the decisions in the cases of Saluka v. Czech Republic ^[12] and Caratube v. Kazakhstan ^[13], ICSID noted that it was enough for the plaintiff to prove only the existence of a "minimum level of economic motivation".

A different approach was applied by the arbitrators in the case of Quiborax v Bolivia ^[14]. One of the applicants, the owner of one share of a legal entity, received it as a gift from another founder. According to the arbitrators, in this situation there was no evidence of a "real contribution" or an intention to make investments in the future.

As we can see, the mere fact of acquiring assets at face value cannot be considered as the absence of a contribution criterion. The low or zero value of the acquired asset is not in itself an indicator of the insignificance of the contribution, but only requires a more detailed analysis of all the circumstances of the case. Thus, the case of Reynolds Jamaica Mine s^[15] was decided in favor of the applicant, who acquired shares of a legal entity by inheritance, thus not paying even the nominal value, but receiving such an asset free of charge.

The above practice testifies to the attempts of various arbitral tribunals to single out their structure in separate criteria of the objective test. For example, as mentioned above, as internal elements of the deposit requirement, specific circumstances that have arisen about a certain transaction, the method of obtaining an asset and its value, the existence of goals can be considered. It seems to us that this approach, although it significantly complicates the research process when deciding on the subject jurisdiction of ICSID, it allows the most objective and accurate determination of the actual availability of capital investment.

As a rule, arbitrators tend to recognize this criterion as met in all cases when an investor has made any expenses or used his financial or human resources to fulfill his obligations under the project. 

   (2) Among the criteria, the arbitrators analyze the duration of the investment project. The duration, as noted in the Salini case, should be from two to five years and is due to the average terms of return of the investor's investments.

When working on the text of the Washington Convention, the issue of fixing the minimum terms of an investor's activity in the text of article 25 was considered. The developers proposed to set a minimum limit of two to five years. However, due to disagreements about the timing, it was decided not to include any deadlines in the text of the Washington Convention.

In practice, the application of this criterion is controversial. It remains unclear which period should be taken into account when qualifying an investor's activity: initially planned (specified in the contract) or actual?

In our opinion, it is necessary to take into account the planned timing of the implementation of the investment project. This will allow taking into account all external factors affecting the implementation of the investment project. For example, an investor whose activity has been suspended or terminated due to illegal actions on the part of the host State will not be deprived of access to the ICSID dispute resolution mechanism. This approach was demonstrated by the arbitrators in the cases of Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka^[16] and LESI S.p.A. and Astaldi S.p.A. v. People's Democratic Republic of Algeria ^[17]. 

The existence of any strict time limits of investment activity, both minimum and maximum, is also controversial. In our opinion, the duration assessment should be carried out taking into account all the circumstances accompanying the investment project, in each specific case. 

 (3) Risks are another criterion in the Salini test. Risks accompany any investment activity and in most cases are caused either by the unstable political situation in a particular state or by a low level of profitability.

In our opinion, risk is a complex category that can simultaneously include elements that are different in nature. Risks can simultaneously be of an economic, political and legal nature, be associated with uncontrolled natural phenomena that affect the implementation of the project. In our opinion, when making a decision on jurisdiction, not all risks should be taken into account, but only those that have an impact on investment activity.

In the doctrine of international investment law, risks are usually divided into three categories: political, economic and risks associated with non-fulfillment by the state of obligations to a foreign legal entity ^[18]. Taking into account that non-fulfillment of any terms of the contract may take place in any, not only investment legal relations, we believe that such a risk cannot be considered as qualifying for investment activity.

An analysis of the current ICSID practice shows that arbitrators take into account two main types of risks - economic and political. At the same time, the risk criterion is closely related to another criterion - the duration of the project: the longer it is, the greater the risks the investor's activity is exposed to.

Unfortunately, in most decisions, arbitrators limit themselves to a general mention of the existence of risks, without conducting a detailed analysis of the content of this criterion.

The assessment of the presence of risks is carried out on the basis of the internal conviction of the arbitrators. For example, in the case of Jan de Nul N. v. Egypt ^[19], it was found that the investor's risk was associated with the increased complexity of work in the Suez Canal.  In another case, Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka ^[16] noted that the presence of an investor's contribution in the amount of $ 2.5 million indicates the risks present in its activities. As you can see, the higher the total investment amount, the higher the risk.

   In addition, some arbitrators believe that the presence of an investor's dispute with a foreign state already indicates risks ^{[9, § 40; 16, § 301]}.

(4) The fourth criterion – the impact on the economic development of the recipient state causes lively disputes in practice. In most cases, attempts by the State to use this criterion as a basis for challenging the ICSID jurisdiction are rejected by the arbitrators, since any investment already initially has, to some extent, an impact on the economic growth of the host State. Despite the fact that the analysis of an activity for its impact on the economy is not, strictly speaking, a legal issue and, moreover, is subject to subjective assessment to the greatest extent among all criteria, this condition has special significance due to the direct reference to it in the preamble of the Washington Convention.

In the case of Quiborax v. Bolivia ^[14], the arbitrators rejected the application of the fourth criterion, pointing out that, despite the direct indication of this condition in the text of the Washington Convention, economic development is a result, not a condition of investment activity. This position seems controversial to us.

A consensus has been reached in the international community regarding the rules of interpretation of international treaties. In accordance with article 31 of the Vienna Convention on the Law of Treaties of 1969^[20], the Washington Convention should be interpreted "in good faith in accordance with the usual meaning to be given to the terms of the treaty" in their context and in the light of the object and objectives of the treaty.

The rules of interpretation set out in the Vienna Convention on the Law of Treaties are of practical importance for choosing between the approaches used in the Salini and Quiborax cases. The Vienna Convention of 1969 requires arbitrators to analyze the full text of the contract, including its preamble. In the preamble of the Washington Convention, economic development is indicated as one of the goals.

The materials of the negotiations of the working group on the preparation of the text of the Washington Convention also indicate that the developers paid special attention to the need for economic development of states ^[21]. Despite the fact that some researchers note the controversial nature of the negotiation materials as an auxiliary means of interpreting the norms of the Washington Convention and, accordingly, the investment criteria arising from it, we believe that the recordings of negotiations as reliable preparatory materials have the status of an auxiliary means of interpretation, since authoritative experts in the field of international investment law participated in them.    

In addition to the main four criteria of the "Salini test" formulated in the disputes already mentioned earlier, some arbitrators use other criteria as additional criteria. Among them, it is worth highlighting such as the integrity of the investor and the compliance of the investor's activities with the national legislation of the recipient state.

For the first time these criteria were applied in the case of Phoenix Action Ltd. v. The Czech Republic ^[22]. The company, originally registered in Israel, was acquired by two Czech companies. During the proceedings, it was established that at the time of the change in the ownership structure of the company, two Czech owners were already involved in various legal proceedings in national courts, including bankruptcy proceedings, as well as criminal charges against the CEO. According to the arbitration, the company's goals did not include investing in the Czech Republic. The establishment of the company pursued only the goal of obtaining benefits and preferences provided for by the provisions of the contract for foreign investors.

Thus, a "looped" ownership structure was created, in which investments did not actually leave the territory of the host State. Formally, the legal entity was a foreign entity and it was subject to the provisions of the bilateral agreement on the protection of investments between the Czech Republic and Israel. However, in fact, the company was controlled by persons having the nationality of the host State. In addition, investments and related transactions did not leave the Czech Republic. The ultimate goal of such actions to plan the nationality of the company was the need to transfer previously arisen disputes considered by state courts to international arbitration. The conditions of personal jurisdiction have been met. However, the arbitrators considered that ICSID has no jurisdiction in this dispute, relying on the so-called "clean hands" doctrine. The doctrine originally originated in the common law system, currently it is applied both in the practice of the International Court of Justice of the United Nations and in the practice of international arbitration. The essence of the doctrine is that a party cannot claim to protect its interests if it is proved that it acted in bad faith ^[23].             

Interpreting the Washington Convention and bilateral investment promotion treaties in the light of general principles of international law, the arbitration concluded that "the purpose of international protection is to protect legitimate and bona fide investments" ^{[22, § 100]}.

The Tribunal concluded that it does not have jurisdiction in this dispute, since the plaintiff created a legal fiction "in order to gain access to the international arbitration procedure, to which he has no right" ^{[22, § 143]}. According to the arbitrators, the initiation of arbitration proceedings "was an abuse of the ICSID investment arbitration system."

An analysis of the current practice allows us to conclude that when evaluating the actions of an investor, arbitrators, as a rule, try to establish the investor's intention. Thus, if the investor's actions were initially aimed only at creating conditions for access to international arbitration, then the applicant may be recognized as unscrupulous and abused his procedural rights.

   The second additional criterion - the criterion of legality - assumes that the investor's activities comply with the national legislation of the recipient state. In the case of Phoenix Action Ltd. v. The Czech Republic, we see that the legal entities involved in the dispute, although they were created with the aim of obtaining the right to apply to ICSID, fully complied with the current legislation of the Czech Republic. The trials in the national courts were not completed at the time of the transfer of the dispute to arbitration, and there were no judicial acts that entered into force and confirmed the illegality of the investor's actions.

In Phoenix Action Ltd. v. The Czech Republic, the arbitrators analyzed six criteria, including the criteria of legality and good faith.

It should be noted that since the criterion of legality is absent in the text of the Washington Convention and is of a material rather than procedural nature, the use of this criterion at the stage of making a decision on jurisdiction seems to us controversial.

According to some authors (D. Baumgartner) ^[24], good faith or legality should not be included in the list of requirements for investments at all. For example, the decision in the already mentioned case Quiborax v. Bolivia states that even though in some cases some abuses precede the appeal to arbitration, investment activity, even illegal or unfair, does not lose its nature and, accordingly, ICSID jurisdiction extends to such disputes. Similarly, the decisions in the cases of Saba Fakes v. Turkey ^[25] and Caratube v. Kazakhstan ^[13] were motivated. This approach seems to us to be the most well-reasoned. In our opinion, the assessment of the investor's behavior and his integrity is beyond the stage of making a decision on jurisdiction. 

In arbitration practice, two methodological approaches to the application of the "Salini test" have been formed.

The first is deductive, when using which, a final logical conclusion is formed, in which a particular conclusion is derived from the general one. To determine whether there is an "investment" in a particular case, arbitrators need to establish all existing investment criteria. This approach has been called "deductive", because in it logical inference is based on private premises. In arbitration practice, the number of the above criteria that need to be used varies, but the arbitrators agree on a common method for determining the content of the "investment" category.

The second method was called intuitive, since it involves the establishment of only the most characteristic features of investment activity in the transactions under consideration.

We share X's position. Schreer, who supports the intuitive method and believes that the criteria developed by practice and based on the doctrinal views of authoritative experts should be understood as the basic features of an investment in accordance with the Washington Convention, without giving these criteria an imperative character.

It seems to us that V.N.Anurov's opinion is well-reasoned, according to which the norms of the Washington Convention have priority over the norms of international agreements on investment protection, ^[26] since it is its provisions that contain procedural norms regulating issues of jurisdiction, and investment protection agreements fix investment guarantees and other material norms. This approach is based on the principle of lex specialis derogat legi generali. We agree with this approach, since the issues of dispute resolution procedure are regulated by the norms of the Washington Convention. The substantive rules contained in investment protection agreements should be taken into account when deciding on jurisdiction, but when deciding on jurisdiction, priority should be given to the Washington Convention.

It seems that acting as "external borders", the criteria of an objective approach allow limiting the discretion of States in determining the characteristics of investment activity in such a way as to prevent attempts to distort the meaning and objectives of the Washington Convention by unreasonably expanding the concept of "investment" in the agreement on the protection and promotion of investment.

The existence of criteria acting as general guidelines also allows potential investors to make decisions on the implementation of investments taking into account the established practice of dispute resolution, thus having the possibility of preliminary minimization of possible risks even before the start of investment activity on the territory of a foreign state.

Without the application of objective criteria, given the special subject area of ICSID, it would seem unreasonable to expand its jurisdiction to any commercial disputes. From the point of view of the balance of interests of investors and states, as well as taking into account the need to extend ICSID jurisdiction to new forms of investment ^[27] (for example, in the media and telecommunications spheres), it seems most logical to us to apply an objective approach with an intuitive methodology. This will allow taking into account both the will of the States that expressed it in bilateral treaties or national legislation, and the objective characteristics of investments.

At the same time, despite the absence of precedent in ICSID practice and, accordingly, the formal obligation of arbitrators to follow previous decisions in similar cases, in practice, the use of objective criteria in one form or another represents the application of the doctrine of jurisprudence constante, the essence of which is that a number of consistently adopted and agreed decisions are considered as the correct interpretation legal norms, and such an interpretation has an impact on the subsequent practice of dispute resolution ^[28].

Despite the fact that the Salini criteria are based on doctrinal approaches and are not a rule of law, therefore, in similar cases, different arbitral tribunals may at their discretion apply or not apply these criteria, we believe that arbitrators will apply the "Salini test" in future practice. In our opinion, the application of the criteria of this test can be considered as a control carried out by the ICSID arbitrators in order to prevent attempts by investors to unreasonably expand the ICSID jurisdiction.

ConclusionsAccording to Article 25 (1) (a) of the Washington Convention, ICSID's jurisdiction extends to any legal dispute arising directly from investments.

Despite the seemingly development of the investment law doctrine, consensus on the concept of "investment" has not been reached and in practice the definition of this concept in order to determine the jurisdiction of ICSID causes difficulties.

According to article 25 of the Washington Convention on the Procedure for Resolving Investment Disputes between States and Foreign Persons, the subject jurisdiction of ICSID is conditioned by the presence of an "investment". However, this concept is not disclosed in the text of the Washington Convention.

Definitions of investment activity, as a rule, are contained in bilateral and multilateral treaties on the protection of investments. However, some contracts do not disclose the concept of investment, so sometimes the applicant who initiated the arbitration proceedings tries to present an unreasonably wide range of commercial transactions as protected investments. The respondent States also use this uncertainty to reject the claim of a foreign investor due to the inconsistency of his activities with investment.

Prior to the rulings in the cases of Fedex and Salini, the disputes considered in ICSID illustrated the different approaches of different arbitral tribunals to the concept of investment. Thus, some arbitrators believed that the Washington Convention does not define any additional requirements for transactions, and to establish jurisdiction, it is enough only to match the investor's activities with the definition of investments in the contract. This put the foreign investor and the recipient state in a situation of legal uncertainty. In some cases, both investors and States have used this conflict to abuse their procedural rights.

For the first time, the need to use objective criteria in determining the jurisdiction of ICSID was indicated by the arbitrators in the decision in the Fedex case, but without any explanation regarding the interpretation of these criteria.

Seven years later, in the Salini case, the arbitrators for the first time analyzed the content of these criteria and their application entered into the practice of ICSID and other arbitration institutions when considering investment disputes. In this case, the arbitrators formulated the signs of investment activity, allowing to distinguish it from any other, for the purpose of establishing the subject jurisdiction of ICSID in relation to the dispute. These include: (1) investment of funds or assets (contribution criterion); (2) a certain duration of the project implementation; (3) an element of risk and (4) a contribution to the economic development of the recipient state.

The application of the Salini test is carried out by different arbitration structures in different ways. The difference lies not only in the number of criteria, which varies from 3 to 5; but also in the method of determining criteria - intuitive and deductive.

When interpreting the norms of the Washington Convention and, accordingly, the investment criteria arising from it, arbitrators can use preparatory materials, transcripts of negotiations, which can be considered as an auxiliary means of interpretation.

Despite the fact that the arbitrators using the Salini criteria differ in their number and content, the basis of the Salini Test (conditions of contribution, duration, presence of risks, contribution to the economy of the host state) remains unchanged.

The criteria of good faith and legality used by some arbitrators are not characteristic features of investments. Establishing the compliance of the investor's activities with these conditions at the stage of making a decision on the subject jurisdiction, in our opinion, at the stage of resolving the issue of ICSID jurisdiction is not justified.

The use of the Salini test remains the only effective way to determine with sufficient objectivity whether the investor's activities comply with both the requirements of the Investment Protection Treaty and the objectives of the Washington Convention on the Procedure for Resolving Investment Disputes between States and Foreign Persons, and, accordingly, to resolve the issue of ICSID jurisdiction.