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Columbia FDI Perspectives

Perspectives on topical foreign direct investment issues
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Riccardo Loschi ([log in to unmask])

The Columbia FDI Perspectives are a forum for public debate. The views expressed by the authors do not reflect the opinions of CCSI or our partners and supporters.

No. 320   December 13, 2021
The definition of covered investment of certain recent international investment agreements (IIAs) incorporates the “contribution to the development of the host State” criterion as one of the characteristics of a covered investment.[1] First delineated as part of the Salini criteria[2] and subsequently abandoned by most investor-state dispute settlement tribunals due to its tricky application, this approach could lead the way forward.
While some definitions of investment in IIAs use “economic development”[3] and others simply refer to “development”,[4] a few adopt the more comprehensive term of “sustainable development”.[5] Some of these provisions mandate that the “contribution” should take place in “effective”,[6] “sufficient”,[7] or “significant”[8] ways. The Slovakia – United Arab Emirates BIT (2016) is peculiar, as its formulation gives three different alternatives: “a certain contribution”, or “any kind of contribution” or a “positive impact” on the development of the host State.[9] The Morocco – Nigeria BIT (2016), Article 1 makes the “contribution to the development of the host State” a mandatory requirement. The Morocco Model BIT (2019), Note 3.3, goes even further by listing certain indicators to measure such “contribution”, i.e., the increase in production capacity, economic growth, quality of jobs created, duration of the investment, technology transfer, and poverty reduction.
To date, no arbitral tribunal has been faced with jurisdictional questions pertaining to such a requirement. Once a claim is brought under one of these agreements, tribunals will be confronted with the fundamental question of how (economic/sustainable) development should be interpreted and what benchmarks should be used to assess the “positive”, “significant” or “effective” nature of such a contribution, absent explicit treaty language.
Although the inclusion of the “contribution to the development of the host-State” criterion may seem reasonable for those countries wishing to restrict IIA protection to quality FDI, such language opens a Pandora’s box, given the complexity of the notion of (sustainable) development. Policy makers need to be cautious on how they translate the concept into legal language to avoid undesirable outcomes, e.g., denying protection to small investments whose contribution may not be “significant” enough.
One possibility to avoid interpretative issues is for countries to specify a set of indicators to assess the investment contribution to development and how substantial it needs to be, similar to Morocco’s Model BIT. While the identification of specific sustainable development indicators remains a daunting task, the work done by, e.g., the OECD and scholars may guide host countries to determine which ones to include in an IIA’s definition of investment. Notably, tribunals have already considered some of these indicators, such as contribution to infrastructure,[10] technology transfer,[11] local employees training,[12] and generation of government revenue.[13]  
Alternatively, countries can promote quality FDI by imposing obligations on investors or through a denial of benefits clause. Obligations may include corporate social responsibilities provisions, which have been introduced in many IIAs. Also, states may incorporate specific multilateral legal instruments (e.g., on the protection of human and labor rights, the environment) in their IIAs, which has become a trend in recent free trade agreements.
These approaches show that IIAs can do more than encourage an economic contribution to host countries and can, indeed, support “sustainable development”, as reflected in the United Nations’ Sustainable Development Goals.
* Daniela Gómez Altamirano ([log in to unmask]) is a Private Sector Specialist at the World Bank and a PhD Candidate at Leiden University. The author wishes to thank Barton Legum, Howard Mann and Peter Muchlinski for their helpful peer reviews.
[1] 2,015 of the 3,600 IIAs analyzed include a reference to “economic development” or “sustainable development” in their preambles. Only 16 of those IIAs incorporate the “contribution to the development of the host State” criterion also in the definition of investment as one of the characteristics of a covered investment. See, Egypt-Mauritius BIT (2014), Iran-Slovakia BIT (2016), Morocco-Nigeria BIT (2016), Slovakia-UAE BIT (2016), Turkey-Ukraine BIT (2017), Turkey-Burundi BIT (2017), Argentina-Chile (2017), Turkey-Uzbekistan BIT (2017), Argentina-United Arab Emirates BIT (2018), Belarus-Turkey BIT (2018), Belarus-India BIT (2018), India-Taiwan Province of China BIT (2018), ECOWAS Investment Code (2018), COMESA Investment Agreement (2018), Morocco-Congo BIT (2018), Turkey-Burkina Faso BIT (2019), India-Kyrgyzstan BIT (2019).
[2]  The Salini test requires that the alleged investment satisfy four criteria to be considered an investment under ICSID Article 25(1): a contribution; a certain duration; a risk; and a contribution to the economic development of the host State.
[3] Iran-Slovakia BIT (2016), Argentina-Chile FTA (2017), Argentina-UAE BIT (2018), Belarus-Turkey BIT (2018), ECOWAS Investment Code (2018), Turkey-Burundi BIT (2017).
[4] Slovakia-UAE BIT (2016), India-Belarus BIT (2018), India-Taiwan BIT (2018), India-Kyrgyzstan BIT (2019).
[5] Mauritius-Egypt BIT (2014), Morocco-Nigeria BIT (2016).
[6] Iran-Slovakia BIT (2016), Art. 1.
[7] India-Taiwan Province of China BIT (2018), Art. 1.
[8] ECOWAS Investment Code (2018), Art. 1.
[9] Slovakia-United Arab Emirates (2016), Art. 1.
The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Daniela Gomez Altamirano, ‘Protecting FDI contributing to host countries’ development: The rise of the “forgotten” Salini criterion as part of the definition of investment,’ Columbia FDI Perspectives No. 320, December 13, 2021. Reprinted with permission from the Columbia Center on Sustainable Investment (” A copy should kindly be sent to the Columbia Center on Sustainable Investment at [log in to unmask].
For further information, including information regarding submission to the Perspectives, please contact: Columbia Center on Sustainable Investment, Riccardo Loschi, [log in to unmask].
Most recent Columbia FDI Perspectives   
  • No. 319, Matthew Stephenson, “Launching a program for investment partnerships,” Columbia FDI Perspectives, November 29, 2021
  • No. 318, Marian Ingrams, Thomas Mason and Joseph Wilde-Ramsing, “The OECD MNE Guidelines: Recent complaints on emerging issues show the need to revise standards on responsible business conduct,” Columbia FDI Perspectives, November 15, 2021
  • No. 317, Nicolas Hachez and Allan Jorgensen, “National Contact Points for responsible business conduct and access to remedy: Achievements and challenges after 20 years,” Columbia FDI Perspectives, November 1, 2021
All previous FDI Perspectives are available at

Other relevant CCSI news and announcements
  • The final panel of CCSI’s Fall 2021 International Investment Law and Policy Speaker Series, entitled “Human Rights and Investment Law: What Does Meaningful Progress Look Like?,” took place on December 8. View the video, as well as the videos of our November 8 and November 16 panels on AfCFTA and Investment Facilitation here.
Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
(212) 854-0689
Fax: (212) 854-7946
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Karl P. Sauvant, PhD

Resident Senior Fellow

Columbia Center on Sustainable Investment
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
p(212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | t: @CCSI_Columbia

"Leveraging Digital FDI for Capacity and Competitiveness", "Green FDI: Encouraging carbon-neutral investment", "Facilitating Sustainable Investment to Build Back Better", "Extending International Legal Aid from Trade to Investment: An Advisory Centre on International Investment Law", "Increasing Transparency in Investment Facilitation: Focussed Support is Needed", Investment Facilitation for Development: A Toolkit for Policymakers, "More Attention to Policies! Improving the Distribution of FDI Benefits. The Need for Policy-oriented Research, Advice and Advocacy", "More and Better Investment Now!", "Facilitating Sustainable FDI in a WTO Investment Facilitation Framework: Four Concrete Proposals", "Multinational Enterprises and the Global Investment Regime: Toward Balancing Rights and Responsibilities”, "An Inventory of Concrete Measures to Facilitate the Flow of Sustainable FDI: What? Why? How?", are available at .

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