The defendant Iranian individuals brought a claim in arbitration against the claimant Korean state under the Korea–Iran bilateral investment treaty. The arbitration was seated in London. In its award, the tribunal found that it had jurisdiction over the claims and awarded damages in the defendants’ favour for breach of the fair and equitable treatment standard. The claimant brought a claim by which it applied to set aside the award pursuant to section 67 of the Arbitration Act 1996, on the ground that the tribunal lacked substantive jurisdiction. It asserted (1) that the bilateral investment treaty provided, in its article 12, for arbitration of any legal dispute arising out of an “investment” between an Iranian investor and the state, where “investment”, by article 1(1), meant “every kind of property or asset, and in particular, though not exclusively, including the following, … invested by” Iranian investors in the state, and that the investments in fact made by the defendants were not “investments” within those terms. It contended (2) that the defendants did not have standing under the treaty to claim in respect of their investments because they had been made not by the defendants directly but through a Singaporean company incorporated by the defendants and in which they were shareholders. The claimant also (3) denied that certain acts relied on by the defendants as founding their claim were to be attributed to it and hence denied that the dispute was one between an investor and the state within article 12.
On the claim—
Held, claim dismissed. (1) The definition of “investments” in the Korea–Iran bilateral investment treaty was a very wide one, in so far as it was expressed in terms of “every kind” of “property or asset” and as “including” investments falling within the enumerated categories. As such, the meaning of the term “property or asset” in the chapeau of article 1(1) of the treaty was not limited by the enumerated categories which followed, which were merely illustrative. It was therefore not necessary for any of the investments relied on by investors to fall within that list in order to be considered investments. Nor did the definition require an asset to have a commercial or exchange value in the sense of being marketable, although it had to be something which was owned and had value. On a natural reading of the treaty, the definition of “investments” included both property and assets into which the investor committed resources as well as property or assets put in by the investor. On the facts, the alleged investments, which in any event had value and were property or assets into which the defendants had committed resources as well as property or assets put in by the defendants, qualified as property or an asset and hence were “investments” for the purposes of the treaty, regardless of whether they could be said to fall within the enumerated examples in article 1(1) (paras 37, 38, 40–41, 42, 46–47, 48, 50, 51, 52, 53–55, 62–64, 67, 96).
(2) There was no requirement inherent in the concept of “investment” or “investor” in a bilateral investment treaty that the “investor” should be the direct legal owner of the “investment”. The relevant question was whether the treaty itself conferred a wide enough protection such that a shareholder might be protected in relation to damage to the assets of the company in which the shares were held. On the terms of the Korea–Iran bilateral investment treaty, there was no express requirement that the “investor” own or have a direct legal interest in the property which constituted the “investment”, and no such limitation could be implied; rather, the terms of the treaty were very wide. In circumstances where the defendants exercised control over the Singaporean company, the fact that the relevant property or assets were directly held by the company and that the defendants relied on their ownership of the shares in that company did not therefore mean that the tribunal did not have jurisdiction over the defendants’ claim. The defendants were “investors” for the purposes of the bilateral investment treaty, who could claim in respect of the “investments” directly held or owned by the Singaporean company (paras 72, 73–75, 76–79, 80, 82, 84, 96).
(3) Questions of attribution raised by the state in the context of a claim under a bilateral investment treaty were not jurisdictional questions within the meaning of section 67 of the Arbitration Act 1996. If an investor made an investment treaty claim against a state that was a contracting party to that treaty, arising out of an investment, and as part of that claimed that the state was responsible for certain acts, and the state denied that it had any such responsibility because the acts were not its, provided the definition of dispute was wide enough to embrace a dispute about whether particular acts were or were not attributable to the state, then there was a dispute between the investor and the state on that issue that fell within the jurisdiction of the tribunal to determine on its merits (paras 87, 88, 89, 90, 96).
Per curiam. Where a bilateral investment treaty contains a broadly expressed definition of “investment”, there is no basis for reading into the treaty requirements as to what might constitute an investment which are not specified (paras 58, 59, 60–61).
Ricky Diwan QC and Peter Turner QC (instructed by Freshfields Bruckhaus Deringer llp) for the claimant.
Ali Malek QC, Cameron Miles and Judy Fu (instructed by Gresham Legal) for the defendants.