From Collision to Collaboration
- Elgar International Investment Law series
Chapter 3: Intellectual property investments and international investment agreements – the territoriality requirement and applicable law
The requirement that investments have to be made in the territory of the Host State is provided in many BITs and MAIs. More precisely, the question is whether an IP investment, despite its intangible nature, can be considered as fulfilling the requirement that the investment has to be made in the territory of the Host State even though the creation and development of the IP at stake does not necessarily take place within the Host State’s territory? ICSID Tribunals recognized the possibility for immaterial assets to qualify as investments both under BITs and under the ICSID Convention. Indeed, discussions gravitating around this issue were often raised in cases involving transfer of funds and led one Tribunal to affirm that: It is a standard feature of many international financial transactions that the funds involved are not physically transferred to the territory of the beneficiary, but put at its disposal elsewhere. In a similar fashion, the CSOB Tribunal stated that: While it is undisputed that CSOB’s loan did not cause any funds to be moved or transferred from CSOB to the Slovak Collection Company in the territory of the Slovak Republic, a transaction can qualify as an investment even in the absence of a physical transfer of funds. More importantly, however, is the holistic approach adopted by the CSOB decision, ‘emphasizing the importance of the entirety of the economic activities of the investor’.
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