Territoriality in Investment Arbitration: The Case of Financial Instruments

This article deals with the continuous relevance of territoriality as a condition that limits the reach of the international regime for the protection of foreign investments. In particular, the analysis focuses on the possibility to consider as 'protected investments' financial transactions that, due to their immaterial character, have very weak territorial roots. The main point of contention is whether these transactions fulfil the so-called territorial requirement, enshrined in the overwhelming majority of international investment agreements, according to which only investments made 'in the territory' of the host State fall within their scope of protection. More specifically, this contribution addresses this issue from the perspective of jurisdiction of investment arbitral tribunals. Indeed, investment arbitral tribunals have jurisdiction over disputes concerning an investment localized in the territory of the host state. This contribution aims at identifying the methods for the localization of financial investments in the view of determining jurisdiction