Source: http://pennjil.com/the-protection-of-migrant-workers-under-the-international-investment-law-regime/
Timestamp: 2017-07-24 12:51:08
Document Index: 136087218

Matched Legal Cases: ['art. 19', 'art. 17', 'art. 25', 'art. 1', 'art. 1', 'art. 1', 'art. 25', 'art. 1', 'art. 9', 'art. 4', 'art. 4', 'art. 19', 'art. 17', 'art. 25', 'art. 1', 'art. 1', 'art. 1', 'art. 25', 'art. 1', 'art. 9', 'art. 4', 'art. 4']

In a globalized world, labor, goods, and capital are traveling across borders at increasing rates. Labor migration, and the subsequent flow of capital in the form of remittances to workers families, is central to the economies of many countries across the globe.01Remittances represent the portion of income that migrant workers send back to their families and home communities and are therefore closely linked to migrant work. The volume and speed of remittances greatly impacts the migrants’ ‘host States’, and nations ‘sending’ migrant workers. The World Bank reported that the volume of remittances from international migrants amounted to $601 billion in 2015, of which developing countries received $441 billion.02World Bank, Migration and Remittances Factbook xii (2016), available at https://openknowledge.worldbank.org/bitstream/handle/10986/23743/9781464803192.pdf. This represents a major economic footprint, especially when compared to the volume of foreign direct investment (FDI) received by developing countries that was estimated at $741 billion for the year 2015.03UNCTAD, FDI Recovery Is Unexpectedly Strong, But Lacks Productive Impact, 22 Global Investment Trends Monitor 1, 2 (2016), available at http://unctad.org/en/PublicationsLibrary/webdiaeia2016d1_en.pdf. See also OECD, Foreign Direct Investment For Development: Maximizing Benefits, Minimizing Costs 1, 5 (2002) (highlighting the positive developments of FDI for developing countries). Additionally, migrant work positively impacts the host States’ economies, including net economic benefits by meeting general labor market shortages, preventing inflation, supplying specialized skills and know-how, and adding incentives for capital accumulation.04International Labour Conference, 92nd Session Report VI: Towards A Fair Deal For Migrant Workers In The Global Economy, 30–31 (2004). In Nepal, for example, migrant labor remittances contribute to over twenty-nine percent of the country’s GDP.05The World Bank, Personal Remittances, Received (% of GDP), http://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS (last visited Apr. 1, 2017). While these payments constitute a significant portion of the economy, migrant workers are often ill protected. Migrant workers are generally in vulnerable positions and are commonly exposed to abuse and exploitation during their recruitment from Nepal and throughout the migration process. While some nations that send migrant workers abroad have taken certain steps to better protect these laborers, these States lack the means and political will to fully implement and enforce laws that completely protect migrant workers and ensure their access to justice.06Vienna Convention on Consular Relations, arts. 23, 29, 30, 31, April 24, 1963, 23 U.S.T. 3227, 500 U.N.T.S. 95. Few existing legal regimes within host States exist to further protect these workers.07Various bodies of law for the protection of migrant workers have been explored, including the current Migration Treaty. One area that could offer solutions is the extraterritorial application of human rights law. However, these areas remain largely underdeveloped. It is surprising that the field of migrant work, which garners monetary sums of more than half the amount of FDI, receives disproportionately less protection compared to FDI.
Some scholars have focused on the economic consequences of international migration,08Robert Lucas, Migration and Economic Development in Africa: A Review of Evidence, 15 J. Afr. Econ. 337–95 (2006). while others have focused on the protection of migrant workers from a human rights perspective.09Sarah Paoletti et al., Migrant Workers’ Access To Justice At Home: Nepal (2014) available at https://www.opensocietyfoundations.org/sites/default/files/migrant-nepal-report-english-20140610_1.pdf. These areas, however, remain largely underdeveloped. Further, little attention has been paid to bridge these two concepts by using the economic benefits of migrant workers – with respect to both remittances back home and on host States – as a means of offering better protection to migrant workers.10Id. at 26. Using Nepal as a case study, this paper will explore a new approach to the protection of migrant workers and analyze whether migrant workers could resort to the existing and comprehensive system of international investment law to seek protection under this regime. Section 1 will explore the link between migrant work and investment. Section 2 will address the question of whether migrant work could fall under the definition of an investment under the BIT and under ICSID. Section 3 will discuss whether there is a means that could enforce migrant worker’s rights under the investment law regime, and whether this would be economically viable. Finally, conclusions will address whether the investment law regime could serve to strengthen the protection of migrant workers.
Section 1 – Migrant Work And Investment
The objective of this paper is to explore whether migrant work can be protected under investment law. It is, therefore, crucial to first establish the legal contours of migrant work and its nexus to investment law.
1.1 Migrant Work
The United Nations Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families defines a migrant worker as “a person who is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national.”11International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, Dec. 18 1990, 2220 U.N.T.S. 3. For the discussion of migrant work as an investment, this paper will consider the situation in which a migrant worker from Nepal enters into a migrant work contract to travel abroad with the hope of generating income and creating wealth.12Paoletti, supra note 9, at 42. (finding that ~7.3 percent of the total Nepalese population is registered as regular worker for “Foreign Work,” and that there are over a million “irregular workers.” UN Women estimated that there were already 1.6 million Nepali workers in countries other than India in 2014, and India is known to host most migrant workers). The paper evaluates only the basic elements of such contracts. Employment of migrant work from Nepal is managed by various public and private actors within Nepal and in the host States.13See Paoletti, supra note 9, at 43 (explaining that public institutions generally oversee the regulatory and administrative frameworks, while private actors and individuals carry out the proceedings governed under the Nepal Foreign Employment Act. Evaluation of the obligations of the host state in exercising this oversight falls outside the scope of this research paper). Migrant workers pay a fee to an agency, the maximum of which is about $700.14Foreign Employment Promotion Board Nepal, Costs Required for Foreign Employment, http://www.fepb.gov.np/downloadfile/lagat_1305454188.pdf (last visited April 1, 2014). Placement agencies in the host State, or “employer institutions,” are authorized by the State to solicit and place migrant workers for employment. The migrant worker enters into a contract with these employer institutions.15Although it falls outside the scope of this paper, it would be valuable for future papers to research and evaluate the extent that government control of these agencies may impact migrant workers’ protections under investment law. The contracts generally establish terms for remuneration, and specify employment for a two-year period, free food, and accommodation, and guaranteed medical care and insurance.16Paoletti, supra note 9, at 66–67. Most contracts do not contain a dispute resolution clause.17Id. A report by Open Society indicated that sometimes clauses are included referring complaints to the Nepali recruitment agency; however, the recruitment agency did not appear to be party to the contract, which calls the enforceability of the contract into question. 1.2 Migrant Work Under Investment Law
While some States are starting to explore the idea of integrating labor standards into their Bilateral Investment Treaties (BITs), protection of migrant workers under these provisions remains limited and labor clauses are generally not applicable under the dispute settlement provisions.18Extensive analysis of BIT law on labor provisions falls outside the scope of this research paper. See Vid Prislan & Ruben Zandvliet, Labor Provisions in Bilateral Investment Treaties: Does the New US Model BIT Provide a Template for the Future?, 92 Colum. FDI Perspectives 1 (April 1, 2013) (discussing labor rights under the U.S. Model BIT). Such labor provisions are more common in trade agreements, and have been incorporated in proposals to recent mega-regional trade agreements that also incorporate investment law. The Trans-Pacific Partnership (TPP) picked up on the opportunity to protect migrant worker rights. Although an important development, the protections under TPP do not extend far and are again omitted from the individual dispute mechanisms.19See U.S. Trade Rep., Trans-Pacific Partnership (“TPP”), art. 19.15(13) (Oct. 5, 2015) https://ustr.gov/sites/default/files/TPP-Final-Text-Labour.pdf (disclosing the treaty’s text while remarking that the United States has formally withdrawn from the agreement per guidance from the President, as the United States had never formally ratified the treaty). See, e.g., United States-Colombia Trade Promotion Agreement, U.S.-Colom., art. 17.7(7), May 15, 2015, available at https://ustr.gov/sites/default/files/uploads/agreements/fta/colombia/asset_upload_file993_10146.pdf (illustrating an equivalent obligation in an analogous treaty). See also Franz Ebert, Labour Standards in Mega-Regional Trade Agreements: The Case of TPP and TTIP, in Mega-Regional Trade Agreements and the Future of International Trade and Investment Law (Thilo Rensmann ed., 2017). 1.3 Need for a different approach
Although it would be desirable to include strong additional provisions on migrant work within the framework of regional and bilateral agreements, and particularly link such provisions to the dispute settlement mechanisms, the current investment regime is not built on these premises.
Section 2 – Can We Treat Migrant Labor As An Investment?
A different approach to including protection of migrant work under the investment law regime would be to redefine migrant work and accompanying remittances as ‘investments.’ In doing so, protections for migrant workers could be creatively implemented and applied under the existing system of Investor-State Dispute Settlement (ISDS). Under this notion, existing arbitral mechanisms would be able to assume jurisdiction over cases arising from migrant work. Interpretation of current case law on the meaning of ‘investment’ suggests that there is certainly room to explore this route. The first question that arises is whether Nepali migrant workers can rely on one or more of the investment law treaties to vindicate their legal rights in a particular case. Section 2.A will discuss the applicable investment treaties to the case study. Although various additional jurisdictional questions are important for tribunals to consider, such as the question of consent and whether a claimant is indeed an investor under the meaning of the treaties, access to tribunals for migrant workers will depend mostly on the existence of a legally cognizable investment. Tribunals’ approaches to determining whether migrant work is a form of economic activity that constitutes an ‘investment’ will therefore form the central point of discussion of this paper, and is further discussed in section 2.B.
Section 2.1 – Applicable Treaty
To date, Nepal has only entered into four BITs, with Finland, France, Germany and the United Kingdom. India, the most important host country to migrant workers from Nepal,20World Bank Group, Large-Scale Migration and Remittance in Nepal: Issues, Challenges, and Opportunities 28 (2011) (“Nearly 41 percent of the foreign work migrants went to India, another 38 percent to the Gulf states and less than 12 percent to Malaysia”). signed a BIT with Nepal which has not yet entered into force.21Agreement Between the Government of India and the Government of Nepal for the Promotion and Protection of Investments, India-Nepal, Oct. 21, 2011, available at http://investmentpolicyhub.unctad.org/IIA/country/147/treaty/1939 [hereinafter “India – Nepal BIT”]. Dispute settlement is available to investors protected by the BITs that Nepal is party to and is referred to the International Centre for the Settlement of Investment Disputes (ICSID) Convention.22Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 575 U.N.T.S. 159, art. 25 (entered into force Oct. 14, 1966) [hereinafter “ICSID Convention”]. Of the most significant destination countries, Malaysia, Qatar, Saudi Arabia and the United Arab Emirates are members of ICSID. India is not.
The investment law regime that Nepal has committed to does not appear to be particularly robust. However, the question of whether the investment law regime if further implemented could offer further protection to migrant workers remains relevant to assessing whether Nepal should advance its investment system to protect migrant work.
Section 2.2 – Does Migrant Labor Fall Under The Meaning Of “Investment”?
The definition of ‘investment’ is key to the establishment of jurisdiction by arbitral tribunals.23Various bodies of law for the protection of migrant workers have been explored, including the current Migration Treaty. One area that could offer solutions is the extraterritorial application of human rights law. However, these areas remain largely underdeveloped. The following discussion about the meaning of investment will first consider the meaning of investment under the BIT and the ICSID, and will primarily focus on the notion of ‘investment’ under the jurisdictional requirements of Article 25 of the ICSID Convention. The first reason for this focus is that ICSID is currently the most important forum for investment dispute resolution. The second reason is that ICSID, more than any other arbitral mechanism, has an incentive to further economic development, as it is part of the World Bank and explicitly references the need for international cooperation for economic development in its Preamble.
2.2.1 Meaning of Investment Under The BIT
Generally, when defining ‘investment’ under BITs, states do not have a particular idea of an economic or financial theory in mind. Definitions for investments in BITs are often broad and nonexclusive, as it is recognized that the concept of investment is dynamic and constantly evolving.24Alan Redfern & Martin Hunter, Arbitration under Investment Treaties, in Redfern and Hunter on International Arbitration 252 (2015). Ad-hoc arbitral tribunals under the BIT are generally free to arbitrate about what parties agreed on, subject to the mandatory rules of the arbitral proceedings. The tribunals can establish jurisdiction merely through interpretation of the relevant BIT.25Velimir Zivkovic, Recognition of Contracts as Investments in International Investment Arbitration, 5 Eur. J. Legal Stud. 174, 177 (2012). Like most BITs, the term “investment” under the Nepal-India BIT is broadly defined to include ‘every kind of asset,’ and refers to a non-exhaustive list of examples.26India – Nepal BIT (2011), art. 1(b). This list includes language that indicates that “claims to money or to any performance under contract having a financial value” fall within the meaning of investment. Such terminology and phrasing is common in BITs and indicates a broad interpretation of investments. Similar language was also used in the UK model BIT.27Model Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of ___ for the Promotion and Protection of Investments, art. 1, available at http://investmentpolicyhub.unctad.org/Download/TreatyFile/2847 [hereinafter “UK Model BIT”]. Similar provisions can also be found in the Germany, France, and Netherlands model BITs. Migrant work and subsequent remittances seem to be compatible with this broad definition of ‘every kind of asset.’ The argument for jurisdiction over migrant work under the BIT therefore seems unproblematic.
2.2.2 Meaning of Investment under the ICSID Convention
Article 25 of the ICSID Convention sets out the basic requirements of jurisdiction under the ICSID system and states:
The jurisdiction of the Centre shall extend to any legal dispute arising directly out of or in relation to an investment between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the Parties to the dispute consent in writing to submit to the Centre.
There is no clear definition of “investment” in the ICSID Convention. Instead, the drafters of the ICSID Convention gave the term broad meaning, as stated in Article 25.28International Center for the Settlement of Investment Disputes, History of the ICSID Convention Volume II-1, 567 (2015). Although it is generally understood that pure commercial transactions do not qualify as an investment under Article 25, its outer limits are far from settled. The nature of investments is constantly evolving. For example, when investments were once used mostly to include natural resource exploitation and ownership of production facilities, in recent years, this has shifted to more modern forms such as service agreements.29Muthucumaraswamy Sornarajah, The International Law on Foreign Investment 11–16 (3d ed., 2010); Zivkovic, supra note 25, at 177. Accordingly, a certain level of flexibility in the definition of ‘investment’ is important to align it with the system’s evolving needs and circumstances.30Kathryn Gordon & Joachim Pohl, Investment Treaties Over Time – Treaty Practice and Interpretation in a Changing World 5 (2015), available at http://dx.doi.org/10.1787/5js7rhd8sq7h-en. While the drafters of the ICSID Convention may not have originally considered the inclusion of migrant work, the flexible outer limits of the definition suggests that the activity of such workers should not necessarily be excluded from investment protection. Over the course of ICSID’s recent history, various different forms of contracts have been brought before ICSID and analyzed by tribunals. Most commonly the following types of contracts were determined to constitute an investment within the meaning of BITs and ICSID: construction, turnkey, management/service, production, profit-sharing, leasing, technology/know-how transfer, and joint-ventures.31Zivkovic, supra note 25, at 176; Christoph Schreuer, The ICSID Convention: A Commentary 138–39 (2d ed., 2009); Treaty Between the Government of the United States of America and the Government of [Country] Concerning the Encouragement and Reciprocal Protection of Investment (“U.S. Model BIT 2012”), art. 1, available at http://www.state.gov/documents/organization/188371.pdf; Prabhash Ranjan, Definition of Investment in Bilateral Investment Treaties of South Asian Countries and Regulatory Discretion, 26 J. Int’l Arb. 219, 225 (2009); John Given, Malaysia Historical Salvors Sdn., Bhd. v. Malaysia: An End to the Liberal Definition of “Investment” in ICSID Arbitrations?, 31 Loy. L.A. Int’l & Comp. L. Rev. 467, 475 (2009); Sergey Ripinsky & Kevin Williams, Damages in International Investment Law 102 (2008); See also Organisation for Economic Co-operation and Development (“OECD”), The Multilateral Agreement on Investment: Draft Consolidated Text 11, available at http://www1.oecd.org/daf/mai/pdf/ng/ng987r1e.pdf. This is not an exhaustive list; rather, it serves as an enumeration of the types of contracts found in ICSID case law.32Zivkovic, supra note 25, at 176. Migrant work is similarly based on a contractual right and therefore deserves consideration under ICSID.
It may be argued in this context that the definition of “investment” should include the non-traditional form of investment of migrant work, for two reasons: (1) the term “investment” under the ICSID Convention was established to be inclusive,33Schreuer, supra note 31, at 71. and (2) the Preamble of the ICSID Convention calls for the “need for international cooperation for economic development, and the role of private international investment therein.”
Although there is no set definition for ‘investment’ under ICSID,34ICSID Convention, art. 25 (establishing jurisdiction under Article 25(1) of the Convention to “any legal dispute arising directly out of an investment.” Note that the ICSID Convention does not define the term “investment”). inclusion of migrant work under the notion of ‘investments’ may mean only a slight departure, if any, from developing case law of the meaning of the term under Article 25 of the ICSID. In an attempt to predict whether the term ‘investment’ as embodied in ICSID may be interpreted so broadly as to cover migrant work, a critical analysis of the criteria that led tribunals to recognize contracts as investments will be beneficial.
The ambiguity of the notion of investment has led practitioners to grapple with the interpretation and inherent meaning of the term. Scholars and tribunals have divided into two main camps in their approach to interpret the meaning of investment.35Julian Mortenson, The Meaning of ‘Investment’: ICSID’s Travaux and the Domain of International Investment Law, 51 Harv. Int’l L. J. 257, 268 (2010). The first group follows a subjective, also called ‘deferential to consent,’ approach that practically equates consent and investment under the BIT. The second represents an objective approach. Additionally, there is a broad scale of alternative perspectives that can be placed somewhere in between these two frames of thought. Among these is the view that the actual contribution to economic development of the host state must be taken into account.
Deferential to Consent approach
Under the deferential to consent approach, tribunals have focused on the specific definition of ‘investment’ as it is adopted in the relevant investment treaty.36Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Decision on Jurisdiction (Dec. 8, 2003), 43 ILM 262 (2004); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (Jan. 14, 2004); Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Award (Aug. 16, 2007); Biwater Gauff (Tanzania) Limited v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award (July 24, 2008) (hereinafter “Biwater”). Tribunals assess whether the asset constitutes an investment depending on what the parties have consented to.37See, e.g., Lanco Int’l, Inc. v. Argentine Republic, ICSID Case No. ARB/97/6, Preliminary Decision on Jurisdiction, ¶ 48 (Dec. 8, 1998); Gruslin v. Malaysia, ICSID Case No. ARB/99/3, Award, ¶¶ 9, 13.5–13.6 (Nov. 27, 2000), 5 ICSID Rep. 1483 (2006). When consent arises from a BIT, the tribunal looks at the BIT definition of ‘investment.’38See, e.g., Parkerings-Compagnier v. Republic of Lithuania, ICSID Case No. ARB/05/8, Award, ¶¶ 99, 249–54 (Aug. 14, 2007); see also Mortenson, supra note 35, at 271. In the event consent is based on a contractual arbitration clause, the tribunal will turn to the clause to see whether it defines ‘investment’ or determine whether the contract invokes ICSID jurisdiction. Some tribunals following the deferential to consent approach have suggested that when the underlying consent to arbitration recognizes the activity or asset as an investment, the ICSID Convention does not impose any additional jurisdictional limits.39Mortenson, supra note 35, at 269. Other tribunals have suggested that the ICSID Convention only imposes jurisdictional restrictions based on the breadth of the term investment in very exceptional cases.40Mortenson notes that the best description of the jurisdictional limits of this approach comes from the Fedax v. Venezuela case which contrasted the debt instruments in that case to “short-term,” and “occasional” arrangements in “volatile capital,” only yielding “quick gains” that were followed by an “immediate” departure from the host country, which might not qualify as an investment. Fedax v. Republic of Venezuela, ICSID Case No. ARB/96/3, Decision of the Tribunal on Objections to Jurisdiction, ¶ 43 (July 11, 1997), 37 I.L.M. 1378 (1998) (hereinafter “Fedax”). Interestingly, the Fedax case was also the first case that mentioned the characteristics under the restrictive approach that will be further discussed in the next section. Nonetheless, the general tendency is a broad application.41Mortenson, supra note 35, at 269. Whether migrant labor under this approach would fall under the broad definition of investment will depend on “explicit and self-conscious deference about what policy structure will best take advantage of the international investment framework.”42Mortenson, supra note 35, at 269. See also Fedax; Ceskoslovenska Obchodnf Banka (CSOB) v. Slovak Republic, ICSID Case No. ARB/97/4, Decision of the Tribunal on Objections to Jurisdiction, ¶¶ 19, 64, 66 (May 24, 1999), 14 ICSID Rev. 251 (1999); Biwater ¶ 312; Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, ¶ 82 (Apr. 29, 2004), 20 ICSID Rev. 205 (2005); Camuzzi Int’l v. Argentine Republic, ICSID Case No. ARB/03/2, Decision on Objections to Jurisdiction, 58 (May 11, 2005); Mihaly Int’l Corp. v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/00/2, Award, ¶¶ 33, 49 (Mar. 15, 2002), 41 I.L.M. 867 (2002) (hereinafter “Mihaly Int’l Corp”); cf. TSA Spectrum de Arg., S.A. v. Argentine Republic, ICSID Case No. ARB/05/05, Award, ¶¶ 8–10 (Dec. 19, 2008) (Aldonas, dissenting) (discussing the question of foreign control for Article 25(2)(b) purposes). It must be assessed whether States took policy decisions to bind themselves vis-à-vis migrant work. The drafters of the Nepal – India BIT, for example, included language indicating that “claims to money or to any performance under contract having a financial value” fall within the meaning of investment. Such terminology and phrasing is common in BITs and indicates a broad interpretation of investments. Similar language was also used in the UK model BIT.43UK Model BIT, art. 1. Note that similar provisions are also found in the German, French, and Dutch model BITs. Professor Mortenson further argues that tribunals should indeed exercise close to complete deference to State definitions of ‘investment,’ as long as the asset is ‘colorably economic.’44See Mortenson, supra note 35, at 301–18 (offering a more comprehensive view on the definition of “investment”). Mortenson notes that BIT terms must be applied according to ordinary methods of interpretation and states that:
the purpose of ICSID was to create a reliable forum that would empower states to strike a deal with potential sources of foreign capital: in exchange for foreigners’ investment of energy, capital, and effort, host governments would create a legally secure environment in which to operate. ICSID is thus a procedural enabling mechanism for a complicated economic principle that can be taken advantage of by anyone who chooses to join-and can be ignored by anyone who wants to stay out.45Id. at 318. According to the deferential to consent approach, it would be left up to the developing States to decide whether they want to commit to extend the ICSID guarantee to migrant employment contracts.46Id. Mortenson was referenced by tribunals who followed his approach. See, e.g., Biwater ¶ 12. Based on Mortenson’s rationale, the concept of migrant work could be included under the meaning of investment under BITs, particularly in light of the broad language in the Nepal – India BIT. While this approach has received less attention than the objectivist approach, it has certainly been embraced by certain arbitral tribunals.
Objectivist approach – considering the characteristics of the Salini-test
Contrary to the deferential approach, other scholars and tribunals have argued that the purpose of establishing whether a transaction is an investment under the BIT is only essential to determine if there is consent as required by Article 25(1), and argue that it is necessary to turn to general legal doctrine to assess whether an asset falls under the meaning of ‘investment.’47Zivkovic, supra note 25, at 181. As such, the first step to determine jurisdiction will indeed be to establish that the contractual right is covered by the relevant BIT to establish consent. As a second step under the restrictive approach, tribunals must additionally apply a set of general ‘characteristics’ or criteria of investment. These characteristics were originally referenced by Christoph Schreuer in his treatise on the ICSID Convention, and later adopted by tribunals.48Schreuer, supra note 31. Although Schreuer’s factors found roots in earlier literature, he was the first to draw them out. But see Chittharanjan Amerasinghe, The Jurisdiction of the Centre for the Settlement of Investment Disputes, 19 Indian J. Int’l L. 180, 181 (1979). The leading restrictive jurisdictional test was adopted by the Salini tribunal.49Salini et al v. Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction, ¶ 152 (Jul. 23, 2001), 42 I.L.M. 609 (2003) (hereinafter “Salini”). The Salini case revolved around two Italian companies that had a claim against the Moroccan government concerning a contract for the construction of a highway. The companies had a delay in the completion of the highway, causing the Moroccan government’s refusal to pay.50Id. ¶ 4. The Salini-test required:
a contribution of money or assets;
a certain duration over which the project was to be implemented;
a contribution to development of the host state’s economy.51Id. ¶ 52. Although the so called ‘Salini-test’ is broadly followed, in applying this test tribunals have followed different approaches. Within the category of contracts, it seems to be widespread practice that contracts of sale cannot fall within the definition of investment.52James Crawford & William Reisman, Foreign Investment Disputes: Cases, Materials and Commentary 344 (2005); Rudolph Dolzer & Christoph Schreuer, Principles of International Investment Law 60 (2d ed. 2012). Some tribunals have further stated that
the classical Salini hallmarks are not a punch list of items which, if completely checked off, will automatically lead to a conclusion that there is an ‘investment.’ If any of these hallmarks are absent, the [t]ribunal will hesitate (and probably decline) to make a finding of ‘investment.’ However, even if they are all present, a [t]ribunal will still examine the nature and degree of their presence in order to determine whether, on a holistic assessment, it is satisfied that there is an ICSID ‘investment’53Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Award on Jurisdiction, 35 (May 17, 2007) (hereinafter “MHS case”). The more restrictive of the objectivists, regard Salini to be a mandatory test, and apply a checklist-like approach.54Sornarajah, supra note 29, at 179. An immediate conclusion that can be drawn from the diversity in these decisions is that the current state of jurisprudence is confusing and this has a detrimental effect on the predictability of new, non-traditional forms of assets and activities before tribunals. Ultimately, achieving investment protection before an ICSID tribunal may be dependent on the doctrinal inclinations of the specific arbitral tribunal deciding on the case, rather than on a set legal principle.55Id. at 179. Technically, there is no requirement under ICSID for tribunals to follow a formal binding precedent doctrine. As such, tribunals will always be free to follow their own approach. However, there is a general commonality along the line of cases, which will be further explored by a discussion of migrant work through the Salini characteristics.
1. Contribution of money or assets
According to the Fedax tribunal, an investment requires a certain commitment from the investor.56In the Fedax case, the arbitral tribunal referred to a “substantial commitment,” whereas in Salini v. Morroco, the arbitral tribunal referred to “contributions.” See Salini ¶ 152. In this respect, tribunals have considered the contribution element in financial terms, but also to include know-how, personnel and money spent.57Salini ¶ 53; MHS case ¶ 131; Quiborax S.A. v. Plurinational State of Bolivia ¶¶ 229-231. See also Helena Engfeldt, Should ICSID Go Gangnam Style in Light of Non-Traditional Foreign Investments Including Those Spurred on by Social Media? Applying an Industry-Specific Lens to the Salini Test to Determine Article 25 Jurisdiction, 32 Berkeley J. Int’l L. 44, 55 (2014). Interestingly, the amount of physical labor involved in a project has also been used as a yardstick to measure “substantial contribution.”58Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Decision on Jurisdiction, ¶ 92 (2006) (hereinafter “Jan de Nul N.V.”) (stressing that “the amount of work involved [including the mobilization of two heavy ships for a period of approximately 19 months] and the related compensation show that the Claimants’ contribution was substantial”). There is no minimum requirement of amount of expenditure by the investor. The tribunal in Mihaly v. Sri stated that “the question whether an expenditure constitutes an investment or not is hardly to be governed by whether or not the expenditure is large or small.”59Mihaly Int’l Corp ¶ 51. Some tribunals even argued that there is no need for an expenditure at all.60RSM Production Corporation v. Grenada, ICSID Case No. ARB/05/14, Award, ¶ 243 (March 13, 2009) (“There would be no need for actual expenses to have been incurred by the private party, the relevant criterion being the commitment to bring its resources toward the performance of such exploration”). As such, the contribution criterion requires the tribunal to weigh whether the investor has a real obligation without taking the quantity of the expenditure into account.
In the case of migrant labor, it appears that the transfer of know-how would be the biggest contribution of migrant workers, in addition to the $700 migrant workers pay the placement agency in the host state. The difficulty of the know-how element is that migrant workers from Nepal are often not highly educated and it is therefore challenging to establish that the transfer of know-how is substantial enough to constitute contribution.61International Labour Organisation et al., The Contribution of Labour Mobility to Economic Growth 11 (2015), available at http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_398078.pdf. However, the cases indicate that the quantum of expenditures should not be taken into account. Potentially the amount of physical work involved under the migrant labor contract could also add weight to the argument.62Jan de nul N.V. ¶ 92. It could, however, be hard for tribunals to measure the contribution feature of a migrant worker, especially if that migrant worker would be a single claimant.63The next section will briefly touch upon the possibility of consolidating claims. In the later annulled Malaysian Historical Salvors v. Malaysia case (MHS case), the arbitrator suggested that a weak presence of one or more Salini characters requires a stronger presence of other features.64MHS case ¶ 112. Potentially, in the case of migrant workers, that greater weight must be given to the development character because evaluation of the contribution prong is hard to assess for just one migrant worker.65Engfeldt, supra note 57 (extending the application of this idea to the context of social media investments). 2. Duration
In order to qualify as an investment, the investor’s commitment to the investment must be evidenced by a certain duration. Even though Salini seems to set a certain minimum two-year time frame, there are other cases including Fedax that suggest that the time frame does not matter as long as the contract is substantially important to the economy.66Mortenson, supra note 35, at 278; See also Fedax ¶ 43. In the MHS case, the tribunal concluded that an enterprise that had an initial contract for eighteen months, which took almost four years to complete, failed to meet the duration requirement. Although the contract met the “duration characteristic or criterion in the quantitative sense, it fail[ed] to do so in the qualitative sense.”67MHS case ¶ 111. The assessment of duration will vary per migrant work contract. While many migrant work contracts are concluded for a period of two years, and would constitute the minimum standard, others are not fixed for any set period, but rather are continuous. These contracts require a change in approach, because contracts for a shorter duration should not necessarily be excluded. For instance, there could be a situation where migrant workers are engaged in a remunerated activity for three or six months, but repeat this activity on a continuous basis. The MHS tribunal suggested that the planned duration of a contract potentially matters more than the actual duration. As such, planned subsequent labor contracts of migrant workers could be taken into consideration.
It can be safely assumed that migrant labor contracts that are short term and not continuous will not be protected under the investment law regime. The general trend of two-year contracts, and the character of continuous migrant contracts, could meet the consideration duration requirement.
3. Element of risk
The third requirement of the Salini-test provides that the activity entails an economic risk for the contributor ‘‘in the sense of an uncertainty regarding its successful outcome.’’68Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, ¶ 27 (Nov. 1, 2006). Risks considered by tribunals include the risk of the other party prematurely putting an end to the contract, increases in labor costs, changes in host state law, long project duration, risk owed solely to the investor, scale and complexity of a project, and any unforeseeable incidents that could be considered as force majeure.69Salini ¶¶ 55–56; Jan de Nul N.V. ¶ 136, Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, ¶ 136 (2005) (hereinafter “Bayindir”). See also Engfeldt at 57. Additionally, risks related to the absence of compensation under an increase or decrease in volume of work load were also mentioned by the Salini tribunal.70Id. at 53. Although these risks of more traditional forms of investments are slightly different from the characteristics of a migrant labor contract, various commonalities can be identified.
The risk associated with the employer prematurely putting an end to the contract is certainly applicable to migrant labor contracts. There are situations where migrant workers travel abroad but upon arrival, the agents do not meet their commitments and migrant workers become stranded. But the risk of non-performance alone is not sufficient to meet the standard of risk. If that were the case, any commercial transaction would be sufficient to constitute an investment.71J. Harb, Definition Of Investments Protected By International Treaties: An On-Going Hot Debate, 28 Mealey’s Int’l Arb. Rep. 8, 10 (2011), available at http://www.jonesday.com/files/Publication/c24e6d62-3269-4b32-b93d-992f1d5e2e77/Presentation/PublicationAttachment/b4526438-d73b-4bd4-a780-8003fe19feaf/689472.pdf. However, migrant workers assume various other risks, such as excessive working hours without being offered compensation. The raised risk of unforeseeable incidents that could not be considered as force majeure could also strengthen the argument of risk in migrant work. These risks include labor violations such as non-payment, or delayed payment, of wages, and the risk of incurring physical harm or illness which may prevent them from fulfilling their work contract.72Paoletti at 66–67. Furthermore, the Bayindir tribunal stated that there generally is an inherent risk in long-term contracts.73Bayindir ¶ 136. This is a risk migrant workers share in entering a long term employment contract. Migrant workers are also particularly vulnerable to adverse host State actions such as denial of justice, human trafficking, forced labor, and other human rights violations. There seems to be a strong argument proving that migrant workers in entering into a migrant contract bear risk.
4. Contribution to Development
The inclusion of economic development in the Preamble of the ICSID Convention underscores the opinion that the term ‘investment’ should be interpreted to include a positive and significant contribution to the host State. As part of the World Bank Group, ICSID is considered by some to be more than just an arbitration institution. Its placement within the World Bank framework inherently places it within the context of economic development.74O. Garcia-Bolivar, Defining an ICSID Investment: Why Economic Development Should be the core Element, Investment Treaty News (Apr. 2012), https://www.iisd.org/itn/2012/04/13/defining-an-icsid-investment-why-economic-development-should-be-thecore-element/#_ftnref3. See also MHS, Decision on the Application for the Annulment of the Award ¶ 14, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=viewCase&reqFrom=Home&caseId=C247. The Salini tribunal set forth two different criteria needed for an investment to contribute to the economic development of the host state: (i) the investment should be beneficial to the public, and (ii) there should be a transfer of know-how.75The Tribunal noted: “It cannot be seriously contested that the highway shall serve the public interest. Finally, the Italian companies were also able to provide the host State of the investment with know-how…” Salini ¶ 57. See also Garcia- Bolivar. In the development of case law after Salini, tribunals have taken different approaches to the development criterion. There are various tribunals that have held the view that a contribution to economic development must be substantial or significant.76Joy Mining Machinery Limited v. Arab Republic of Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, ¶¶ 49, 53 (Aug. 6, 2004) (“Joy Mining”); Consortium Groupement L.E.S.I. – DIPENTA v. People’s Democratic Republic of Algeria, ICSID Case No. ARB/03/8, Award, § II ¶ 14 (Jan. 10, 2005) (“L.E.S.I. – DIPENTA v. Algeria”); Bayindir ¶ 137. Both in the Joy Mining case and in the MHS case, the activities at issue were determined not to constitute an investment because the investments did not contribute enough to the host State.77Joy Mining ¶ 73; MHS case ¶ 60. MHS held that advancing the GDP of the local economy was the deciding factor in determining economic development, and specified that the enhancement of GDP needs to be more than a small contribution for the investment to receive ICSID protection.78MHS case ¶ 123. This is not the exclusive outcome. There are tribunals that have taken a different approach. Most notably, this was illustrated by the application of the criterion by the annulment committee’s decision in MHS, in which it argued for the non-jurisdictional and flexible character of the criterion. The tribunal emphasized that small contributions, along with an investment’s cultural and historical nature, should not be excluded from the contribution to the economic development condition.79Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Decision on the Application for Annulment (Apr. 16, 2009). Other tribunals have flatly rejected consideration of this Salini criterion, mostly on the argument that development of the host State is impossible to ascertain.80Patrick Mitchell v. Democratic Republic of Congo ¶ 33; Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award (April 15, 2009) (hereinafter “Phoenix”). The Phoenix tribunal considered contribution to the development inherent to the concept of investment, and argued that it should therefore not be considered separately.81The Phoenix tribunal noted that a “less ambitious approach should therefore be adopted, centered on the contribution of an international investment to the economy of the host state, which is indeed normally inherent in the mere concept of investment as shaped by the elements of contribution/duration/risk, and should therefore in principle be presumed.” See Phoenix at 34. It can thus be concluded that the concept of economic development is very broad and encompasses many different elements. Although tribunals have taken disparate positions, the case law suggests that several factors need to be considered to test whether migrant work would fit within the contribution to development requirement. These factors are: (i) a benefit to the public interest; (ii) a transfer of know-how from the investor to the host state; (iii) an impact on the GDP of the host country; and (iv) a positive impact on the host state’s development.82Omar Garcia-Bolivar, Protected Investments and Protected Investors: The Outer Limits of ICSID’s Reach, 2 Trade L. & Dev., 145 156 (2010). It can be argued that benefit to the public interest and transfer of know-how are inherent to the character of ‘work.’ Studies in this regard have shown the positive impact of human capital to host countries.83Note that this benefit is higher for highly educated migrants than for the migrant workers discussed in this paper. See International Labour Organisation et al., supra note 61, at 11. More difficult is the assessment of the impact on GDP and the host State’s development. Although migrant work forms twenty-nine percent of the GDP of Nepal, it is less immediately apparent what the impact is on the host country as remittances are often sent back to the country of origin. Empirical studies have attempted to estimate the impact of net migration on economic growth. An extensive assessment of the impact of immigration on host States was reported by the International Labor Office in its report Towards a Fair Deal for Migrant Workers in the Global Economy. This report identified various contributions of migrant work, including net economic benefits by meeting general labor market shortages, prevention of inflation, the supply of particular skills that were in high demand, and the added incentives for capital accumulation.84International Labour Conference, supra note 4, at 30–31; International Labour Organisation et al., supra note 61, at 28–30 (discussing the economic contributions of migrant labor on host States in G20 countries). It also noted, however, large numbers of irregular migrants can also cause problems in host States, such as unfair competition for regular workers.85Id. at 120. It is unclear if tribunals would take a negative impact into account.
This empirical research is necessary to strengthen the argument that the contribution to the economic development of the host State criterion is met. Although not all tribunals require strong evidence of economic impact, and some even venture to argue that it is not up to the tribunals to make an assessment of the contribution, in the case of migrant workers it is recommended to put forth a strong case based on their contribution to economic development. As the ICSID is a mechanism that is built within a system focusing on development, there is no better ISDS mechanism to bring a claim that is heavily development focused, such as a case about migrant work.
Section 3 – Is There A Means That Could Enforce Rights Arising From Migrant Labor?
3.1 ICSID
The assessment of whether a migrant work employment contract could be added to the list of recognized investments under Article 25 of the ICSID Convention and enforced as such under ICSID is a difficult one. The analysis in Section 2 suggests that, although the non traditional notion of migrant labor is unlikely to align with the exact same features of traditional investments, there is a strong argument for the inclusion of migrant work within the meaning of investment. Whether migrant work will be recognized as an investment before an ICSID tribunal will largely depend on the approach taken by the tribunal.
Under the deferential to consent approach, it seems highly likely that migrant work could fall within the broad meaning of the BIT. Nepal could strengthen this approach by including language on migrant work directly in the BIT – for instance in the Nepal-India BIT – but also by entering into new BITs with the Gulf States.
The outcome of tribunals following the objective approach is harder to predict. This paper argues that while the four main characters of the Salini-test must be used as guidelines, encompassing non-traditional investments like migrant work under the notion of investment will require an approach along the more flexible, creative line of cases, as many of the features of migrant work are not incompatible with the meaning of investment under the Salini test, and could be creatively interpreted to fit its characteristics.86See Schreuer, supra note 31, at 140 (Professor Schreuer, the source of these criteria, criticized the acceptance of these characters as a strict jurisdictional test). The development feature in particular significantly strengthens the argument.
However, the issue under every criterion remains that the impact of an investment of just one migrant worker is very small as compared to more traditional forms of investment. Although the notion of investment does not define a minimum threshold, and the fact that the amount of the claim is low should not preclude jurisdiction, this will still leave the consideration whether it would be economically viable to bring a relatively small claim before an ICSID tribunal.87International Center for the Settlement of Investment Disputes, supra note 28, at 567 (explaining that, during the initial drafting process of ICSID, there was a $100,000 limit discussed, but this proposal was rejected “because disputes involving small amounts could be important as test cases, whereas there would be other cases in which it would be impossible to place a pecuniary value on the subject-matter of a dispute”). While it is often thought that big businesses bring the majority of ICSID cases, in fact, the majority of U.S. claimants using ICSID appear to be individuals or small enterprises. See U.S. Small Business Administration, Table of Small Business Size Standards Matched to North American Industry Classification System Codes (July 2014), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (last visited Apr. 1, 2017). ICSID proceedings are extremely costly. The first advance payment requested of parties to start proceedings is already between US$100,000 and US$150,000. On average, party cost for claimants are estimated at US$5,619,261.74 for claimants.88Jeffery Commission, How Much Does an ICSID Arbitration Cost? A Snapshot of the Last Five Years, Kluwer Arb. Blog (Feb. 29, 2016), http://kluwerarbitrationblog.com/2016/02/29/how-much-does-an-icsid-arbitration-cost-a-snapshot-of-the-last-five-years/ (reviewing 55 ICSID arbitrations concluded between 2011 and 2015). The costs to bring an individual claim of a migrant worker before an ICSID tribunal might very well outweigh the benefits of seeking protection through this system.
The option of consolidation of claims could offer a solution in this respect.89Schreuer, supra note 31, at 383. Consolidation is the joiner of separate proceedings that share common questions of law or fact in the underlying disputes and is designed to promote procedural efficiency.90Id. If all migrant workers in Saudi Arabia would consolidate their claims, it could change the story.91Forcing a State to be a respondent in an investor State dispute could have an additional benefit: it could spark changes in legislation. See, e.g., Karen Kizer & Jeremy Sharpe, Reform of Investor-State Dispute Settlement: The US Experience, 1 Transnat’l Disp. Mgmt. 12 (2014); Jose E. Alvarez, Return of the State, 20 Minn. J. Int’l L. 223, 233–34 (2011). For instance, in the groundbreaking Abaclat v Argentine Republic case, the tribunal found that the jointly filed claims of 60,000 individual investors arising out of the sovereign debt default of Argentina in 2001 were within the tribunal’s jurisdiction and admissible.92Abaclat (formerly Beccara) v. Argentine Republic, ICSID Case No. ARB/0715, Decision on Jurisdiction and Admissibility, ¶ 490 (Aug. 4, 2011). The possibility of consolidated claims deserves further consideration.
3.2 Additional Facility
In the event it turns out that migrant work cannot be brought before ICSID, the option remains to take these cases to the Additional Facility. The Administrative Council of ICSID adopted the Additional Facility Rules to fill in the gaps of proceedings between States and nationals of other States that are beyond the scope of the ICSID Convention.
These rules could be beneficial to Nepali migrant workers in two scenarios. Firstly, disputes can be brought before the Additional Facility if only one of the parties is a Contracting State or a national of a Contracting State. Most of the Nepali migrant workers travel to India; India is not a member of ICSID yet and will therefore not have standing before ICSID. The Additional Facility would offer a forum for dispute resolution because Nepal is a member to ICSID.93Additional Facility Rules arts. 4(1)–4(2) (explaining that conciliation and arbitration under the Additional Facility is available where at least one of the parties is a contracting State to ICSID). The Nepal – India BIT, although not ratified, also allows parties to bring disputes before the Additional Facility subject to the parties’ agreement.94Nepal-India BIT, art. 9(3)(ii). Secondly, the Additional Facility may be used if an activity does not meet the requirements of an “investment” under the Convention.95Schreuer, supra note 31, at 141. An agreement to bring arbitration proceedings before the Additional Facility must be approved by the Secretary General.96Additional Facility Rules, art. 4(1). The Secretary General will grant approval if he or she is “satisfied that the underlying transaction has features that distinguish it from an ordinary commercial transaction.”97Schreuer, supra note 31, at 141; Additional Facility Rules, art. 4(3). In cases where it is unclear whether the activity meets the requirements of an ‘investment’ under ICSID, the case has to be brought to ICSID first. As such, the Additional Facility could provide a good fallback mechanism for migrant workers to bring their claim in the event the ICSID tribunal would reject jurisdiction over the case.
3.3 Ad Hoc
In light of the uncertain availability of options for the migrant workers who clearly fall in a bit of a grey zone under ICSID, an option would be to take their case to a non-ICSID ad hoc tribunal. They would thereby forego the major benefit of the ICSID, which includes the availability of pre-established rules and procedures, administrative assistance from the institution to establish the tribunal, assistance of the institution in encouraging reluctant parties to proceed with arbitration, and most importantly, the benefit of access to enforcement measures that are directly actionable in domestic courts without review.98Mortenson, supra note 35, at 280. However, the Nepal-India BIT does allow for ad hoc arbitration and could provide a forum for migrant workers to seek justice and protection of their human capital. The option of an ad hoc tribunal could economically be more viable, as it is established tailored to the parties. However, in practice many examples prove that ad hoc arbitration is not always less expensive than the institutional process.99See Institutional vs. ‘Ad Hoc’ Arbitration, Out-Law, https://www.out-law.com/en/topics/projects–construction/international-arbitration/institutional-vs-ad-hoc-arbitration/ (last visited Apr. 1, 2017). The choice between ‘ad hoc’ and institutional arbitration deserves a more accurate cost projection before migrant workers decide to submit their cases.
Conclusion – What Could Be The Consequences Of Redefining Migrant Labor As Investment?
The impressive success of the investment law regime to protect FDI raises the question whether this regime should require a corresponding opportunity for access to justice and participation in arbitral proceedings by migrant workers. Migrant workers and the related remittances form an important part of the economy and can play a vital role in improving economic welfare in developing countries. This significant financial vehicle can be weakened when States fail to protect migrant workers. The conclusion reached in this paper is that the investment law regime could play a paramount role in improving the protection of migrant workers. The benefits of including remittances under the definition of investment, rather than including labor provisions in the BIT, is that this would induce the practice of including migrant work in the dispute settlement provisions of the BIT.
In moving the discussion out of the human rights framework and into the investment regime, and applying an economic lens to the problem of ill protection, migrant workers may stand a better chance to be protected, which would simultaneously benefit the welfare and economic growth of developing countries. Potentially, this system could also facilitate ways to reduce costs of sending remittances across borders.
A system of protection would be beneficial for both host States and sending countries. Host States benefit economically from the incoming flow of migrant labor and should acknowledge and encourage this phenomenon through liberalization of laws and inclusion of migrant workers in BITs. One of the many benefits for the sending country to create an attractive social, economic, and political environment is that it could encourage migrants to stay tied to the home country, which would encourage remittances to flow back to the sending nations. Remittances as such contribute greatly to the GDP of sending nations and the protection of remittances advances the economy as a whole.100Thomas Cottier & Charlotte Sieber-Gasser, Labour Migration, Trade and Investment: From Fragmentation to Coherence, in The Palgrave Handbook of International Labour Migration 41 (2015). Thus, it would be advisable for Nepal to strengthen its investment law system. As a first step, Nepal should ratify the BIT with India. If ratified, claims against India could be brought under the ICSID, or ad hoc tribunals. Secondly, Nepal should enter into treaties with other destination countries such as the Gulf States. If this policy decision is made with an incentive to benefit migrant workers, it would be worthwhile to add migrant work to the non- exhaustive list of elements that constitute an investment under the definition of the BIT. Such inclusion would greatly benefit the predictability of cases under the ICSID, and protect human capital in the future.
References [ + ]	01.	↵	Remittances represent the portion of income that migrant workers send back to their families and home communities and are therefore closely linked to migrant work. 02.	↵	World Bank, Migration and Remittances Factbook xii (2016), available at https://openknowledge.worldbank.org/bitstream/handle/10986/23743/9781464803192.pdf. 03.	↵	UNCTAD, FDI Recovery Is Unexpectedly Strong, But Lacks Productive Impact, 22 Global Investment Trends Monitor 1, 2 (2016), available at http://unctad.org/en/PublicationsLibrary/webdiaeia2016d1_en.pdf. See also OECD, Foreign Direct Investment For Development: Maximizing Benefits, Minimizing Costs 1, 5 (2002) (highlighting the positive developments of FDI for developing countries). 04.	↵	International Labour Conference, 92nd Session Report VI: Towards A Fair Deal For Migrant Workers In The Global Economy, 30–31 (2004). 05.	↵	The World Bank, Personal Remittances, Received (% of GDP), http://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS (last visited Apr. 1, 2017). 06.	↵	Vienna Convention on Consular Relations, arts. 23, 29, 30, 31, April 24, 1963, 23 U.S.T. 3227, 500 U.N.T.S. 95. 07.	↵	Various bodies of law for the protection of migrant workers have been explored, including the current Migration Treaty. One area that could offer solutions is the extraterritorial application of human rights law. However, these areas remain largely underdeveloped. 08.	↵	Robert Lucas, Migration and Economic Development in Africa: A Review of Evidence, 15 J. Afr. Econ. 337–95 (2006). 09.	↵	Sarah Paoletti et al., Migrant Workers’ Access To Justice At Home: Nepal (2014) available at https://www.opensocietyfoundations.org/sites/default/files/migrant-nepal-report-english-20140610_1.pdf. 10.	↵	Id. at 26. 11.	↵	International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, Dec. 18 1990, 2220 U.N.T.S. 3. 12.	↵	Paoletti, supra note 9, at 42. (finding that ~7.3 percent of the total Nepalese population is registered as regular worker for “Foreign Work,” and that there are over a million “irregular workers.” UN Women estimated that there were already 1.6 million Nepali workers in countries other than India in 2014, and India is known to host most migrant workers). 13.	↵	See Paoletti, supra note 9, at 43 (explaining that public institutions generally oversee the regulatory and administrative frameworks, while private actors and individuals carry out the proceedings governed under the Nepal Foreign Employment Act. Evaluation of the obligations of the host state in exercising this oversight falls outside the scope of this research paper). 14.	↵	Foreign Employment Promotion Board Nepal, Costs Required for Foreign Employment, http://www.fepb.gov.np/downloadfile/lagat_1305454188.pdf (last visited April 1, 2014). 15.	↵	Although it falls outside the scope of this paper, it would be valuable for future papers to research and evaluate the extent that government control of these agencies may impact migrant workers’ protections under investment law. 16.	↵	Paoletti, supra note 9, at 66–67. 17.	↵	Id. A report by Open Society indicated that sometimes clauses are included referring complaints to the Nepali recruitment agency; however, the recruitment agency did not appear to be party to the contract, which calls the enforceability of the contract into question. 18.	↵	Extensive analysis of BIT law on labor provisions falls outside the scope of this research paper. See Vid Prislan & Ruben Zandvliet, Labor Provisions in Bilateral Investment Treaties: Does the New US Model BIT Provide a Template for the Future?, 92 Colum. FDI Perspectives 1 (April 1, 2013) (discussing labor rights under the U.S. Model BIT). 19.	↵	See U.S. Trade Rep., Trans-Pacific Partnership (“TPP”), art. 19.15(13) (Oct. 5, 2015) https://ustr.gov/sites/default/files/TPP-Final-Text-Labour.pdf (disclosing the treaty’s text while remarking that the United States has formally withdrawn from the agreement per guidance from the President, as the United States had never formally ratified the treaty). See, e.g., United States-Colombia Trade Promotion Agreement, U.S.-Colom., art. 17.7(7), May 15, 2015, available at https://ustr.gov/sites/default/files/uploads/agreements/fta/colombia/asset_upload_file993_10146.pdf (illustrating an equivalent obligation in an analogous treaty). See also Franz Ebert, Labour Standards in Mega-Regional Trade Agreements: The Case of TPP and TTIP, in Mega-Regional Trade Agreements and the Future of International Trade and Investment Law (Thilo Rensmann ed., 2017). 20.	↵	World Bank Group, Large-Scale Migration and Remittance in Nepal: Issues, Challenges, and Opportunities 28 (2011) (“Nearly 41 percent of the foreign work migrants went to India, another 38 percent to the Gulf states and less than 12 percent to Malaysia”). 21.	↵	Agreement Between the Government of India and the Government of Nepal for the Promotion and Protection of Investments, India-Nepal, Oct. 21, 2011, available at http://investmentpolicyhub.unctad.org/IIA/country/147/treaty/1939 [hereinafter “India – Nepal BIT”]. 22.	↵	Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 575 U.N.T.S. 159, art. 25 (entered into force Oct. 14, 1966) [hereinafter “ICSID Convention”]. 23.	↵	Various bodies of law for the protection of migrant workers have been explored, including the current Migration Treaty. One area that could offer solutions is the extraterritorial application of human rights law. However, these areas remain largely underdeveloped. 24.	↵	Alan Redfern & Martin Hunter, Arbitration under Investment Treaties, in Redfern and Hunter on International Arbitration 252 (2015). 25.	↵	Velimir Zivkovic, Recognition of Contracts as Investments in International Investment Arbitration, 5 Eur. J. Legal Stud. 174, 177 (2012). 26.	↵	India – Nepal BIT (2011), art. 1(b). 27.	↵	Model Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of ___ for the Promotion and Protection of Investments, art. 1, available at http://investmentpolicyhub.unctad.org/Download/TreatyFile/2847 [hereinafter “UK Model BIT”]. Similar provisions can also be found in the Germany, France, and Netherlands model BITs. 28.	↵	International Center for the Settlement of Investment Disputes, History of the ICSID Convention Volume II-1, 567 (2015). 29.	↵	Muthucumaraswamy Sornarajah, The International Law on Foreign Investment 11–16 (3d ed., 2010); Zivkovic, supra note 25, at 177. 30.	↵	Kathryn Gordon & Joachim Pohl, Investment Treaties Over Time – Treaty Practice and Interpretation in a Changing World 5 (2015), available at http://dx.doi.org/10.1787/5js7rhd8sq7h-en. 31.	↵	Zivkovic, supra note 25, at 176; Christoph Schreuer, The ICSID Convention: A Commentary 138–39 (2d ed., 2009); Treaty Between the Government of the United States of America and the Government of [Country] Concerning the Encouragement and Reciprocal Protection of Investment (“U.S. Model BIT 2012”), art. 1, available at http://www.state.gov/documents/organization/188371.pdf; Prabhash Ranjan, Definition of Investment in Bilateral Investment Treaties of South Asian Countries and Regulatory Discretion, 26 J. Int’l Arb. 219, 225 (2009); John Given, Malaysia Historical Salvors Sdn., Bhd. v. Malaysia: An End to the Liberal Definition of “Investment” in ICSID Arbitrations?, 31 Loy. L.A. Int’l & Comp. L. Rev. 467, 475 (2009); Sergey Ripinsky & Kevin Williams, Damages in International Investment Law 102 (2008); See also Organisation for Economic Co-operation and Development (“OECD”), The Multilateral Agreement on Investment: Draft Consolidated Text 11, available at http://www1.oecd.org/daf/mai/pdf/ng/ng987r1e.pdf. 32.	↵	Zivkovic, supra note 25, at 176. 33.	↵	Schreuer, supra note 31, at 71. 34.	↵	ICSID Convention, art. 25 (establishing jurisdiction under Article 25(1) of the Convention to “any legal dispute arising directly out of an investment.” Note that the ICSID Convention does not define the term “investment”). 35.	↵	Julian Mortenson, The Meaning of ‘Investment’: ICSID’s Travaux and the Domain of International Investment Law, 51 Harv. Int’l L. J. 257, 268 (2010). 36.	↵	Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Decision on Jurisdiction (Dec. 8, 2003), 43 ILM 262 (2004); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (Jan. 14, 2004); Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Award (Aug. 16, 2007); Biwater Gauff (Tanzania) Limited v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award (July 24, 2008) (hereinafter “Biwater”). 37.	↵	See, e.g., Lanco Int’l, Inc. v. Argentine Republic, ICSID Case No. ARB/97/6, Preliminary Decision on Jurisdiction, ¶ 48 (Dec. 8, 1998); Gruslin v. Malaysia, ICSID Case No. ARB/99/3, Award, ¶¶ 9, 13.5–13.6 (Nov. 27, 2000), 5 ICSID Rep. 1483 (2006). 38.	↵	See, e.g., Parkerings-Compagnier v. Republic of Lithuania, ICSID Case No. ARB/05/8, Award, ¶¶ 99, 249–54 (Aug. 14, 2007); see also Mortenson, supra note 35, at 271. 39.	↵	Mortenson, supra note 35, at 269. 40.	↵	Mortenson notes that the best description of the jurisdictional limits of this approach comes from the Fedax v. Venezuela case which contrasted the debt instruments in that case to “short-term,” and “occasional” arrangements in “volatile capital,” only yielding “quick gains” that were followed by an “immediate” departure from the host country, which might not qualify as an investment. Fedax v. Republic of Venezuela, ICSID Case No. ARB/96/3, Decision of the Tribunal on Objections to Jurisdiction, ¶ 43 (July 11, 1997), 37 I.L.M. 1378 (1998) (hereinafter “Fedax”). Interestingly, the Fedax case was also the first case that mentioned the characteristics under the restrictive approach that will be further discussed in the next section. 41.	↵	Mortenson, supra note 35, at 269. 42.	↵	Mortenson, supra note 35, at 269. See also Fedax; Ceskoslovenska Obchodnf Banka (CSOB) v. Slovak Republic, ICSID Case No. ARB/97/4, Decision of the Tribunal on Objections to Jurisdiction, ¶¶ 19, 64, 66 (May 24, 1999), 14 ICSID Rev. 251 (1999); Biwater ¶ 312; Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, ¶ 82 (Apr. 29, 2004), 20 ICSID Rev. 205 (2005); Camuzzi Int’l v. Argentine Republic, ICSID Case No. ARB/03/2, Decision on Objections to Jurisdiction, 58 (May 11, 2005); Mihaly Int’l Corp. v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/00/2, Award, ¶¶ 33, 49 (Mar. 15, 2002), 41 I.L.M. 867 (2002) (hereinafter “Mihaly Int’l Corp”); cf. TSA Spectrum de Arg., S.A. v. Argentine Republic, ICSID Case No. ARB/05/05, Award, ¶¶ 8–10 (Dec. 19, 2008) (Aldonas, dissenting) (discussing the question of foreign control for Article 25(2)(b) purposes). 43.	↵	UK Model BIT, art. 1. Note that similar provisions are also found in the German, French, and Dutch model BITs. 44.	↵	See Mortenson, supra note 35, at 301–18 (offering a more comprehensive view on the definition of “investment”). 45.	↵	Id. at 318. 46.	↵	Id. Mortenson was referenced by tribunals who followed his approach. See, e.g., Biwater ¶ 12. 47.	↵	Zivkovic, supra note 25, at 181. 48.	↵	Schreuer, supra note 31. Although Schreuer’s factors found roots in earlier literature, he was the first to draw them out. But see Chittharanjan Amerasinghe, The Jurisdiction of the Centre for the Settlement of Investment Disputes, 19 Indian J. Int’l L. 180, 181 (1979). 49.	↵	Salini et al v. Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction, ¶ 152 (Jul. 23, 2001), 42 I.L.M. 609 (2003) (hereinafter “Salini”). 50.	↵	Id. ¶ 4. 51.	↵	Id. ¶ 52. 52.	↵	James Crawford & William Reisman, Foreign Investment Disputes: Cases, Materials and Commentary 344 (2005); Rudolph Dolzer & Christoph Schreuer, Principles of International Investment Law 60 (2d ed. 2012). 53.	↵	Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Award on Jurisdiction, 35 (May 17, 2007) (hereinafter “MHS case”). 54.	↵	Sornarajah, supra note 29, at 179. 55.	↵	Id. at 179. 56.	↵	In the Fedax case, the arbitral tribunal referred to a “substantial commitment,” whereas in Salini v. Morroco, the arbitral tribunal referred to “contributions.” See Salini ¶ 152. 57.	↵	Salini ¶ 53; MHS case ¶ 131; Quiborax S.A. v. Plurinational State of Bolivia ¶¶ 229-231. See also Helena Engfeldt, Should ICSID Go Gangnam Style in Light of Non-Traditional Foreign Investments Including Those Spurred on by Social Media? Applying an Industry-Specific Lens to the Salini Test to Determine Article 25 Jurisdiction, 32 Berkeley J. Int’l L. 44, 55 (2014). 58.	↵	Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Decision on Jurisdiction, ¶ 92 (2006) (hereinafter “Jan de Nul N.V.”) (stressing that “the amount of work involved [including the mobilization of two heavy ships for a period of approximately 19 months] and the related compensation show that the Claimants’ contribution was substantial”). 59.	↵	Mihaly Int’l Corp ¶ 51. 60.	↵	RSM Production Corporation v. Grenada, ICSID Case No. ARB/05/14, Award, ¶ 243 (March 13, 2009) (“There would be no need for actual expenses to have been incurred by the private party, the relevant criterion being the commitment to bring its resources toward the performance of such exploration”). 61.	↵	International Labour Organisation et al., The Contribution of Labour Mobility to Economic Growth 11 (2015), available at http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_398078.pdf. 62.	↵	Jan de nul N.V. ¶ 92. 63.	↵	The next section will briefly touch upon the possibility of consolidating claims. 64.	↵	MHS case ¶ 112. 65.	↵	Engfeldt, supra note 57 (extending the application of this idea to the context of social media investments). 66.	↵	Mortenson, supra note 35, at 278; See also Fedax ¶ 43. 67.	↵	MHS case ¶ 111. 68.	↵	Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, ¶ 27 (Nov. 1, 2006). 69.	↵	Salini ¶¶ 55–56; Jan de Nul N.V. ¶ 136, Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, ¶ 136 (2005) (hereinafter “Bayindir”). See also Engfeldt at 57. 70.	↵	Id. at 53. 71.	↵	J. Harb, Definition Of Investments Protected By International Treaties: An On-Going Hot Debate, 28 Mealey’s Int’l Arb. Rep. 8, 10 (2011), available at http://www.jonesday.com/files/Publication/c24e6d62-3269-4b32-b93d-992f1d5e2e77/Presentation/PublicationAttachment/b4526438-d73b-4bd4-a780-8003fe19feaf/689472.pdf. 72.	↵	Paoletti at 66–67. 73.	↵	Bayindir ¶ 136. 74.	↵	O. Garcia-Bolivar, Defining an ICSID Investment: Why Economic Development Should be the core Element, Investment Treaty News (Apr. 2012), https://www.iisd.org/itn/2012/04/13/defining-an-icsid-investment-why-economic-development-should-be-thecore-element/#_ftnref3. See also MHS, Decision on the Application for the Annulment of the Award ¶ 14, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=viewCase&reqFrom=Home&caseId=C247. 75.	↵	The Tribunal noted: “It cannot be seriously contested that the highway shall serve the public interest. Finally, the Italian companies were also able to provide the host State of the investment with know-how…” Salini ¶ 57. See also Garcia- Bolivar. 76.	↵	Joy Mining Machinery Limited v. Arab Republic of Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, ¶¶ 49, 53 (Aug. 6, 2004) (“Joy Mining”); Consortium Groupement L.E.S.I. – DIPENTA v. People’s Democratic Republic of Algeria, ICSID Case No. ARB/03/8, Award, § II ¶ 14 (Jan. 10, 2005) (“L.E.S.I. – DIPENTA v. Algeria”); Bayindir ¶ 137. 77.	↵	Joy Mining ¶ 73; MHS case ¶ 60. 78.	↵	MHS case ¶ 123. 79.	↵	Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Decision on the Application for Annulment (Apr. 16, 2009). 80.	↵	Patrick Mitchell v. Democratic Republic of Congo ¶ 33; Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award (April 15, 2009) (hereinafter “Phoenix”). 81.	↵	The Phoenix tribunal noted that a “less ambitious approach should therefore be adopted, centered on the contribution of an international investment to the economy of the host state, which is indeed normally inherent in the mere concept of investment as shaped by the elements of contribution/duration/risk, and should therefore in principle be presumed.” See Phoenix at 34. 82.	↵	Omar Garcia-Bolivar, Protected Investments and Protected Investors: The Outer Limits of ICSID’s Reach, 2 Trade L. & Dev., 145 156 (2010). 83.	↵	Note that this benefit is higher for highly educated migrants than for the migrant workers discussed in this paper. See International Labour Organisation et al., supra note 61, at 11. 84.	↵	International Labour Conference, supra note 4, at 30–31; International Labour Organisation et al., supra note 61, at 28–30 (discussing the economic contributions of migrant labor on host States in G20 countries). 85.	↵	Id. at 120. 86.	↵	See Schreuer, supra note 31, at 140 (Professor Schreuer, the source of these criteria, criticized the acceptance of these characters as a strict jurisdictional test). 87.	↵	International Center for the Settlement of Investment Disputes, supra note 28, at 567 (explaining that, during the initial drafting process of ICSID, there was a $100,000 limit discussed, but this proposal was rejected “because disputes involving small amounts could be important as test cases, whereas there would be other cases in which it would be impossible to place a pecuniary value on the subject-matter of a dispute”). While it is often thought that big businesses bring the majority of ICSID cases, in fact, the majority of U.S. claimants using ICSID appear to be individuals or small enterprises. See U.S. Small Business Administration, Table of Small Business Size Standards Matched to North American Industry Classification System Codes (July 2014), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (last visited Apr. 1, 2017). 88.	↵	Jeffery Commission, How Much Does an ICSID Arbitration Cost? A Snapshot of the Last Five Years, Kluwer Arb. Blog (Feb. 29, 2016), http://kluwerarbitrationblog.com/2016/02/29/how-much-does-an-icsid-arbitration-cost-a-snapshot-of-the-last-five-years/ (reviewing 55 ICSID arbitrations concluded between 2011 and 2015). 89.	↵	Schreuer, supra note 31, at 383. 90.	↵	Id. 91.	↵	Forcing a State to be a respondent in an investor State dispute could have an additional benefit: it could spark changes in legislation. See, e.g., Karen Kizer & Jeremy Sharpe, Reform of Investor-State Dispute Settlement: The US Experience, 1 Transnat’l Disp. Mgmt. 12 (2014); Jose E. Alvarez, Return of the State, 20 Minn. J. Int’l L. 223, 233–34 (2011). 92.	↵	Abaclat (formerly Beccara) v. Argentine Republic, ICSID Case No. ARB/0715, Decision on Jurisdiction and Admissibility, ¶ 490 (Aug. 4, 2011). 93.	↵	Additional Facility Rules arts. 4(1)–4(2) (explaining that conciliation and arbitration under the Additional Facility is available where at least one of the parties is a contracting State to ICSID). 94.	↵	Nepal-India BIT, art. 9(3)(ii). 95.	↵	Schreuer, supra note 31, at 141. 96.	↵	Additional Facility Rules, art. 4(1). 97.	↵	Schreuer, supra note 31, at 141; Additional Facility Rules, art. 4(3). 98.	↵	Mortenson, supra note 35, at 280. 99.	↵	See Institutional vs. ‘Ad Hoc’ Arbitration, Out-Law, https://www.out-law.com/en/topics/projects–construction/international-arbitration/institutional-vs-ad-hoc-arbitration/ (last visited Apr. 1, 2017). 100.	↵	Thomas Cottier & Charlotte Sieber-Gasser, Labour Migration, Trade and Investment: From Fragmentation to Coherence, in The Palgrave Handbook of International Labour Migration 41 (2015). You Might Also Like