Sovereign Wealth funds in the ICSID: A New Approach to Standing

• Author: Christopher Beus
• Position: University of Utah S.J. Quinney College of Law
• Pages: 543-571

e Indonesian Journal of International & Comparative Law

ISSN: 2338-7602; E-ISSN: 2338-770X

http://www.ijil.org

© 2014 e Institute for Migrant Rights Press

rst published online 20 March 2014

543

SOVEREIGN WEALTH FUNDS IN THE

ICSID

A NEW APPROACH TO STANDING

CHRISTOPHER BEUS

University of Utah S.J. Quinney College of Law

E-mail: Christopher.Beus@law.utah.edu

Sovereign Wealth Funds are receiving increased attention in the sphere of international

foreign investment due especially to their instrumentality in the recovery from the

recent nancial crisis. ey present new challenges to investment tribunals such as the

ICSID in determining the nature of these entities and, in particular, whether they

are public or private in nature. is characterization is important for the purposes of

ICSID standing. To date the tribunal of CSOB v. Republic of Slovakia is the only

ICSID tribunal to directly take on the issue of standing as it relates to such entities.

CSOB hinged its determination of an entity’s relationship with the government

almost entirely on the governmental versus commercial nature of the specic activities

of the entity in question.

is article explores an alternative approach to CSOB’s methodology in the form

of State Attribution doctrine. State Attribution may provide a way to remedy the

shortcomings of CSOB’s approach by using a variety of factors adaptable to the diverse

and complex relationships between governments and SWFs. More importantly, it

could open the way for inquiry into the purpose behind an entity’s actions in making

such determinations. ese enhancements could better address the concerns of the

ICSID and the international community generally as they relate to SWFs.

Keywords: State Responsibility, Commercial Dispute Settlement, Foreign Direct

Investment, International Arbitration.

The Indonesian Journal of International & Comparative Law Volume I Issue 2 (2014) at. 543–571

Christopher Beus

544

I. INTRODUCTION

Sovereign Wealth Funds are receiving increased attention in the sphere of

international foreign investment due especially to their instrumentality

in the recovery from the recent nancial crisis and their close ties to their

respective governments. ey have presented new challenges in particular

to the ICSID in trying to determine whether these entities are public or

private in nature for the purposes of ICSID standing. To date the tribunal

of CSOB v. Republic of Slovakia is the only ICSID tribunal to directly take

on the issue of standing as it relates to such entities. e tribunal in CSOB

hinged its determination of an entity’s relationship with the government

almost entirely on the governmental versus commercial nature of the

specic activities in question. is article explores an alternative approach

to CSOB’s methodology in the form of State Attribution doctrine. State

Attribution may provide a way to remedy the shortcomings of CSOB’s

approach by using a variety of factors adaptable to the diverse and complex

relationships between governments and SWFs. More importantly, it could

open the way for inquiry into the purpose behind an entity’s actions in

making such determinations. ese enhancements could better address

the concerns of the ICSID and the international community generally as

they relate to SWFs.

In order to present these arguments, this article will rst present

information on SWFs and the concerns surrounding them. Second, it will

turn to their standing under the current ICSID methodology as found in

CSOB. Next, it will present the methodology of state attribution doctrine

after which it will compare the two methodologies. Finally, it will analyze

how well state attribution doctrine meets the interests of the ICSID and

the international community in dealing with SWFs in particular.

II. SOVEREIGN WEALTH FUNDS

Sovereign wealth funds belong to a larger group of entities called state-

controlled entities (SCEs). SCEs are increasing in number and inuence

in the realm of international foreign investment. ey gained considerable

recognition during the recent nancial crisis and played a key role in

stabilizing western nancial markets. SCEs may entail a state’s direct