Salini v. Morocco (ICSID, 2001): The Landmark Case that Shaped the Definition of “Investment”
The most frequent ISDS question: “So, is it an investment or not?” — the case that set the test is Salini.
Hello everyone! If you study international investment arbitration even a little, you inevitably hit the wall of “defining investment.” When I first learned ICSID jurisdiction, I kept asking, “Where exactly does ‘investment’ begin?” My professor said, “Master Salini and half the job is done,” and I’ve never forgotten it. Today I’ll unpack the famous Salini v. Morocco case—not through dense award prose, but by focusing on why it matters, why it keeps appearing on exams, and how to remember it. Whether you’re a law student, preparing for ISDS practice, or just investment-arbitration curious, you’ll come away with a firm grip on the Salini test.
Contents
Case Background: What was the dispute?
Salini v. Morocco was brought by the Italian construction firm Salini Costruttori against Morocco at ICSID. The dispute arose out of a highway (Autoroute) construction project in Morocco. Salini completed the works under contract, but alleged that Morocco delayed and underpaid, then invoked the BIT and went to ICSID. On its face, it looks like a straightforward construction-contract dispute. But the tribunal’s central question became: “Is this the kind of ‘investment’ protected by ICSID?” Out of that analysis came the now-textbook four-element “Salini test.” The case effectively set the direction for answering the threshold ISDS jurisdiction question—“Does an ‘investment’ exist?”
The Four Salini Elements: The ICSID “Investment” Framework
ICSID Convention Article 25 does not define “investment.” To fill the gap, the Salini tribunal articulated four substantive indicators that have since been cited again and again. The table makes them easy to digest.
| Element | Explanation | Applied to the Case |
|---|---|---|
| ① Contribution | Was there substantial input of capital, labor, or know-how? | Highway construction costs, equipment, and technical input |
| ② Duration | Did the activity span a significant period? | Multi-year construction project |
| ③ Risk | Did the investor bear economic risk? | Cost overruns, payment delays, etc. |
| ④ Contribution to Development | Did it contribute to the host state’s economic or social development? | Expansion of Morocco’s highway infrastructure |
How did the tribunal apply the test?
The tribunal didn’t treat the four elements as a mechanical checklist. It emphasized that the indicators interrelate and must be assessed holistically. It ultimately held that the highway project qualified as an “investment” under Article 25. Key analytical points:
- Not a mere works contract: a complex, ongoing project with sustained, multifaceted inputs
- Host-state infrastructure development aligns with the “investment” purpose
- Commercial risks borne by a private contractor were sufficiently present
Salini’s Impact in Later Cases: A Comparative Look
After Salini, many tribunals followed, adapted, or even rejected the four indicators. Hence the ongoing debate: “Is the Salini test dispositive?” Crucially, the test became the starting point for distinguishing simple commercial transactions from genuine investment activities. Some awards demanded all four elements strictly; others accepted two or three as sufficient. Salini thus remains both a baseline and a flashpoint in defining “investment” in ISDS.
Academic & Practice Critiques—Summary Table
Widely used doesn’t mean flawless. Practitioners argue that ICSID’s drafters intentionally left “investment” open-textured, and tribunals may have narrowed it too much. Representative critiques and counterpoints:
| Critique | Explanation |
|---|---|
| Overly narrow definition | Risks excluding certain services or financial investments |
| “Contribution to development” is vague | No clear metric for economic/social contribution |
| Blurred lines among elements | Contribution, risk, and duration overlap; independence is unclear |
Exam & Practice Tips for Remembering Salini
Don’t just memorize the four labels—understand why the test exists and how it’s applied. In practice, the four elements are a strong checklist for jurisdictional planning. Memory aids:
- Lock in the four-step set: Contribution – Duration – Risk – Development
- Compare why a services contract may or may not qualify as an investment
- Study Salini alongside follow-ups (e.g., SGS cases) for nuance
Frequently Asked Questions (FAQ)
No. It’s a jurisprudential test, but it’s highly influential and used quasi-consistently in many cases.
Recent awards often treat it loosely or omit it in practice. It’s not a strict sine qua non.
Yes—if it is sustained/long-term, carries risk, and involves substantial contributions.
Yes. For example, SGS v. Philippines pushed back against an overly rigid application.
No. The treaty definition governs. Salini is a supplementary tool for ICSID jurisdiction analysis.
As a checklist when structuring jurisdictional arguments. Strategy shifts depending on which indicators are strongest.
Conclusion: How to View the Salini Test
Salini v. Morocco offered the first structured guide to the gateway question of investment arbitration—“Is this an investment?” The test has since been varied by tribunals, sometimes expanding and sometimes narrowing the concept. Understand Salini, and the architecture of ICSID jurisdiction comes into focus—along with practical instincts for how to assess “investment” in both practice and exams. I once memorized the four elements mechanically, but rereading later, the context—the why and how—proved far more important. I hope this guide helps you situate Salini within the larger current of international investment law. If you’d like comparisons with later cases or a ready-to-use investment-assessment framework, I’m happy to help!
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