Unicon Limited v. Ministry of Energy and Water of Afghanistan (I)
ICSID · Investment (ICSID and treaty) · Afghanistan · 17 Feb 2023
Why it matters
This case is a notable application of the Salini test for jurisdiction under the ICSID Convention. It clarifies that a simple supply and installation contract, without long-term commitment or significant contribution to the host state's development, may not qualify as an investment. The decision reinforces the objective criteria for investment and limits ICSID jurisdiction over purely commercial contracts.
Summary
Unicon Limited, a German company, entered into a contract with the Ministry of Energy and Water of Afghanistan to supply and install electricity meters. The contract was for a fixed price and a short duration. After a dispute arose, Unicon initiated ICSID arbitration under the Afghanistan-Germany BIT, claiming that the contract constituted an investment. The tribunal had to decide whether it had jurisdiction, which required finding that the contract was an 'investment' under both the ICSID Convention and the BIT. The tribunal applied the Salini test, which considers factors such as a substantial commitment, a certain duration, an element of risk, and a contribution to the host state's development. The tribunal found that Unicon's contract did not meet these criteria: the commitment was not substantial, the duration was short, the risk was limited, and the contribution to Afghanistan's development was minimal. Therefore, the tribunal declined jurisdiction and dismissed the claim. The award is significant for its strict interpretation of the investment requirement in ICSID arbitration.
The detail
Parties: Unicon Limited v. Ministry of Energy and Water of Afghanistan (I)
Case number: PCA Case No. 2020-33
Outcome: The tribunal dismissed the claim for lack of jurisdiction because the investment did not qualify as an 'investment' under the ICSID Convention and the Afghanistan-Germany BIT.
Applicable law: ICSID Convention, Afghanistan-Germany Bilateral Investment Treaty (BIT), Afghan law
Issues in play: The definition of 'investment' under the ICSID Convention and the BIT was at issue. The tribunal applied the Salini test to determine whether Unicon's contract to supply and install electricity meters constituted an investment.
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